Austin voters will likely be asked to approve a series of big-ticket ballot measures over the next year and a half that, if all OK’d, could add more than $300 to the typical property tax bill, according to an American-Statesman analysis.
Public officials pledged last year to coordinate spending initiatives as they try to keep pace with the region’s rapid population growth. But there are more proposals in the pipeline than upcoming election dates.
First to the ballot: $892 million in Austin school bonds for a range of projects, including to build schools, beef up technology and repair aging facilities. If approved Saturday, the borrowing would add $61 to the tax bill for a median-value Austin home. At least five more spending measures are being planned for November or next year:
- An increase in the Austin school district’s tax rate.
- City of Austin bonds to pay for low-income housing.
- Up to $600 million in bonds for new Austin Community College facilities, including a renovation of Highland Mall.
- $340 million in bonds for a new county civil courthouse.
- $275 million or more in bonds to partially finance the first phase of an urban rail system.
Though the cost of some projects remains in question, working estimates and published forecasts show they could collectively add about 8 percent to tax bills. For a house worth $189,027, the projected median value of an Austin home next year, that’s roughly $345. The increases would be phased in over several years and wouldn’t appear in full on tax bills until 2017 or 2018.
Taxes are already on the rise. Last November, voters approved a 5-cent tax increase starting this year for Central Health, Travis County’s hospital district, to pay for a medical school, a new teaching hospital, expanded indigent care and other initiatives — which translates to an additional $75 on the tax bill of the median-value Austin home. Voters in November also approved $306.7 million in city bonds, which came without a tax increase because other debt is being retired.
The possibility of sticker shock has some public officials worried.
“That’s a lot to throw at taxpayers,” Austin Mayor Lee Leffingwell told the Statesman. “If you’re a taxpayer looking up at all this stuff coming at you, at some point you’re going to say no.”
Rising taxes and a bond rejection
Austin voters have typically had a voracious appetite for bond measures, whether for parks, school repairs or bike lanes. Prior to last November, every bond package had passed since a $1.9 billion light rail proposal failed by less than 1 percent of the vote in 2000. That was 29 times in a row Austinites said yes to spending measures, often by wide margins.
Despite rising tax bills, the portion of the city’s tax rate dedicated to paying off debt has shrunk over the past decade, as has the city debt per dollar of property value. Greg Canally, the city’s deputy finance chief, said voters’ willingness to approve the borrowing has improved Austin in the eyes of the ratings agencies that measure Austin’s financial health and determine how much interest the city pays when it borrows money.
“We would argue Austin has had the success it’s had partly because of the infrastructure investments we’ve made,” Canally said. “These are investments in the community.”
Bond projects also offer residents the most direct means of expressing their priorities. Last year, clues began to emerge that the electorate’s priorities could be changing.
In the May City Council election, challengers to four council members focused attention on Austin’s rising tax burden. The incumbents prevailed — but the general sense about rising taxes was confirmed last summer by an American-Statesman analysis, which found that the property tax bill for an average-value home rose 38 percent between 2000 and 2010, even when adjusting for inflation.
Following the election, the budget chiefs of Travis County’s largest taxing entities took the unusual step of putting together a joint tax forecast. The report outlined possible spending measures, partially to avoid crowding a ballot and risking one initiative undermining another.
A few months later, the medical school initiative passed by a comfortable margin despite worries that it might fail. But there was also a November surprise: Voters turned down one of the seven city bond proposals, a $78.3 million package for low-income housing.
Coming this year
Some elected officials explained the defeat as a failure of political tactics or confusion among voters about what the bonds would pay for, not voter fatigue over public spending.
Six months later the school district is asking voters to approve four bond measures totaling $892 million, the district’s first bond proposal since 2008 and its largest ever. Proponents say the money would go to much needed improvements.
“It’s a good way to improve the conditions for our students,” said Nicole Conley-Abram, the school district’s finance chief. “If our schools are in good shape, it makes the neighborhoods look good and helps property values.”
The district might ask voters for more. Last year, the school district anticipated asking voters to approve a tax-rate increase between 5 and 9 cents this November, adding between $87 and $156 to the tax bill of a median-value home. Unlike the city and county, the school district has limited authority to raise its tax rate and, in this case, doing so would require a referendum.
District officials say the increase will probably be necessary to avoid teacher layoffs and deal with other effects of $60 million worth of recent cuts in state funding. But Conley-Abram said the district’s professional staff hasn’t broached the subject to board members elected last November, and, until those discussions happen, “we really don’t know what the appetite is for the board.”
City Council members are also eyeing November for another low-income housing bond initiative, though the council hasn’t committed to the idea and the amount remains uncertain.
Also in November, ACC board members could ask voters to approve as much as $600 million in bonds for various projects. Among them could be converting Highland Mall into classrooms, which would enable the college to dramatically expand its offerings. A bond advisory committee is now studying the possibilities. The board would have to call an election by August for the package to make the November ballot. District projections show a $600 million package adding about $45 to the tax bill of typical Austin home.
Crowded ballots in 2014?
If ACC’s proposal slips to 2014, it could appear on a ballot alongside two projects that have been in the works for several years: a new county courthouse and the first phase of an urban rail system.
Judges and other court officials have long said a new civil courthouse is needed to relieve crowding in the old Heman Marion Sweatt building. County commissioners had considered forgoing a public vote for the building, but they changed course and decided to ask voters for approval. The new building comes with a price tag estimated at $340 million, which would translate to $31 added to the tax bill of a median-value home.
Leffingwell has said he would like to put an urban rail bond issue to voters in 2014. Last year, city officials said a 5.5-mile first phase from downtown to the Mueller area in East Austin could be built for $550 million, with Austin taxpayers paying half that. With every $100 million in bond debt adding roughly 1 cent to the city’s tax rate, that borrowing would cost the typical homeowner about $52 a year.
The mayor and other city officials have been looking for other ways to pay for rail, including possibly leasing the airport and using the proceeds from that on the first phase. Still, Leffingwell said, an airport lease is “pretty close to last” on the list of funding options, and a bond election “is still the most likely scenario.”
About this story
Staff writer Marty Toohey compiled a list of spending initiatives being considered for voter approval from all five jurisdictions that tax a typical Austin home (the city, Travis County, Austin school district, Austin Community College and Central Health). Not all the proposals have a final cost, but most come with a general estimate. Many of the assumptions about these costs are based on a forecast that the budget offices of the various local taxing entities presented in summer 2012. In some cases, the forecast was updated or expanded at the American-Statesman’s request.
From there, Toohey calculated the approximate tax rate of the various proposals and determined the effect on the property tax bill of a typical Austin home with a projected median value of $189,027. Homestead exemptions, offered by several taxing entities, were taken into account.
Marty Toohey has written about local government in Travis County since 2005 and has reported on Austin City Hall since 2009. He has taken in-depth looks at how Austin Energy revenue supports the city budget, the rise in government pension and health care costs, and the combined burden of various local taxing entities on area property owners.