Why Are Austin’s Property Taxes So High?

September 4, 2013

We hear that question all the time.  There are a variety of reasons, including undervaluations of commercial property, as confirmed by the good research done by local citizen, Brian Rodgers.  But here is something that you might not know.  The City of Austin does not take any chances when it comes to raising taxes during their annual budget process.  If you thought they went into special meetings early on to find out how much they might need to raise taxes, well think again.

The City’s official training document, “Adopting a City Budget and Property Tax Training Guide,” lays bare my greatest fears about how the process actually works.  Their annual ritual starts out with raising taxes to the legal maximum, even before the budget process begins!

You can read all about it, straight from this excerpt from the training guide:

“The mechanism Austin uses to set the process in motion is an item on council’s agenda for a resolution to adopt a proposed maximum tax rate that the city will consider and set the date that council will consider adoption of the actual tax rate.”

“In the resolution adopting the proposed maximum property tax rate, Austin adopts the highest rate that keeps us below the trigger for citizens to take action to roll back the rate. Council then can consider various budget scenarios in the upcoming months that may lower the rate needed to generate the revenue for the upcoming fiscal year’s budget, but they know the cap and the cap is public. A sample of this resolution is at

http://www.cityofaustin.org/edims/document.cfm?id=141378.”

“When we adopt this resolution, we make clear in agenda notice, and in statements made by the Mayor at the agenda adopting this resolution, that the council may ultimately adopt a property tax rate that is lower than the maximum set out in the notice. We adopt the proposed property tax rate using a roll call vote where each person’s vote is recorded after the clerk reads their name. This information is then included in the Notice of Public Hearing discussed below. Including this information is required by Tax Code 26.06(b).”

You can read the entire training guide at: www.texascityattorneys.org/2013speakerpapers/RileyFletcher/BudgetAndTax_LeelaFireside.pdf

Raising taxes to the legal maximum provides an 8% increase over the “effective tax rate,” that would generate the same amount of revenue as the previous fiscal year.  So, year after year for as long as I can remember, the City has set a tax rate that was at or near the maximum, allowing spending to go up 8% each year.

Since 2004, the Austin City Budget has increased 73.7%, from $1.9 billion to $3.3 billion.  The Travis County Budget has nearly doubled over ten years.  The Austin American-Statesman editorial board has raised a really good question.  What has happened to all of the new tax revenue from block after block of gleaming new high rises that dot the downtown skyline?

It is very important to keep in mind that the tax rate can stay the same from one year to the next, or even go down, and we can still get steep property tax increases on our homes.  That’s because the tax appraisals on Austin homes are rising rapidly.  This year, Mayor Lee Leffingwell has shown some laudable restraint by telling the rest of the City Council that he will not vote for an increase in the tax rate.  But if the day ever comes when I hear any City leader say, “I will not vote for an increase above the zero effective tax rate,” then I’ll know that it’s a dream and I’ll roll over in bed and expect to hear the alarm go off at any moment.

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