Austin taxpayers getting their property tax bills in the coming weeks could see an increase of a couple of hundred bucks — even though new elected officials have taken steps, separately and together, to try to make living in the area more affordable.
The increase in the overall tax bill for the owner of a median-valued home in Austin will be $242.
“It’s going to be a struggle for many Austinites to come up with more and more money every year,” City Council Member Ellen Troxclair said.
“From the city of Austin’s perspective, there has been a focus this year, maybe more than there has been in years past, in doing what we can to keep the overall cost of living down,” Troxclair added. “But at the end of the day, we’re not the only taxing entity.”
The city passed a general homestead exemption this year that knocks 6 percent off the value of owner-occupied homes for tax purposes. Other taxing entities, some of which have already hit the 20 percent general exemption maximum, have acted in a similar vein.
Travis County, Central Health, Austin and Austin Community College all increased their senior and disabled homestead exemptions this year to shave anywhere from an extra $5,000 to $10,000 off home values. (School taxes for those populations are already capped.)
And leaders from all five taxing entities, as well as others, have been meeting through the newly formed Regional Affordability Committee, discussing everything from creating an expectation for where the total tax burden should be to reviewing the existing agreements between governments.
Taxes for the Austin Independent School District make up the largest chunk of the bill for Austinites. And in contrast to other taxing entities, which can reap the benefits of a growing economy, the more property tax revenue the district receives, the more it turns over to the state.
If voters in November approve a ballot proposition increasing the school district general homestead exemption to $25,000, though, the increase in the typical Austin homeowner’s bill would dip to $121.
Not everyone agrees elected officials should bend over backward in the name of relieving taxpayers.
University of Texas Professor Emeritus Terrell Blodgett said one taxing entity — the Austin City Council — was “overly sensitive to the calls for cutting things and giving tax relief.”
Blodgett blasted the council’s decision to raise $1 million less in property tax revenue in order to lower the property tax rate. The city is instead using one-time funds to pay the difference, which means less flexibility in the next budget year.
And Blodgett also said that many of those “suffering from the lack of affordability” are renters, who don’t directly pay property taxes.
The ‘growth dividend’
Austin’s economic boom showed in the surge in value on the tax roll this year.
But that surge, another $17.1 billion in taxable value on the county tax roll, had one effect on the city, the county, the community college and Central Health — and quite a different effect on the school district.
Of the $242 tax bill increase for the median-valued home, $213 is from the school district (under the current homestead exemption). The bill varies depending on the value of the home.
Travis Chief Appraiser Marya Crigler attributed the rise in the county tax roll to her efforts to increase commercial appraisals, new construction and a housing market in which demand continues to outstrip supply.
There was a 22 percent increase in the taxable value of existing and new commercial property from 2014 to 2015, compared with a 13 percent increase the prior year. The appraisal district received a substantial chunk of funding last year, and Crigler said it went toward obtaining additional market data for commercial properties, leading to higher appraisals.
The taxable value from new construction alone spiked by 58 percent from 2014 to 2015, compared with a 14 percent increase the year before.
Topping the appraisal district’s lists of the parcels that added the most new value were the Apple campus on West Parmer Lane, the JW Marriott hotel downtown and the Bowie apartments at 311 Bowie St. New construction of single-family housing also contributed significantly to the increase, according to information from the appraisal district.
As a result of a larger tax base, the city and the county were able to drop the tax rates they had projected and still bring in more property tax revenue than the previous year.
The City Council, among other things, added $7.6 million to the budget for public health and social services. The county was more restrained.
“We’re coming out of an economic downturn, and during economic downturns governmental entities actually have a responsibility to pay out more,” said Travis County Judge Sarah Eckhardt, citing a greater strain on the health and social services safety net. “Now that we’re coming out of that economic downturn, it’s time to take a close look at what is working, what isn’t working.”
Neil Vickers, ACC’s vice president of finance and budget, said the significant increase in Austin-area commercial appraisals — along with the growth in suburbs such as Round Rock and Buda, also included in the college’s tax base — allowed the college to bring back services it cut in slow economic times.
ACC is also not raising tuition or fees for in-district students this year, unlike last year, Vickers said.
“If you think about it, affordability goes way beyond just taxes,” ACC Trustee Allen Kaplan said.
Unlike its neighboring taxing entities, the Austin school district cannot keep all of the additional revenue generated by the increasing property values.
The district instead will send $272.8 million to the state — a 55 percent increase over last year — to subsidize property-poor districts elsewhere in Texas under the state education finance system.
Subtracting the recapture payment from the budget, as well as food and debt service, the district is left with about $2 million less for operations than last year. The recapture payment is growing faster than the money the district collects for its own operations, even as Austin schools are losing students to neighboring communities.
District Trustee Paul Saldaña said if the district were not subject to recapture payments, it could lower its tax rate enough to save the average home owner nearly $1,000.
“The average taxpayer and homeowner is simply not aware that at least one-third of their tax payment to AISD is subject to the state of Texas’ recapture payment,” he said. “While most taxing entities and ISDs in Texas benefit from increases in the appraisal tax assessment, AISD simply forfeits more money to the state.”
Sharing the burden
Austin Mayor Steve Adler, while on the campaign trail last year, floated the idea of a tax swap between the city and the Austin school district. The idea is that, if the city instead raised property tax revenue to fund certain social services currently provided by the district, all that money would go toward those services — whereas the district has to send some of the revenue to the state.
Adler recently said he’s seriously considering moving forward on such a swap but said the city would need to figure out how to “equitably treat” its other school districts.
Eckhardt has suggested a pot of city and county money that could go toward local school districts, with all parties coming up with performance measures for social services, she said.
School board member Gina Hinojosa said the district is seeking assistance for social services such as campus-based resource centers that help families meet basic needs in housing, employment, and physical and mental health care. (The community school model has played a role in turning around several of Austin’s struggling campuses.)
“We need to figure out how to pay for services that our families need in a more equitable way,” Hinojosa said. “It’s more a disproportionate and punitive impact on the taxpayer when these services are paid for by AISD because of recapture.”
Dale Craymer, president of the business-backed Texas Taxpayers and Research Association, said such a swap would provide a “better revenue yield,” but for it to truly be a swap, the school district would have to reduce taxes instead of spending the money on something else.
Here’s how the total $4,813 tax bill breaks down for the owner of the median-valued Austin home*:
• The Austin school district’s tax rate of $1.202 per $100 in taxable value comes out to $2,599 with the current $15,000 general homestead exemption. That’s a 9 percent increase from last year’s $2,386 school tax bill. There is a tax cap for seniors and people with disabilities.
• The city of Austin’s tax rate of 45.89 cents per $100 in taxable value decreases its part of the bill by 1 percent, to $998 from $1,011. The city increased the general homestead exemption to 6 percent and raised the senior/disabled exemption to $80,000.
• Travis County’s tax rate of 41.69 cents per $100 in taxable value means a bill of $771 with a 20 percent general homestead exemption — a less than 1 percent increase from this year’s $768. The county increased its senior/disabled homestead exemption to $75,000.
• The Central Health tax rate, 11.78 cents per $100 in taxable value, increases taxes by 2 percent to $218, up from $213. Central Health, like the county, has a 20 percent homestead exemption and raised its senior/disabled exemption to $75,000.
• Austin Community College’s piece of the tax bill would increase by 18 percent to $227 from $193, under a tax rate of 10.05 cents per $100 in taxable value. The college raised its senior/disabled exemption to $135,000.
* The assessed value of the median home in Austin is $231,241, up from $210,279 in the previous tax year.
As an exercise, the American-Statesman calculated the total tax bill for the residents of three other cities.
All calculations use a general homestead exemption when applicable and the current $15,000 school district exemption. The home values used below were chosen for illustrative purposes.
Bastrop: A Bastrop resident whose assessed home value increased from $130,000 to $140,000 would pay $3,454 in taxes, up $250 from last year. That includes county, city and school district taxes.
Kyle: A Kyle resident whose assessed home value rose from $130,000 to $150,000 would pay $3,932 in taxes this year, up $625 from last year. That includes city, emergency services district, school district, county and community college taxes.
Round Rock: A Round Rock resident whose assessed home value increased from $200,000 to $220,000 would pay $4,499 in taxes, up $463 from last year. That includes city, county, school district, community college and Upper Brushy Creek Water Control and Improvement District taxes.