Government
BY BEN THOMPSON
The city of Austin could face budget deficits of tens of millions of dollars over the next five years, while residents are likely to face rising taxes and other charges. New information shared ahead of the summer budgeting process projects annual budget gaps growing to $80 million by fiscal year 2029-30. A deficit of $6 million in the current fiscal year is already anticipated thanks to lower-than- expected sales and alcoholic beverage tax collections. The forecast was based on a slowdown in local job creation and new development, the end of federal stimulus money, and other factors like inflation and signs of an economic slowdown, according to city finance staff. Another near-term impact is a likely dip in total property values across Austin, based on preliminary reporting from the Travis Central Appraisal District. A record number of appraisals are also being protested and property value growth is slowing, city staff said, leading to tens of billions of dollars less in taxable value for FY 2025-26 compared to this year. City Council members responded to the “sobering” and “concerning” financial report during an April 8 review by noting the challenges they’ll face in maintaining city services. On top of local trends, they also pointed out Austin’s mounting losses of federal funding and the need to support local initiatives amid those cuts. Austin expecting funding gaps; costs could rise
The approach
City costs
The typical Austin homeowner is projected to pay roughly 25% more in city property taxes, fees and utility charges by 2030.
With sales tax revenue already lower than expected, and a potential drop-off ahead if consumer spending falls off, Budget Office Director Kerri Lang said “tough decisions” could lie ahead. City Manager T.C. Broadnax said financial staff are continuing to refine their projections and work to reallocate funding in line with City Council and community goals. “Given the uncertainty in the global and national economy and the effect of property tax caps, we knew we’d be facing headwinds this year. We’ve prepared for them and will adjust as necessary,” he said in a statement. His budget will be presented in July before review and council consideration in August.
Property taxes
Utility charges, city fees
$8K
$6K
$4K
$2K
$0
NOTE: ESTIMATES BASED ON ANNUAL MEDIAN HOME VALUES AND TYPICAL UTILITY USE.
General fund deficits Austin could face gaps of tens of millions of dollars in the city budget for public safety, parks, libraries and housing.
Looking ahead
State law blocks cities from raising more than 3.5% in additional property taxes year-over-year, aside from any newly-added value. However, tax rates generating revenue beyond that cap can pass with voter approval. Austin hasn’t yet needed a tax rate election, or TRE, but city officials and staff have been pointing to the likelihood of one on the horizon—and continuing every four years. City Council plans to pass a formal TRE policy in May before setting any potential election dates.
Revenue
Spending
2024-25 2025-26 2026-27 2027-28 2028-29 2029-30
$0 / $1.4B $1.5B $1.6B $1.7B $1.8B
SOURCE: CITY OF AUSTIN/COMMUNITY IMPACT
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