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Local forecast: chance of higher taxes likely in coming years

Wednesday, July 11, 2012 by Michael Kanin

Homeowners in the capital region could see an average increase of roughly $1,400 in taxes and assorted other fees by fiscal year 2017.


That’s according to a set of projections delivered to members of the Austin City Council’s Audit and Finance Committee last month. The increase represents a compilation of potential tax, utility and fee increases from the area’s major taxing entities: The City of Austin, Travis County, the Austin Independent School District, Austin Community College, and the Central Health district. They reflected a host of potential bond and tax elections, as well as regular tax increases expected over the next five years.


City of Austin Budget Officer Ed Van Eenoo was careful to stress the preliminary nature of the figures. “It’s all just kind of what we’re hearing and where we think things might be headed,” he said.


As part of the meeting, Council members continued to hear that Central Health officials would not seek a bond election to cover costs associated with the potential construction of a new University of Texas medical school. Instead, Central Health Chief Financial Officer John Stephens said that the organization would attempt to leverage current regional health expenses to bring in substantial federal investment for the project.


If it happens, that would come via what is called a Medicaid 1115 waiver. With it, the U.S. Government would match local investment at a rate of 58 cents to every 42 cents offered by a municipality. According to Central Health President and CEO Trish Young, the process is a way for local municipalities to use federal money to “transform (our medical) delivery system.”


“This is what I’ve been waiting for my whole career,” Young continued. “It embodies everything that we’ve been envisioning but we didn’t have the means to do it.”


However, it remains unclear whether Central Health can find enough pre-existing expenditures to pull in the federal money that is needed. If that indeed is the case, officials will have to raise the funds through a tax election.


On Monday, Gov. Rick Perry announced that the state would decline to expand Medicaid, a part of the Affordable Care Act, sometimes known Obamacare. Experts say that means the state gives up about $13 billion a year in federal funding between 2014 and 2017. The Texas Legislature will have the last word on the matter but they are unlikely to go against the governor, especially in light of the fact that the state is already facing a $4 billion to $5 billion shortfall in Medicaid funding.


Central Health spokesperson Christie Garbe told In Fact Daily via email, “It is our understanding that the two are separate issues. The Governor’s and/or legislature’s decision to not participate in the ACA Medicaid expansion does not affect the available funds with regard to the 1115 Transformation Waiver.”


City projections included a potential $385 million bond election that seems likely to go to Austin voters this fall. All told, Van Eenoo told Council members that average city property tax bills could increase from $962 in FY2012 to $1,214 in FY2017.


A much-discussed urban rail bond initiative – projected by Van Eenoo at the $275 million currently predicted for the first phase of construction – was not included in those figures. Such an effort would raise the average bill by just over 2 cents per every hundred dollars of property tax valuation.


Travis County bills were projected to rise from $777 in FY2012 to $940 in FY2017. Outgoing County Budget Director Leroy Nellis told Council members that that translates to a potential 2.7 cent increase to the rate of 49.61 cents per $100 of valuation in FY2013.


Austin Independent School District (AISD) officials projected both a $350-million to $500-million bond election and a tax increase of 5 to 9 cents (per $100 property tax valuation) in 2013. AISD taxes would go from $2,298 in FY2012 to $2,657 in FY2017 for the typical home.


Austin Community College officials projected a $600 million bond election in 2014. According to their figures, average taxes would rise from $185 per household in FY2012 to $264 in FY2017. That amount would represent the largest single percentage increase among the local taxing districts.

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