Wednesday, August 9, 2017

#atxcouncil: Adler proposes GIGANTIC tax hike (vaguely assures someone else will cut taxes)....

"Rest in the Lord, and wait patiently for Him;
Do not fret because of him who prospers in his way,
Because of the man who brings wicked schemes to pass."
Psalm 37:7

What could POSSIBLY go wrong?!?
Austin will consider a maximum tax rate of 46.5 cents per $100 of property value — a 14.4 percent revenue increase that could trigger an election — to facilitate a possible tax swap with the Austin school district.


Such a swap would involve the city raising its taxes, the school district lowering its taxes, and the city taking over paying for some school district functions. The goal would be to keep more dollars locally, and to send less money in school district taxes back to the state to help fund schools in property-poor areas.


If approved, the tax swap would be full of complications. The city would have to persuade residents to approve a tax increase when they wouldn’t see immediately see the decrease on the school district side. Six other school districts include parts of Austin’s city limits, and it’s unclear whether residents in those areas would see a benefit or just a higher bill. The city would have to find a way to balance the deal for senior and disabled residents, whose school district taxes are frozen.
And therein lies the greatest rub of all:  This proposal, at least as it's currently structured, doesn't have an enforcement mechanism.  Austin ISD is under no obligation to cut its portion of the tax bill.  Essentially, Mayor Adler is saying "trust me."

[Note: This lack of an enforcement mechanism is very similar to what's wrong with the Texas house's current "school finance" proposal.]

Then, of course, there's the fact that it's pretty much impossible for this to not be a net tax hike for city residents who don't live in Austin ISD; that might not be a dealbreaker for this author, but it doesn't take a genius to see how that creates a political nightmare.

The biggest shame is that there might be some merit in the underlying concept.  There's something to be said for getting the property tax bill away from a body subject to recapture.  But, to be done properly, any tax swap of this nature would have to be vetted for unintended consequences by a team of lawyers.  And, to be done properly, that process would take months.  Unfortunately, we don't have months.  We have seven weeks.  The city is legally required to adopt a budget by October 1 and that simply isn't enough time to vet this proposal with the amount of care it needs.

[Note: This is very similar to the challenges with some of the tax swap proposals under consideration in the legislature.]

Bottom Line: Not in its current enforcement mechanism free form, and certainly not on the current compressed timetable.


What Troxclair said:

She also put out a press release with similar sentiments:

Ellen Troxclair

Austin City Council Member
For Immediate Release
Contact: 512.978.2108

Troxclair "will be first to sign" Petition Opposing City Tax Hike
AUSTIN, TX – Today, Council Member Ellen Troxclair opposed Mayor Steve Adler's proposal to set the maximum tax rate at a staggering 14.4% above the effective tax rate, or 46.51 cents per $100.  State law currently allows voters to protest a tax increase above 8%, called the "rollback rate".  While the city has adopted increases of nearly 8% in 8 of the last 11 years, the city has never exceeded this threshold.

Council debate centered around a possible tax swap with Austin Independent School District, a proposal to reduce some of the funds recaptured by the state and allocated to less property rich school districts across the state.

Council Member Ellen Troxclair said, “Although this idea might have some merit, if this was something the City wanted to pursue, we could absolutely do it without turning back to the taxpayers and asking them for more than 8% than what they paid last year.”

Troxclair continued, “It is so upsetting to me to know there so many people in the city who are struggling with property taxes and affordability, and the City decides they can afford an 8% tax increase year after year. I was opposed to the 8%, and now we’re even exceeding that rate. It’s outrageous.  I will be absolutely the first person to sign a petition for a rollback election, and I will lead the opposition in opposing a 14% tax increase.”

Council passed the item on a 6-4 vote, with Councilmembers Garza, Houston, Flannigan and Troxclair voting "no".

The tax rate will not be final until budget adoption in September.  Upon that vote, citizens can sign a petition to call an election on the tax rate for March of 2018.  Council will hear citizens thoughts on the proposed budget during the public hearing on August 17th at 4pm.

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