Richardson officials are warning that a slow-building budget crunch is coming for the city, and they are pointing the finger squarely at the state’s cap on property tax revenue. City Manager Don Magner told the City Council that a statewide limit on how fast property tax collections can grow has already cost Richardson about $21 million in new revenue since it took effect. Even with optimistic assumptions, his long-range models show annual net new property tax revenue staying under $1 million through fiscal 2031-32.
How the law limits local revenue
The Texas Property Tax Reform and Transparency Act of 2019, also known as Senate Bill 2, requires voter approval for local governments that want to increase property tax revenue by more than 3.5% per year, a sharp drop from the previous 8% threshold. That statutory framework, and its accompanying notice and reporting rules, is the legal engine behind Richardson’s shrinking revenue projections, according to capitol.texas.gov.
Magner’s models: smaller growth, bigger tradeoffs
Magner told the council his office ran multiple scenarios to see how the city’s revenue picture changed after SB2 went into effect, and the numbers were not pretty. As reported by Community Impact, Richardson averaged about $4.76 million in new property tax revenue in the six years before SB2, compared with roughly $2.35 million per year since fiscal 2020-21. That gap has compounded into Magner’s estimate of roughly $21 million in lost cumulative new revenue.
Bond planning and budget reality
The developing shortfall is arriving just as the city is already juggling bond planning, year-end financials, and long-term capital needs, which helped drive the urgency of Magner’s presentation. The Dec. 15 agenda and packet outline staff briefings on the 2026 bond program and the FY2024-25 year-end financial report, according to the City of Richardson.
Public safety at risk
Public safety is where the squeeze gets especially real. Council approved a Fire Department Strategic Master Plan in November to guide expansion over the next eight years, but Magner warned that funding that plan alone would create “almost a $3 million deficit” between now and the end of FY2032. Mayor Amir Omar called Magner’s models evidence of an “incredibly awful policy,” and Councilmember Jennifer Justice said the cap has “gutted” cities, according to Community Impact.
Why Richardson isn't alone
City leaders say Richardson is part of a broader statewide squeeze in which rising costs for equipment, vehicles, and personnel are colliding with capped revenue growth. Reporting from the Houston Chronicle and recent legislative testimony describe emergency responders and small districts across Texas feeling similar strain, the same regional backdrop Magner cited in his briefing.
What’s next for Richardson
Looking ahead, Magner urged a top-to-bottom review of current programs and services, warning that the city will need to be prepared either to identify new revenues or to reduce services if the cap tightens further in 2027. Council members are expected to weigh those tradeoffs as they refine bond propositions and begin work on the next budget cycle, as outlined in the city’s budget materials from the City of Richardson.
