The Austin City Council narrowly gave final approval to increasing the city’s homestead exemption Wednesday, which will save the typical Austin homeowner about $23 a year while the city takes in $3.8 million less revenue.
The measure will knock 8 percent off the value of a home for city tax purposes, up from the 6 percent exemption offered this past year.
The tensions surrounding the 6-5 vote showcased the primary challenge confronting the council this budget cycle: managing the collision of desires to expand government services and affordable housing programs against the growing anger caused by rising property tax bills.
“I think it is really unfair to cast this vote as a vote between rich and poor people in our community,” Mayor Steve Adler said. “I don’t think that’s right. I think that’s wrong.”
He added, “We should use the tools that we do have to do the best job we can, and I think this is part of that.”
Wednesday’s vote came after the council tentatively approved the measure last Thursday. The push comes as the city plans to ask voters in November to pay for a $720 million transportation bond, which would fund road improvements along more than a dozen major corridors.
Adler linked the two issues last week in an interview with the American-Statesman, saying it was important to show voters the city was doing what it could to alleviate its property tax crunch to help gain support for the bond, which would increase property taxes by about $60 a year for the typical household.
Split along district lines
The debate Wednesday over the homestead exemption left council members split along district lines. Those in renter-heavy districts said the changes would do little to help their residents, while the $3.8 million in lost revenue meant the city would have to cut programs those districts need.
“I just hope we all understand the position we’re putting ourselves in,” said Council Member Delia Garza, who represents Southeast Austin’s District 2. “To me, it’s bad policy to put this hole in the budget for such a tiny impact.”
She added, “To frame this as, ‘We’re helping struggling families,’ it’s not helping struggling families, it’s helping the wealthiest.”
City staffers previously told the council that based on already-approved spending, there is only about $2 million available to expand the exemption, unless spending cuts are made elsewhere.
Garza was joined in opposition by Council Members Ora Houston, who represents Northeast Austin’s District 1; Sabino “Pio” Renteria, who represents East Austin’s District 3; Greg Casar, who represents North Austin’s District 4; and Kathie Tovo, who represents Central Austin’s District 9.
A procedural twist
The path to Wednesday’s special meeting wasn’t straightforward. State law requires that changes to the exemption be adopted by July 1. And while the measure scraped through the council provisionally last Thursday, it failed to get the seven votes needed to fast track it for final passage. The council would be required to meet twice this week just to vote on the measure twice more.
That was, until 2:18 a.m. Friday, when Adler told a weary council that Casar would reverse his opposition and support the measure procedurally. That allowed the council to meet just once this week, when Casar would vote in opposition for the final vote.
“I’m going to vote for this on first and second reading as a courtesy,” Casar said in the early morning hours of last week’s meeting. He added, jokingly: “I was told that if I wanted to be courteous or be a statesman, I should not run for City Council.”
Calls for taxpayer relief
Ann Kitchen, who represents South Austin’s District 5, and Leslie Pool, who represents North Austin’s District 7, argued that increasing the exemption would offer a measure of relief to struggling families and those on fixed incomes as rising property values contribute to higher tax bills.
“I hear from folks in my district about the importance of the homestead exemption,” Kitchen told the council last week. “This does make a difference to them.”
Both voted for final passage, but neither spoke from the dais Wednesday. They were joined in support by the council’s fiscal conservatives: District 6’s Don Zimmerman and District 10’s Sheri Gallo, who represent West and Northwest Austin, and District 8’s Ellen Troxclair, who represents Southwest Austin.
The council created the 6 percent homestead exemption last year, and Adler and some members have pledged to gradually increase it to 20 percent within four years.