Austin American-Statesman Affordability Editorials

Austin American-Statesman

City, County Must Stop Its Binge On Tax Hikes

Posted: 2:40 p.m. Friday, Aug. 16, 2013


The Austin City Council is either unable or unwilling to stop itself from raising taxes to near or at maximum legal levels — despite larger revenues, windfalls, and growing tax bases. In doing so, city officials have shown themselves to be drunk on tax hikes, and it’s time to implement a 12-step program.

How else can their actions be explained? Year after year, without much — if any — consideration for the public’s ability to pay through-the-roof tax bills from the city, county, school districts, hospital district and Austin Community College, elected officials have continued to impose steep tax hikes. Other cities, such as Round Rock and Cedar Park, have held the line on taxes, even while giving employees a pay raise and expanding city services.

Certainly, well-financed local governments provide services to residents and take care of parks, libraries, schools, roads and people in need. But there are limits – points at which more harm is being done than good when taxes are raised beyond certain levels. As local contributor Bill Oakey notes in his commentary below, the current system is not sustainable for most city residents whose wages have not kept pace with ballooning housing costs, electric rates and tax bills. It’s disheartening that the public’s ability to pay has been an afterthought in budget decisions.

That concern continues to be trumped by other priorities, such as providing substantial yearly pay raises and benefits for city and county employees and, in some cases, pay raises elected officials have awarded themselves; tax rebates for private companies that relocate to Austin or Travis County; and tax breaks for homeowners of historical homes in upscale neighborhoods. The steep and continued increase of tax bills is curious given all the additional money generated by new construction and businesses, a rebounding economy and larger revenue from higher property values. Elected officials tout growth as a counterbalance against such steep tax increases. Yet that benefit is not showing up in our tax bills.

That situation caused Austin City Council Member Laura Morrison to pose this question, “What do we have systemically in our business model that, even with growth, we can’t keep up with expenses … and (because of higher rates) are taking more and more of a bite out of people’s incomes?”

That question deserves an immediate answer. And neither the council nor the commissioners court should approve budgets until that question is answered and budgets are adjusted to reflect the financial realities of people who are paying the bills. Taxpayers should be getting a break, given all the extra money the city and county are taking in.

But the binge continues.

American-Statesman writer Sarah Coppola reported in recent editions that Austin’s property tax rate would increase from 50.29 cents per $100 of property value to 51.14 cents. That rate is just below the highest rate the city could choose under state law — 51.34 cents — without triggering a possible election to limit the increase.

Under the proposal, the typical Austin household would pay $173 more in property taxes, utility bills and other fees next year if the budget is approved in September. Austin would add 365 jobs to its nearly 12,400-person payroll, including 23 jobs in the planning department to review, inspect and permit new construction. Local attorney Bill Aleshire has a good recommendation to address planning department expenditures, including new jobs: Make the department a self-supporting enterprise from user fees. Council Member Mike Martinez, citing 900 positions in the city that are vacant, doesn’t see the need to add hundreds more. We agree. Council Member Bill Spelman is challenging the idea that Austin needs an additional 47 police officers in jobs that can be filled by non-civil service employees, who earn considerably less than police officers.

To give taxpayers a break, the council should take the long overdue step of granting home owners tax relief through a homestead exemption, as the county already offers.

For its part, the county also is on a bender regarding its expenditures. Earlier this month, two county commissioners, Margaret Gomez and Ron Davis, voted themselves and about 40 other elected officials a 3 percent pay raise. They were joined in that arrogance by retiring County Judge Sam Biscoe. The proposed budget for the next fiscal year also includes 3 percent across the board pay raises for all employees, though employees received hefty pay raises this year and the year before.

Though county tax bills will rise nearly 3 percent for the average homeowner, the tax rate will decline by a wee bit, about 1.1 percent. Taxpayers could and should get a bigger break, given the windfall to the county budget from rising property values. Officials seem unaware that most residents don’t share their affluence or ability to pay ever-increasing tax bills.

We’re not advocating that the city, county and other taxing entities practice strict austerity. Perhaps smaller tax increases are warranted in some cases, but they should be justified. We are arguing for tax sobriety.


Oakey: Dollar signs can be danger signs

Posted: 12:00 a.m. Friday, Aug. 16, 2013


Let’s get straight to the bottom line. The Austin city budget has increased a whopping 73.7 percent in the past 10 years, from $1.9 billion to $3.3 billion. Travis County’s budget increased 93.6 percent between 2003 and 2013, which means that it nearly doubled. Right now, the Austin area is experiencing one of the biggest economic booms that the entire country has ever seen. The glow looks great in the national spotlight. But look out for the danger signs.

We surged from becoming America’s 17th largest city in 2000 to 11th place this year. But not without a hefty price. The layer upon layer of related cost increases and future spending proposals can be summed up with one word — unsustainable.

Local property taxes have increased 38 percent in the past decade, and rents have skyrocketed 49 percent. And yet, the median income in Austin, adjusted for inflation, has stayed virtually flat since 2000. The tax rates for the city and county alone have gone up 25 percent in just four years. Homeowners whose tax appraisals have increased during that period have seen even higher increases. And that does not include Austin Community College, Central Health, area schools, and water and electric rate increases.

When many people think of 21st-century Austin, they envision young high-tech whiz kids and innovative entrepreneurs who bring new companies with good-paying jobs to town. We hear about Formula One and the X Games, and an impressive schedule of music and cultural festivals that attract more tourists every year. But beneath the veil of prosperity lies an inescapable fact. The Austin population is a diverse demographic mix.

According to U.S. Census figures, one in five Austinites lives in poverty. Interestingly, poverty has spread to our suburbs at a growth rate that ranks number two nationwide. The Brookings Institution released a report that shows we have the nation’s fastest-growing population of “pre-seniors,” ages 55 to 64, and the second-fastest-growing senior population. And yet, our city and county older-than-65 homestead exemptions have never been indexed for inflation or rising home values, and are woefully inadequate.

Estimates of the number of people moving here range from 100 to 158 per day. Those who landed a good job or who sold their home in a West Coast market can live quite comfortably in Austin. But their arrival in older neighborhoods has driven up property values and priced a lot of longtime Austinites out of their homes. Many of the tens of thousands of residents who were already here before the boom started now face economic uncertainty.

Some of these problems are not unique to Austin. San Francisco, Portland, Ore., and other cities have gone through similar growing pains. But the accelerated pace of the Austin transition gives reason for local government officials to wake up to the harsh realities of affordability. If anyone thinks the past 10 years of tax increases and high housing costs were hard to swallow, just ask yourself this. How long could you sustain the same pace, if not even higher costs going forward?

Over the next 15 months, voters will need to decide on some very expensive bond propositions. ACC is considering a half-billion dollar bond election for building renovation and expansion. Next year, we may see a $275 million election for the first phase of the urban rail project. Add to that a proposed new Travis County Civil Courthouse for $300 million to $345 million. More water and electric rate increases are forecast. Worst of all, the Austin City Council continues to raise property taxes to the legal maximum year after year.

So, what can be done to bring the area’s perceived needs and the cost to fund them in line with the public’s ability to pay? I have read dozens of consultant reports and internal planning documents. But nowhere have I ever encountered the phrase “the public’s ability to pay.” Policymakers should heed the warning signals. For many Austinites, there are only two options: cut the family budget, or load up the car and watch Austin fade away in the rear view mirror.

If local officials really want to tackle this problem, they must first recognize how serious it is. Then they need to schedule some joint planning sessions and get down to the business of doing whatever it takes to make Austin more affordable.

Oakey is a retired accountant and a consumer advocate


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