There may be no more ironically named governmental body than the Austin Regional Affordability Committee. In its most recent meeting, the committee heard testimony about how awful it would be for the city of Austin if the Legislature were to limit its ability to raise taxes excessively — not lower them, mind you, but merely slow the rate of increase, unless voters say otherwise.
As the Austin Monitor reported, “Deputy Chief Financial Officer Ed Van Eenoo told committee members that a 4 percent cap proposed in the 2017 Legislature would have resulted in a $45 million decrease in city revenue.”
That’s misleading, but more on that in a moment.
What the committee doesn’t seem worried about are the affordability problems created by huge annual tax increases year after year. People are being taxed out of their cities, out of their homes, and out of their businesses.
In the latest high-profile example, Threadgill’s World Headquarters had to close its downtown Austin location. The owner, Eddie Wilson, was blunt about the reason why.
“Flummoxed and bludgeoned by property tax increases, the grim truth is that we can’t afford it on the slim margins you make on meatloaf and chicken-fried steak,” said Wilson.
It’s not just an Austin problem either. Throughout the state, property taxes are crushing small businesses, middle-class families and elderly Texans.
In 2016, property taxes levied statewide grew to $56.1 billion. That’s a burden so large that the taxman effectively took $2,000 from every man, woman and child in the Lone Star State or $8,000 from a family of four.
And that burden is only growing.
In 2011, property tax levies totaled a more modest $40.5 billion, meaning that from 2011 to 2016, the overall tax burden grew by $15.6 billion or by about 40 percent. That’s a sharp increase, especially compared to population and inflation, which grew a combined 16 percent.
What we forget is that the power to tax is the power to take. When Texans can’t pay their skyrocketing tax bills, their property is seized and sold off. It happens all the time.
One partial solution is for lawmakers to create a property tax trigger.
A trigger would require local officials to get voter approval before raising taxes too much in any one year.
And that’s where Austin’s deputy chief financial officer gets it wrong. If the Legislature had enacted that bill, the city of Austin wouldn’t have had to forego that $45 million in new revenue; it simply would have had to make its case to voters, and convince them it needed the additional funds.
In more technical terms, a property tax trigger would reduce the rollback tax rate (to 4 percent in the legislation proposed in 2017 or preferably to 2.5 percent or less in legislation coming next year), and require an automatic election if a city, county, or school district wanted more.
This would do three things; it would get rid of a clunky petition process and replace with a better system; give voters a more prominent seat at the table; and force government officials to ensure they’re spending money wisely or risk telling voters they need more.
Any person or committee truly interested in tackling the state’s brewing affordability crisis should be enthusiastic about getting this done next session.
Quintero leads the Think Local Liberty project at the Texas Public Policy Foundation. He may be reached at [email protected].