City budget writers outline some rate increases

For Austin, like most other Texas cities, property taxes are its single largest source of revenue for the General Fund. The second-biggest revenue source is sales taxes, as explained by Budget Officer Kerri Lang at Tuesday’s City Council work session.

Overall, for homeowners paying fees in the typical range, city taxes and fees are projected to increase by 4.4 percent by Fiscal Year 2029. With overall sales tax collections not meeting expectations so far this fiscal year, the city is expecting a $13.2 million deficit. Somehow city budget writers and Council must close that gap by the time the FY 2025 budget is adopted in August.

Lang mentioned during her presentation that the city could hold a property tax election to allow the city to increase property taxes. Without such an election, the city may not impose a property tax of more than 3.5 percent under state law. Council members did not discuss the issue. If the city continues on its current trajectory without an increase in property taxes, budget writers project that the deficit for FY 2028-29 will have grown to $59.9 million.

Chief Financial Officer Ed Van Eenoo noted in February that the city had factored in a 4 percent growth rate in sales tax receipts when writing this year’s budget. However, so far this fiscal year, Austin’s sales tax collections are up only 1.61 percent over a year ago. That makes transfers from the city’s enterprise departments even more important. But each of those enterprises – Austin Energy, Austin Water and Austin Resource Recovery – in particular have their own requirements.

According to Lang, the General Fund transfer from Austin Energy will be $124 million for FY 2025 and that number will increase to $135 million by FY 2029.

The typical Austin Energy customer pays about $119 per month this year. That number is projected to grow to $120.45 next year, with the bill increasing by about a dollar a year to FY 2027. After that, the monthly charge is projected to be $126.80 in FY 2028 and $128.05 in FY 2029. The utility says the compound average annual growth rate is projected at 1.4 percent. Of course, this does not include fuel costs, which the utility passes through to customers without taking a profit.

Budget writers note that Austin Energy is not currently meeting all of its key performance indicators that are used to ensure the utility’s financial health. However, they expect improvements in those indicators over the next five years with the utility increasing its liquidity.

The typical Austin Water ratepayer is paying about $83.44 per month, and that bill is projected to rise to $91.20 next year, more than $99 per month in FY 2026 and more than $105 per month in FY 2027, up to $111.83 in FY 2029. That equals an annual growth rate of about 6 percent.

Austin Resource Recovery, which picks up trash, compost materials and recycling, charges the typical residential customer $31.35 per month. That cost is projected to go up to $32.35 per month starting in October. By FY 2029, the monthly fee is expected to increase to $37.30. The overall rate increase between now and then is 3.5 percent.

Austinites living in houses, condos and apartments are all expected to pay the Clean Community Fee, which is used to keep the streets clean, among other things. That fee is currently $9.70 and is expected to go up to $10.25 per month next year. It is projected to rise just 1.9 percent by FY 2029. The drainage utility fee – which the city uses to maintain and repair drainage infrastructure, cleaning creeks, water quality ponds and storm sewer drainage systems – is based on the amount of impervious cover on a property. Budget writers anticipate that the fee will increase from the current average of $12.17 per month to an average of $16.06 per month by FY 2029.

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