Warning signals about the state’s plans to significantly tighten the cap on how much cities can collect in property taxes year-over-year have flashed from local leaders since the idea first grew legs—and then died—during the 2017 legislative session.
However, on April 15, the Texas Senate approved tightening the cap from the current 8% to 3.5% and sent the proposal to the state House of Representatives. That set off alarms in many cities where officials view the cap as a critical hit to operational and quality of life services.
Austin Mayor Steve Adler, who has lambasted the property tax caps for more than two years, invoked Victorian era author Charles Dickens to contrast the “large and immediate” threat of the bill against the city’s potential in what Adler referred to as its “Golden Moment.”
“We are truly in the best of times; one of the things that’s going right is that our success puts us in the position to actually address in real ways the challenges we face with affordability, mobility and equity,” Adler said. “Unless, of course, state government is successful in upending our success. In my 40 years in Austin, our city and Texas’ cities have never been so aggressively under attack by the state. In that regard we are in the worst of times as well.”
Adler’s April 17 speech closely mirrored his 2018 address as he laid out Austin’s most pressing internal issues of affordability, mobility, equity and homelessness, and the city’s efforts and progress in addressing them. Then the speech turned reminiscent of his 2017 talk. The mayor pushed back against the state Legislature’s efforts to weaken local control—Texas cities’ ability to govern themselves—through capping property tax revenues and undoing city ordinances aimed at paid sick leave, LGBTQ equality, short-term rentals and environmental protection.
The best of times
Affordability and mobility have been the city’s most pressing issues for years. They are often attributed as growing pains, as Austin continues to evolve from a once sleepy college town to the major U.S. city it is today. Meeting those changes have been challenging for Austin, Adler said.
“Everyone supports change until change starts happening,” Adler said. “We need to be comfortable with change. We need to change to protect what’s always been special about the spirit and soul of this city.”
Adler restated his commitment to completing a land development code rewrite in 2019, something the city has been working toward since 2012. He also highlighted the city’s pledge to build 135,000 new housing units by 2025, 60,000 of which will be affordable for the lowest income brackets. The pledge will get help from the $250 million affordable housing bond passed by Austin voters in November.
Efforts to solve mobility issues in Austin took a significant step earlier this month, after City Council approved its strategic mobility plan, which takes a high-level look at mobility and transit over the next 20 to 40 years. The city is also gearing up to bring a 2020 bond package to voters to fund a high-capacity transit system.
“Imagine a dedicated lane taking transit from up north along Lamar all the way south, across the river, down Congress Avenue to the city line. And from the airport, down Riverside, and then across the river traveling north through the UT campus and up to the ACC Highland Mall,” Adler said. “We need to think big. We need to get this done. Truly transformative.”
Adler reaffirmed the goal is to improve transit without losing any car lanes throughout the city.
Homelessness grew in Austin by 5% last year, for the second consecutive year. Adler talked about the city’s adoption of an action plan to end homelessness, public-private partnerships to fund services and a potential $10 million per year revenue stream for homelessness services through a convention center expansion.
Adler said the city’s rare position to make meaningful progress over the next couple years on these issues places the city in the “best of times.”
The worst of times
But Adler said the city, and its ability to govern itself, was under attack once again by the state Legislature’s efforts to overrule city ordinances that require businesses to provide paid sick leave, stop LGBTQ discrimination and place restrictions on short-term rentals.
He condemned the state’s progress on moving forward with a bill that would limit Texas cities from collecting more than 2.5% or 3.5% more in property tax revenues each year without voter approval. The current cap is 8%. Adler said the change would “cost us millions and save us pennies,” and “unnecessarily create a crisis.”
A 2.5% cap would create a budget shortfall of $51.7 million for the city while saving the typical taxpayer less than $3 per month. The proposal would also fail to cover standard increases in the cost of doing business, such as health insurance and pay raises for city employees. Adler said the city currently spends two-thirds of its general fund budget—the budget funded by property tax revenues—on public safety. It would be “impossible” to make the cuts required under a 2.5% cap without impacting public safety, he said.
“People are not telling you the truth when they tell you that these bills would not require budget cuts to existing budgets,” Adler said. “it’s hard to understand why there is such an assault on cities that are doing their best to be strong components of the Texas economy.”
Adler blamed politics and called out Gov. Greg Abbott, Lt. Gov. Dan Patrick and House Speaker Dennis Bonnen for failing to work across the aisle and across jurisdictions.
“Austin is doing so well, and we are poised to do great and big things,” Adler said. “It breaks my heart that the largest, looming risk we face is our own state government. It’s a self-imposed and manufactured threat.”
