- By Editorial Board Special to the American-Statesman
Perhaps the Austin City Council is getting the message: Affordability is a two-way street, impacting those who need city services and those who pay the bills.
Perhaps they are following the lead of new City Manager Spencer Cronk, who offered a budget this year with one of the lowest tax revenue increases in a decade.
Maybe they drank the Kool-Aid Council Members Ellen Troxclair and Ora Houston have been mixing up in recent years to quench the city’s thirst for driving up taxes to or near maximum levels. Perhaps a $925 million bond package on the November ballot, which requires voters to tax themselves to retire the debt, sobered them up.
Whatever the reason, we welcome the council’s more moderate approach on city spending and taxes.
We give Cronk kudos for offering a budget that relies on a tax rate that increases city revenue by 4.9 percent in the next fiscal year. That is below the maximum 8 percent allowed by state law. Taxing jurisdictions that set rates above the state maximum risk triggering an election in which voters can roll back the rate to significantly lower levels.
It’s worth noting that the increase Cronk proposes is the lowest in all but two of the past 10 years, according to city figures.
Aside from illustrating that Austin can meet its public safety and other obligations, including social services for underserved communities, Cronk’s budget set the table for council members —who ultimately must approve a budget — to moderate spending in 2019.
Austin’s 2019 proposed budget is hardly austere. It will be the largest ever at $4.1 billion — that’s up $156 million over 2018.
Cronk’s spending plan won’t lower taxes, mind you; tax bills will go up. With property values rising, Cronk would have to lower tax rates considerably to lower your city tax bill. That is an unlikely scenario, but with more money than ever coming in, there is opportunity to ease the bite for taxpayers.
In previous years, council members have shown less restraint reining in taxes. Last year was no exception – in what only can be described as a political grandstanding, the council set a tax rate that raised tax revenue 7.9 percent, which offered scarcely any relief to taxpayers. In 2017, the council hit the maximum 8 percent.
Things were different this time around, with those who pressed for the maximum rate – Council Members Kathie Tovo, Greg Casar, Sabino “Pio” Renteria and Delia Garza – yielding to the majority. Against that backdrop, the council came together, voting unanimously to set the maximum tax rate at 44.2 cents per $100 of assessed property value. That would increase city revenue by 6 percent in 2019.
That doesn’t mean the tax rate is set. As the American-Statesman’s Elizabeth Findell reported, it means that the final rate the council adopts cannot be higher than that. So, there is room to decrease tax revenue, as Troxclair and Houston have urged.
In explaining the council’s departure from past years, Mayor Steve Adler said: “This year, we’re coming to the voters with a bond in November and wanted to make a statement about fiscal restraint. It’s important to send a message that tax rates are set to meet public needs, but not always to max it out.”
The council deserves credit for taking another step to help relieve the burden on homeowners — albeit overdue — for raising the homestead exemption to 10 percent, up from 8 percent. Collectively, the tax measures address Austin’s rising cost of living.
As an editorial board, we have long supported increasing the homestead exemption as one of many tools to help control skyrocketing taxes. The council, however, has been slow to move the exemption up to the 20 percent allowed by law.
Nonetheless, Austin residents can knock off 10 percent of the value of their homes in calculating city taxes next year — and that is significant. And while every little bit helps, the city’s moderating tax and spend measures won’t do a darn thing to rein in the biggest, most burdensome tax facing taxpayers in Austin and elsewhere: the dreaded school property tax.
It’s dreaded not because of its purpose, which is to finance Texas public schools, but because it has become the primary tool in equalizing school funding between rich and poor districts – not to mention an ever-increasing share of state spending on education.
The Austin Independent School District will surrender $669.6 million in recapture payments to the state for equalizing purposes. Consider that in two years, the recapture payment will eclipse the amount of money the district gets to keep for its own operating expenses.
Even as the Legislature continues to propose lowering the 8 percent cap it imposes on cities, counties and other jurisdictions, it excludes school districts from such measures. The state would have to make up the difference to school districts if their tax caps were lowered.
Under Cronk’s proposal, the owner of a median-valued home, $332,366 with a homestead exemption, would pay $4,022 for all city taxes and fees in 2019, which is $78 more than last year. That doesn’t include an additional $60 that could be added to the tab if voters approve the bond package.
With taxes going nowhere but up, the council would be wise to stick with Cronk’s budget and tax rate.