Local NewsTaxes & SpendingTransportationAustin Small Business Owners Rail Against Transit Plan Tax Increase

City of Austin voters will vote on the 20 percent tax rate increase that would fund a portion of a $7 billion public transit plan.
October 12, 2020
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A group of Austin small business owners gathered in Esther’s Follies, a local comedy club, on the corner of 6th and Red River to voice their vehement opposition to the city’s proposed 20 percent tax rate increase to pay a portion of the $7 billion public transit plan.

Co-founder of the Texas Heritage Songwriters Association, Terry Boothe, said, “This is not realistic without a pandemic, now it’s suicide.”

With the increase, Esther’s Follies property taxes will increase $3,000. The theatre hasn’t been open since the beginning of the pandemic and won’t be for the foreseeable future, according to its owner Shannon Sedwick.

Amy’s Ice Cream will see its property tax bill increase by $1,600, Juan in a Million $1,030, and Joe’s Bakery $1,250.

And this proposition is on top of the city’s 3.5 percent property tax increase which is at the voter-approval limit, therefore out of the scope of voters.

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The other aspect which must be considered is appraisal increases. If those increase significantly over the length of the bond — during the previous two decades Austin’s real estate appreciation has ballooned 193 percent — the property taxes remitted will expand even further.

“Project Connect is supposed to be funded with money we don’t have, taxes we can’t afford, and a federal government with no money to pay [their projected portion],” said property owner Bob Woody, known as the “Mayor of 6th Street.” He further called the plan and tax proposal “unconscionable.”

“This will severely damage what’s left of Austin’s businesses downtown,” Travis County Commissioner Gerald Daugherty exclaimed, joining the business owners.

David Kruger, owner of Kruger’s Diamond Jewelers on Congress Avenue, told The Texan, “The city council is so fiscally irresponsible it defies imagination.”

Kruger’s father opened the jewelry store 80 years ago last year.

His store was closed for three and a half months and then eased back into regular operations. Kruger is making it by but is worried that this tax increase, which will span two to three decades at the least, will jeopardize his ability to preserve the business for his two daughters that work for him.

He stressed that it’s not just the property tax increase that he’ll have to pay, but he pays taxes on his business’s personal property — which, being a jeweler, can really stack up — and his home.

But the timing, especially, concerns Kruger who wonders how the city council can move forward with the expensive and logistically-difficult plan it has chosen. “Have any of these people had to make a payroll or take out a business loan from a bank?”

About the city council, Kruger said, “You can’t get ahold of those people, they have zero interest in talking with someone like me.”

Others, like Rob Lippincott, owner of Güero’s Taco Bar, are especially concerned about the ambiguity of the project. While Capital Metro has mapped out the proposed routes, detailed plans over how the construction and finished product would impact parking and the general street layout downtown.

Former Democratic state Senator Gonzalo Barrientos added, “This is a bad time. We have a pandemic, workers laid off, evictions, and businesses closed. I say not now, no on Prop A.

Back in June, the Austin City Council initially approved a $10 billion public transit plan that included, among other things, three light rail lines and an underground station downtown. To finance its estimated portion of the project — assuming the federal government would finance 45 percent — an 11-cent tax increase would have been taken to the voters.

The plan is referred to as “Project Connect,” and the city insists this proposal is only an “initial investment.”

But in July, the council slightly revised the plan, dropping the fiscal note down to $7.1 billion and the tax increase to 8.75-cents. The tax will bring in about $175 million more in property tax collections — amounting to a 22-year financing period, and that’s only if the federal government provides the projected portion and the project’s cost isn’t more than expected.

Capital Metro, Austin’s public transit authority, has asserted the proposition will only have “an anticipated total tax bill impact of 4%.” This is true insofar as the city makes up a lower portion of a taxpayer’s overall tax bill. That does not mean, however, that the individual tax increases will be easy to shoulder.

Even if Capital Metro succeeds in passing this levy and constructs the project, a potential roadblock with which the city must contend is ridership. The currently in-operation rail lines run by Capital Metro were originally projected to transport 17,000 people daily by 2025. But August’s ridership was shy of 400 daily, about 900 fewer than the same month in 2019.

In November, Austin voters will cast an up or down vote on the proposed tax increase — raising the question of what the city will do with an approved project but, should the levy fail, no funding to compensate.

The businesses voicing their opposition hope to head off the massive expenditure, warning of lazy planning and unforeseen expenses — each hoping their businesses, having thus far survived the pandemic, do not become sunk costs of a city council’s public transportation crusade.

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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.