The Texas House of Representatives was scheduled to consider a bill April 11 long feared by leaders in cities across the state: lowering the ability of cities to increase their year-over-year property tax revenues from 8% down to 2.5%.
In Austin, this would mean a budget shortfall of $51.7 million and a monthly tax savings of a little more than $2 per month for the typical homeowner, Mayor Steve Adler said in an impassioned monologue at the April 11 Austin City Council meeting, decrying the proposed tax cap.
“This is an attack on cities, and I don’t understand it,” Adler told the audience inside City Council chambers, whom District 6 Council Member Jimmy Flannigan asked to remain in the room while the mayor and City Council members took turns speaking about the bill following the passage of the consent agenda. “Cities are the economic engines of our state, the innovation incubators of our state. We are doing something right. I don’t understand this attack on cities.”
City Council unanimously supported a resolution to officially oppose the tax bill. Mayor Pro Tem Delia Garza said the sacrifice to quality of life in Austin tied to such a budget shortfall—between the likely cuts to parks and recreation, public safety, and health and human services—was not worth the money back to taxpayers, which she amounted to a cup of coffee per month.
Garza said the cap would put Texas cities at the “brink of a crisis.” Austin’s Deputy Budget Officer Ed Van Eenoo has told City Council in the past that increasing property tax revenue by just 2.5% each year would not only prohibit the city from funding new programs, but also fail to cover the annual cost increases to existing city functions, such as health insurance and pay raises for existing city of Austin employees.
The bill would do little to provide tax relief, said District 5 Council Member Ann Kitchen, who also said if the state were truly concerned about tax relief, legislators would give cities the tools to enhance senior and homestead exemptions—tax relief strategies that could be negatively impacted by the property tax cap. Instead, Kitchen said, the state has only provided “blunt tools” to its localities.
The city’s recent commitment to hire more police officers, uphold the terms of the new police contract and build the five necessary stations in underserved areas on the outskirts of town could also be impacted. Adler pleaded with state legislators to, in the event of passing the 2.5% cap, create an exemption for public safety and road infrastructure budgets.
Flannigan said opposition to the tax cap has become a bipartisan position for local leaders throughout Texas.
Since the 10-1 City Council came into power in 2015, the annual increases in property tax revenue have floated between the maxed-out 8% and about 5.5%.