How much could the city of Austin raise your property tax bill this year?

AUSTIN (KXAN) — Thursday, Austin City Council is set to declare a maximum property tax rate, which it will use as a cap during its ongoing budget process. The tax rate that’s ultimately adopted by city council may end up being lower than that cap.

Much of that discussion Thursday is likely to be centered around declaring a maximum tax rate higher than what is allowed by state law without ultimately triggering a tax rate election. In 2019, Texas lawmakers made it so that local governing bodies cannot raise the property tax rate year-over-year more than 3.5% without taking that hike to voters.

“Because our community has raised important issues and questions about Austin’s needs–and the potential need for a tax rate election to meet those needs–it is likely that the maximum tax rate we declare on July 31st, will be a tax rate that, if ultimately adopted, would trigger an election. This is because, if we don’t declare the possibility of such a rate, then we preclude a TRE. I believe we will want to keep our options open as we go through the budget process. It is possible (more likely, probable) that the maximum rate we declare on July 31st is higher than what we will finally adopt when we pass a budget.”
Austin Mayor Kirk Watson

What would the proposed budget cost you without a tax rate election?

Right now, the city manager’s proposed budget sits at the 3.5% limit set by state law. Still, that proposed budget would cost the average ratepayer and homeowner $268.23 more per year.

That breaks down to a proposed property tax rate of $0.5276 cents per $100 assessed property valuation. So the “typical” Austin homeowner would see an increase of $12.90 per month, or $154.83 per year, in the city’s portion of their annual property tax bill. 

The city’s rates and fees, including for electricity, trash service, water, drainage, and the transportation user fee, would also rise under the proposed budget. Add those in and the projected increase for the typical Austin tax and ratepayer is $22.35 per month, or $268.23 per year.  

The city of Austin accounts for roughly a quarter of your property tax bill. Austin Independent School District (AISD) takes the largest chunk. Travis County, the Austin-Travis County health district (Central Health) and Austin Community College also take property taxes from you.

How much would it cost if Austin votes to go above that 3.5% rate?

According to Watson, every one cent the tax rate increases, the typical taxpayer’s bill will go up by another $40.26 per year. But it would also generate roughly $21.6 million in city services.

While some homeowners can declare property tax exemptions — like homestead, senior or disability exemptions — those only apply to homeowners, not landlords. Watson expressed concern that those rate increases would be passed from landlords to renters.

“Austin is too unaffordable. There’s an inherent tension between collecting the public’s money to pay for our needs and adding to our affordability challenges. We have to be balanced, disciplined, and stable in this difficult process. We don’t want to inappropriately contribute to the problem we say we’re trying to solve,” Watson said.

But some city council members have expressed concern about the cuts made in the current budget and what it will mean for services if the city doesn’t ask voters for more money.

“This budget does more than just cut out fat; we’ve hit some bone,” Austin City Council Member Ryan Alter said. City financial staff laid out some options earlier this month for what could be included in the budget should a tax rate election happen.