Local NewsTaxes & SpendingAustin City Council Revises Transit Project, Settles on Near-20 Percent City Tax Increase

The Austin City Council will put a measure before city voters in November to finance its portion of a $7 billion public transit plan.
July 28, 2020
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Back in June, the Austin City Council unanimously voted to move forward with an 11 cent property tax rate increase to fund part of a $10 billion transit project.

This week, however, the body modified the project some, reducing the total budget for the project to $7 billion and revising the planned tax rate increase to 8.75 cents — an almost 20 percent increase.

The plan in June included three new light rail lines that have been cut to two. Both lines would be connected by a downtown hub along with improvement funding for existing bus routes and construction of subway lines. The council stipulated this is just an initial investment and hopes to expand it further down the road.

Those expansions, especially if funded in addition to the currently proposed tax levy rather than a backend extension, would require additional voter approval.

Austin Mayor Steve Adler said of the decision, “I’m excited about moving Project Connect forward with both an initial and smaller overall impact to Austin property taxpayers. It’s the right decision to lower taxpayer cost while still pursuing the entire Project Connect rapid transit system.”

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“Project Connect will address traffic, get essential workers better access, benefit our climate, reduce traffic fatalities, and so much more. The dedicated investment to mitigate displacement is essential and very significant,” he added.

With a 9.4 percent increase in the taxable property values from 2019 to 2020, using the Travis Central Appraisal District’s 2019 and preliminary 2020 figures, the new rate increase amounts to about 20 percent from its already-planned increase below the voter-approval limit set by the legislature.

That comes out to over $175 million in new revenues from property taxes the city will bring in, and is a 24 percent increase from the effective, or no-new revenue, rate.

The city’s taxable value estimate, however, is higher than the appraisal district and so if the former becomes the presiding figure, the increase will be even higher.

Based on the overall percentage increase in values, and taking into account the council’s 3.5 percent increase in the Maintenance & Operations rate for this year that will not be left up to voters, someone with a 2020 median Austin home value can expect to pay about $450 more than they did last year should voters approve of this increase in November.

This comes at a time when many Austin residents have lost income or even lost their jobs entirely due to the pandemic-driven closures and economic downturn and it is not only property owners that will take the hit. Cost of living increases, including property taxes, are often calculated into rental payments. 

The plan is for the city to be on the hook for 55 percent of the project’s total costs, or $3.85 billion. 

With the 8.75 cent rate increase, it would take over 20 years to pay off that city-portion of the project’s projected cost.

But that is dependent on whether the estimated federal and/or state funding comes in as estimated and whether the project runs into unforeseen or unplanned-for costs.

Travis County Republican Party Chairman Matt Mackowiak, who also spearheaded the petition effort to reinstate the homeless camping ban, told The Texan, “Project Connect costs billions of dollars over several phases, and the first phase includes a subway downtown, more rail, and precious few dollars for new roads. It’s a disaster for taxpayers and should be soundly defeated.”

Going into this week’s meeting, Capital Metro, the area’s regional transit authority, recommended an 8.5-cent rate increase, but that increased to 8.75-cents as the city council wanted to include $100 million in funding for “housing displacement programs.”

The council also plans to move forward with a 3.5 percent increase in its Maintenance & Operations (M&O) rate — right at the new limit established by the Texas legislature last year. That would not be subject to a referendum by voters.

The Project Connect tax rate increase is in addition to the regular M&O increase and must be approved by voters in November — regardless of the final outcome of the disaster loophole debate.

Austin will very likely see two significant initiatives on the ballot in November: the Project Connect tax increase and the homeless camping ordinance.

Those two hot-button topics could burgeon turnout even higher than normal in an already contentious presidential year.

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Brad Johnson

Brad Johnson

Brad Johnson is an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad watching and quoting Monty Python productions.

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