Is the new city of Austin budget sustainable, affordable?

FILE - Austin skyline (KXAN Photo/Frank Martinez)
FILE - Austin skyline (KXAN Photo/Frank Martinez)

AUSTIN (KXAN) — Austin City Council passed a new budget Wednesday, raised some of the taxes Austin residents will be paying and placed funds behind new community services.

For the average taxpayer, Mayor Steve Adler noted that total fees and expenses will go up a little over $12 each month. He added that many of the fees you see on your utility bill will not change at all.

The budget approved a 7.9 percent increase in the tax rate. If the council had increased the tax rate to anything greater than 8 percent, it would have allowed voters to challenge it.

The property tax rate within the new budget is 44.48 cents per $100 of property valuation, the city said in a statement.

With the rate of 44.48, the city tax bill for the projected median-priced non-senior home with a standard homestead exemption is estimated to be $1,250 per year or $104.18 per month, the city said, representing a $9.77 approximate increase per month over the FY17 property tax bill for the owner of a median-priced home, estimated at $305,510 in fiscal year 2018.

Mayor Adler said he is proud of the budget the city came up with and feels that overall it addresses the deeper issues which can make Austin unaffordable. He noted that this budget makes allocations to services for school children, tax relief, workforce development and support for low wage workers.

“Even with this, property taxes are going up and everyone feels it in the community,” Adler said.

“But everyone needs to know that over a thousand dollars of that is the state increase of its property tax, it’s the money that they’re levying through the school districts that then goes to the state, because of the broken school finance system that doesn’t come back to the city in the way that it should in an equitable way,” he added.

Alder noted that over 75 percent of the property tax increase that people felt in the Austin community last year came from an increase in the state property tax.

Mayor Adler acknowledged that Austin is experiencing an affordability crisis which is pushing some residents and communities out.

Homeowners in the South Lamar Boulevard and Manchaca Road neighborhoods told KXAN about how dramatically their home valuations had increased over the past few decades, with some growing five times larger over 20 years. Some residents there said that property taxes were forcing them to consider cashing out and moving out.

Council Member Jimmy Flannigan, who represents District 6, was one of the three council members who voted against the budget. He explained that affordability is more complicated than any one number, noting that the chunk of taxes which go to school districts make up more than half of what Austin taxpayers pay.

But he said property values and taxes don’t show the complete picture either, noting that a majority of people in his district are renters.

His greatest concern with the budget was the lack of funding the budget placed in the reserves.

“Instability in our national political environment is going to lead to dramatic cuts to federal programs. Our community in Austin will demand that the city make up that difference,” Flannigan said. “We need to have replenished our reserves so that we can be prepared for the outcome of this instability and strife. And we did not do that, in fact we reduced our reserves below the fiscal minimums defined by our staff.”

Flannigan calls the budget unsustainable, he explained that the city’s financial staff advises having a minimum of 12 reserves, the budget they approved last night dips below that minimum.

Mayor Adler noted that it is possible that the council would increase the reserve levels during mid-year budget amendments.

Flannigan said the council still has more budget-related discussions ahead, including ironing out police, fire and EMS contracts as well as continuing conversations over the Hotel Occupancy Tax.

He is not sure how much the new budget will impact affordability in Austin and thinks conversations about Code NEXT will have a greater impact.

“There are a lot of decisions we make at City Hall when it comes to affordability, it is not just about the tax rate, I don’t think we made a good decision this week but I’m gonna keep fighting to make better decisions in the future,” Flannigan said.

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