Rail Bond Vote Would Bring Historic Tax Increase

By Bill Oakey – July 30, 2014

If anyone thinks the property tax impact of an annual City Council budget battle is something to worry about, please consider this.  For the last two years, the budget discussions have centered around changing the City’s tax rate by a tiny fraction of one penny.  That’s because our tax appraisals have skyrocketed, meaning that even a zero change in the tax rate would yield a considerable tax increase.

Well, make sure you are sitting down when you read this.  If voters approve the $1 billion urban rail and road bond package in November, they can say hello to a 6 cent increase in the property tax rate over the next five years.  The sobering details are contained in a City document called “General Obligation Bond Capacity Analysis.”  You can read it here.

What Would Happen to Our Bond Debt If the Rail Bonds Pass?

That’s an easy question to answer.  It would flat out double!  Our current general obligation debt, made up of previous bond votes for roads, parks, libraries, open space, and housing stands at about $1 billion.  So, in one fell swoop we would double our debt by voting for the rail and road package.  And the worse part is that it would do essentially nothing to relieve traffic congestion for most existing residents.

In fact, Austin won’t even come close to attaining the ridership levels needed for Federal funding for the urban rail line unless we reach extremely optimistic, massive growth projections. The developers pushing for the rail line from Riverside to Highland Mall would need to convince voters of the “miracle” in economic development potential that the project would bring. And yet, as one Austin American-Statesman reader wrote to the editor recently, “Well, thank goodness they are building a line from Riverside to Highland Mall, because I travel between those two points all the time. SAID NO ONE EVER!”

What the City Report Says About Taxes, the Debt and Our Bond Rating

Here is a snapshot of some of the report’s most significant facts and conclusions:

1. Our current general obligation debt is about $1 billion.

2. We still have an additional $425 million in 2006-2013 bonds left to issue.

3. The City estimates that another $425 million will be needed in a separate bond election in 2018, on top of the $1 billion in rail and road bonds to be voted on this November.

4. In order to preserve our AAA bond rating, we would need to raise property taxes by 6 cents between 2015 and 2020 if all of the bonds pass.

5. Not only would the property tax rate increase by 6 cents, but the City estimates that property tax appraisals will jump by over 25%!  Their example shows a $200,000 home being assessed at $255,000 by 2020.  So, the tax impact would multiply exponentially.

Don’t Forget About All the Other Tax Increases!

None of the above estimates include the back to back tax increases for the main part of the City Budget, plus utility rate increases and add-on fees, and taxes for AISD, Travis County, ACC, and Central Health.  And don’t forget that ACC will be asking for a $386 million dollar bond package this November as well.

So, as long as your career is rocking along with huge pay raises every six months or so, or your retirement income is zooming past inflation and leaving you with extra piles of cash, then you can easily afford to vote for the rail bonds.  But if you’re like the vast majority whose income is flat or even decreasing, then make sure you pass this information along to your friends and ask them to cast a resounding NO vote in November.

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5 thoughts on “Rail Bond Vote Would Bring Historic Tax Increase

  1. Jann @ AustinDetails.me

    Sobering details, and important to note and share, Bill. My only vote would go the Lone Star Rail project, which travels a clearly-used already overloaded corridor and offers a serious solution to an existing problem. Thanks for putting this info together as we face an important decision.

    Reply
  2. kkabler

    very insightful. As I have stated many time to anyone who would listen, this city is over indebted and no one really seems to understand the ramifications.

    Reply
  3. Margie Burciaga

    Bill, for many in west Austin we are getting hit with a flat 10% increase in just our property tax bills each year. That mean’s in 6 years it will be way more than a 25% increase as projected in the blog. Needless to say the way things are going it is not sustainable for anyone. At least 1 in every 4 homes when block walking are saying they will have to consider moving out of Austin. We must stop the wasteful spending and get zero line accounting practices to city hall so every tax payer knows how ever tax dollar is being spent.

    In addition, there has been little talk about cost differentiation between a comprehensive bus system throughout the metro-plex vs rail. Here is what I blogged back in late June:
    Want to weigh in on the proposed urban rail project?
    Fact 1:If we put into place all projected transit options today we would still have a traffic issue
    Fact 2: West Austinites will carry the bulk of the tax burden for any proposal that is implemented
    Fact 3: There is none nor has there ever been any aggressive plan for transit options west of MoPac, yet we must pay regardless that we struggle especially along 360 and west of it for affordable transit so our businesses can prosper, good service be maintained, and residents can get out of their cars (not to mention there were affordable options like HOV and metered on ramps for MoPac)
    Fact 4: City council has neglected to reach out to state and federal representatives to solve our transportation issues due to political differences so unlike other cities getting appropriations we have to increase taxes or seek private funding like with HWY 130
    Fact 5: The bus stop right down the street doesn’t have covering, a bench, or a trash receptacle…buses are considered cheap compared to rail…why aren’t we looking at a citywide approach to a fantastic bus system that runs regular routes so people can work and play in this city regardless of the time or where they live…hint look at Boston now that city knows mass transit while maintaining unique character of neighborhoods.

    We have got to get spending under control by bringing transparency to city hall with zero line accounting practices!

    Reply
  4. SToddJones

    Any way you look at it Austin residents are screwed even if nothing passes. It’s UN-affordable to live here unless you make six figures every year.

    Reply
  5. Steve Goldstraw

    The wording of the rail bond vote is like a 12 year old who wants $12 from his dad to go to a movie asking “Dad, may I have $12 for entertainment purposes?” How should the father respond?

    Reply

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