Layoffs, economic development deal cancellations on table in Austin if state tax reform proposals become law

The 86th session of the Texas Legislature convened Jan. 8.

The 86th session of the Texas Legislature convened Jan. 8.

Local leaders say city personnel, economic development incentive deals, labor contracts and service programs are all at stake should the property tax revenue cap bills proposed by the Texas Legislature last week gain traction.

After a failed attempt to pass similar laws in 2017, the Texas House and Senate introduced tax reform bills on Jan. 31 that would restrict cities like Austin—those which collect more that $15 million in annual property tax revenue—from increasing property tax rates that fund city operations by more than 2.5 percent without voter approval.

The property tax revenue cap for taxing entities currently stands at 8 percent. With the exception of last year, Austin City Council has increased city taxes by or near the legal maximum—between 7 and 8 percent—each year since the new 10-1 council took over in 2015.

A 2.5 percent cap would result in a $51.7 million budget deficit within the next three years, according to city budget numbers. With so much money at stake, City Council members warned Tuesday of dire consequences should the state cap their ability to raise taxes.

District 4 Council Member Greg Casar called it the worst information for city leaders to receive, as they will be forced to have conversations over which staff to lay off, which fire stations to staff or not staff and which libraries to consolidate.

“There is just no way we can help the people … we want to help,” Casar said. “[Instead] we’ll be talking about how to mitigate hurt. Given that the legislature is more concerned with forcing austerity on people rather than helping them, we have to start preparing for that potential.”

District 10 Council Member Alison Alter said it’s likely the city would not have a choice but to lay off some city staff.

“A huge portion of our budget is spent on personnel and there’s just is only so much room to maneuver,” Alter said. “There are a lot of things where we really don’t have a choice if we want to provide the safety that we deserve.”

District 3 Council Member Pio Renteria floated the idea of backing out of some economic incentives and tax abatement deals the city has with corporations in town, such as the Domain developers, to which the city owes $22.8 million over the next four years. Renteria said he wants state legislators to know how much the city is giving corporations in order to let businesses thrive.

“If the state is going to come after us we might have to pull back on some of these tax credits we offer to businesses,” Renteria said. “I want to make sure we’re able to recover a lot of these resources we [might otherwise] do without.”

Austin currently has eight active tax incentive agreements with companies worth roughly $127.2 million. The city still owes $33.1 million in these agreements, according to city data.
SHARE THIS STORY
By Christopher Neely

Christopher Neely is Community Impact's Austin City Hall reporter. A New Jersey native, Christopher moved to Austin in 2016 following two years of community reporting along the Jersey Shore. His bylines have appeared in the Los Angeles Times, Baltimore Su


MOST RECENT

Early voting for the March 3 primary elections began Feb. 18. (Community Impact Newspaper)
Southwest Austin 2020 Primary Election Guide

Find out which candidates will be on Southwest Austin ballots.

State Sen. Kirk Watson announced his resignation from state government Feb. 18. A number of local politicians have expressed interest in the seat.
Who is interested in Kirk Watson’s Senate seat? Here is where local members of the state House stand

State Reps. Gina Hinojosa and Eddie Rodriguez say they are "seriously considering" a run for the District 14 seat.

Austin ISD Superintendent Paul Cruz addresses the media on Feb. 20 after announcing plans to resign.
Outgoing Superintendent Paul Cruz says 'work will continue' in Austin ISD as transition plan is developed

A timeline for Cruz's departure has not yet been established by Austin ISD.

Austin taps downtown homeless shelter operator to expand permanent supportive housing program

Experts hold up permanent supportive housing as crucial to ending chronic homelessness.

Gold's Gym now open on South Congress near Slaughter Lane

Gold's Gym opened its new South Austin location in late January.

Dimassi’s Mediterranean Buffet now open on Stassney Lane

The Texas restaurant chain offers a lunch and dinner buffet.

54th Street Grill is expected to open a South Austin location in 2021. (Courtesy 54th Street Grill)
54th Street Grill planning South Austin location

54th Street Grill will open a South Austin location in 2021.

A photo of young adults creating artwork.
Cordovan Art School & Pottery Parlor to open new location in Southwest Austin

The new art school will open on West Hwy. 290 on March 1.

Velocity Credit Union will break ground on a Dripping Springs location this year

Construction will begin on a new Velocity Credit Union branch this summer.

Fight over sales market data means Travis County home appraisals will not change this year, area schools may suffer

Travis Central Appraisal District will not appraise residential properties this year following a cease-and-desist order from the Austin Board of Realtors prohibiting use of its sales price data.

Austin ISD Superintendent Paul Cruz announced his resignation on Feb. 19. (Nicholas Cicale/Community Impact Newspaper)
Paul Cruz to resign as Austin ISD superintendent to take job with University of Texas

Austin ISD Superintendent Paul Cruz will resign and accepted a position with the University of Texas.

Back to top