Once again, Austin City Council members this week will have to decide whether to move forward on a homestead tax break they once promised property owners before backing away from the idea.
Council Member Ellen Troxclair will mark her return to work after a two-month maternity leave by asking colleagues to increase the city’s homestead exemption from 8 percent to 10 percent. The exemption decreases a home’s value for purposes of taxation if the owner lists it as his primary residence.
“Yay, it’s happening — maybe,” Troxclair said. “But very excited to have the homestead exemption on the agenda. … Property taxes continues to be the No. 1 thing I hear about from constituents. This isn’t the only thing we should be doing, but it’s a tool we need to utilize.”
In 2015, council members created a 6 percent exemption and passed a resolution vowing to raise that to 20 percent within four years, a campaign promise of Mayor Steve Adler’s. The proposal stalled last year, though, when the council said the city budget was too tight to forgo extra revenue.
Complicating matters, Austin officials have been fearful in recent years that the Texas Legislature may curb a city’s ability to raise taxes on constituents. Lawmakers considered measures last year to drop the maximum rate a city can raise taxes in a year from the current 8 percent to 4 or 6 percent. The legislature could take up the issue again when it reconvenes in January.
Austin leaders, who raise taxes the maximum amount almost every year, have fretted that if their ability to do so is further curtailed, they might regret lowering taxes on homeowners.
Further, council members including Delia Garza have blasted the homestead exemption as a tax break that helps wealthier residents more than poorer ones. The exemption’s impact is greater the higher a property’s value, and it does nothing for renters.
Previous votes to implement and increase the exemption passed narrowly in 2015 (7-4) and 2016 (6-5). Last year, Troxclair failed to get enough support to consider the item on an agenda.
Adler, who is up for re-election this year, would not say yet how he plans to vote Thursday. Adler backed away from increasing the exemption last year, saying he only supported it in years when overall taxes could be raised to cover it without reducing city services.
Last year, the city had no space between already approved spending increases and the maximum it could raise taxes. This year, it appears to have more wiggle room.
“I have been a consistent supporter of the homestead exemption where it can be revenue-neutral,” Adler said. “What I have not seen yet, and look forward to seeing, is the specific cost and budget impacts for this year.”
Troxclair, the council’s only Republican, who is up for re-election this year, angered her council colleagues when she advocated at the Capitol in favor of curtailing Austin’s ability to raise taxes. She said last week that potential moves by the Legislature next year are no reason to hold off on increasing the homestead exemption.
“I think the exact opposite,” she said. “Do it now, while we have some flexibility in the budget, without making the budget too tight.”