What to do about revenue caps?

As you may have heard, the Legislature just approved property tax “reform.” The good news is that that included $6 billion of new state funds for schools. The bad news is just about everything else.

The city of Austin, Travis County and most other local governments will now be limited to 3.5% annual increases in property tax revenue unless they get approval from voters. That’s down from the current 8% limit.

There hasn’t been a rollback election in Austin in recent memory. Will it become a normal thing? Maybe not normal, but it could become an occasionally useful tool.

The good news for progressives is that the law requires the election to take place in November. That is logical, since it would follow soon after Sept. 30, the state-mandated deadline for local governments to complete their budgets and certify their tax rates. But November elections, particularly during national election years, generate the highest voter turnout and give liberals a fighting chance of mounting a campaign that appeals to their base. 

If the rollback elections could take place in weird times of the year, the electorate would be dominated by older homeowners who are frustrated about property taxes. If the city wants an electorate amenable to property tax increases, then it needs as many voters at the polls who don’t pay property taxes directly.

The new revenue caps don’t go into effect until next year, so this year the city of Austin and all other taxing jurisdictions should go all the way up to the 8% limit to a) establish a higher floor that future increases will based on and b) get some extra cash to put into reserves in preparation for lean times.

However, if there is strong messaging and dedicated campaigning, I can imagine Austin voters approving the city going above the 3.5% revenue cap at the polls in 2020, along with a major transit bond (and hopefully) a major bond targeting pedestrian/bike infrastructure.

At the very least, I hope that the mayor and other Council members who recklessly approved increases in the regressive homestead exemption in past years will not even consider increasing it again.

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