Councilmember-elect Ellen Troxclair emphasized two issues
during the campaign for District 8’s council seat: affordability and Austin’s
budget priorities.
Concerning affordability, she emphasized the fact that
District 8 has the highest rate of homeowners among the 10 districts, that many
homeowners are dismayed by their increasingly high property taxes, and that the
increasing property taxes threaten the ability of homeowners to stay in their
homes and live in District 8. In a forum during the runoff election campaign, she
stated that property taxes had increased by 40 percent in the last six years.
To deal with the issue, she advocated an immediate 20 percent homestead
exemption, which was also advocated by other council and mayoral candidates.
Furthermore, she suggested that tax rates should be cut to maintain the
effective tax rate (the rate that would produce the same revenue as the
previous year). Is this true, and what can she and other council members do to
reduce the tax burden for Austin residents?
Let’s examine the issue. I’ll consider two issues: First,
what does the percentage of home ownership have to do with property taxes paid
by the residents of District 8; Second, why have property taxes increased in
Austin and how would Troxclair’s proposals deal with the problem of an
increasing property tax burden?
On the first issue, the percentage of homeowners in a
district has nothing to do with property taxes paid. Property taxes are based
on the Travis County Appraisal District’s (TravisCAD) appraisal of the home’s
value, regardless of ownership. Furthermore, whether one rents or owns, they
are paying property taxes. The renter pays the property tax indirectly through
the rental rate that is paid to the owner of the home. Does anyone believe that
a homeowner is going to pay the property taxes out of his/her pocket? No,
they’re going to pass the tax payment to the renter through the charge for the
rental of the house. So, that’s really not an issue.
Secondly, why have property taxes increased so dramatically
in Austin? Let’s examine the property tax bill for a resident of District 8
over the last six years—2008 to 2014. The home is mine; the taxes paid are not
mine because I have exemptions that others may not have. So, the calculations
are based on appraised value, a homestead exemption, and the tax rates for the
five taxing authorities in District 8. The table below illustrates my
calculations:
|
2008
|
|
2008
|
|
|
2014
|
2014
|
2014
|
|
%
|
Taxing Authority
|
Tax Rate
|
2008 Appraisal
|
Exemption
|
2008 Tax
|
2014 Tax
|
Tax Rate
|
Appraisal
|
Exemption
|
2014 Tax
|
Increase
|
Austin ISD
|
1.2020
|
$
289,403.00
|
$ -
|
$ 3,478.62
|
$
3,536.50
|
1.2220
|
$
368,210.00
|
$ -
|
$ 4,499.53
|
29.35%
|
City of Austin
|
0.4012
|
$
289,403.00
|
$ -
|
$ 1,161.08
|
$
1,391.74
|
0.4809
|
$
368,210.00
|
$ -
|
$ 1,770.72
|
52.51%
|
Travis County
|
0.4122
|
$
289,403.00
|
$
57,880.60
|
$
954.34
|
$ 1,320.55
|
0.4563
|
$
368,210.00
|
$ 73,642.00
|
$ 1,344.11
|
40.84%
|
Travis Healthcare
|
0.0679
|
$
289,403.00
|
$
57,880.60
|
$
157.20
|
$
365.81
|
0.1264
|
$
368,210.00
|
$ 73,642.00
|
$ 372.33
|
136.85%
|
Austin CC
|
0.0954
|
$
289,403.00
|
$ 2,894.03
|
$
273.33
|
$
272.62
|
0.0942
|
$
368,210.00
|
$3,682.10
|
$ 343.39
|
25.63%
|
Total
|
2.1787
|
$ 6,024.58
|
$ 6,887.21
|
2.3798
|
$ 8,330.08
|
38.27%
|
In 2008, the appraised value of my home was $289,403. The
property tax bill for someone claiming the homestead exemption was $6,024.58.
In 2014, the appraised value was 368,210, and the property tax was $8,330.08.
The percentage increase from 2008 to 2014 was 38.27 percent, close to Troxclair’s
claim of a 40 percent increase in property taxes. However, during that period,
the appraised value of the home increased by 27.23 percent. Also, note the
percentage increase in taxes during the period for each taxing entity. The City
of Austin’s percentage increase was 52.51 percent—the second highest among the
five taxing entities. But, what if the appraised value of the home had remained
constant? By applying the 2014 tax rates to the 2008 appraised value, I found
that the city of Austin’s property tax would have increase by $230.66, a 19.87
percent increase.
What would happen to the 2014 property tax bill if a 20
percent homestead exemption were applied? The assessed valuation is reduced to
$294,568 and the City of Austin’s property tax becomes $1416.58, reducing the
property tax owed the COA by $354.14. That is a 25 percent reduction in the
property tax paid to the city. As a result, the total property tax is now
$7,975.94, a 4.25 percent reduction. Indeed, $354.14 is not small change, but
it is only a little over $29.50 a month. If the exemption were adopted by the
COA, it is estimated that revenues would decrease by about 35.6 million
dollars. Which programs or services would be cut were never specified by
Troxclair. It’s a question that should have been asked.
If the tax rate for Austin were kept at the effective tax
rate, thereby eliminating the impact of increasing property appraisals, the
impact on the COA’s programs and services would be even greater. Would the cuts
be made across the board? A discussion of the COA’s budget is the subject of a
future blog post.
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