Tag Archives: Austin Taxes

Special Event Fee Waivers – Other Texas Cities Prefer Hotel Occupancy Tax

By Bill Oakey – June 4, 2015

The quest to eliminate taxpayer-subsidized special event fee waivers may get a boost, thanks to the discovery of a little-publicized City Manager’s Power Point presentation from mid-2014. This presentation followed the May 1st passage of City Council Resolution # 20140501-036, sponsored by Kathie Tovo, directing the City Manager to review alternative funding sources for special event fee waivers. One specified option was to consider using the Hotel Occupancy Tax. A subsequent information request from then Mayor Pro-Tem Sheryl Cole revealed that Austin’s Hotel Occupancy Tax revenues have galloped from $51 million in 2012 to an estimated $70+ million in 2014.

The newly discovered Power Point presentation should put to rest any fleeting suggestion that Austin cannot or should not use Hotel Occupancy Tax funds to replace millions of dollars in fee waivers. This statement appears on Slide # 17: “To date we have researched and found 30 cities in Texas that currently utilize other funding sources for special events that qualify; most utilizing a percentage of HOT Funds administered by the Convention & Visitors Bureau (CVB).” Cities cited in the presentation include Cedar Park, Dallas, Georgetown, Giddings, Fredericksburg and Round Rock. You can download the Power Point presentation here.

From an affordability standpoint, here’s a revelation that should catch everyone’s attention. On Slide # 8, charts show that in 2013 the City granted $1,146,127 in fee waivers. But somehow they wound up with a funding gap of $3,110,104 that year. The event costs for all City departments added up to $6,703,457, while fees collected only came to $3,593,353. (The City Transportation Dept. reported the 2013 funding gap to be $4,256,000, with the total five-year deficit from 2009-2013 coming to $10,694,000).

At the City Manager’s Power Point session, Slide # 2 states that an alternate funding proposal for special events was due to his office on July 24th, and to the City Council on August 7th (the date specified in the Council resolution). We now know that something transpired at City Hall between May and November of 2014. Marc Ott’s November 7th memo signaled a new direction for responding to the issue, as well as a new one-year-later deadline. They are now pursuing a plan for multi-year agreements with special event organizers. These carry the potential for locking in the taxpayers to continuous fee waiver subsidies. The whole notion of considering the Hotel Occupancy Tax as an alternate funding source disappeared down the rabbit hole.

But now it is on its way back out…Stay tuned!

Rabbit Hole

Dancing To The Taxpayer Blues

By Bill Oakey – May 29, 2015

A long tall Texan got into his pickup truck and switched on the radio. He listened to the following commentary from a country music deejay down in Austin.

Now folks, I don’t get into politics on this show, but I heard about something the City Council said that I think you should know about. They were talking about an unlevel playing field for property taxes.  Something about the system that isn’t quite right.

Maybe they have a point.  Have you ever sat down in a Texas dance hall and tried to hold onto a beer when the table wasn’t level? Worse case scenario, you would spill some of that beer on your best friend’s wife, right after you danced to “The Last Cheater’s Waltz.” I think we need the City to level our taxes.

I have a nutty friend who spends a lot of time reading City financial reports. Darned if he didn’t tell me that the City Manager is promising once again to “hold the line on the tax rate.” Man, they’ve been pulling the wool over our eyes every year on that stuff. Willie Nelson, Norah Jones and Wynton Marsalis nailed it with the song, “Here We Go Again.” Isn’t there supposed to be some kind of truth in taxation?

The high taxes have priced people so far out into the suburbs that it’s a wonder more of them don’t fall Asleep at the Wheel while sitting in traffic. I can see why the character in George Strait’s song, “All My Ex’s Live in Texas” now hangs his hat in Tennessee. He couldn’t afford his Austin taxes.

And it keeps getting worse. The end of year tax deadline is not a whole lot of fun. In 1974, Merle Haggard released a sad but hopeful tune called, “If We Make It Through December.” He must have known what was coming down the pike in Austin.

All right folks, it’s time for me to get off my soapbox and get back to some more hit music. Here’s one I think you’ll enjoy called, “When I’m Under the Table, I’ll Be Over You.”

hat

City Council Unanimously Approves Commercial Tax Appraisal Challenge

By Bill Oakey – May 28, 2015

In a historic move likely to elicit statewide attention, The Austin City Council on Thursday voted unanimously to proceed with a formal challenge of commercial property valuations to the Travis Central Appraisal District (TCAD). Several citizen speakers, including Leigh Murrin with Real Values for Texas and Vicki Totten with Austin Fair Tax spoke eloquently in favor of the challenge.

The rallying cry from both citizens and our Council Members this afternoon was all about fairness. In my view, this decidedly bold step will enable our City to shine a beacon for fairness across the state. Mayor Steve Adler summed up the sentiments when he stated that “Everyone here on the Council dais agrees that our appraisal system is broken.” What Austin has done will inspire other cities to sit up and take notice that the battle has begun. We all recognize that comprehensive tax reform must be done through the State Legislature. Although that task has seemed insurmountable in the past, we now find ourselves on a firm path toward that goal. People seeking to galvanize the spirits of taxpayers across the state have witnessed the lighting of the spark today. With a lot of hard work yet to come, our sights are already fixed on the 2017 legislative session.

Mayor Adler has signaled a strong desire for a spirit of cooperation among the various taxing jurisdictions impacted by today’s decision. Discussions are underway with various involved parties to ensure that each taxing entity is kept in the loop at every step of the process.  Earlier concerns expressed about potential delays in tax roll certifications and possible interruptions in revenue disbursements are being addressed quite satisfactorily. One solution being considered is to send estimated bills to taxpayers, so they can make their annual payments at the usual time and still claim their Federal income tax deductions.

We must all keep in mind, however, that the opponents of this action will be working every bit as hard to counter the success of our challenge. On that note, we are fortunate to have new City leadership with good experience and expertise. Mayor Adler, who brings many years of legal practice to the table, has established a cooperative tone at the outset. And by voting unanimously to support the appraisal challenge, the entire City Council approaches the endeavor on a united front.

Several City Council Members mentioned the compelling need to address affordability in Austin. They acknowledged that rapidly escalating tax appraisals are an oppressive burden for long-term residents, including many in our minority communities. It was also announced today that TCAD staff and City officials will work together over the next two weeks to take the necessary steps to ensure that the challenge does not impede the critical functions of each taxing authority. TCAD has assured everyone that no adverse effects will happen during that initial two-week period.

On Friday morning at 10:00 AM the Travis County Commissioners Court will meet in executive session to consider their role in Austin’s appraisal challenge.

The Biggest Tax Appraisal Shock Yet!

By Bill Oakey – April 29, 2015

They’re here!

That expression is somtimes used to announce that a flying saucer has landed. Emotions like horror and fear come to mind, especially when you get a peek at what lurks inside.

The same thing happens at this time every year in Austin.

The new TCAD property tax appraisals are now posted online. If you want to get scared out of your socks, just start picking out addresses from various neighborhoods and take a look, using TCAD’s property search page.

It’s not a pretty sight! Here is a map that shows some of the astonishing appraisal increases, as high as 29% in some neighborhoods. Click the graphic to enlarge it.

web_042915_travisappraisals

By reviewing the values across the City on TCAD’s website, you will see many $60,000 to $90,000+ increases for single family homes. Many of these same homeowners saw appraisal increases last year that were well above 10%. So, guess what that means. Even though there is a 10% cap on the home value used to calculate their tax bill, the assessment amount above the cap sits in the system to haunt the taxpayer in future years.

Even if the taxing entities lower their tax rates slightly to compensate for rising appraisals, tax bills continue to skyrocket.

Think about the longtime Austinites who have already seen their tax appraisals double and even triple in the last 10 or 15 years. Then think about the future. If taxes go up just 5% each year, it would only take 14 and a half years for today’s tax bills to double! That’s becuase the impact is compunded.

Ask yourself if the City of Austin can sustain that kind of tax spiral. Then you might want another cup of coffee.

Have a nice day!

Rail And Road Bond Taxpayer Impact – A Chart Of The Numbers

By Bill Oakey – July 30, 2014

We know now that the $1 billion package of urban rail and road bonds would raise the debt portion of our City of Austin property taxes by 6 cents.  Between 2015 and 2020, that rate would increase from .1151 to .1751.  As you discuss this epic boondoggle with your family and friends, and urge them to vote against it in November, you can use the chart below to show them the taxpayer impact on their homes.

Since many readers of this blog have complained that their tax appraisals have increased dramatically in the past few years, I decided to build the chart using annual appraisal increases of both 5% and 10%.  The appraisals range from a starting point of $200,000 to $500,000. The chart makes it easy to see that the cumulative level of tax and appraisal increases that Austin is currently experiencing is simply not sustainable.  If all of the estimated tax increases for the various taxing entities were built into a single chart, I shudder to think how ominous it would look! So, for now, let’s just examine the taxpayer impact of the rail and road bonds.

Click the link below to see the chart.

Property Tax Impact of Rail & Road Bonds

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.

10,000 Page Views – And It’s Time To Ask For Accountability!

By Bill Oakey – July 22, 2014

This blog has now passed the 10,000 mark for page views.  That’s because here in Austin, 2014 has become the tipping point for affordability.  We can no longer afford to stand by while public officials spend our money without serious accountability reforms.  We need bold initiatives to steer us away from business as usual.

Nobody Will Tell Us How Much Money Is Left In the City Budget!

Year after year, the Austin City Council pads the City Budget with surplus funds, yet does not provide transparency for the taxpayers.  Even the Council does not track the running surplus balance because they have yet to adopt my proposal to ask the City Manager to present quarterly reports on the breakdown of surplus funds to the Audit and Finance Committee.  This blog and its followers were able to halt the spending of a $14 million surplus that was declared back in February.  And with unfilled staff vacancies representing nearly 10% of the workforce still on the books, plus sales tax and permitting fees on the rise, we have no inkling of how much surplus funds could be used to lower taxes and reduce a water rate increase.  It is time for all of us to hold them accountable!

What Can You Do to Help?

On August 5th, the City Council will hold their first work session on the budget.  Now is the time for all of us and our friends to contact them and ask for full accountability on the surplus funds in the budget.  If we leave it to the City Manager, the surplus will be quickly and quietly absorbed into new spending projects.  Let’s ask for the detailed quarterly reports on the budget surplus, and insist that the full amount be applied to lower taxes and utility rate relief.  You can contact all 7 City Council members with one click, using this link.

How to Get the Most Out of This Blog

Use these handy tools in the right hand column:

Search:  Enter a topic into this box, such as taxes, budget, City Council, etc.

Follow:  Enter your email address to receive automatic affordability updates

Vote for These City Council Candidates!:  Visit the candidate websites endorsed by this blog

Recent Posts:  Click on any of these for recent news

Categories:  Pick one of these to see all the posts in that category.  Check out “Humor” for a good laugh or stress reliever

Don’t Let Your Friends, Neighbors, and Co-Workers Miss Out on Affordability Updates

Be sure to email, tweet, and Facebook everyone on your contact lists with a link to this blog. Stay up to date on the upcoming City Council races, affordability reforms, and the need to defeat the incredibly wasteful urban rail bonds that will be on the ballot in November.

Austin Leaders Should Unite Behind Tax Appraisal Reform

By Bill Oakey – June 4, 2014

The Travis County Commissioners Court took the first step on Monday toward meaningful action on tax appraisal reform.  Thanks in large part to the efforts of commissioner candidate, Brigid Shea, the Court is seriously exploring whether to legally challenge all of the commercial tax appraisals in Travis County.  Two stunning facts tell the story of gross inequities in the current system:

1. Commercial property is currently being assessed at only about 60% of its market value, thanks to a gaping loophole in State law.

2. The Travis Central Appraisal District is out-gunned by high priced lawyers who often sue in court and win if those property owners don’t get the appraisals they want from TCAD.

The end result is that residential homeowners get the shaft.  And with Austin taxes hitting unsustainable levels, local leaders are speaking out on the need for reform.  If the County Commissioners follow through with their challenge, the entire state will take notice, and regardless of the outcome, the Legislature will be confronted with the issue come January.

County Judge Sam Biscoe stated after the discussions in executive session on Monday that a lot of legal questions will need to be answered before commissioners can decide whether to take action.  A formal challenge would trigger the need to find out what set of appraisals the City, County, and other taxing entities would use for tax collections in the upcoming year.  A potential delay in tax collections could jeopardize the chances of a challenge being filed.  The issue will return to the Commissioners Court on June 17th.  At that time, homeowners will be given an opportunity to speak.

City Council Member Kathie Tovo has scheduled an item for the City to consider an appeal as well.  What would really be helpful would be a coordinated effort, including AISD.  The year of 2014 apparently marks the tipping point where citizens and local leaders have finally gotten the message.  Austin cannot continue to grow and maintain a booming economy unless there is available money to pay for services.  Homeowners cannot be expected to carry a lopsided portion of that burden.  It’s not even a matter of whether they WANT to pay.  The fact is that rapidly increasing numbers of them simply can’t afford to pay any more.

Mayoral Candidate Steve Adler Adds His Voice To The Call For Reform

I especially appreciate the comments that Steve Adler made on Monday in his handout to the packed crowd of frustrated homeowners at the Commissioners Court on Monday:

“Residential property owners are being unfairly burdened with property taxes. The city and local governments should have challenged the system years ago. There is nothing new about this problem and it is good to see Travis County considering action now.”

“Politicians should be honest when they talk to taxpayers about raising taxes, regardless of what they do with the tax rates. Taxpayers deserve truth in taxation.”

Mr. Adler’s characteristic breadth of scope in approaching complex issues will place him ahead of the pack when it comes to tackling property tax issues.  His experience working in the Legislature will help with respect to appraisal reform.  And he has made it clear in discussions with me that he would not tolerate the deceptive City Hall practice of hiding behind the tax rate during annual budget deliberations.  It was Steve Adler who brought to my attention the fact that the 7/10 of a cent tax rate reduction in the City Manager’s budget forecast actually adds up to a 5.5% tax increase.

I was reminded of John Kerry’s comment in his acceptance speech at the 2004 Democratic National Convention, “Imagine a President who believes in science!”  Well, how about this.  “Imagine a mayor who believes in truth in taxation!”

If This Is A Chess Game, What Is The Next Move?

By Bill Oakey – June 2, 2014

If you often feel like a pawn in somebody else’s chess game, you are not alone.

The Players are looking down at Us from their perches on the upper floors of the tall towers. Those towers are all over the country, and even in some places overseas.  They can see us on their super-HD computer screens.  I’m not talking about literally seeing us through the cameras on our computers.  I’m talking about the figurative representations of us.

They are the kings and the queens, the rooks and the knights.

We are the pawns.

The City of Austin is just one ledger on one page in their impressive portfolios.  Of course, there are more of these viewing stations in downtown Austin than there are in New York, California , and Dubai.  But the objective is the same.  Move the pieces on the chess board around.  And try to outwit the opponents.  Try to make as much money as they can as fast as they can.  If only those gosh darned pawns didn’t get in the way sometimes!  They could make even more money.

We are the little dots seen slogging through the crowded streets, trying to get to work, to the grocery store, or perhaps over to Barton Springs, if only we could find a parking place.  And then slogging back home again to get some rest.  Before getting into the game all over again the next morning.

The Players have to be pretty worried right now.  Our tax appraisals were not a pretty picture. The news media is telling them that we have been observed acting restless.  So, what does that mean?  What will They do if We fall victim to the simple laws of economics?  No amount of maneuvering on the chess board can change the fact that we only earn X amount of income.  We can only afford so much in taxes.  We can only afford to vote for X number of bond elections.

The economy is part of the game too, but it is a Silent Player.  Just like Mother Nature is silent. You can’t do anything about the weather.  And when the economic scales get tipped out of balance, it becomes a desperate race against time.

Can The Players find enough new pawns to replace the estimated 40 current pawns who are leaving Austin every day?  Can they build enough self-enclosed “apartment communities” where the lowest rent for a one bedroom apartment is $1,375 per month?  These places have secured club rooms, open terraces with views, green lighting, and DNA testing for dogs.  You read that right.  If you find dog poop on your doorstep, THEY know whose dog did it. They have everybody’s dog’s DNA.  (I’m not making this up!  I saw it last night).

They want you to sell your single-family house so they can scrape it off and add another “apartment community” to their portfolio.

But what will happen to Them if the economy and Mother Nature don’t cooperate?  They have to scrambling to find a solution to the drought problem.  (I have to wonder how They feel about the proposed 30% water rate increase, with a new “drought fee” added to it).

Reports keep popping up in the news, stating that too many of Us are have stagnant wages and we can’t keep up with the costs of living in Austin.  So, I will end with the same question that I started with.

If this is a chess game, what is the next move?

The Big Set Of Numbers That Don’t Add Up – City Projects 33.6% Property Tax Revenue Increase!

By Bill Oakey – May 19, 2014

The City of Austin has released a very strange set of numbers.  Maybe you can help me figure them out.  if it’s just me who’s crazy, then the rest of you can breathe easier and I’ll go find something else to do.

On April 24th, the City’s financial staff released a Five Year Financial Forecast for all City departments.  The strange phenomenon that I discovered involves the number of new employees projected to be added annually for each department.

Let’s Look at How the City Introduces the Numbers

Here is a brief introduction to the staffing projections, taken from Page 7 of the report:

Staffing Projections

“Staffing costs represent the single largest component of the City’s Budget, and an accurate projection of future staffing levels is essential to forecasting expenditure growth. This section details existing positions and projected changes in the City’s Financial Forecast. ”

My comment:  Take careful note of the portion that I underlined in the first sentence.  You will want to come back later and read it again.

Now Let’s Look at Their Description of the Numbers

From Page 7, Third Paragraph:

“Staffing projections for General Fund departments do not include any positions required to implement new programs or enhance service levels. However positions have been included to address service demands arising from newly annexed areas, a growing population, and the opening of new facilities.”

My comment:  Those sentences sound a little fuzzy.  But not nearly as fuzzy as the numbers.

Now Let’s Take a Look at the Numbers…Click each link below:

Five Year Staffing Projections – Page 8

Five Year Staffing Projections – Page 9

Here Comes the Brain-Twister…Do These Numbers Make Any Sense?

The following City departments are projected to see no change at all in staffing levels for six years in a row, including this year:

Animal Services, Fire (Non-Sworn), Health & Human Services, Parks & Recreation, Planning & Development Review…(Really?), Police (Non-Sworn), Austin Convention Center, Economic Development, Juvenile Case Manager Fund, Neighborhood Housing & Community Development, Parks & Recreation – Golf, Traffic Safety Fund

These City departments are projected to see no change in staffing levels over the five years from 2015 – 2019:

EMS (Non-Sworn), EMS (Sworn), Austin Transportation –  Parking Management, Austin Transportation – Transportation Fund, Aviation, Child Safety, Public Works – Capital Projects Management, Public Works – Transportation Fund. (Note: The last two departments each lose staff from 2014 to 2015)

Of course, there are several departments that are projected to see increased staffing levels. These include the new downtown library, police and fire, Austin Energy and the Water Utility. The Water Utility’s staffing numbers look pretty disturbing, considering the fact that Austinites have heeded the call for conservation and are using less water.  Even further usage reductions are forecast over the next five years.  And yet, the Water Utility plans to add 136.75 new positions, second only to the 187 for new police officers.  The forecast suggests that the drought will continue, but it blindly assumes that water restrictions will remain at Stage 2.  For an explanation of the projections for the Water Utility, see Pages 29 – 31 in the City report.

What’s the Bottom Line for You As a Taxpayer?

How About a 33.6% Increase in City Property Tax Revenue…

The official projections for tax, utility and fee increases do not look good.  On Page 17 of the report, you will see that home appraisals are forecast to increase by at least 5% each year.  You can see the ominous progression of increasing taxes here:

Five Years of Escalating Tax Increases

The most shocking thing about this chart is that it shows Austin’s total property tax revenue increasing a staggering 33.6%, from $355.3 million to $474.8 million!  The tax rate, which would cost you more even if it stayed the same, is projected to steadily increase. Then you have to pile on utility rate increases, a parade of add-on fee increases, and all the other area taxes that you pay.  As scary as that sounds, the stark reality is probably much worse.  If anyone believes the projections that all those City staff positions will remain flat for five to six consecutive years, can we talk about that bridge that I have for sale?

The best solution to this strange conundrum of numbers that don’t look reliable is to work with our new City Council candidates and ask them to commit to much better transparency and accountability in the whole process of budget, planning, audit and finance.  The oversight role of the City Council and their authority over the budget is crucial.

Beyond that, the current City Council should take a good hard look at whether they should continue to rely on the current City Manager, or send him on his way and appoint an interim manager to take his place.  A six month internal transition before the new City Council takes office might be the best first step to getting the City’s fiscal house in order.