AUSTIN (KXAN) — The clock is ticking for the city of Austin to set the upcoming budget. One idea could help out the Austin Independent School District keep more money, rather than send it to the state, but not everyone’s on board. At least not yet.
It has to do with what’s called a tax swap. As just about everyone knows, the housing boom has led to higher property values and people paying higher property taxes. Under the current school financing system, a large chunk of the money is paid to the state.
The state then divides it up among poorer school districts. Under the tax swap, the city of Austin could pay for some of AISD’s services and programs. In return, the school district would lower its tax rate to avoid more money going to the state. The goal is to lower property taxes and keep the money in Austin.
But we’ve learned that roughly 25 percent of homeowners living in the city limits but outside of AISD would be left paying more.
“My taxes in ’87 were about $700 for the year. And this year they’re going on $3,700,” homeowner Linda Lombard told KXAN. She lives in the city limits but within the boundaries of Pflugerville ISD.
Under any of version of a tax swap currently proposed, she and others outside of AISD would pay more in property taxes. Under one of the proposed scenarios, a typical AISD homeowner would save $8.33. Anyone outside AISD would pay $44.97 more.
Mayor Steve Adler says there would need to be a community benefit to those living outside of AISD to make it fair.
“We could equalize those things and say, for example, the residents in Del Valle could get over $1 million a year out of a tax swap equalization that they could spend for a clinic in Del Valle, toward a clinic, or for different programs,” Adler explained. “But all of the areas of the city that have a district other than the Austin Independent School District would get a return of benefit that was at least equal to the change in taxes they would see – but in most cases a several fold return.”
It’s just not clear right now what that would be.
“I’m not real excited about the idea of raising my taxes with no proof of what we get out of it,” Lombard said.
Adler admits a tax swap may not be possible this budget cycle, but it’s important to have the conversation.
“Even if all we’re doing is starting a conversation that now will continue for the year now that we have details that we can work through, that’s OK with me,” he said. “I just think it’s important for us as elected leaders to be doing everything that we can to think outside the box, to come up with as many new and different ideas as we can and open it up for community conversation.”
The mayor told KXAN he won’t support a tax swap unless there is property tax relief, AISD schools get more money, seniors get an expanded homestead exemption and taxpayers in other school districts get a fair and equitable deal.
“I think it’s a good idea to explore all options. I don’t see a problem with that at all. But it’s when you start involving people outside of the area that that might be a problem. It’s going to raise a lot of eyebrows,” Lombard said.
In a statement, Superintendent Paul Cruz told KXAN, “Austin ISD is always looking for ways to offset our recapture payments, which will exceed $533 million this year, and find relief for our taxpayers. We appreciate the city of Austin in its efforts to come up with unique solutions to address taxpayer issues in Austin. We will continue working with the city and other stakeholders to make meaningful progress in regard to recapture.”
A public hearing on the proposed tax rate was held Thursday. The second is scheduled during the Aug. 31 city council meeting.
If city council approves a 13.2 percent property tax increase as part of a tax swap, 2 cents higher than the rollback tax, voters may petition for an election.