At Every Turn, Austin Officials Look to Raise Taxes

First, local officials were rumored to be considering raising taxes by 8% in the next fiscal year, using the statewide disaster declaration as its excuse. And now, in the same year as a global pandemic and resulting economic turmoil, the Austin City Council wants to increase property taxes by hundreds of dollars a year to pay for light rails, a downtown rail tunnel, and other infrastructure projects.

Both are at odds with the direction of state leadership. “Property owners shouldn’t be saddled with rising property taxes while dealing with a pandemic,” said Gov. Greg Abbott. “…local governments, who set property tax rates, should find ways to reduce the tax burden on Texans. Whether we’re facing times of challenge or times of prosperity—raising taxes on the people of Texas is never the answer.”

Despite this, Austin City Council voted unanimously in favor of a $7.1 billion funding plan for the first phase of Capital Metro’s Project Connect on Monday. The proposed public transit package includes an additional $300 million for “Transit Supportive Investments,” or anti-displacement measures. Capital Metro reduced their original proposal of $10 billion to $7.1, ostensibly in an effort to reduce the financial burden on taxpayers.

Despite the reduction in scope and budget, the Project Connect proposal will still add significant burden to already overwhelmed local property owners. While around 45% of Project Connect will potentially be funded by the federal government, $3.85 billion will need to be funded locally. This large sum will come, in part, from property taxes.

For the average Austin-area homeowner, that means absorbing a large tax increase. An Austin homeowner with a house valued at $325,000 will pay $276 more per year to fund this plan.

Austin taxpayers rejected a similar scheme in 2014 when they overwhelmingly voted against a much less expensive $1 billion plan to build a light rail in the city. Yet, local government officials believe that the tide of public opinion has shifted this year and that, despite the enormous economic struggles most Texans are facing,this time will be different.

But in truth, the same challenges still exist.

Texas Public Policy Foundation released a report in 2015 that demonstrated how increases in property taxes disproportionately affect the working poor. Property taxes, which are assessed on an arbitrary determination of value on a given year, are inequitable and negatively impact the working poor. Those who work minimum wage jobs see their tax expenses increase with no resulting increase in income. Increases in the average appraisal value and tax rate in Austin hurts those living on fixed incomes, the working poor and the elderly, as property taxes rise from factors out of their control.

“Increases in property taxes disproportionately affect the working poor.”

And rise, they do. From 2015 to 2020, the average Travis County homeowner’s tax bill rose by 54% while the city’s contribution rose by 44.2%. Those living in areas with skyrocketing property taxes are forced to either lower their housing costs by living in smaller houses, increase the portion of their incomes allocated to housing by a significant percentage, or leave the area altogether and drive further to work or school.

Austinites should be given the freedom and opportunity to allocate their income as they see fit. By having more disposable income, property owners can decide how they want to reinvest in the local economy, either by spending their money on local businesses or investing in a business venture. It’s imperative Texans are given the freedom to own their own property instead of renting it indefinitely from the government.

For traffic mitigation projects, local officials need to explore all alternatives to raising taxes, like reprioritizing the $4.2 billion Austin already spends annually. Simply put, the knee-jerk reaction for most government initiatives is to raise taxes; we need to slam the brakes on that.

Austinites should be prepared to place pressure on local officials to reduce government spending. And the opportunity to do so is fast approaching. On Aug. 12, the full budget and tax rate will be up for a vote and on Nov. 3, voters will have to decide if they want their city to adopt a higher tax rate to fund the first phase of Project Connect.

There is no excuse to raise taxes today. The economy can’t support it and the infrastructure projects don’t justify it.