Bill: HB 1290, 83(R) - 2013

Vote Recommendation

Vote Recommendation Economic Freedom Property Rights Personal Responsibility Limited Government Individual Liberty
Yes Neutral Neutral Neutral Positive Neutral

Author(s)

Larry Phillips

Bill Caption

Relating to the authority for local governments to jointly administer transportation reinvestment zones.

Fiscal Notes

No fiscal implication to the State is anticipated. There could be additional revenue for municipalities and counties to use toward state highway projects; however, the amounts would vary depending on whether a tax increment account is established, and the number and cost of highway projects

Bill Analysis

Summary of Legislation: This legislation authorizes the joint administration of Transportation Reinvestment Zone (TRZ) projects. Upon passage, 2 or more local governments may enter into an agreement to finance and manage reinvestment zones as long as the agreeing bodies share contiguous boundaries. This legislation grants authority to parties to create a board of directors for the project administration and to create a joint tax increment account for the TRZ.

Analysis: This bill seeks to remedy statutory limitations of TRZs to be under the jurisdiction of the applicable local authority. Citing regional importance of transportation projects, proponents argue it is necessary for local governments to have the authority to enter into joint investitures across local and county boundaries. This bill also gives more local control to transportation projects. By allowing local governments to use their own resources to finance projects, they have more control of an issue that is familiar to them, including development and private investment opportunities.

Concerns: TRZs are financed by Tax Increment Financing (TIF) methods. In our view the TIF method is incredibly risky. TIF creates funding for projects by borrowing against the projected future increase in property tax revenues. In the event that the TRZ district terminates without meeting its contractual (repayment) obligations, the remainder of the pledges or bonds will be paid out of general revenue leaving taxpayers on the hook. Transportation projects are notorious for incurring cost overruns. In the event that property tax revenues do not meet projected increases within the TRZ, and if the project runs over budget, the taxpayers will be left footing the bill for the difference.

In addition, Transportation Reinvestment Zones often overlap other taxing entities; this effectively siphons off tax dollars that were otherwise meant to finance other public services.As property values increase, TIF revenues rise even if the district does nothing to improve the area. Since TIF districts capture the revenue generated by increased property values over the life of the project, the other tax jurisdictions miss out on revenue they would otherwise have used to meet their obligations.

Recommendations: Since local governments already have the ability to establish Transportation Reinvestment Zones and fund them with Tax Increment Financing, HB 1290 merely allows adjacent local governments to pool their resources together in a jointly administered account to fund and manage a project that they consider mutually beneficial. This puts government decision making at the lowest reasonable level and raises the possibility that joint funding may mitigate some of the risks associated with the financing method. On this basis we encourage legislators to support HB 1290.


Source URL (retrieved on 03/28/2024 11:03 AM): http://reports.texasaction.com/bill/83r/hb1290?print_view=true