Giving Texas voters a say on how much their property taxes can be increased each year not only empowers homeowners in cities like Austin, it also puts a much-needed cap on municipal spending and forces local governments to make budget cuts.
Senate Bill 2, which Gov. Greg Abbott signed into law last summer, places a cap on property tax hikes across the state at 3.5 percent per year. This is a significant move for cities like Austin where city councils are used to more freedom when it comes to their budgets. This cap forces cities to be more conscious of their spending. Forty-one percent of Austin’s general fund comes from property taxes.
Last October, the Austin City Council approved a 7 percent hike in city property taxes for median-valued homes. Prior to the law, local governments could increase property taxes by up to 8 percent per year without seeking voter approval. With the new law in place, Austin voters will head to the polls to approve or reject the proposed increase.
In 2018, close to 70 percent of the city’s operating budget was spent on police, fire and EMS services. City officials had hoped the tax increase would bring in additional revenue to pay for more police officers. Austin Police Chief Brian Manley asked to hire 123 officers, which City Manager Spencer Cronk said the city would pay for in the coming years.
Additionally, the Austin City Council approved a four-year contract between the city and the Austin Police Association worth $44.6 million.
These two plans were reportedly approved based on the assumption that the city’s revenue would increase by at least 6 percent. The property tax cap throws a wrench into the city’s plans and forces them to find a way to cut the budget to come up with the remaining 2.5 percent.
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