With each passing year, as the appraised values of Austin homes increase, homeowners receive a higher property tax bill than the year before. That’s become the norm. Yet, every year, the mixed messages sent by taxing jurisdictions contribute to the sticker shock property owners experience when they receive their tax bill.
When setting budgets — and the tax rates that finance them — some local taxing jurisdictions work independently, not knowing what the others are doing. As a result, the messages the jurisdictions — the city of Austin, Travis County, Austin Community College, Central Health and the Austin school district — deliver rarely tell the whole story. That needs to change.
CONTINUING COVERAGE: Central Health budget brings $12.50 hike to typical homeowner’s bill.
Homeowners should be able to more accurately estimate how much they will pay in total taxes to all major jurisdictions before their tax bill arrives. For that to occur, two things that this editorial board has long advocated for must happen. Elected officials who set budgets must be honest with taxpayers about how total combined tax increases or decreases of each jurisdiction will impact tax bills as a whole. And, second, all taxing entities must establish ongoing communication with one another as they each set their budget and tax rate.
Taxing jurisdictions have a responsibility to provide honest information to taxpayers, who are feeling more than ever the sting from a sustained super-heated housing market and the tax increases that result.
Property taxes are a huge part of Austin’s affordability equation. Property taxes are one of the biggest expenses homeowners pay annually. As the value of their property goes up, every penny in the tax rate costs the homeowner more.
This year, for instance, the owner of an Austin home with a median-value of $305,510 will pay $6,070 in total property taxes to the city, county, Austin school district, ACC and Central Health – a $531 increase from last year’s tax bill, according to city of Austin estimates. That figure does not include utility and other fees of $4,043 that a typical single-family home is also expected to pay in the next year.
Just three years ago, those figures were significantly less. Then, the median-value home was $185,133, and the total tax bill for that Austin home was $4,138. Utilities and other fees a typical single-family home paid in 2014 totaled $2,843. Homeowners have felt that upward trend for over a decade. Indeed, taxes, utility and other fees for Austin homeowners have gone up every year since 2007.
The budget-setting decisions of each of the five taxing entities have a direct impact on a taxpayer’s total tax bill. Yet, because taxing jurisdictions continue to work in silos when setting tax rates, they mask the full cost and effect of their tax decisions.
Travis County officials, for example, estimate that property taxes for the owner of a median-value home will rise only about $50 next year, portraying it as a small, manageable increase. Similarly, the city of Austin, school district, community college and health district each have been known to do the same, rarely, if ever, acknowledging the impact of their collective actions on taxpayers. The result? Homeowners are unhappy when their tax bills arrive months later showing a total amount due that many would hardly describe as manageable.
That can be resolved if taxing entities become upfront with the public about their taxes when it counts — as the taxing jurisdictions begin setting their budgets. But it doesn’t stop there.
All five taxing entities should hold joint and public meetings. It’s long overdue. Working together, officials could set priorities while considering what homeowners can afford to pay in taxes.
A better way forward is to set spending priorities that don’t overly burden taxpayers. This way, if there is agreement on one spending priority that relies on raising taxes, other proposals could be delayed, scaled back or eliminated to ease the collective tax burden on homeowners. The priorities set should also look beyond the upcoming year.
Such information could help guide a more truthful discussion about property taxes. It could also serve as a blueprint for setting collective priorities, so taxpayers aren’t hit with steep tax increases year after year.
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In 2014, then-Austin City Council Member Sheryl Cole initiated a five-year report that looked at the collective impact of property taxes and certain fees on homeowners in the big five taxing jurisdictions. Even today, generating a five-year forecast is not standard. But it should be.
Taxpayers can do their part. They can remember that their total taxes are made up of several parts — and they can demand that taxing entities no longer set their budgets and tax rates in a vacuum.
It might be too late for Austin taxing entities to come together this year, but for the sake of transparency they should come together the next time they set their budgets. Taxpayers can’t afford more sticker shock.