Texas Governor Greg Abbott has voiced strong opposition to a recent decision by the Austin City Council, which plans to raise the maximum property tax to 60 cents per $100 of valuation for the upcoming fiscal year. This increase from the current rate of 47.76 cents is estimated to address a projected shortfall of $33 million for the city, resulting from federal funding cuts and rising expenses for essential services, including police and fire departments. Abbott’s stance resonates with Texas Republicans who are often critical of increasing taxes, particularly in light of recent fiscal constraints faced by the city.
On Thursday, the Austin City Council voted unanimously to set this maximum tax rate, a move that has significant implications for taxpayers. While this decision serves as a starting point for budget deliberations, it does not automatically guarantee that the council will propose the full increase. Texas law mandates that any tax increase over 3.5% must be approved by voters, adding an administrative layer to the council’s fiscal plans. Abbott reacted strongly to the council’s vote, urging the Texas Legislature to intervene and prevent what he views as excessive taxation and unwarranted spending increases.
The context for this potential tax hike includes a budget that anticipates significant growth in city expenses, particularly within the police department, which is projected to increase its budget by around $92 million from 2024 to 2027. This includes pay raises awarded to officers as part of labor agreements. Additionally, the Austin Firefighters Association recently received an 8% pay increase, further straining the city’s budget as it navigates these increasing costs alongside the need for improved services.
Property taxes in Texas have already surged dramatically, climbing 26% between 2019 and 2023. Recognizing this trend, Governor Abbott signed bills aiming to reduce tax burdens, which, pending voter approval in November, would raise the homestead exemption for homeowners and increase benefits for senior citizens and individuals with disabilities. These legislative measures underscore Abbott’s focus on alleviating property tax pressure as local governments consider significant tax hikes.
Reacting to the council’s decision, Austin Mayor Kirk Watson expressed support for the council’s vote, asserting that it would provide necessary flexibility for future negotiations. The statement indicates a willingness to adapt to changing financial circumstances while ensuring core services are maintained. Progressive members of the council echoed this sentiment, arguing that relying on inconsistent funding sources to support vital services is no longer tenable, thereby justifying the proposed tax increase.
Looking ahead, the Austin City Council is set to begin discussions on alterations to the draft budget proposed by City Manager T.C. Broadnax next week. A final vote on the budget is anticipated by mid-August, creating a timeline where community feedback and potential voter sentiment may play a crucial role in shaping the outcome. As these discussions unfold, the council must navigate fiscal realities while addressing public concerns about rising taxes and overall city spending.
