Homestead exemption won't rise
City Council members pass on chance to increase it from current 8 percent, citing budget tightness.
The ship has sailed on any 2018 increase to Austin’s homestead exemption.
Just over two weeks before the City Council would miss its chance to increase it, Council Member Ellen Troxclair posted on a city message board, all but begging her colleagues to at least consider discussing it.
“I am hoping that some of you all will cosponsor an item for next week’s Council meet(ing) to increase the homestead exemption,” she wrote, posting a copy of a draft ordinance. “The deadline for us to take action is July 1, so we would need to act next week.”
An hour and 15 minutes later, Troxclair, whose political clout as the council’s only Republican has diminished significantly this year, added, “I would be happy to support any other Council Member who wants to take the lead
on this as well.”
But the request was met with deafening silence.
Council members had already signaled that they probably would not keep up with a promised increase to the exemption, which gives a tax break to residents who live in homes they own. The current exemption knocks 8 percent off a home’s value for the purposes of taxation. Council members in 2015 set Austin’s homestead exemption at 6 percent and passed a resolution signaling their intent to raise that to 20 percent within four years.
At a budget workshop in May, Mayor Steve Adler and Council Member Leslie Pool, who previously voted for the exemption increases and made them central in campaigns, backed away from their timeline for doing so. The budget is too tight this year, Adler said, and the state could further hamstring funding increases with a proposed lowering of the cap on property tax increases.
Adler has supported increasing taxes overall to pay for the exemption, which shifts the burden somewhat from people who live in their own homes to businesses, renters and second-home owners. But this year, the council has already approved spending increases for the opening of the larger Central Library, body cameras for police officers and staff raises that are likely to cause the city to increase taxes a maximum 8 percent for 2018 with no room to spare.
Council Member Delia Garza, who has always opposed any homestead exemption, said she was “excited that this might be the year that we see that (homestead exemption decisions) put us in a tough position, and this could be the year when we don’t add to the percentage.”
Expanding the exemption to 8 percent from 6 percent passed in a narrow 6-5 vote last year, and since then, two of the council’s fiscal conservatives, Sheri Gallo and Don Zimmerman, have been replaced with more progressive members Alison Alter and Jimmy Flannigan. Alter said last week that she supported getting to a 20 percent homestead exemption eventually, but not now.
“As we’re looking at the special session and the budget that we’re looking at, I don’t think it makes sense to move forward,” Alter said, adding that the requirement to set the homestead exemption three months before the final budget made it difficult to assess trade-offs.
Staff members said increas- ing the homestead exemption from 8 percent to 14 percent would result in a loss of tax revenue of about $10.1 million for 2018. Troxclair said that amount of wiggle room in the budget could be found by reallocating hotel tax money away from the Austin Convention Center and into parks and arts, and with more efficient maintenance.
The way things ended up, however, homeowners next year will get the same 8 percent homestead exemption that they got this year. Troxclair called herself disappointed, if not surprised, by the result.
“I obviously had hope the council would make good on its promise,” Troxclair said. “I feel like a lot of members of the council and the mayor made a commitment, not only during the campaign, but after we were elected.”