What's happening
Under state law, Texas cities can only increase their tax revenue from the same properties by 3.5% year over year without seeking voter approval. Austin City Council passed a $6.34 billion fiscal year 2025-26 budget backed by a higher tax rate that goes beyond that limit, requiring a local tax rate election, or TRE.
If voters support Proposition Q, Austin's budget and tax rate of $0.574017 per $100 of property value will stand. If it's rejected, the council will have to finalize a reduced budget with the lower tax rate of $0.524017 per $100 valuation—the highest allowed under the voter-approval cap—and will have discretion over which spending items to cut "as it determines necessary." Either way, the rate will rise from last year's $0.4776 per $100 valuation.
Austin's FY 2025-26 budget includes nearly $110 million in additional revenue supported by the TRE onto City Manager T.C. Broadnax's original balanced budget outline presented in the summer.
During their two-day budget approval in August, council members their priorities and other funding requested by the community. Those additions were led by tens of millions of dollars for homelessness response, based on an investment plan released by Austin Homeless Strategies and Operations this spring. Millions more were dedicated to parkland improvements and climate initiatives, public health and safety, housing efforts, and city employee benefits.
A breakdown of many programs that'd be supported by Proposition Q is available here and can be viewed below. However, the city can't detail all spending that'd take place under the revenue increase.
The city hasn't responded to multiple questions about how all of the nearly $110 million in TRE revenue would be used within the 13-department general fund. In response to a public information request for any accounting of that additional spending, the city referred back to Austin's Proposition Q informational website and approved FY 2025-26 budget document.
"There are no specific projects that the TRE money is set aside for; the revenue will go toward the general fund," a response to the information request stated.
Put in perspective
Multiple groups are campaigning ahead of November, including two local political action committees, or PACs, in favor of Proposition Q and two against. Those organizations are ramping up their activity after raising tens of thousands of dollars through the summer and early fall. Final reports on their finances before Election Day are due Oct. 27.
Donors to efforts supporting the TRE include Mayor Kirk Watson and two other council members, several housing and homelessness nonprofits, and labor unions for government employees and city medics. A coalition of advocacy groups and other entities including VOCAL-TX, Public Citizen and the Austin Area Urban League are rallying for the proposition, citing the need to support public services amid state and federal funding cuts.
PAC funding against Proposition Q has come from hundreds of individuals and a handful of local companies. Additionally, a coalition of area business groups including the Austin Chamber, Opportunity Austin, Real Estate Council of Austin, Austin Regional Manufacturers Association are stating their opposition to the tax hike due to affordability impacts.
