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Council debates raising taxes to secure more bond money

Friday, August 10, 2012 by Josh Rosenblatt

As City Council prepares to vote on a bond-package proposal to put before Austin voters this November, battle lines are being drawn around two main issues: 1) whether to push for a recommended proposal put forth by staff or by the citizens Bond Election Advisory Task Force; and 2) whether to sign off on a tax increase to secure those bonds.

At their work session Tuesday, Council Member Laura Morrison told her colleagues she is inclined to support the smaller of the proposals put forth by the task force, which calls for a $400 million bond issue. The task force also recommended a $575 million bond proposal. The city’s staff has recommended a $385 million bond issue, an amount that is the maximum the city can issue without requiring a tax increase. An increase of about one-third of a penny in the debt service tax rate would allow for the $400 million package.

“I’m interested in using the task force recommendation for $400 million to start,” Morrison said. “It is a mechanism that weaves in the work of the citizens. … I am much more comfortable starting with the work that integrated the staff and the community input.”

Morrison said in particular she is concerned that the $385 million proposal from City Manager Marc Ott features nearly $12 million less for affordable housing than the task force plan.

But Mayor Lee Leffingwell, who said he would not support any bond package more than $385 million, argued that the city actually needs less, not more, affordable housing money. He recommended Council support staff’s proposal but eliminate $8.5 million for affordable housing, money he said the city won’t need as a result of the $10 million in affordable housing funds the city will secure over the next six years from master development agreements related to the redevelopment of the site of the Green Water Treatment Plant and other development projects.

“You have this longstanding policy that when city land is sold to private interests, 40 percent of those taxes paid on that go to the affordable housing trust fund,” Leffingwell said. “So we’ll get more than that $8.5 million during the term of this bond offset by that source.”

That $8.5 million was just one of several decreases in funds Leffingwell recommended to offset increases he would like to see elsewhere, particularly a $5 million increase for Austin Studios’ renovation of a neighboring National Guard armory into film studio space.

“These kinds of (film) investments have resulted in a positive return on investment for the City of Austin,” Leffingwell said. “They have an economic impact.” Giving more money to the local film industry, he continued, will help filmmakers compete “against states outside Texas that have a lot of support from the state government, which we don’t have.” Leffingwell also recommended adding $2 million to complete the Violet Crown Trail, $3.2 million to improve East 51st, and $2 million to improve the Barton Springs bathhouse.

Using affordable housing money to offset those increases will probably not sit well with certain members of the Council, several of whom said they couldn’t support reductions in funding for that or other social services. At least one said funding for affordable housing in the current staff proposal is already too low.

“I’m very concerned about the allocation we have in our current proposal for affordable housing,” said Council Member Kathie Tovo. “I would not support reductions in that category. In fact I’m going to look hard for ways to increase that. I think we’ve got critical needs in this community. Our needs far exceed what would be contemplated in the proposal before us.”

Tovo also said she would push for increased funding to expand the Austin Shelter for Women and Children.

Council’s Aug. 16 meeting is that last one at which Council members can vote to get the bond proposal on the November ballot. Perhaps aware of the tight deadline, Council Member Mike Martinez put forth a compromise that would involve adopting the $400 million task force proposal but shaving off some costs to fund the projects Leffingwell was promoting. The compromise would involve taking the lesser costs found in the staff and task force plans for several projects, including renovations to Interstate 35 and affordable housing projects. Doing so would save $14 million but would still require Council to have what Martinez called the “fortitude” to have the conversation about a tax increase.

“There is a pathway to achieve a compromise to get these requests met but it would require a third-of-a-penny tax increase,” Martinez said.

But Leffingwell was having none of it.

“I will not support anything that will require a tax increase,” the mayor said.

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