Government
BY ISABELLA ZEFF
City expects deficit due to tax cap
Zooming in
Magner estimated that Richardson has expe- rienced a cumulative loss of $21 million in new revenue as a result of SB 2. In the six years prior to SB 2, Richardson averaged $4.76 million in new property tax revenue each year, he said. Since 2021, the first fiscal year under the new legislation, the average new property tax revenue has dropped to $2.35 million a year. “We will need to either identify new revenue sources or we’re going to have to reduce funding for existing programs and services,” Magner said. “This is just simple math.”
Richardson could see a budget deficit in the next few years due to the statewide cap on property tax increases, city manager Don Magner warned City Council at the Dec. 15 meeting. The Texas Property Tax Reform and Transparency Act of 2019, or Senate Bill 2, required voter approval for local governments to increase property tax revenue by more than 3.5% a year, effectively capping their property tax revenue. Under prior law, the cap was set at 8% increase per year. The budget could get even tighter if state legislators lower the property tax increase cap again during the 2027 legislative session. Earlier this month, Lt. Gov. Dan Patrick announced his plans to oversee legislation in 2027 that further cuts back the property taxes charged by local governments. Both the Senate and the House attempted to pass legislation in the 2025 session to lower the tax increase cap to 2.5% and 1% respectively. “It’s time to drive a stake through the heart of local property tax hikes for good,” Gov. Greg Abbott said at a Nov. 9 campaign event.
Five-year property tax rate history Collin and Dallas Counties have reduced property tax rates over the last five years. Richardson’s property tax rate is $0.54218 per $100 of taxable value in 2025, down from $0.62516 in 2020.
Collin County
Dallas County
$0.3
$0.2
“This is a region-wide, statewide issue that is impacting municipalities and we’re finally seeing the trending of what
$0.1
0
that looks like.” JENNIFER JUSTICE, COUNCIL MEMBER
SOURCES: COLLIN, DALLAS, HARRIS, TRAVIS COUNTIES/COMMUNITY IMPACT
What’s next
modest expenditure assumptions, Magner said the city will run a deficit in 2028, which will only increase with the addition of any new programs. He said this issue will be at the forefront for city staff when they start work on the fiscal year 2026- 2027 budget.
limits on revenue or expenditures, as well as new unfunded mandates from the next legislative session in 2027. Magner presented another model that showed the city’s revenue if the legislature reduced the cap on property tax increases to 2.5%, which was pushed in the last session. With robust revenue and
Magner suggested a comprehensive review of current programs and services to ensure that they are aligned with City Council priorities. He said the city needs to prepare for “very probable”
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