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Martinez, Adler bicker over homestead exemption

Friday, September 5, 2014 by Jo Clifton

Mayoral candidate Mike Martinez staged yet another battle in the ongoing war over homestead exemptions Thursday, holding a news conference to attack candidate Steve Adler’s plan and reveal details of his own proposal.

“If Steve Adler has his way, the average middle-class renter in Austin will see their cost of living increase by $80 each year. That money is going to help pay for his $36 million plan that gives the wealthiest Austinites the most tax relief,” said Martinez.

“If Steve Adler wants to pick a fight with middle-class families in Austin, he’ll have to go through me first,” said Martinez, who said he would expect to hear Adler’s plan coming from “the Republican Party of Texas or the Koch brothers,” not someone running for mayor of Austin.

Martinez added that, in his opinion, the city should take a hard look at the fees it charges and gradually reduce them. He pointed out that utility fees were the most regressive “tax” the city charges, and that they now total about $22.87 per month. He said that, as mayor, he would make reducing those fees a top priority.

Bill Aleshire, a former Travis County Judge and Tax Assessor-Collector, was on hand with his own release, chastising Martinez for “opposing tax relief for homeowners in Austin.”

Aleshire supports Adler but specifically said he is not a campaign spokesman. He said, “Martinez is blowing smoke trying to explain why he and his colleagues have done absolutely nothing to help homeowners while they give corporate tax breaks to the richest companies in America and stand by just watching the exodus of middle-class families from Austin. The truth is that giving a homestead exemption can have the effect of shifting tax burden from homes to commercial property, apparently something Martinez opposes.”

The former county official pointed out that the fact “a home appraisal has skyrocketed does not mean the income of the family living there is high.” According to Aleshire’s data, “42 percent of families living in homes valued between $250,000 and $500,000 have incomes at or less than $75,000, roughly the median family income.”

In addition, he said, “21 percent of families living in homes with values over $500,000 have incomes at or less than $75,000. This is an indicator of the gentrification of neighborhoods like East Austin.”

Aleshire concluded, “As the Statesman has reported, home values have skyrocketed during a 38 percent increase in taxes between 2000 and 2010, while median family income in Austin rose 9 percent from 2004 to 2013.”

The Austin Monitor contacted Council Member Bill Spelman, who teaches statistics at the LBJ School of Public Affairs and has studied the question of rising property values and taxes.

Spelman said Aleshire’s numbers are probably right. “A lot of people are living in houses they currently couldn’t afford to buy,” he said. “This is not gentrification in East Austin. Everybody’s home values are increasing faster than their income. It’s a supply issue.” He noted that more people were moving to Austin than the city had homes for, pushing up prices and home valuations for everyone.

“If we offered a 20 percent exemption, although it would help a lot of people of low or moderate income, it would also increase the tax rate, or we would have to cut city services, or both,” Spelman said. He agreed with Aleshire that the property tax exemption for homeowners would increase taxes for commercial property owners.

Spelman added, “One needs to be cautious about this sort of thing, as this Council was last month when we chose a very small exemption rate … because accommodating more would cause a really substantial increase for renters.”

Council voted in August to give a homestead exemption that amounts to about $5,000 per homeowner.

Asked to respond to Martinez’s comments, Jim Wick, Adler’s campaign manager, said, “Basically it’s pretty clear that Council Member Martinez just doesn’t understand the homestead exemption proposal … It’s about giving relief to the middle class. Nearly 200,000 people would benefit.”

Wick added, “We’ve gone from being the most affordable city in Texas to now being the most expensive. We have a crisis here, and families are being pushed out of the city because they can’t pay their tax bill. I just don’t understand how Council Member Martinez can stand by and say we have a tool but we won’t use it because it’s not perfect.”

Martinez has the support of AFSCME and State Rep. Eddie Rodriguez (D-Austin), who will be filing a bill that would allow Austin to establish a flat-rate homestead exemption, combine that with the percentage rate exemption, and cap the overall exemption amount. Education Austin President Ken Zarifis also spoke at the news conference, in support of Martinez.

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