Austin News

A new law that prevents property taxes from increasing more than 3.5 percent without voter approval may force municipalities to make tough decisions to fund their budgets.

Cites like Austin, for example, which has increased property taxes over the last five years between 5.5 and 8 percent, are now confined to a 3.5 percent hike unless the public approves a larger increase at the ballot box. The cap does allow for certain exceptions

In many states with similar tax-cap laws, their passage brought on fears of belt-tightening that would come at the expense of public services and safety.

However, the latter should not be the case, said Roger Falk, president of the Travis County Taxpayers Union, a nonpartisan organization focused on tax issues, according to its Facebook page.

“There is abundant fat in the City of Austin budget,” Falk said in an email on Feb. 18. “But our leadership is of a tax-and-spend mentality and will protect their pet programs.”

As an example, Falk cited the city spending approximately $100,000 to maintain a public bathroom facility.

Texas Gov. Greg Abbott signed the reform in June, which also included $5.1 billion of education aid to reduce property taxes.

The law brings to end nearly four decades of policy that allowed local governments to raise property taxes up to 8 percent. If residents objected to the increases, they had to collect signatures for an election to reduce the increase.

“We have an interesting situation evolving for the November election,” Falk said. The law “does reduce the rollback rate by 4.5 percent, [but] the bigger thing it does is, make the rollback election automatic if the threshold is exceeded.”

Soon after the governor signed the property tax law, Austin Mayor Steve Adler told the Houston Chronicle no decisions have been made on what’s next.

“But if we’re being responsible and prudent, it’s certainly something we have to consider,” Alder told the publication, “if only to create extra reserves so that the cuts (over) the next three years aren’t felt all in the same year. So that we can transition.”

The current budget, which went into effect on Oct. 1, is $1.1 billion, with a $1.2-billion capital budget, according to city documents. The spending plan represents an 8-percent hike over the Operations and Maintenance rate, though city expenses increased 3.9 percent.

“The city, in particular, has become a tax-and-spend vampire who sees property owners as a perpetual fountain of funding, to slake its insatiable thirst,” Falk said.