City taxes, fees for average homeowner likely $4,032
Thanks to lower-than-expected spending on public safety, Austin will likely end its fiscal year with a tad to spare and, thanks to growth and tax increases, will have more money to play with next year than it did in 2018.
As for growth, the city is expecting $3 billion in new construction value in 2019.
But be careful, the city staff warned Wednesday. If state lawmakers drop the maximum the city can increase taxes from 8 percent to 4 or 5 percent, city finances will be in trouble in a few years.
For next year, city officials are projecting the average homeowner living in a $303,555 house will pay a total of $4,032 in city taxes and utility fees, an increase of $88,
according to staff estimates. This year, city of Austin taxes made up only about a fifth of a typical resident’s $6,070 property tax bills, with school district taxes accounting for more than half.
The city expects to finish this year having spent $4.4 million less than expected on public safety. That’s in part because of newly negotiated union contracts with fire and emergency medical per- sonnel with lower raises than expected in early budget estimates. And it’s partly because an unresolved police contract has saved Austin from paying out some types of specialty pay.
Those costs make a huge difference, said Ed Van Eenoo, Aus
tin’s deputy chief financial officer. Last year, the city had to raise taxes 8 percent, the maximum allowed under state law without a tax election, just to meet costs already approved. This year, rais
ing taxes 8 percent will generate $14 million “to fund other priorities,” Van Eenoo said.
Public safety makes up 67 percent of Austin’s $1 billion general fund budget, down from 70 percent a few years ago. All property and sales taxes combined don’t even cover the city’s public safety budget. With self-sustaining enterprise funds, such as util- ities, the city’s total budget is more than $3.9 billion.
Police officers in Austin are paid more than anywhere in the state, 13.6 percent more than the second-place city, Fort Worth, Van Eenoo said. Several council members noted that the cost of living is higher in Austin than in most other Texas cities.
“Cost of living numbers, I think, are interesting, but they should trigger a con- versation about how we can make it cheaper to live here,” Council Member Jimmy Flan- nigan said. “Not just pay our employees more.”
Built-in cost drivers come from raises for employees (union-represented police and firefighters as well as civilian workers across departments), new facil- ities, fuel cost increases, equipment replacement and changes in policies such as allowing part-time workers to take paid sick days.
The Legislature last year considered requiring lowering the threshold to require voter approval of property tax increases. The measure ended in a stalemate between a Senate that wanted the cap at 4 percent and a House that set it at 6 percent. If the bodies reach a compromise in 2019, it will tie the hands of an Austin City Council well accustomed to raising taxes 8 percent every year.
Staffers proposed an idea that might be a long shot to City Council members, who always have more wish-list programs than funding for them: raise taxes the maximum 8 percent, but don’t spend the extra. Keep it in the bank to avert major cuts in 2021 if the ability to raise taxes is reduced.
“Eventually, your cost structure is still going to have to change,” Van Eenoo said.