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Legislative <br /> <br />Legislative Services <br /> <br />PROPOSED TAX CAPS IGNORE <br /> BUDGET REALITIES <br /> <br />As noted above, the school finance reform debate has spawned several <br />proposals to limit city revenue; new caps on property tax rates; popular <br />elections to approve any new taxes, higher tax rates or increased <br />revenues; lowered rollback rates; and others. All these ideas are based <br />on the flawed belief that the need for city services, and thus revenue, is <br />easily predictable and steady from year-to-year. In fact, the opposite is <br />true. Cities frequently face new budgetary crises. The following are but <br />a few examples of unexpected expenses that cities face: <br /> <br /> 1. the high cost of homeland security, a cost that would increase if <br /> there is another terrorist attack; <br /> 2. skyrocketing health care premiums for city employees; <br /> 3. natural disasters requiring direct expenditures; <br /> 4. new development creating the need for additional infrastructure <br /> and services; <br /> 5. lost municipal court fine revenue because of state fees on court <br /> convictions; <br /> 6. a deluge of open records requests by disgruntled citizens (some <br /> cities have had to hire new staff just to respond); <br /> 7. loss of sales tax revenue due to the closing of major businesses <br /> or a general economic downturn; <br /> 8. premature aging of city infrastructure; <br /> 9. state and federal mandates for which no state/federal funding is <br /> provided; <br />10. lawsuits against the city; <br />11. the expansion of a police or fire department from four to five <br /> employees triggering a legal requirement for overtime pay; and <br />12. proposed changes to federal overtime laws expanding the <br /> number of employees eligible for overtime pay. <br /> <br />Any of these budgetary emergencies might require a one-time tax <br />increase that could be impossible to accomplish under some of the tax <br />cap proposals being offered up during the school finance debate. City <br />officials should be prepared to share this fact with their legislators. <br /> <br /> TML member cities may use the material herein for any purpose. <br />No other person or entity may reprodttce, duplicate, or distribute any part of this <br />document without the written authorization of the <br /> Texas Municipal League. <br /> <br /> <br />