AUSTIN – The Austin City Council on Wednesday approved setting the maximum property tax rate two cents higher than its current value, a move that could end up helping lower taxes for some area residents.
According to KVUE’s partners at the Austin American-Statesman, the city council voted 6-4 to approve setting the maximum tax rate at 46.5 cents per $100 of property value. The vote does not commit to that rate, but allows it while Austin considers a possible tax swap with Austin ISD.
"First thing," Mayor Steve Adler said Wednesday, "is that we didn't decide to do anything today other than consider this idea."
Adler said as an innovative city, he wants the idea to be examined and considered in the next month to see if it can work for all taxpayers.
"We're not going to do this unless it is to the benefit of everyone in this city," he said. "Including the 25 percent of taxpayers that are in other school districts."
The tax swap would involve the city raising its tax rate higher than the rollback rate, defined as the maximum tax increase allowed without allowing a petition for an election, and the voters approving the plan. Austin ISD would lower its taxes by an amount greater and the city would take over some district functions.
The proposed swap would keep more money local and evading the percentage of school district taxes that go back to the state in order to fund schools in low-income areas. The Statesman reported the process, known as recapture, made up 7.6 percent of the average Austinite’s tax bill four years ago, but is expected to make up 22.7 percent – greater than the city’s share – of next year’s bill. While the average Austin resident’s payment to the recapture system has grown from around $350 to $1,378 since 2014, the Statesman reports each resident has seen less of their money stay in the district. This is due to how the recapture system is tiered.
If approved, council members would have to convince taxpayers to approve the tax increase when they would not immediately see a decrease from the Austin ISD side.
Additionally, as council member Jimmy Flannigan argued Wednesday, not all residents would receive the Austin ISD cut of the "swap."
"For District 6," he said, "it's very simple. Nearly the entire district is outside of AISD. It will dramatically increase our taxes compared to the rest of city."
Flannigan said 25 percent of the city's taxpayers would be let down by this swap in its current form and added that the change may not be Austin's responsibility.
"This is a problem that has been imposed on us by the State Legislature," he said. "It is not the city's job to solve it and the city is not in a place to solve it equitably."
Council members Ellen Troxclair, Jimmy Flannigan, Ora Houston and Delia Garza voted against the proposal, with Pio Renteria absent.
Both Troxclair and Flannigan have said they'd start a petition to rollback the increase if it is voted through in September.