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.
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

Neil Vickers, ACC executive vice president
Austin Community College approves $416.11 million budget for FY 2020-21, defers salary increases

The budget does not include staff raises, but raises will be re-evaluated in the fall.

Travis County is approaching Stage 5 risk with 69 new hospitalizations July 6. (Community Impact staff)
Travis County reports 7 new coronavirus deaths July 6

Travis County is appoaching Stage 5 risk with 69 new hospitalizations July 6 and 64.6 per day this past week.

A photo of two women walking on a trail
Travis County reopens some parks after holiday weekend, warns more closures could come

Seventeen Travis County parks will reopen following Fourth of July weekend closures.

Austin Community College President and CEO Richard Rhodes
Austin Community College resumes some in-person classes July 6

The district is continuing to offer most classes online, but some classes have resumed in-person activities.

Pharmacist Emily Smith opens a cooler for a patient to place their self-swab coronavirus test at a Walmart drive-thru testing site in McKinney on June 29. (Shelby Tauber/The Texas Tribune)
Poll says Texans' hopes for quick return to pre-coronavirus life are fading

Texans remain focused on the coronavirus pandemic and are less optimistic about returning the state to normal quickly, according to polling by the Texas Politics Project at the University of Texas.

Texas Agriculture Commissioner Sid Miller recently backed a movement calling for the reopening of winery and distillery tasting rooms and brewery and brewpub taprooms. (Courtesy Adobe Stock)
Texas Agriculture Commissioner joins voices calling for reopening of tasting rooms, taprooms

In a letter to Texas Gov. Greg Abbott, Agriculture Commissioner Sid Miller said demand from distilleries and breweries provides an important revenue stream to the state's farmers.

Volunteers help load food at an event hosted by the Central Texas Food Bank at Del Valle High School in April. (Courtesy Central Texas Food Bank)
Central Texas Food bank announces four drives in July

Families in need can pick up free produce, milk, protein and shelf-stable items, as available, on four dates.

Travis County added 670 new coronavirus cases July 4-5.
Austin metro COVID-19 hospitalizations rise to 446 after holiday weekend

Travis County added 670 new coronavirus cases July 4-5.

The project is one of six that Travis County Commissioners Court on June 30 approved bond funding to support. (Community Impact Newspaper Staff)
Cascades at Onion Creek Apartments to bring affordable housing to South Austin

The development, partially financed by Travis County multifamily housing revenue bonds, will have over 200 income-restricted units.

Overall in Travis County there has been a total of 10,695 cases since mid-March.. (Community Impact Newspaper staff)
Travis County adds 571 COVID-19 cases; new restriction put in place ahead of holiday weekend

Overall in Travis County there has been a total of 10,695 cases since mid-March.

The First Street Foundation's dataset includes a forecast models that anticipate the effects of climate change and sea level rise. (Screenshot via First Street Foundation)
Analysis: FEMA may be undercounting national total flood risk by as much as 70%

The new dataset includes an interactive Flood Factor dashboard that anyone can use to assess the risk of flooding over a 30-year period for any address.