At a public hearing Thursday, City Council took the first step toward a possible tax rate election on the November ballot in order to plug Austin’s $33 million deficit and fund the proposed $6.3 billion budget, setting the maximum Council can ask voters to increase their property taxes at 8 cents, or an extra $421 annually for the average homeowner. The current proposed budget already includes a 3.5 percent increase, which is the limit the state has set for cities to be able to collect. Anything more will require a tax rate election.
The state legislature and rampant federal funding cuts since Trump took office have contributed to the city’s shortfall, but so has unpredictably low sales tax revenue, and the last of the American Rescue Plan Act pandemic relief funding running out. To plug the gap on the high end, a 7 cent tax rate increase – which at least six Council Members have expressed support for – would raise the average homeowner’s taxes by about $200 or more annually. On the low end, Council Member Marc Duchen is fully opposed to any tax rate election (TRE), while Mayor Kirk Watson has come down on the side of a 3.5 cent increase over the proposed budget, outlining a spending plan on the Council message board over the weekend.
If there were no election, Austin would be looking at major shortfalls and extreme gaps in services across the board. City leaders are already considering cutting firefighter staffing on fire trucks below national standards; Austin Public Library’s used bookstore Recycled Reads could close; and Austin Public Health has lost more than $15 million in federal grants since Trump took office, which staff has warned will curtail immunization capabilities. The Trump administration’s role in Austin’s financial woes was a focal point of the conversation on Thursday, as well as the state’s continuing push to constrict local power. Indeed, over at the state capitol on the same day, the legislature was considering cutting cities’ ability to raise taxes even more, lowering the cap to 2.5 percent on Texas cities with more than 75,000 residents.
A city survey conducted over the spring and summer indicates that more than two-thirds of Austinites will support a tax increase – the question is how much of an increase, and what will it go toward. Survey respondents’ biggest priorities across the board were housing and homelessness services, transportation and mobility and sustainability, while speakers at the meeting Thursday emphasized the City’s responsibility to care for its most vulnerable constituents.
At the hearing, AFSCME 1624 member Ben Suddaby brought his P. Terry’s receipt for two burgers ($24.46) up to the podium, saying “I will forgo this to pay for your library, to pay for your health care. I’m confident our community will come together and counter the state and federal government trying to defund us.”
Many speakers advocated for certain social services to be reprioritized within the proposed budget’s tier structure for different cent increase scenarios, flagging Immigration Legal Services as particularly integral to protecting vulnerable Austinites from the next four years of aggressive ICE raids.
“Just because something is listed at 7 or 8 cents doesn’t mean that’s where they need to be,” said Austin Justice Coalition’s Peter Hunt. Longtime justice advocate Kathy Mitchell urged Council that legal aid “should not be a thing that we get to if we can – it needs to be a thing that we prioritize.”
One budget area that most speakers agreed on fully funding is the city’s $101 million homelessness strategy. City partners and stakeholders providing homeless services expressed their support for the proposed budget’s focus on housing in a critical time of need: Davon Barbour, CEO of the Downtown Austin Alliance, noted that “we have seen a 26 percent increase in the number of people living unsheltered Downtown from February to July this year.”
Austin Community Law Center’s Brian McGiverin urged Council to invest in supportive housing and rental assistance, telling a story of a single client with three children who fell behind on rent when the fourth was born and was eventually evicted and unable to find housing for her family. “We have to push back on what the state’s trying to do – I represent too many clients who, if evicted, have nowhere to go.”
Though most speakers supported a TRE, some were critical of Council’s spending habits and reluctant to foot the bill. Council Member Marc Duchen echoed this view on the Council Message Board, saying that “if there was an interest on the dais, I would explore a compromise and support a modest one or two cent TRE that includes priorities that I believe we can all agree on. However, what I heard yesterday was ‘go big or go home’. And when presented with a 5+ cent ($200+) TRE I fear Austin taxpayers will tell us to ‘go home’.” He also urged austerity with social programs, including spending on housing and homelessness, in favor of more robust partnerships with nonprofits.
To address the painful price tag and redress the City’s past spending mistakes, longtime public policy commentator Julio Gonzalez Altamirano suggested ballot language that splits the TRE in two, so that the public sees a less scary number – 2 or 3 percent respectively for basic services like fire and EMS and another for housing/homelessness. This would improve the TRE’s electoral chances over a more general one, and prevent Council from what Altamirano urged is a “blank check for future Councils” to allocate that revenue to more public safety increases, which he said caused this shortfall in the first place. “We’re in this situation because of a lack of realism by previous Councils on public safety cost. It’s why we need granular cent commitments in the ballot language.”
The next public hearing on the budget is set for August 13, 10am at City Hall.
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Correction, August 4, 2025 3:28 pm:
This story has been modified to clarify that the proposed budget would cut staffing mandates on fire trucks and to correct the total budget.