You know it’s coming. Your property tax bill next year will be worse than this year’s. But tune in on Thursday: The Austin City Council could make it hurt a little less.
Council Member Ellen Troxclair has a proposal to increase the homestead exemption to 10 percent. Austin’s current homestead exemption knocks 8 percent off the value of a home when calculating city property taxes.
This is an important moment for the council to show it understands the growing tax burden residents are shouldering — and that it remains serious about addressing Austin’s affordability crisis.
Our editorial board has long supported increasing the homestead exemption as one of many tools to help rein in the cost of living here. True, it doesn’t touch the largest and fastest-growing piece of every homeowner’s bill, the school taxes that are ballooning under a broken school finance system. Nor does Troxclair’s measure help the roughly 55 percent of Austinites who are renters.
But those limitations should not become an excuse for doing nothing. Affordability is a complex problem, and various tools tackle the problem in different ways. Increasing the homestead exemption is a concrete step that would help a great many homeowners, especially if the council resumes its march toward a 20 percent exemption, as some council members previously vowed.
City staffers on Friday outlined three budget scenarios for a 10 percent homestead exemption: The city could forgo $4.8 million in revenue next year to give a $28.59 tax break to the owner of a typical home, which is assessed at $329,951; it could give up $3.9 million to provide a $27.15 tax cut; or it could bump up the tax rate, so there’s no loss in revenue to the city, saving the typical homeowner $18.79.
That may not sound like much money. But council members often defend surging costs for city services by focusing on the installments for individual taxpayers: It’s only $4 a month for customers getting curbside composting service. It’s only $5 a month for the 2016 transportation bond. It’s only $10 a month more in city taxes this budget year.
Trouble is, all those charges add up.
Increasing the homestead exemption, Troxclair told me, “is just one way we can chip away at that.”
It would also signal to voters that the council hasn’t forgotten the promises that many members made on the campaign trail. Mayor Steve Adler campaigned in 2014 on a pledge to phase in a 20 percent homestead exemption over four years. The council majority indicated that was its goal, too, when it voted in June 2015 to start with a 6 percent exemption.
The council bumped that up to 8 percent the following year in a narrow 6-5 vote. But then last year, as the council faced a tight budget cycle, Troxclair couldn’t even get enough co-sponsors to put a higher homestead exemption on the agenda.
It’s a good sign she has cleared that hurdle this year, with Council Members Ora Houston, Ann Kitchen and Leslie Pool joining her in bringing the item to the full council. The council needs to decide by July 1.
Pool and Adler are critical swing votes: Both supported the initial exemptions in 2015 and 2016, but worried last year the city couldn’t afford to expand the tax break.
In separate interviews this week, Adler and Pool told me they support the concept of a larger homestead exemption, but they need more information about the budget impact before they can decide.
Even so, Pool recognizes what this vote telegraphs to the community.
“If I’m saying I’m concerned about the people who are living here now,” Pool said, differentiating between that and focusing on policies for generations yet to come, “I have to back that up with concrete votes in ways they recognize and are looking for.”
I’m also eager to see where Houston lands: She voted against the homestead exemption in 2015 and 2016, along with Council Members Greg Casar, Delia Garza and Kathie Tovo (Council Member Sabino “Pio” Renteria flipped from a supporter in 2015 to a “no” vote in 2016). But Houston’s role as a co-sponsor now suggests she’s at least interested in talking about the tax break.
Council Members Alison Alter and Jimmy Flannigan joined the dais last year, so they weren’t part of the council that set the 20-percent-in-four-years goal. Both replaced fiscal conservatives who strongly supported the homestead exemption. If their West and Northwest Austin districts are like the rest of the city, though, many of their constituents are concerned about rising taxes.
Back in 2015, the Zandan Poll found 79 percent of Austinites supported a 20 percent homestead exemption, and 69 percent supported the idea even if it meant higher tax bills for industrial and commercial properties. Last year’s Zandan Poll found two-thirds of those surveyed had cut back on their spending because of the rising cost of living in Austin.
Even with those affordability concerns, though, many voters agreed to open their wallets for a massive $720 million transportation bond in 2016, as well as a largest-ever $1.1 billion Austin schools bond last year, both of which will get tacked onto property tax bills for years to come. The council hopes to find similar support for a November bond package that could climb past $800 million to provide affordable housing, buy parkland and fix up facilities, among other things.
Austinites care about having a quality city. By and large, they’re willing to pay for it. They just don’t want to be priced out of it.
This is a prime opportunity for the council to give a little back.