BY BEN THOMPSON
Some context
Austin's tax rate is just one of several paid by most city residents. Totaling local taxes for FY 2025-26
The county tax rate is also rising above the vot- er-approval threshold next year—although public authorization isn’t needed as it’s tied to disaster response for the July floods. That rate is expected to drop again next year. Looking ahead, Austin is now planning a com- prehensive bond package for consideration next fall. Staff recommended a total of no more than $700 million for that measure across multiple city departments, which would bring a roughly $100 annual tax increase for the typical homeowner.
The approved tax rate is about 20% higher than this year’s. If the TRE fails, it’d drop 5 cents to the maximum allowed without voter approval. City taxes have been increasing for years, but represent just one piece of the total bill most homeowners might pay to different entities. Proposition Q comes one year after successful tax elections for both Austin ISD and Travis County, and three years after the city, school district and Austin Community College each passed bonds.
Austin ISD 44.13% City of Austin 27.38% Travis County 17.93% Central Health 5.63% Austin Community College 4.93%
SOURCES: AUSTIN COMMUNITY COLLEGE, AUSTIN ISD, CITY OF AUSTIN, TRAVIS COUNTY/COMMUNITY IMPACT
The bottom line
Zooming out
Budget barriers Austin leaders cited several reasons for the city’s tightened financial outlook. Federal funding cuts Expiring American Rescue Plan Act dollars Texas’ 3.5% cap on annual local tax revenue increases Declining property tax forecasts Slipping sales tax collections
Majority voter support for Proposition Q will keep the adopted city budget in place, setting new floors for the city’s tax rate and the state’s cap on year- to-year civic revenue increases. If voters reject the tax rate measure, council will have to trim the spending plan below the TRE threshold. That process could see them potentially remove both base budget items and their later amendments. Officials also previously decided TREs won’t be held more than every four years, barring financial emergencies or “significant” funding cuts. Residents have until Oct. 6 to register to vote. Early voting will run from Oct. 20-31 ahead of Election Day on Nov. 4.
Austin leaders had been signaling the likely need for a TRE throughout much of 2025, espe- cially after the city’s latest five-year forecast, released in April, showed widening shortfalls expected through the 2020s. The city’s original proposed budget closed a more than $30 million deficit for the coming fiscal year, and gaps were expected to reach $80 million by FY 2029-30. Increasing taxes under the TRE will set up balanced budgets for the next two years, and smaller deficits by 2030. Austin representatives have cited Texas’ limit on year-over-year jumps in local revenue collections as a large budgeting obstacle. They’ve also pointed to the federal level, where recent grant cuts have impacted local programming, while one-time pandemic relief primarily used for homelessness is nearly used up. Budget staff also said local tax revenue may be falling off from recent highs.
SOURCE: CITY OF AUSTIN/COMMUNITY IMPACT
The impacts of an expanded budget and higher taxes were criticized by many in the community this summer. One, resident Paul Dietz, told council he’s seen longtime Austinites and businesses pushed out by cost pressures that don’t affect many of the city’s “ultra-rich” new arrivals. “It’s forming a new caste system here, and it’s crowding out the soul of what made Austin, Austin,” he said.
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