Austin City Council approves 'maximum tax rate' proposal to keep 'tax swap' discussion alive

Austin City Council members were up against the clock during Wednesday morning's budget work session.
They heard from the city's Deputy Chief Financial Officer Ed Van Eenoo about a potential service agreement with Austin ISD -- a “tax swap.”  And by law Council only had until about noon to decide if that was something they wanted to at least consider.
The tax swap is a way to fight "recapture."
"Right now the last $22 million that's raised by the school district, the major school district in our city, $17 million of that leaves the city.  And the question is 'Can we do things in a more efficient way?'" said Mayor Steve Adler.

Basically the city would take on some Austin ISD services.  And more taxdollars would stay local.

Council Member Jimmy Flannigan: not a fan of the idea.  But he explained what it means.

"When AISD collects a dollar from a taxpayer, a lot of that money goes back to the state but that doesn't happen to the city.  So conceptually if the city pays for things it would be cheaper," Flannigan said.

As mentioned, Council Member Flannigan was not on board with the swap or with the maximum tax rate proposal council had to vote on Wednesday morning.  Most of District 6 isn't in AISD.

"This is a massively problematic proposal.  Not just for my district but for 25% of the city.  A quarter of the city, this is massively problematic," Flannigan said during the meeting. 

Council won't have to decide on the tax swap until September but in order to keep the option on the table, they had to agree on a proposal that puts the maximum tax rate at 46.51 cents per $100.  2 cents above the rollback rate.  And they had to do it by around noon.

"Never before has the city exceeded what's called the state's rollback rate of 8%, meaning the city can only increase your taxes 8% year over year without risking an election by the voters," said Council Member Ellen Troxclair.

It passed 6 to 4.  Council Member Troxclair along with Flannigan, Houston and Garza voted against the tax rate proposal.  While others said 'yes' but admitted they might not end up supporting the tax swap in the end. 

"If ultimately it turns out this doesn't save taxpayers money then it's not something I'm going to vote for, not something I'm going to do.  But we ought to be investigating every idea," Adler said.

Adler says the tax rate discussion is just a theoretical limit of what the city could do.  He says it's highly unlikely that rate will be adopted.  But Flannigan and Troxclair say if that number is what council goes with, they'll help the community petition for a rollback election.

"We will have to have a very hard conversation in this community about the million dollars we'll have to spend to hold a special election in March to roll back a tax rate," Flannigan said.

Over the next month, there will be plenty of discussion and opportunities for the public to have their say about this idea.
Council will decide on the tax swap and the tax rate in September.