By Bill Oakey – April 24, 2014

Last night during an affordability presentation to the Austin Neighborhoods Council, I had the privilege of recognizing someone with a well deserved award.  Kathie Tovo and her Policy Aide, Shannon Halley, have been more responsive and attentive to the details of affordability issues than anyone else on the Austin City Council.  Not only that, Kathie’s actions have spoken louder than words.  She worked with City Staff to find an alternative to spending the budget surplus for funding a worthy project for a senior citizen recreation center.  And her office stayed in touch throughout the week that increasing the Over-65 and Disabled Homestead exemption came up for a vote.  She steered it past an uncertain fate, all the way to a welcome victory.

Giving an award is one of the fun parts of an otherwise treacherous process.  Along with it comes the AustinAffordability.com endorsement for Kathie for District 9 in the upcoming City Council election.  You can see the award below.  Click to enlarge it.

By Bill Oakey – April 21, 2014

Last Friday night I spent a cool and very pleasant evening at the Lenoir Wine Garden on South First Street.  It was an Authors Party, sponsored by the Austin Public Library Friends Foundation.  In addition to the opportunity to mingle with literary standouts such as Elizabeth McCracken,  I happened upon a chance meeting with noted psychologist and Austin resident, Dr. Gemma Marangoni Ainslie.  Little did I know at the time that my curiosity would lead to…

Goodnight…And Pleasant Dreams!

A Google search for a few of the intriguing folks on hand for the party turned up a disturbing New York Times article.  You might be better off reading this in the morning, rather than right before bed.

Entitled, “The House of Your Dreams,” the article was published in 2009 during the height of the real estate bust and economic collapse.  “Foreclosure, eviction and an uncertain real estate market are providing material for disturbing dreams and nightmares about home, which has an especially powerful place in the psyche,” the story begins.

As I continued reading, I began to discover an eerie parallel between the housing collapse of the Great Recession and the feelings of hopelessness felt by many Austinites as they struggle to hold onto their homes today.  Just yesterday, a realtor in my neighborhood told me that quite a few of her clients are sellers who can no longer afford to live here.

Back to the article, here is another interesting quote.  “At a time of collective angst and fear of economic insecurity, psychologists say more patients are recounting stressful dreams that revolve around the theme of home.”

Some psychological studies suggest that people’s dreams reflect actual real life situations that they can act upon as a result of what they learn from their dreams.  Austin’s own Dr. Gemma Marangoni Ainslie, whom I met at Friday’s party, cautions against taking dreams too literally.  “Things are not necessarily what they seem to be,” she stated in the NY Times article.  In her view, dreams are simply “clues about personal struggles and ongoing conflicts.”

As you turn down the sheets tonight, try not to think about Austin affordability.  Goodnight…and pleasant dreams.

Presentation to the Austin Neighborhoods Council on Wednesday

On Wednesday April 23rd, I will give a presentation at the Austin Neighborhoods Council meeting at approximately 7:53 PM at the Austin Energy Building, 721 Barton Springs Road.  The title is “Affordability –  Goals And Reforms to Maintain Austin’s Economic Diversity.”

“Above and Beyond” – The First Award From This Blog

Stay tuned for an upcoming announcement.  The first ever AustinAffordability.com award will be presented to a public official who has demonstrated outstanding leadership in the face of the inertia of Business As Usual.  She has definitely gone above and beyond her peers.  It will be a happy occasion, but the time and place have yet to be determined.  (As you probably already guessed, the tittle for this award was inspired by the classic Harlan Howard song, first reaching number three by Buck Owens in 1960, and then number one by Rodney Crowell in 1989).

Austin’s critical water situation is an important element of affordability.  Veteran energy and water activist and author of the Austin Environmental Directory, Paul Robbins, weighed in recently with this guest editorial in the Austin American-Statesman:

Robbins: Austin needs to take measures to control water rates

Posted: 12:00 a.m. Saturday, April 12, 2014

BY PAUL ROBBINS – SPECIAL TO THE AMERICAN-STATESMAN

By Bill Oakey – April 17, 2014

Is it possible to make a duck walk without looking like a duck and quack without sounding like a duck?  In politics, yes, it is definitely possible.  Especially when dealing with that dreaded word that all politicians despise, TAX.  With property taxes, they must find a way to massage the thing, so that it looks like it hasn’t gone up since the year before.  So, how do they play that game downtown at Austin City Hall?

It’s really pretty simple.  They just don’t talk out loud about the percentage of a tax increase at all.  What they do talk about is the tax rate.  During boom times like we are in right now, property values are galloping upward.  So, using simple math, you know that the tax rate can stay the same, while your property tax bill will be higher if the tax appraisal on your home has gone up.

As recently as Thursday afternoon April 17th, I was told by one City Council member during Citizens Communications that the City complies with State law on property tax disclosure.  He is technically correct in that their public hearing notices published in local newspapers comply with State law.  But during annual budget deliberations, the City actually starts the process with a revenue assumption that raises taxes to the legal maximum of 8%.  The final adopted budget may come in below that amount by a couple of percentage points.  But what you will hear in the news media and from the City Council dais is how little they have adjusted the property tax rate. Little or nothing is spoken verbally about the true percentage of the tax increase.

Let me demystify it for you.   There is something officially called the “effective tax rate” that would result in a zero tax increase, when applied to the total value of all the property on the City’s tax rolls.  State law allows cities to raise taxes up to 8% above the effective rate.  That maximum amount is called the “rollback rate.”  Anything above that level could trigger a citizen initiative to roll the rate back.  (See the City’s official guide called, “Adopting a City Budget and Property Tax Rate Training).”

What do they have in store for this year’s budget cycle?  Well, here is one key sentence in a memo to the City Council from Deputy Chief Financial Officer, Ed Van Eenoo, dated February 28, 2014:  “City management has communicated its intent to present a proposed fiscal year 2014-15 Budget that maintains the property tax rate at 50.27 cents per $100 of assessed value.”  (See Conclusion, second sentence).  In other words, staff plans to “hold the line” on the tax rate, while collecting all the money that comes in from raising taxes on homes and businesses that receive big tax appraisal increases.  In order to not raise taxes when property values increase, they would have to lower the tax rate.

Last fall when the City Budget was adopted, KUT reported this headline story, “2014 Austin City Budget Holds Line on Tax Rate.”  The implication was that taxes were not going up.  But in fact, because of large appraisal increases, we did have a tax increase.  But the percentage increase above the zero “effective rate” was not readily disclosed beyond the required public hearing notices.  Better disclosure in the budget document with my proposed “Taxpayer Impact Statement” may not happen until we elect a new City Council in November.  

Now for a final bit of history.  I am the culprit who dragged out my old Sears typewriter in 1987 and went to my State Representative and State Senator and proposed the Truth in Taxation law that I was reminded of today by one of the City Council members.  Below is the cover page for House Bill 328, which established the State law.  It was signed by Governor Bill Clements on June 17, 1987.  Click the image below to enlarge it.

By Bill Oakey – April 14, 2014

This all happened quite unexpectedly.  I stopped into a local restaurant for a nice hot breakfast and to kill some time before a meeting at City Hall.  It was Monday, so just to make some idle chat, I asked my server the simplest of questions, “How was your weekend?”

Her response told me something about Austin affordability that I must have known somewhere inside of me.  But in the next few moments it was all out in the open.  She will remain anonymous, but she is very real.  And of course, there are many others like her.

“I just finished my 13th straight day of working,” she commented.  “I have two jobs, and on each of those 13 days, I worked 10 hours.”  Needless to say, she did not have the kind of fun weekend that you might read about in the Chronicle.  I then asked her if she had gotten a chance to check out South By Southwest when it was in town.  That’s when I discovered that hers was a story that needed to be told.

Yes, she made it to a music event on the East Side, but somehow she injured her ankle and could not find any convenient transportation back to where she lived.  I had read about the multiple-hour waits for cab rides.  In this case, the only faster option was a pedicab.  For a cool $60.00 fare.

I decided to email her some additional questions.  She told me that she moved here from Toronto in 2012.  Here are some excerpts from her reply:

“Affordability is going to be an issue anywhere you live, but I think Austin is feeling some very strong growing pains. The sudden massive increase in demand for housing, combined with a seeming lack of oversight and rent control is one of the largest issues I’ve witnessed.  Everyone I know who lives in an apartment complex faces yearly rent increases. There seems to be no limit to how much landlords can raise the rent.  Most of my friends have had to move out due to such increases.”

“My other major issue is transportation: the recent changes made by Cap Metro have been very negative for me. I live near S. Congress and Ottorf, which has seen a decrease in service for the local route and increased service and pricing for the express route, as well as a detour in the route.  Basically, I’m forced to pay more money for decreased service on a route that takes me out of the way I used to take.  It’s a significant price increase, too.  A $30 monthly pass used to get me onto any bus.  That’s been increased to $33 but service has been deceased so much that I’m forced to pay $49.50 for the less convenient but necessary premium pass.”

“Other than during election time, I don’t really keep track of local politics.  Mostly because it’s kind of depressing.  It seems like Austin has been sold to developers to do what they want with it.  I fully support creating more housing.  There’s obviously a strong demand.  It’s just too bad that the only buildings going up are hotels and million dollar condos.  It’d be nice to see more housing go up that is meant for average Austinites.”

“A final thought on affordability – Austin is known for being an art hub.  It’s a place where artists can work as a bartender/server/barista and still focus on their art.  Instead of going to new York or L.A and struggling all the time to make ends meet.  Austin provides an environment that is encouraging and livable.  A rising cost of living will drive that community away from Austin, taking away a big part of the city’s character.”

If our local officials do not pay enough attention to what longtime residents have to say, perhaps they will take note of how our city looks to some of the newcomers.  There is a human face behind all those demographic facts and figures.  And she casts a long shadow over Austin’s uncertain economic future.

By Bill Oakey – April 7, 2014

By Bill Oakey

October 6, 2013

You have probably seen the news reports that AISD has lost student enrollment this year.  They lost around 1,200 students for a variety of reasons, most notably the lack of home affordability in Austin.  The median home price here is the highest of any major city in the state, at $227,600.  That figure is very misleading however, since so many central city neighborhoods haven’t seen home prices that low in about 20 years.

Where Have Urban Austin’s Children Gone?

District officials should have seen the enrollment drop coming, but instead their demographer predicted a 250 student enrollment increase.  Perhaps AISD bureaucrats should consider reading an Austin affordability blog.  The migration of families with children to the outskirts of Austin is nothing new.  We all witnessed the plans for closing Zilker Elementary and some other schools just two and a half years ago.  At that time, the Austin American-Statesman ran a captivating story entitled, “Where Have Urban Austin’s Children Gone?”

Neighborhood parents rose up to successfully protest the school closings, but the handwriting was on the wall.  Then there is the whole question of the reputation of Austin schools and where people choose to live in hopes of finding the highest quality schools.  Affordability plays a wicked role in that battle, since some of the most affordable homes are in sections of town with low student achievement. On top of that, there has been a growing trend of low-income families fleeing to the suburbs because of high inner-city housing costs and high property taxes. But increasingly, more and more middle class families are leaving for the same reasons. Austin is fast becoming a destination for luxury homeowners, with fancy condos and townhouses mixed in with oversized McMansions.

A Legacy of High Spending and Top-Heavy Administration

In my taxpayer advocacy days of the 1980’s, I ofter referred to AISD as the Austin Inefficient School District.  I clearly remember that they typically maintained the highest per student costs in 8 out of 11 categories among the largest districts in the state.  Just four years ago in 2009, I met with then superintendent Pat Forgione and a couple of the board members to discuss AISD’s property tax rates.  That year they called for a “tax ratification election,” which is a State sanctioned local option for school districts to ask voters for a supplemental property tax increase.  This brings the total annual increase above the normally allowed cap.

In my meeting with the superintendent, I was told that the tax increase was necessary to keep teacher salaries competitive.  And that if those salaries ever fell too far behind,  it would be nearly impossible to catch up, given that the State Legislature does not fund schools adequately.  The local tax increase option passed with no organized opposition.

Fast forward to 2013.  We are clearly not living in the same Austin anymore.  The voters’ surprising defeat of two out of four school bond propositions in the spring was not the first cost related AISD issue to hit the newspapers this year.  Back in January, the American-Statesman reported that the number of administrators with six-figure incomes has increased 63% in the last five years.  A large chunk of that occurred in a single year, when the number of six-figure bureaucrats jumped 25% between 2012 and 2013.  It’s as if AISD feels compelled to join the private sector in extending the ever widening gap between rank and file workers and the privileged executives at the top.

The Winds Gather for the Perfect Storm

AISD teachers and staff did receive a pay raise for the new 2014 fiscal year that began this month.  However, the raises are not permanent since the funds were drawn from reserves.  So, how can the district restore funds for teacher pay raises next year?  The answer is another tax increase election on top of whatever regular tax increase would come in the 2015 budget. Nothing much will be happening to spook taxpayers next fall, other than three overlapping bond proposals totaling at or above a billion dollars.

AISD faces a daunting financial quagmire in the coming years.  If student enrollment continues to decline, the revenue loss of $7,400 per student would trigger a confounding question.  What could they do abut it?  This year alone, the district stands to lose $8.6 million.  If high living costs and high taxes are driving families away, raising taxes even higher to cover their losses would only make the problem worse.

District Judge John Dietz, who presides over the highly complex Texas school finance lawsuit will resume the trial in January, based on new evidence.  The Legislature restored much of the school funding that had been cut in the 2011 legislative session.  The State has vowed to appeal any court decision that awards more money to the schools.  In fact, the school funding bill that passed in this year’s session was crafted precisely in a manner that would help win the appeal.

If AISD finds itself back to square one, with declining student enrollment and no local appetite for increasing property taxes, they could be headed for financial trouble.  This is not a good time for that to happen, especially since the recently elected school board ran in opposition to the management decisions and personality of Superintendent Maria Carstarphen.

We can only hope that the new board can muster the gumption to steer the district in a direction of leaner spending.  At the same time, they need to restore the confidence of parents that their children will receive a quality education, while fostering an administrative attitude that welcomes citizen input instead of arrogantly rejecting it.