TAX IN­CREASE PRO­POSAL DRAWS SHARP WORDS

Draft bud­get calls for 8 per­cent in­crease in prop­erty tax rev­enue, some higher city fees.

Austin American-Statesman - - FRONT PAGE - By El­iz­a­beth Fin­dell efind­ell@states­man.com

The roll­out of Austin’s pro­posed 2018 bud­get de­volved into a de­bate Wed­nes­day over the state’s han­dling of school fi­nance as City Coun­cil mem­bers face a tight spend­ing plan with lit­tle wig­gle room for new ini­tia­tives.

The staff-pro­posed bud­get draft in­cludes an 8 per­cent in­crease in prop­erty tax rev­enue, the max­i­mum al­lowed with­out po­ten­tially trig­ger­ing a roll­back elec­tion. That hike would add $118 to the an­nual bill of a house worth $305,510, the me­dian for the area. With in­creases to garbage, anti-lit­ter­ing and Austin En­ergy costs, the av­er­age home­owner would pay $178 to­tal in ex­tra fees and taxes next year.

Un­like the past two years, this bud­get brings no in­crease in the city’s home­stead ex­emp­tion, which cur­rently knocks 8 per­cent off a home’s value for the pur­poses of tax­a­tion.

The pro­posed bud­get in­cludes a $1 bil­lion gen­eral fund and $3.9 bil­lion in to­tal spend­ing, in­clud­ing the gen­eral fund and all util­i­ties and en­ter­prise funds. It would boost fund­ing to more quickly process de­vel­op­ment per­mits, but other­wise makes few changes to ex­ist­ing ex­pen­di­tures — by­pass­ing so­cial ser­vice fund­ing in­creases coun­cil mem­bers have re­quested.

Down the rab­bit hole

This bud­get, for the fis­cal year be­gin­ning Oct. 1, comes at a par­tic­u­larly un­cer­tain time.

Ne­go­ti­a­tions are un­der­way on a la­bor con­tract that would out­line the next sev­eral years of spend­ing on Austin po­lice and fire­fight­ers, lead­ing bud­get of­fi­cers to be in­ten­tion­ally vague on how much they plan to spend on them.

And the Leg­is­la­ture is meet­ing in a special ses­sion that in­cludes con­sid­er­a­tion of a lower cap on prop­erty tax raises, new re­stric­tions on mu­nic­i­pal an­nex­a­tion and dead­lines for lo­cal gov­ern­ments to process per­mits.

The Leg­is­la­ture’s prop­erty tax pro­posal — which would lower the thresh­old for po­ten­tially trig­ger­ing an elec­tion to raise prop­erty taxes from 8 per­cent to 5 per­cent — has caused par­tic­u­lar con­ster­na­tion at City Hall. Austin has raised tax bills by nearly 8 per­cent in seven of the last 10

years. Austin lead­ers have ar­gued the in­crease is nec­es­sary for city ser­vices to keep pace with growth, while de­trac­tors ar­gue the growth should be plenty to bring in cash with­out tax in­creases.

Staff mem­bers em­pha­sized Wed­nes­day that city taxes make up only about a fifth of a home­owner’s tax bill. About 55 per­cent is school dis­trict taxes — a large por­tion of which go back to the state through a re­cap­ture sys­tem meant to help pay for schools in poorer ar­eas.

The por­tion of the aver- age home­owner’s pay­ment to the Austin school dis­trict that goes back to the state has in­creased from $355 to $1,378 in four years, and next year will ex­ceed the to­tal city of Austin tax bill, staff- ers es­ti­mated. Charts on the sub­ject led to a pas­sion­ate mono­logue from Mayor Steve Adler and a lengthy backand-forth with con­serva- tive Coun­cil Mem­ber Ellen Trox­clair, which two other coun­cil mem­bers grabbed pop­corn to watch.

“The re­cent in­creases by the state, of prop­erty taxes, has been ex­treme,” Adler said.

“Yet in this ‘Alice in Won­der­land’ world, state lead­ers are blam­ing lo­cal gov­ern­ments for their prop­erty tax in­creases,” he said.

Trox­clair didn’t de­fend the state’s school fi­nanc­ing sys­tem, but said city taxes needed to stop ris­ing.

“This city has cho­sen to adopt nearly the max­i­mum tax (in­crease) of 8 per­cent year af­ter year,” she said. “So I have a hard time be­liev­ing any­thing would change, re­gard­less of whether this leg­is­la­tion were pend­ing.”

Not much for ex­tra

Most Austin city de­part­ments will keep their spend-

ing lev­els the same for 2018, with the ad­di­tion of 2.5 per- cent cost-of-liv­ing raises for civil­ian em­ploy­ees, said in­terim City Man­ager Elaine Hart.

The big­gest pro­posed in­creases come in De­vel­op­ment Ser­vices, whose bud­get would grow from $37.5 mil- lion this year to $58.4 mil- lion next year, mostly due to in­creas­ing staff to han­dle per­mits more quickly af­ter the 2015 Zucker Re­port

doc­u­mented lengthy per­mit de­lays and other prob­lems. That of­fice will also take over en­vi­ron­men­tal re­views from the Wa­ter­shed Pro­tec­tion Depart­ment. All but $5 mil­lion of the depart­ment’s bud­get will be cov­ered by its own fees, not taxes.

Austin En­ergy, which touted cut­ting rates for all cus­tomers last year, isn’t in­creas­ing base rates. But cus­tomers will see a cost in­crease due to a power sup­ply ad­just­ment and reg­u­la­tory charges in­creas­ing, staffers said.

The b ud­get also adds 27 po­si­tions to the Austin Code Depart­ment to ex­pand en­force­ment hours, par­tic­u­larly to re­spond to com­plaints about short-term rentals. It plans for in­creased costs as­so­ci­ated with oper­a­tion of the new Cen­tral Li­brary, set to open dur­ing the fis­cal year, and fund­ing for new city elec­tric-car charg­ing sta­tions and more Austin Con­ven­tion Cen­ter em­ploy­ees.

It leaves only $5 mil­lion for City Coun­cil mem­bers to add new pro­grams — not even enough to cover one of the sev­eral ideas the coun­cil has floated, such as adding fire sta­tions or sub­stan­tially in­creas­ing health pro­grams.

Coun­cil Mem­bers Delia Garza, Kathie Tovo and Ann Kitchen ex­pressed frus­tra­tion that there isn’t more money al­lo­cated to Health and Hu­man Ser­vices pro­grams, de­spite nu­mer­ous coun­cil res­o­lu­tions to in­crease fund­ing. Coun­cil Mem­bers Ora Hous­ton and

Ali­son Al­ter wor­ried about un­known state and fed­eral grant shifts and won­dered if money should be held as a buf­fer.

The coun­cil can make what­ever changes it wishes to the bud­get in the com­ing weeks be­fore adopt­ing it in Septem­ber.

“I ap­pre­ci­ate the ($5 mil­lion), but I think it’s im­port

ant for us to know that’s not what we’re lim­ited to,” Garza said.

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