A major setback for the City of San Antonio, as the bill City Hall had labeled as Public Enemy Number One has easily passed the State Senate and appears poised for approval in the House, News Radio 1200 WOAI reports.

The bill, dubbed S.B. 2, will limit local governments to 5% budget increases annually, in a bid to end the massive spikes in property taxes being paid by Texas homeowners and businesses.

Under Sen. Paul Bettencourt's (R-Houston) bill, if city or county governments want, for any reason, to increase their budgets by more than 5%, they would be required to get a vote on the people to do it.

"Lowering the rate of growth on taxing jurisidictions so homeowners and small business owners can stay in their homes and businesses," Bettencourt said.

Lt. Gov. Dan Patrick, who has made this bill one of his top priorities in the session, said the passage is good news for homeowners.

"This is a property tax relief bill, which will require your local taxing entity to let you vote before they can increase their budget by more than five percent in a year."

He says the vote is 'automatic' and would not need citizens to file a petition.

Patrick says any election to raise property taxes would have to take place 'in November, not on some obscure day when nobody knows the vote is happening.'

Patrick said the bill is the first step toward a 'lean and efficient government.'But the City of San Antonio doesn't see it that way.  The City says the bill will handcuff its ability to make the needed investments in infrastructure and public safety to prepare for a large population growth forecast for the coming decade.

But State Sen. Kirk Watson says S.B. 2 does nothing to deal with by far the largest chunk of a homeowners' property tax bill, public schools.

"If we were serious about providing citizens with property tax relief, than we would get serious about reforming school finance," Watson said.

He and the City of San Antonio point out that having the state pay more for the operation of public schools would have taxpayers far more money than imposing artificial limits on city and  county budget growth.

The bill is in reaction to the skyrocketing property taxes being paid by most San Antonio residents, due largely to sharply higher property taxes, which allow the City to reap a windfall in additional ad valorem tax revenue, while giving City Council members the opportunity to claim that 'we did not raise the property tax rate.'

Many homeowners saw 12 to 16 percent increases in their real property taxes this year, due to a combination of a significantly higher city budget, sharply higher property appraisals, and the unwillingness of the City Council to roll back the tax rate like Bexar County Commissioners did.

A companion bill would also limit the annual incrases in property appraisals to five percent.