Ending Forced Annexation in Texas: Reverse Intergovernmental Aid

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From Ending Forced Annexation in Texas: Hon. Jess Fields & James Quintero, TPPF, Center for Local Governance (July, 2015)


Reverse Intergovernmental Aid

Before concluding this study, it is worth addressing another issue that is often brought forward by cities as a reason for needing to annex involuntarily. It is also commonly brought up by the Texas Municipal League (TML), which represents the majority of Texas cities as members and lobbies on their behalf for preserving local authority on most things, including their ability to involuntarily annex.

In presentations and in testimony, the TML has repeatedly referred to a concept that it calls “Reverse Intergovernmental Aid” (RIGA), as a primary reason why Texas cities need to retain the authority to annex involuntarily.46 The argument is that most states aid cities directly out of their budgets, while Texas provides little financial assistance to cities, and in fact takes money from cities through RIGA. As a result, the power to annex involuntarily exists as a counterweight to RIGA, and so long as it exists, the ability of RIGA to negatively affect cities is limited.

It is difficult to gauge the fiscal positives of involuntary annexation taken as a whole, for reasons previously described here. That said, the TML is correct about RIGA’s harmful effect on Texas cities, and as part of broader reform of statutes affecting local governments generally, it is necessary to include RIGA in the discussion.

In order to address RIGA, which the TML pegs at hundreds of millions of dollars, several state agency fees and programs would need to be eliminated. First is the Texas Comptroller’s cut of sales tax remittance to municipalities. The TML estimated in 2012, this figure rose to $137 million, which accounts for a significant portion of the operating budget of the Comptroller’s office.47

Additionally, another major component of RIGA is the amount of municipal court fines remitted to the state, which the TML reports at a $227 million for 2012.48

Another player in RIGA is the Commission on Fire Protection, which generates its budget of nearly $4 million through “fees on cities and firefighters,” and is tasked with generating even more revenue to go into the state’s general fund.49