Texas Capitol Building/Photo by Noah Dawson
With a deal finally struck by lawmakers in Austin to reduce school property taxes, there is now hope for a revival of the Amarillo Civic Center lawsuit inspired Senate Bill 2035.
The bill, which was vetoed by Governor Abbott, would have prevented taxing entities from issuing either tax anticipation notes or certificates of obligation for the same purpose as a failed bond election for five years after the election. Under current state law, the moratorium only covers certificates of obligation and only lasts for three years.
The bill, which was filed by State Senator Paul Bettencourt (R-Houston), came after the City of Amarillo’s May 2022 attempt to issue tax anticipation notes to renovate the Amarillo Civic Center, despite the fact that voters had rejected a similar bond-funded plan in November of 2020. That move was met by a lawsuit by Amarillo businessman Alex Fairly, who alleged the city broke a litany of state laws. Fairly prevailed in court, with Judge William Sowder ruling that the notes were “invalid and void.” Despite this win, the City of Amarillo has appealed the ruling.
Governor Abbott vetoed the bill on June 13th. Though Abbott cited the bill as having “too many loopholes” as the reason for the veto, the bill was the first of many killed by Abbott as he pressured the legislature to deliver property tax relief.
Despite initial deadlock, the legislature finally delivered a deal, which includes an $18 billion tax cut. (Bettencourt was also the author of the deal.) This could set the stage for the bill to be reintroduced at another future session. However, the road to passing the legislation may not be straightforward. Abbott has indicated he is also eager for a deal on school choice. State senators may also have their hands tied during early September as the trial in Attorney General Ken Paxton’s impeachment looms. It also remains to be seen what specific loopholes Abbott wants cut. The version of the bill vetoed by Abbott did include exemptions to allow for entities to comply with laws and court orders, as well as in some emergency instances.