ANALYSIS AND COMMENTARY
If you are upset about the recent enactment of the new Right of Way Fee by the City of San Angelo, don’t be.
If recent history is any indicator, it will not last long once the legislature reconvenes.
Gov. Abbott and Lt. Gov. Patrick will kill it and prohibit cities from doing anything like this ever again.
There has been one consistent message from Austin over the last twenty years: the age of local control and local decision making is over.
For example, the famed “Texas Death Star Bill” HB 2127 outlaws any local ordinance or regulation that is already regulated by the state.
For example, local ordinances mandating water breaks for construction workers, local anti-discrimination ordinances, noise and trash ordinances, local minimum-wage laws and numerous other regulations crafted at the municipal level have been outlawed.
The legislature has also banned any local firearm ordinances, along with regulations or banning of manufactured and mobile home parks and housing.
But they did not stop there.
They also limited the ability of cities to raise revenue through property taxes. Previously, a city could only raise property taxes by 8 percent without an election. The legislature changed that to 3.5 percent in 2025.
There are also maximum property tax rates for cities depending on population. The reality of these maximum rates is that it keeps any increase in tax rates well below the 3.5 percent increase allowed.
For the current budget year, the city’s total property tax revenue is around $5.7 million. The property tax rate for the city for the 2026-2027 fiscal year is .079 cents per $100. This is the same rate as the current budget, so no increase in the city’s property tax for next year.
You may be surprised to learn that the total property tax revenue the city receives is only 10 percent of the amount the City spends on public safety. That figure is around $56 million. The total operational budget of the city is more than $241 million.
San Angelo’s budget for street maintenance and right-of-way infrastructure is around $10.7 million. Only a tiny portion of property tax revenue goes toward street maintenance. (Approximately .0072 cents per $100 valuation.)
The rest of the city’s revenue comes from sales taxes, state or federal grants, user fees and other sources.
The need for additional revenue for street maintenance and road infrastructure improvements is obvious to anyone driving over San Angelo’s streets, but how do we pay for it without property tax increases, which the city is now outlawed from doing without voter approval?
The city could issue a call for a bond election for roads. That would still raise property taxes, but once those bonds are spent the money dries up.
What city staff sought to do with the ROW Fee is find a mechanism to fund street maintenance with revenue that would not have a negative impact on providing other crucial city services like water, sewer, parks and public safety.
Essentially the ROW Fee frees up property tax and sales tax revenue for other budget priorities.
Of course, a tax, by any other name, is still a tax, and Americans have never found a tax they did not hate.
Depending on the outcome of the election in November, I predict this form of taxation will get axed by the governor sooner or later. I expect it will be sooner.
Then the city will be right back where it was, trying to figure out how to fund the ever-increasing demands for maintenance and public services without the ability to seek additional revenue to adequately fund them.
The only result will be a reduction in services, less spent on street maintenance and infrastructure improvements.
The irony about Americans hating taxes is they actually hate austerity and reduced services even more.
If the legislature does kill the ROW Fee, as I expect, maybe the city should take a lesson from the State of Texas and just make all of our streets toll roads.
Everyone will have to have a toll tag on their car and pay per mile every time they drive on the street. Maybe we can dual purpose the Flock cameras as toll cameras and mail everyone a bill every week.
If the City has proved anything, it is that under our current government, you have to get creative and use every trick you can to keep the lights on.
