FILE - Houston Texas neighborhood

A row of houses in Houston Heights

(The Center Square) – As the time for adopting property tax rates nears, Texas property owners are being advised to check whether their local taxing districts have used an exemption that allows setting higher property taxes following natural disasters.

The biennial system means the state Legislature won’t be back in session until after local jurisdictions adopt tax rates later this summer, but a pair of lawmakers have discussed imposing penalties on taxing entities that try to exploit the disaster clause exemption to property tax caps, Dale Craymer, president of the Texas Taxpayers and Research Association (TTARA), told The Center Square.

“The real question mark I think is with cities," Craymer said. “Because of the lingering effects of the virus, sales tax revenue is plummeting. Cities will raise property taxes as much as they can to offset the loss of sales tax. For property owners, keeping an eye on what their cities are doing is probably going to be the best way to focus their energies.”

Last year, state lawmakers approved a new property tax law that requires residents to vote on any property tax increases imposed that are higher than 3.5 percent in cities and counties with a population of 30,000 or more.

The bill, SB2, was spearhead by Sen. Paul Bettencourt, R-Houston, and supported by Republican Gov. Greg Abbott.

Up until 2020, cities and counties have been able to increase property taxes by up to 8 percent without voter approval.

The new law also limits tax increases for school districts by 2.5 percent without voter approval, and excludes growth, or new tax revenue from new properties added to the tax rolls.

But the law includes an exemption in the event a natural disaster occurs – the cap on increases then rises to 8 percent without voter approval. Some lawmakers are concerned local governments will claim COVID-19 is a disaster, allowing them to raise property taxes by the higher rate.

State Sen. Paul Bettencourt, R–Houston, and State Rep. Dustin Burrows, R–Lubbock, have spoken of possible retroactive corrections on jurisdictions that increase rates under the Senate Bill 2 disaster exemption.

“He and I have also discussed the idea of a COVID-19 penalty,” Burrows said on KFYO’s Chad Hasty show. “That if we have cities and counties somehow get away with jacking property taxes way way up during this time, this 2020 cycle ... we should probably come back in 2021 and 2022 and force a lower rate to penalize them for having done that.”

Given that the COVID-19 pandemic presents a different kind of disaster than a flood or hurricane, local jurisdictions should abide by the 3.5 percent cap, Craymer said, adding that it’s also possible the attorney General could be asked to provide a legal opinion.

“Senate Bill 2 was a giant leap forward,” Craymer said. “If it turns out 8 percent is the allowable rate, then that is a giant step backward.”

Property owners will soon start receiving cards in the mail from their appraisal district that explain where more rate information can be found online.