Monthly Archives: May 2022

Your Over-65 School Tax Freeze Will Thaw – And That’s Good News!

By Bill Oakey – May 24, 2022

My mother always told me not to refreeze anything in the refrigerator, after it has been frozen once. But that does not apply to our currently frozen over-65 and disabled school property taxes.

We have one adventurous news hound in Austin to thank for chasing down this winding tale of a story. I tip my hat to Bridget Grumet at the Austin American-Statesman. This will make you want to follow her reporting every week.

Grumet: New school property tax ceiling is ‘a 15-step math problem’ that benefits seniors

Bridget Grumet
Austin American-Statesman

Bill Oakey cleaning his West Austin condo. Photo by Jay Banner, Austin American-Statesman

The vast majority of voters in the May 7 election — nearly 87% — decided to lower the tax bills for homeowners who are disabled or over 65. But do you understand exactly how we just changed the school property tax freeze that has been a financial lifeline for about 2 million Texas households?

Don’t feel bad. I didn’t know the mechanics of it, either. Nor did Bill Oakey, a retired accountant and longtime taxpayer activist who runs the blog at AustinAffordability.com.

“Will our school taxes be reset back to the dollar amount that we paid in 2019? And then refrozen at that amount?” Oakey asked me a few days after voters approved Proposition 1. “Or will they be refrozen at whatever dollar amount they’re at in 2023?”

Actually, none of the above.

I promise you, this is a good news story for taxpayers. And I’ll do my best to keep the math digestible. But I figured if someone as plugged in as Oakey didn’t understand how Prop 1 worked, we could all use a fuller explanation.

Tax freeze was ‘a miracle’

For decades, as soon as a Texan got the special homestead exemption for older or disabled homeowners, that person’s school property taxes were frozen at that year’s amount. The school portion of their bill couldn’t go above that ceiling in future years, although it could be lower. (Notably, the freeze doesn’t apply to city or county taxes.)

The school portion of my property tax bill has shot up more than $700 over the past five years, so I can imagine what it means for older adults on fixed incomes to know they’re shielded from those kinds of costly spikes over the long term.

“Everybody I know that lives in Austin now, including me, probably wouldn’t be able to stay here if not for the over-65 tax freeze,” Oakey, 74, told me. “It was just a miracle it was on the books.”

But the freeze became an impediment of sorts in 2019, when the Legislature passed House Bill 3. The massive school finance reform package included a complicated plan to “compress” the school property tax rates, reining in the surging bills for homeowners like me.

That didn’t do much for older or disabled homeowners, though, because their bills were already frozen.

How low can it go?

Prop 1, the measure Texas voters approved this month, aims to bring some relief to that group of homeowners. But I must warn you, this is not the kind of thing you can calculate yourself.

“It’s like a 15-step math problem,” said David Clark, a senior policy analyst for state Sen. Paul Bettencourt, the Houston Republican who authored the legislation behind Prop 1.

Here’s the basic gist:

Next year, tax collectors’ offices will unfreeze the school property tax bills for seniors and disabled homeowners, then recalculate by factoring in the compression rates for 2019, 2020, 2021, 2022 and 2023. That will be the catch-up year for those homeowners, getting the benefit of several years’ worth of reduced rates that the rest of us already got.

As a result, the 2023 tax bill for older and disabled homeowners will be lower than their previous “frozen” amount. Then, under Prop 1, that lower amount becomes the new ceiling.

But not forever.

In 2024, and each year after that, the bill is once again unfrozen and recalculated, using the latest year’s compression rate, which is provided by the Texas Education Agency. In a worst-case scenario, if we hit a recession, the school property tax bill would stay the same as the year before. But most of the time, Clark said, the bill should drop a little more each year.

And each year, the lower amount becomes the new ceiling.

It’s like older and disabled homeowners are trading their tax ceiling for a limbo stick.

I should also note: As property owners pay less, the state is kicking in more dollars to ensure school districts don’t lose funding. The state dollars come from the general revenue pot that includes sales tax, taxes on the production of oil and natural gas, and other tax streams.

That infusion of state dollars is long overdue. For years, the state had reduced its contribution to school budgets because soaring property values led to higher property tax collections from the local districts. But, as any homeowner who has paid those bills knows, the rising burden on local taxpayers was unsustainable.

Making sense of your bill

You might have heard that under Prop 1, older adults on average will save $110 in 2023. Where did that figure come from?

Clark told me that Prop 1 will bring an estimated $220 million drop in school property tax collections from older and disabled homeowners that first year. Divide that by the 2 million Texans who get those particular homestead exemptions, and you arrive at $110.

Using similar back-of-the-envelope math, the state projects an additional $125 savings for those homeowners in 2024.

In reality, each senior or disabled homeowner has specific factors — how long they’ve had the tax freeze, what’s happening to home values in their area, what the compression rate for their district is — that make it impossible to guesstimate what Prop 1 will mean for their specific tax bill.

Photo by Jay Janner – Austin American-Statesman

Even local tax officials are still wrapping their heads around Prop 1. They’ll also have to factor in the other measure voters approved May 7, an increase to the general homestead exemption for all Texans.

Instead of knocking $25,000 off the value of a home when calculating school property taxes, Proposition 2 knocks off $40,000. (Older and disabled residents already get an extra $10,000 exemption on top of the general one for all homeowners.) Depending on how low their already-frozen bill is, however, older and disabled homeowners might not notice much of a difference from the higher homestead exemption under Prop 2.

Officials in Travis County, where nearly 75,000 people have the older adult or disabled person’s homestead exemption, expect to compare notes with other tax collectors and work with their software vendors to figure out the best way to calculate the bills.

Then it will be a matter of helping homeowners understand their 2023 bills, though I’m guessing most taxpayers will be satisfied with the bottom line.

“Usually people are pretty happy when their tax ceiling goes down, as long as they know it’s not an error,” Tiffany Seward, spokeswoman for the Travis County Tax Assessor-Collector’s Office, told me.

And that was pretty much the case when I relayed all of this to Oakey. The math was more complicated than either of us expected. But given the rising cost of living, and the fact that retired teachers and retired state employees haven’t seen a cost-of-living adjustment in roughly two decades, Oakey welcomed the tax break.

“I’m very happy to hear they’ve done this,” he said, “because seniors are losing ground.”

Grumet is the Statesman’s Metro columnist. Her column, ATX in Context, contains her opinions. Share yours via email at bgrumet@statesman.com or via Twitter at @bgrumet. Find her previous work at statesman.com/news/columns.

Musical Accompaniment for This Blog Posting:

1. “The Freeze” – Tony and Joe, 1958
2. “Let It Go” – From Disney’s “Frozen”
3. “Limbo Rock” – Chubby Checker, Original 1962 single version
4. “Taxman” – The Beatles

City Should Establish Lots of Senior Discounts

By Bill Oakey – May 22, 2022

Austin’s affordability disaster has reached every neighborhood in the city. Few people were surprised by the latest round of obnoxiously high tax appraisals. Our City leaders created this problem by marketing the city relentlessly, until the growth spiraled out of control. No other city  in Texas has seen the steep rise in housing costs on the scale that exists here.

Our long term residents should not be shoved aside, just to make room for more luxury housing units. Instead, the City should look for ways to keep the older folks here. After all, we are the ones who worked, volunteered and paid our taxes, to create the lively atmosphere and high quality of life that makes Austin special.

It’s Time for the City to Implement a Full Range of Senior Discounts

I am making the following recommendations to the City Council to consider for senior discounts:

1. All fixed customer charges on utility bills – for electric, water, wastewater, trash collection

2. Admission tickets, services charges and parking fees for all events, both public and private, that are held at City-owned facilities or on City-owned land. This includes music festivals, wine tastings and the multitude of other events at Zilker Park, Botanical Gardens, Auditorium Shores, etc.The City’s contracts with private entities that use City parks and facilities should be modified to require senior discounts.

3. General admission and parking for City parks and City facilities at all times, even when no special events are happening. State and national parks already provide senior discounts.

4. Fees for all parking meters, parking lots and parking garages throughout the city. This includes libraries, City Hall and all other City facilities.

The City should roll out this initiative with a major public relations campaign. They should encourage all private businesses to partner with them and offer similar senior discounts. We are starting to see far too many luxury events with sky-high prices. And it can cost an arm and a leg just to park, before going in to these events. That’s fine for the folks who can shrug it off with a few taps on their phones. But, it’s high time for our City officials to recognize that Austin still has some of the local people who cannot light a cigar with a $100 bill.

How Austin Can Lead The Way On Climate Change

 By Bill Oakey – May 10, 2022

CNN recently published an article that provides a climate change and affordability solution that is perfect for Austin. Big-box stores are starting to install solar panels on their rooftops and portions of their giant parking lots. IKEA has already taken an early lead in this endeavor, with 54 solar installations, covering 90% of their stores nationwide. The cost savings and climate change benefits that could be achieved if more stores did this are enormous. Check out these points, summarizing CNN’s findings:

1. From September to December 2020, IKEA cut its energy purchases by 84% and slashed its energy costs by 57% at their Baltimore store. Meanwhile, the cars in their parking lot stayed cooler in the shade provided by the solar panels.

2. A report from the nonprofit Environment America estimates that solar panels could cut the electricity needed by big-box stores and shopping centers by 50%.

3. The same report found that if big-box stores nationwide installed solar panels, it would generate enough electricity to power 8 million average homes. The climate change impact would be equivalent to pulling 11.3 million gas-powered cars off the road.

4. The average Walmart has 180,000 square feet of rooftop. That’s equal to 3 football fields of space. It’s enough for solar panels to generate the electricity needed to power 200 homes.

Three Words Come to Mind for Austin – Let’s Do It!

 This initiative will require a coordinated effort from both public and private sector officials. There are some hurdles and strategic planning efforts that will come into play. In Austin, we may have permitting and other regulatory requirements. These could be reviewed and possibly adjusted to encourage the installations. The CNN study found that some big box stores have roofs that may need repairs or modifications to accommodate solar panels. The City Council should consider appointing a task force to engage the stakeholders, evaluate the situation and make recommendations on how best to move forward.

IKEA installed solar panels at its Round Rock store in 2012. Just imagine how much the technology has improved since then. What are we waiting for?

Austin Energy Would Need to Rethink Its Future Plans

A sudden large-scale shift to solar panels would impact Austin Energy’s ability to sell enough electricity to keep their operations financially viable. But, more solar installations are coming online already, some of which include entire residential subdivisions. Some serious discussions need to be held, regardless of this proposal. Part of Austin Energy’s reason for their pending rate increase is related to lower sales to customers in new, energy-efficient homes.

Here Are Some Things That Our City Officials Can Do

1. Explore whether Austin Energy can legally sell power directly to other utilities, and / or offer it for sale on the Texas power grid.

2. Do a detailed study on the impact of scaling up rooftop solar installations, and chart a path to gradually accommodate it. This can include reducing power generation from other sources, and rethinking Austin Energy’s future power generation plans. Another critical aspect would be evaluating the optimal mix of base load vs. peaking power capacity. This will ensure that we always have enough power to meet the demand during periods without a lot of sunshine.

3. Reach out to other major cities and large utilities, to determine best practices for a smooth transition toward large-scale solar installations.

4. Explore options to use available Federal funds for expanding solar infrastructure. Contact members of our Congressional delegation to seek assistance under both existing and potential new legislation.

5. This opportunity is hiding in plain sight – Put a solar installation on the roof of our massively expanded Austin Convention Center (!)

Let’s Not Forget About Rapidly Evolving Battery Storage Technology

This is the icing on the cake. Elon Musk and others are already manufacturing and selling new models of home and industrial battery installations to store solar power. These are following the path of solar panels, in rapidly becoming more affordable and of higher quality. City, State and Federal officials should review the excellent 2018 U.T. Honors Program thesis by my good friend, Maddie Bratcher. The title is “Gridlock on the Power Grid: How Battery Storage Technology Reveals Challenges to the Lone Star State.”

The future is now for both large-scale solar and battery storage. To quote an old fashioned saying, the train is roaring down the track. Austin needs to either hop on that train, or get out of the way. My advice is to move to the front of the train and lead the way!

Musical Accompaniment for This Blog Piece

1. “Up On the Roof” – The Drifters
2. “Walk Right In” – The Rooftop Singers
3. “Bring Me Sunshine” – Willie Nelson
4. “Here Comes the Sun” – The Beatles
5. “Walking In the Sunshine” – Roger Miller