Thursday, June 25, 2015 by Caleb Pritchard

Eagerness for tax relief hits a ceiling

Austin officials are considering tax relief for the elderly and disabled as one way to combat the rising cost of living in Central Texas, but some are not entirely happy with the idea.

Both the Travis County Commissioners Court and the Austin City Council Audit and Finance Committee have endorsed raising the homestead exemption rate for residents who are 65 and older or disabled. They have also both balked at giving those homeowners a property tax ceiling, at least for one more budget cycle.

The court on Tuesday voted to increase the exemption from $70,000 to $75,000. Commissioner Gerald Daugherty voted against the increase while Commissioner Margaret Gomez abstained.

According to county staff, the increased exemption will cost the county $1 million in lost revenue next year. That number will continue to rise as the senior population grows in Central Texas.

However, a tax ceiling for seniors and disabled residents would have a much larger impact over time. Under state law, qualified homeowners would pay the same tax bill they paid in their first year of eligibility for the rest of their lives, regardless of rising appraisals. When the homeowner dies, he or she can pass the tax rate on to a surviving spouse who is at least 55 or older. Under state law, the ceiling would be irreversible.

“This is really dangerous, y’all,” Daugherty told the court during Tuesday’s briefing. “This is so beyond dangerous. You are fixing to ratchet something up.”

On Wednesday, Daugherty told the Austin Monitor that he is extremely uncomfortable with reducing revenue in a way that could lead to a tax hike.

“Now all of us are going to be looking to what can we not spend,” he said. “And my history with the Commissioners Court … the Commissioners Court is not very good at saying no to just about everything you have to say no to.”

At Tuesday’s meeting, Gomez championed the ceiling, declaring it the right thing to do for a generation who has earned extra relief.

“I just don’t see how we can roll over and say, ‘Oh, no, this is too much for us to carry when they’ve carried us for many, many decades while we reached our point of … getting a good job and earning money and contributing to society,’” Gomez argued. “And so I just don’t think it’s that big of a problem when we’re called on to take care of other people who have taken care of us in the past.”

Ultimately, the court decided not to consider the tax ceiling this year. However, it voted to direct staff to continue studying the ceiling over the next year so it can revisit the issue during budget talks for 2017. That passed over County Judge Sarah Eckhardt’s and Daugherty’s opposition.

On Wednesday, Commissioner Brigid Shea told the Monitor that she is sympathetic with senior homeowners but deeply skeptical of the ceiling, even though she supported the motion. She explained, “It wasn’t to explore the possibility of doing it, but so that we know the impact, because at this point we’re just grasping in the dark.”

That sentiment also prevailed at Wednesday’s Council Audit and Finance Committee. Chaired by Mayor Pro Tem Kathie Tovo, the committee considered tax-relief options for seniors similar to those considered by the Commissioners Court on Tuesday.

Deputy Chief Financial Officer Ed Van Eenoo explained to the committee the financial impacts of an increase in the fixed exemption as well as a tax ceiling. Raising the exemption to $77,000 would cost the city $14.4 million in revenue by 2020, he said, while a tax ceiling would be a loss of $21 million over the same period.

The committee decided to send the report to the full Council for discussion. Council Member Ellen Troxclair emphasized her support for consideration of the tax ceiling while Tovo, Council Member Leslie Pool and Council Member Pio Renteria each expressed their strong misgivings with the proposal.

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Key Players & Topics In This Article

Austin City Council: The Austin City Council is the body with legislative purview over the City of Austin. It offers policy direction, while the office of the City Manager implements administrative actions based on those policies. Until 2012, the body contained seven members, including the city's Mayor, all elected at-large. In 2012, City of Austin residents voted to change that system and now 10 members of the Council are elected based on geographic districts. The Mayor continues to be elected at-large.

Travis County Commissioners Court: The legislative body for Travis County. It includes representatives from the four Travis County Precincts, as well as the County Judge. The County Judge serves as the chair of the Court.

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