By slim margin, Council approves an 8 percent homestead exemption

In a vote that pitted representatives of the city’s lowest-income districts against their colleagues, City Council members Wednesday narrowly approved an 8 percent homestead exemption — an increase of 2 percent over last year’s exemption. To a resident with a home worth $250,000, that equates to a nearly $23 yearly savings on property taxes.

But as discounts go, this will cost the city. According to estimates from the city’s financial team, its coffers will have to empty out $3.8 million. With an anticipated $2 million surplus, that could put the city $1.8 million in the red.

Council Member Delia Garza cautioned members Wednesday.

“That means cutting something, somewhere,” she said. “And I just hope we all understand the position we’re putting ourselves in.”

And for what, Garza asked. The District 2 representative was among the five Council members who voted against the measure. (The final vote was 6-5 in favor.) Of those five Council members, four of them represent city districts with the lowest average incomes (around $40,000 per family) — Districts 1 through 4.

Because homestead exemptions are available to cities only as percentages and not as flat rates (per state law), Garza and the colleagues who followed her “nay” vote argued that families in their district would see little change in their property tax bills. For example, a home valued at $100,000 would see an annual discount of $9.18.

“To frame this as, ‘We’re helping struggling families,’ it’s not helping struggling families,” said Garza. “It’s helping the wealthiest in our community.”

Mayor Pro Tem Kathie Tovo, who represents a district with a median family income of just over $80,000, also voted against the exemption.

“It’s not just those of us on the dais who represent some with a lower MFI,” said Tovo. “We have great needs within the city of Austin, and this is going to be a tough budget cycle. And I am really concerned about how some of those needs will get funded if we start the budget process almost $2 million in the hole.”

But Mayor Steve Adler cautioned Council members against marking this as a David and Goliath tale.

“I think it is really unfair to cast this vote as a vote between rich people and poor people in our community,” said Adler. He argued that property taxes make up a greater percentage of a low-income family’s budget, meaning that this relief, however miniscule, could be felt more.

Council Member Ellen Troxclair, who represents a district with a median family income of $116,000, also knocked this as a rich versus poor narrative.

“The people who are coming to me on a consistent basis begging for some kind of relief from the constant cost of living increases that they see in Austin, they’re not rich people,” she said. “They’re people who are struggling to stay in their homes; they’re people who have lived in Austin for years, for decades.”

This small increase does not bode well for some Council members’ hopes of getting the city to a 20 percent homestead exemption by the end of a four-year term. In addition, the savings to homeowners is still up for debate. The city will prepare to finalize its tax rate this fall. If it decides to raise the exemption, the savings approved Wednesday would decrease.

This story is the result of a partnership between the Austin Monitor and KUT News.