Council OKs raising property tax, adding funds for homeless services in new $5.9 billion budget

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Austin taxpayers will see an increase in their property tax bills next year, but not so much that it will require their approval.

Taxpayers will be charged $0.4776 per $100 taxable value, with a homestead exemption of $154,000 for homeowners 65 years of age and older. Child care facilities will also be exempt from city property taxes. According to a city news release, “The typical Austin homeowner will see an increase of $15.67 per month, or $188.02 per year, in the City’s portion of their annual property tax bill. The City’s rates and fees, including for electricity, trash service, water, drainage, and the transportation user fee, will rise in response to escalating operations costs, as well as increasing service demands from a growing population. The increase for the typical Austin tax- and ratepayer is $30.16 per month, or $361.92 per year.”

Under state law, the city may not raise property taxes by more than 3.5 percent per year. This budget hit that mark. Both the Travis County Commissioners Court and the Austin ISD Board of Trustees have scheduled tax rate elections in order to fund their needs. Some, but not many, of those addressing City Council on Wednesday said they wished that they could vote to raise taxes. Most simply offered their advice on how to spend the city’s tax dollars. A few asked that Council not raise taxes at all.

Although the majority of Council members offered amendments to pay for new items or to make improvements to current programs, most of the budget was as proposed by the city’s financial staff. The only issue that Council members disagreed about was how much the city should keep in its reserve fund for a rainy day. Council Member Ryan Alter proposed lowering the city’s reserve level to 16.7 percent, or about $4 million on a budget of $5.9 billion. The policy is to keep that reserve at 17 percent.

After approving the base budget, Alter proposed adding a variety of programs that will cost the city $4 million. That includes a cadet class of firefighters at a cost of $875,000; increasing funds for homelessness prevention by $1 million; another $300,000 for families experiencing homelessness; $400,000 to provide logistical support for women seeking abortions, which Council Member Vanessa Fuentes sponsored; funding for José Velásquez’s substance abuse continuum of care proposal at $140,000; and close to $200,000 for early childhood social service contract adjustments as proposed by Fuentes. Alter also proposed expanding the mobile crisis outreach team to 24/7 at a cost of $1.46 million, and $105,000 for a communications specialist for EMS as proposed by Velásquez.

Mayor Pro Tem Leslie Pool moved to amend Ryan Alter’s motion to increase the reserve to 17 percent, but Alter said the motion was not appropriate under Robert’s Rules of Order. Mayor Kirk Watson ruled in his favor. Council Member Alison Alter then made a motion to divide the question. But Fuentes asked whether they should vote on dividing the question, which they did.

There were only four votes in favor of the motion to consider dividing the question, which was effectively a vote against considering Ryan Alter’s proposal to reduce the reserve funding separately from the items he proposed to add to the budget. Those in favor of the motion to divide were Pool, Watson, and Council members Alison Alter and Paige Ellis. The amendments were ultimately approved by the rest of Council.

Council Member Mackenzie Kelly voted against adoption of the budget, but did not object to Ryan Alter’s amendments. She had proposed many reductions to the city’s budget to keep the tax rate the same as it has been this year. However, she thanked Watson for supporting a budget amendment to add funding for cemetery upkeep.

Although a variety of Council members expressed their satisfaction with the budget, Pool and Alison Alter each said they were concerned about spending the $4 million that could have gone into the reserve fund.

Alison Alter said, “I have no problem with all the things people want to invest in,” but warned her colleagues that proponents of all the things that they funded this year will come back next year and ask for more money. She also cautioned that sales taxes are much lower than the city had earlier anticipated and that could cause problems later. She said all of the items being funded were “worthy elements, but it is a slippery slope here and we have to be mindful of that.”

Ellis expressed concern about not having dollars in reserve to tap into when the city needs them. She said she worries about wildfire risks, flooding and weather events like the ice storm of 2023. She said the Federal Emergency Management Agency will help with some expenses but not all. She said she was also worried about the budget becoming “out of balance, which affects our ability to issue bonds.”

Pool said, “I too am very concerned about where we’re heading,” warning that the 3.5 percent revenue cap will be even more difficult to deal with in the future.

“I pray we get back to respecting our fiscal policy,” said Pool.

Pool and Alison Alter will be leaving the dais at the end of the year.

Fuentes told her colleagues she was not concerned about the slight reduction in the reserve.

“It was just a little over a year ago when we had a 14 percent reserve,” she said. She praised her colleagues, saying that they had done a good job. She said she was proud of the cost-of-living increase for city employees, for adding to the budgets of the Fire Department and EMS. She closed by noting that they were not changing the policy of keeping 17 percent of funds in reserve.