Austin News

When he signed Senate Bill 2 into law last summer, Gov. Greg Abbott capped property tax revenue increases in Texas at 3.5 percent a year, excluding new construction and debt obligations. The new law is a game changer for Austin and other Texas municipalities and counties that are used to having much more flexibility in spending.

Before SB 2, Austin and other local governments had been able to raise property tax revenue up to 8 percent a year without voter approval. Now, under SB 2, an election is triggered if city officials want to exceed a 3.5 percent hike in property taxes.

Roger Falk of the Travis County Taxpayers Union is supportive of the 3.5 percent limit. He believes it gives Austin taxpayers more accountability. But don't call it "a cap," he says.

Roger Falk | mbc.org

"There is no cap," Falk told Austin News. "They can raise taxes as much as they want. They can double them. The difference is that now, with this new law, they have got to ask the people who are paying the bill, ‘Are you willing to pay a bigger bill?’” 

Property tax revenue accounts for 47.1 percent of the city’s general fund.

City officials are grappling with how to work with their largest expenses – police, fire, and emergency medical services – under the new cap. Police, fire and EMS spending accounted for almost 70 percent of Austin’s operating budget in 2018. The 3.5 percent cap will make it tougher for the city to absorb annual cost increases in wages, rents and insurance premiums, city officials say. 

In November, Austin City Council approved a four-year, $44.6 million contract between the city of Austin and the Austin Police Association (APA).

Austin Police Chief Brian Manley has asked for 123 more police officers to be hired. City Manager Spencer Cronk has pledged to fund those positions in future budgets.

The problem is that funding for both the contract and the police staffing plan were based on an assumed rollback rate of at least 6 percent, Community Impact reported. If that is the case, SB 2 will force the city to make up the 2.5 percent difference with other funding cuts.

Falk says the talk of cutbacks in public safety because of SB 2 is a red herring.  

“When you look at the budget, every little pet project is funded,” Falk said. “They have plenty of money.”

He believes SB 2 will force municipal officials to roll up their sleeves and do the hard work of prioritizing spending and cutting out unnecessary projects.  

APA President Ken Casaday told Community Impact that he is not worried about funding for the current contract.

“The city’s continuing to spend a massive amount of money on homeless issues and housing,” he said. “So we certainly don’t expect to see a lot of changes [to public safety funding],” Casaday told Community Impact.