Thursday, June 4, 2015

Council plays games with a Homestead Exemption

"But the former governors who were before me laid burdens on the people, and took from them bread and wine, besides forty shekels of silver. Yes, even their servants bore rule over the people, but I did not do so, because of the fear of God."
Nehemiah 5:15

With the Lege out of town, let's turn back to City Council:
Austin Mayor Steve Adler had pushed in recent weeks for a 6 percent homestead exemption as a middle ground the majority of the City Council could accept, but now two alternative proposals are pulling council members in opposite directions.

Council Member Greg Casar and Adler said Wednesday they favor a slightly lower 5 percent homestead exemption paired with $740,000 toward a rental assistance program that would mainly benefit tenants in lower-income parts of the city. The city could absorb the $3.7 million cost of the exemption, plus the extra funding for renters, by raising the tax rate, meaning businesses and other nonresidential properties would see the largest tax increases.


Council Member Ellen Troxclair countered with a pitch for the highest possible homestead exemption, which would knock 20 percent off the value of owner-occupied homes for tax purposes. To more than cover the $32.5 million cost of that exemption, Troxclair identified $60.6 million in potential savings, such as tiering wage increases for city employees and cutting off payments for companies receiving financial incentives from the city.


If the council passed a 20 percent exemption and stayed with the lower tax rate city budget writers have projected, typical homeowners would save $186 compared with what they would otherwise pay in 2016 taxes — and would save $133 compared with what they paid in 2015 taxes.

The actual savings will depend on how much spending the City Council approves at the end of the summer for the fiscal year starting Oct. 1, and what tax rate is needed to fund that spending.


Troxclair said she was frustrated that much of the council’s discussion has focused on making up the cost of a homestead exemption with a tax rate increase rather than looking at ways to hold the line on spending.

“My point is … there are other ways for us to provide significant property tax relief to homeowners and to also put $700,000 or more into a rental relief fund, if we broaden the conversation to, ‘How else can we do it besides increasing the tax rate?’” Troxclair said.

If a majority of the council doesn’t support a 20 percent exemption, Troxclair said she hopes for the highest possible tax break. Council Member Don Zimmerman agrees, but said he doesn’t think funding for rental assistance should be part of the package, noting the council already approved $6 million for affordable rental developments this year.

Council Member Sheri Gallo suggested that if the council doesn’t pass a 20 percent exemption this year, it could indicate its intent to phase in the full exemption in the next few years.
Read the whole thing here.

Bottom Line: This is the new council's first budget cycle.  The voters were VERY clear last fall in their desire for the maximum possible homestead exemption.  Council will either pass the Troxclair plan, or there will be more Republicans on the Austin City Council in 2017.

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