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Adler says he won’t pursue tax swap this year

Friday, August 25, 2017 by Jo Clifton

Mayor Steve Adler said Thursday that he does not intend to pursue the idea of a tax swap with the Austin Independent School District this year. He also confirmed that he would not be pushing City Council to set the tax rate above the current rollback rate.

Adler had proposed to raise the city’s tax rate for Fiscal Year 2017-18 two cents above the rollback rate of 44.51 cents, an increase of more than 14 percent over this year. Council approved a preliminary measure that would allow the city to raise the tax rate and take over payment for some AISD services on a vote of 6 to 4.

The swap is a proposal to help AISD lower its tax rate and send fewer dollars to the state under the so-called Robin Hood plan.

“Half a billion dollars is leaving our city in a very inequitable way and I think we need to … fight back,” he said.

However, he added that the tax swap idea had not been developed enough and that the city and AISD had not had time to negotiate the details of a proposed swap. But he has not given up on the idea of the swap for next year.

AISD Superintendent Paul Cruz told the Austin Monitor via text message, “Austin ISD is always looking for ways to offset our recapture payments, which will exceed $533 million this year, and find relief for our taxpayers. We appreciate the City of Austin in its efforts to come up with unique solutions to address taxpayer issues in Austin. We will continue working with the city and other stakeholders to make meaningful progress in regard to recapture.”

Council members Delia Garza, Ora Houston, Jimmy Flannigan and Ellen Troxclair voted against raising the city’s property tax rate to two cents above the rollback rate. At the time, both Troxclair and Flannigan vowed to lead a petition drive for an election against the tax increase if it eventually passed.

On Thursday, Troxclair texted this response to the news of Adler’s decision to the Monitor, “Great news for taxpayers!”

Flannigan said he had not yet heard the news but responded, “That would be fantastic news for my constituents.”

Mayor Pro Tem Kathie Tovo, a strong supporter of the tax swap idea, said she and Adler had talked about not moving forward with the swap this year and she agreed that it was too soon.

However, she added, “I am very committed to exploring this for next year. I believe this plan makes great sense for taxpayers in this area and I believe it would be a real benefit to individual taxpayers as well as the school district.”

State Sen. Kirk Watson told the Monitor via email: “Let’s not lose sight of who has created this problem that the Austin City Council was trying to address: the Legislature and those in control of the Capitol. The Legislature’s failure to provide Austin ISD any relief from the increasing burden of ‘Robin Hood’ hurts both the taxpayers of Austin as well as our students.”

Watson, a former Austin mayor, added, “There were many more questions than answers about this complicated arrangement, and I appreciate the decision not to push ahead without fully answering those questions.”

Adler said he will continue to push for new ideas for funding city services. “We need as many ideas as we can to find new money so we’re not just cutting each other up over the same size pie,” he said. “I think that as a community we need to be creative and innovative and come up with as many ideas as we can, (to bring in) new revenue without increasing property taxes.

“The tax swap is one of those ideas. The downtown puzzle is another one,” Adler said, referring to a plan to increase the Hotel Occupancy Tax, among other things, and enlarge the Austin Convention Center in order to bring in more revenue and potentially help the homeless population.

“But I think the tax swap is not developed yet, it’s not ready yet.” He thanked city staff for working hard on bringing forward scenarios for the tax swap but said there were still “some challenges.” Those challenges include questions about how to do the swap without raising taxes for people over 65, whose school district taxes are frozen.

“The offer of the increase in the senior homestead exemption is not the same as a senior tax freeze. We need to be a better solution. And then about a quarter of the town would need to pay increased taxes,” he said, referring to Austinites who live in one of the other school districts, such as Round Rock and Del Valle. “Even though those parts of town could receive up to tenfold in benefits, I’m not sure that we defined those benefits well enough,” he concluded.

Tovo said next year Council and AISD’s Board of Trustees would have time to work on a plan before the district adopts its budget in the spring. “To me, it’s a plan that makes great sense but it was clear that community members had lots of questions about it, not just those outside AISD. We need a longer process, so (we should be) reaching out to the public, hearing their concerns and seeing if those concerns can be mitigated.”

Photo by John Flynn

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