Involuntary Annexation Reform
“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.
That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed.”
Annexation occurs when one city expands its boundaries to take in new, outlying territory and residents. The policy issue arises however, when cities annex areas without giving the affected property owners a right to vote on the issue. Unfortunately, this is currently legal under Texas Local Government Code Chapter 43.Read more
Cities that engage in this practice are almost always home rule cities, meaning they are population areas of 5,000 residents or more that have adopted a “home rule charter.” Due to Texas’ preference for local government control, the State Legislature has delegated almost all of its power to home rule cities. Rather than having enumerated powers, home rule cities are only confined by what the State Legislature has specifically prohibited. Under this structure, home rule cities can annex unincorporated areas within a certain radius of their boundaries without consulting the affected homeowners. The cities impose their property taxes, regulations, zoning restrictions, and city services on these residents, whether they like it or not.
This law is undemocratic, and goes contrary to the idea of “the consent of the governed.” It must be changed. Think Local Liberty fought hard to change this policy during the 84th legislative session, progressing Senate Bill 1639 through numerous barriers and roadblocks. Unfortunately however, the bill died before passage.
Based on Senate Bill 1639, Think Local Liberty has prepared model legislation which, if passed, would give affected landowners a vote in the annexation process. Think Local Liberty has already begun advising legislators and the public regarding the importance of issue, and is hopeful that it will be passed during the 2017 legislative session.
In the meantime however, landowner rights are in jeopardy. San Antonio is in the process of annexing more than 66 square miles of unincorporated land without the consent of the affected homeowners. Hudson Bend, northwest of Austin, is another area ripe for annexation, whether they want it or not. The most appalling aspect of these forced annexations is that they remain legal. To read more about Think Local Liberty’s efforts to educate the public on this issue and influence cities’ current annexation policies, please visit our Resources page.
Public Pension Reform
Over the years, more than one-dozen local retirement systems have successfully petitioned the Legislature to codify certain aspects of their pension plans in state law, including provisions related to “contribution rates, benefit levels and the composition of their board of trustees.” By establishing their plan provisions in state statute, these select systems have erected a major political barrier to local oversight and control.Read more
Absent approval from the Texas Legislature, many critical features of these state-governed systems cannot be changed or modified locally. This is true even in instances where the long-term sustainability and reliability of these systems has been called into question.
Obtaining legislative approval of good government changes is no easy task either. The Texas Legislature only convenes a regular session for 140 days every other year, providing community stakeholders with a narrow window of time to achieve necessary reforms. This condensed timeframe can be an especially challenging hurdle for stakeholders who are either new to the legislative process or lack the right connections at the statehouse.
Generally speaking, making it difficult, if not impossible, to enact good government changes locally has not yielded positive fiscal results for these state-governed systems. The latest data from the Pension Review Board reveals that the health of many of these systems is lacking.
Combined, unfunded pension liabilities for these 13 state-governed systems, which have more than 50,000 active members, amount to $8.7 billion or $171,155 owed per active member. That is more than a $1 billion increase since June 2015’s estimate of nearly $7.5 billion.
Among the plans, 4 of the 13 systems had unfunded liabilities in excess of $1 billion, while 6 of the systems’ future pension debt was greater than $500 million. The Dallas Police & Fire Pension System—Combined has accumulated the highest total amount of unfunded liabilities at $2.1 billion.
What’s more, 9 of the 13 systems have funded ratios that are below 80 percent. It is generally presumed that “a ratio below 80 percent may indicate a pension plan is not fiscally healthy,” according to the Texas Comptroller. However, even the 80 percent ratio is forgiving; only a ratio of 100 percent or more would reflect a fully-funded plan. None of the state’s protected plans have funded ratios of 100 percent or more.
Another measure of a plan’s financial health—and the one favored by the Pension Review Board—is the amortization period. Yet, looking at that measurement, almost two thirds of Texas’ state-governed systems still show the need for improvement. Whereas the PRB recommends that a plan’s amortization period remain below 25 years, 7 of the 13 systems ingrained in state statute have amortization periods outside this guideline. Even the PRB’s “maximum” recommended guideline of 40 years is exceeded by 2 systems: the Dallas Police & Fire Pension System—Combined (infinite) and the Fort Worth Employees’ Retirement Fund (55.7 years).
In the absence of local control, the health and sustainability of some of Texas’ largest local retirement systems has come into question. For this reason, it is critical that the Legislature move to restore local control of local retirement systems that are currently governed by state law. Policymakers should restore management and authority over these systems back to the community of their origin, so that stakeholders can implement necessary changes and ensure these systems’ long-term viability and recovery.
Special Purpose District Reform
Special purpose districts (SPDs) are the most numerous unit of government in Texas, yet many people know relatively little about their function, structure, or governance, earning them the nickname: Invisible Governments.Read more
SPDs are independent governmental entities that exist locally and provide infrastructure and deliver specific services, like firefighting, road construction, and water treatment. Districts can be created by local government bodies, the Texas Legislature, or the Texas Commission on Environmental Quality. Generally, SPDs are governed by the commissioners court of the county of their origin or by a board of directors.
The purpose and jurisdiction of SPDs tends to vary from district to district, but broadly speaking, their powers can include:
- Impose a property tax;
- Impose a sales tax;
- Issue bonds and borrow money;
- Contract with other entities;
- Sue and be sued;
- Acquire, purchase, sell, or lease real or personal property; and/or
- Eminent domain.
Although SPDs have broad powers, they are not limitless. For example, district bonds must be approved by 2/3 of the voting public residing in the district, and may not exceed 1/4 of the assessed value of property in the SPD.
Today, there are approximately 3,350 special districts in Texas providing all manner of government goods and services. Of these thousands of districts, there are approximately 40 different types.
Types of Special Districts in Texas
|Groundwater Management Area (GMA)||Sports and Community Venue District (SCVD)||Noxious Weed Control District (NWCD)|
|Groundwater Conservation District (GCD)||Multijurisdictional Library District (MJLD)||Road District (RdD)|
|Water Control and Improvement District (WCID)||Public Improvement District (PID)||Road Utility District (RUD)|
|Fresh Water Supply District (FWSD)||Homestead Preservation District and Reinvestment Zone (HPD)||Wind Erosion District (WED)|
|Municipal Utility District (MUD)||Municipal Management District (MMD)||Arts and Entertainment District (A&E)|
|Water Improvement District (WID)||Municipal Development District (MDD)||Sports Facility District (SFD)|
|Drainage District (DD)||County Development District (CDD)||Library District (LD)|
|Levee Improvement District (LID)||County Assistance District (CAD)||Independent School District (ISD)|
|Irrigation District (ID)||Hospital District (HD)|
|Regional District (RD)||Health Services District (HSD)|
|Navigation District (ND)||Mosquito Control District (MCD)|
|Self-Liquidating Navigation District (SLND)||Emergency Services District (ESD)|
|Special Utility District (SUD)||Jail District (JD)|
|Stormwater Control District (SCD)||Crime Control and Prevention District (CCPD)|
|Municipal Management District (MMD)||Agricultural Development District (ADD)|
Source: Texas Senate Research Center
Because of the expansive nature and sheer quantity of special districts, there are some common problems that have begun to arise in relation to these entities, including:
- Layering of local governments. Overlapping layers of governments servicing the same jurisdictional boundaries creates the conditions necessary for inefficiency, redundancy, and waste.
- Contribution to soaring property taxes. A majority of special districts levy property taxes, which are fast-outgrowing people’s ability to pay. Consider that from 2000 to 2013 local property tax levies increased by 101.1 percent, well-above population and inflation which increased only a combined 70.3%.
- Questions of accountability. There is no comprehensive review mechanism in place to determine if these entities are still providing value to the community.
- Lack of transparency. Few, if any, financial transparency requirements exist oftentimes meaning that the public has little or no idea about how their tax dollars are being spent.
Addressing these problem areas with targeted reforms will be a critical task for lawmakers next session.