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Susan Spataro, Retired Travis County Auditor, challenges Mayor’s 4% property tax increase narrative

Susan Spataro, Retired Travis County Auditor, challenges Mayor’s 4% property tax increase narrative

Susan Spataro, Retired Travis County Auditor, challenges Mayor’s 4% property tax increase narrative 150 150 Voices of Austin

FOR IMMEDIATE RELEASE
(Updated 10/27/2020 with the official Travis County table showing the average Prop A tax increase  on a homestead property is $423.53 or 24.6%.)

This op-ed was received by Voices of Austin from Susan Spataro, retired Travis County Auditor (1988-2012) and retired CPA and CMA.

In this piece, Spataro proves that if Project Connect’s Proposition A (Prop A) passes it will make up 111% of this year’s property tax increases. While other taxing authority increases range from $4 to $15, Prop A will increase Austin property taxes by $303 for the average homestead. Renters will be subjected to a higher rate of taxation. Prop A will wipe out a $67 decrease in AISD property taxes!

If Project Connect’s Proposition A passes, Austinites will have to pay the additional taxes by Christmas.

Proposition A and Response to Mayor Adler who is asking you to approve a Tax increase that will increase the City Property Tax increase you will pay this year by any savings you could see from lower AISD Taxes

Mayor Adler “If we don’t take advantage of this moment, this time, to be able to move forward on Project Connect (Proposition A), I don’t think we get another chance to make the same kind of choices. It’ll be about a 4% increase on someone’s tax bill.” (KVUE, October 6, 2020)

Why do the Mayor and proponents of Proposition A keep saying that the property tax increase is only a 4% increase in the total property tax bill which is inconsistent with the disclosures required in the Texas Property Tax Code? Furthermore, they don’t tell you what percentage of the property tax increase it will be this year for the average homeowner!

Why is the City imposing a significant property tax increase of 24.5% in the middle of an affordability crisis, pandemic, business closures, and high unemployment while many people currently can’t afford mortgage payments, property taxes, or rent?

“Truth in Taxation.” How much is the true City property tax increase and how is it calculated? 

The Texas Property Tax Code section 26 clearly governs how property tax increases must be calculated, displayed, and communicated to constituents. It’s called “Truth in Taxation.”

Austin taxpayers deserve the truth on this very significant City property tax increase.

Texas Property Code section 26.06 – “Notice, Hearing, and Vote on Tax Increases” defines the methodology for calculation and format. City officials clearly understand the Code because they follow the disclosure requirements on their website Austin Finance Online and in the City’s legally required ads. The City’s official documents show No New Revenue Tax Rate 0.4284, Voter Approved Tax rate 0.4460, and Adopted Tax Rate 0.5335. The increase in tax rate is calculated as follows:  0.5335-0.4284 = 0.1051/0.4284 = 24.5% increase over No New Revenue Tax Rate.

While City residents are desperate for tax relief, the City is taking $193 million of additional property taxes out of this economy with likely the biggest tax increase in Austin’s history. (Austin Finance Online, City website) They have denied rents to landlords. Unemployment rate is 6.4%. (Austin American Statesman, October 16, 2020)

Why would the Mayor use the 4% number that is inconsistent with disclosure requirements in the Texas Property Tax Code?  

The Travis County Tax Assessor’s Office provides centralized billing and collection services for taxing units in Travis County that wish to participate. Instead of focusing on the legally required disclosure of 24.5%, the proponents of Proposition A attempt to mask the City’s 24.5% tax increase by comparing it to all taxing units that participate in central billing. In fact, all properties in the incorporated area of Austin are not even in AISD.

For comparison purposes, according to Travis County Central Appraisal District’s records, a homestead assessed at $372,349 in AISD (with no over 65 exemption) would see a $67 decrease in AISD taxes and a $423.53 increase in City taxes (see the table below from Travis County) . For Travis County, Central Health District, and ACC, taxpayers would see small tax increases of $15, $15, and $4, respectively. This means as a homeowner, if the Project Connect Tax increase passes, 111% of your property tax increase will come from Project Connect’s permanent tax that will be the highest property tax increase in 100 years!

These calculations use the actual tax rates for 2019 and adopted rates for 2020 and assume no increase in valuations. The City tax increase is consuming all AISD savings.

Instead of property tax relief for taxpayers, the City is making the unprecedented move of creating a new bureaucracy, Austin Transit Partnership, that will be dependent on property taxes that will continue to increase in perpetuity. So, in partial answer to the question “why now?”, it is likely that the City wants to take advantage of the school tax reduction and the restraint shown by other taxing units to obscure their own very large City tax increase and create an additional bureaucracy that is dependent on property taxes.

Conclusion– The Mayor and proponents of Proposition A are attempting to mislead voters when they deviate from the methodology prescribed in the Texas Property Tax Code. The adopted tax rate of 0.5335 exceeds the No New Revenue Tax rate 0.4284 by 24.5%. It exceeds the Voter Approved Tax Rate 0.4460 by 19.6%.

Proposition A is being placed on the ballot November 3 to take advantage of the property tax reductions provided by HB3 in the last Legislative session and budget constraints of other taxing units. Proponents are hoping this election draws support from a large number of young voters that do not understand that this large tax increase will negatively impact rents.

This City property tax increase will be decided on November 3. If passed, in less than 3 months property taxpayers will have to come up with the funds to pay their taxes or incur penalty and interest and perhaps lose their home or business. Many businesses have been closed by City order for seven months without a clear end in sight. Affordability now has reached a crisis stage in many neighborhoods with corresponding losses of culture and community.

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Voices of Austin (VofA) is a grass roots citizens organization formed to speak out for the vast majority of Austin citizens and organizations.  VofA is a registered 501c4 nonprofit, nonpartisan organization.  It is not a political action committee and will not endorse or oppose candidates or propositions in an election or make financial contributions to candidates or campaigns.

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