The Austin city council looks like it will put a massive $925 million bond package in front of voters in November which would be “the largest in Austin’s history.” If approved, the near-billion dollar proposal would raise the city’s property tax rate by another 2 cents per $100 of value, further putting the squeeze on struggling families and businesses.
The irony is that while city council claims this proposal would help boost the stock of affordable housing units, it does so at the expense of everyone else and exacerbates an already-pronounced affordability crisis.
The El Paso Apartment Association recently came out against the City of El Paso raising its property tax for some of the very reasons that the City of Austin is proposing. The association warned that the proposed property tax increase, which would make El Paso the most expensive property taxed city in the State, would adversely impact not only homeowners but also renters in the form of higher prices. This further underscores that repeated property tax increases would only add to the stress on the housing market leading to a decrease affordable housing.
It’s thought that passage of the bond would result in an annual property tax increase of $61, which would add to an already significant tax burden. For fiscal year 2019, it’s estimated that the average homeowner will pay $1,311.68 in city taxes (see Taxpayer Impact Statement for more).
Of course, the reason that the city must raise taxes is to pay for the increased debt—which will add to an already substantial existing debt load. According to the Texas Bond Review Board, the city of Austin’s local debt service outstanding totals a staggering $9.8 billion, or roughly $10,300 owed per Austinite. Relatedly, taxpayers are already on the hook in a big way for debts owed by Travis County and Austin ISD which total $863.5 million and $1.4 billion, respectively.
Such elevated levels of government debt could eventually lead to a fiscal crisis down the road. That’s one of the reasons why conservatives have been so vocal about calling for various local government debt reforms. While certain projects ultimately do require government spending, the rate at which cities, like Austin, are accumulating debt is unsustainable.
Another problem with Austin’s proposal is how most, if not all, of its recent bond issuances have centered on the same themes: affordable housing, transportation, public safety, cultural centers, etc. While there may indeed be needs in these areas, the question becomes: have the problems been resolved with the substantial taxpayer resources provided? One could well argue that the level of progress in these areas does not match the level of debt incurred.
The fact is that cities need to do a better job working within their existing budgets to solve problems and avoid going into massive debt. Austin only invites more taxes and greater affordability problems by heading in its current course.