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Wednesday, October 17, 2018 by Jo Clifton

Property taxes, Austin Energy top city’s worry list

Once again, the city of Austin, along with other large Texas cities, will face a grueling task as the 2019 legislative session begins in January.

Intergovernmental Relations Officer Brie Franco told City Council during Tuesday’s work session that she and the city’s outside lobbyists would be concentrating on protecting Austin Energy and preventing passage of legislation that would reduce the amount of revenue the city can bring in from property taxes.

After last session’s failure to enact new property tax rollback rates for cities, Gov. Greg Abbott has indicated that he wants to see passage of a 2.5 percent rollback rate for all taxing jurisdictions, including school districts. That cap could only be exceeded for what he termed “public safety and critical infrastructure,” Franco reported, although those terms have not been defined.

The current rollback rate is 8 percent. If the city wants to raise taxes higher than 8 percent above the previous year, voters can approve or reject the rate in a rollback election. However, Abbott is proposing that taxing jurisdictions not be able to exceed 2.5 percent unless a supermajority of the governing body approves the rate and a supermajority of voters also approves it at an election. This last twist is something that Texans have not previously dealt with.

During Franco’s presentation, Mayor Steve Adler took the opportunity, as he has in the past, to point out that because the state of Texas is not providing sufficient funding for schools, school districts must rely on property taxes, which continue to climb.

“Over the last five years,” Adler said, “the state’s hidden property tax (school district taxes) have gone up 288 percent, but now that Ed (Van Eenoo) and the Financial Services people have rolled in this year, we have six years’ worth of numbers. And it’s over 360 percent, so it’s going up an average of 60 percent a year.”

Over the same period of time, Adler said, the city’s property taxes have only been going up about 4 percent a year.

Franco said her office would be bringing forth a resolution in conjunction with the other local taxing jurisdictions in support of state funding to give taxpayers relief on their school property taxes.

Franco noted that the number of bills introduced climbed from 5,629 in 1997 to 6,800 in 2017. Twenty-one years ago, legislators introduced 1,100 city-related bills and passed 130 of them, she said. In 2017, 2,500 such bills were introduced, with 294 of them passing.

The major concerns about Austin Energy are forced deregulation and legislative action to force Council to relinquish its role as the board of directors of the utility. The Senate Committee on Business and Commerce is reviewing competitive versus noncompetitive retail electricity markets across the state and is expected to release a report on the matter this month or next month.

Franco told Council she is also concerned that there will be an attempt to pass legislation that would interfere with the city’s authority to do any number of things related to business. That legislation falls under the category of “super preemption.”

Other matters Franco said she expects to deal with include who can use what bathroom, zoning and short-term rentals, sick leave and fair chance hiring.

On Thursday, Council will consider approving a lobby team for the 86th legislative session as well as a federal lobby team.

In Austin, Franco is recommending the firm Focused Advocacy, which includes Brandon Aghamalian, Snapper Carr, Curtis Seidlits Jr. and Andrew Keefer, for $165,000, plus Nora Del Bosque, Cliff Johnson, Clayton Pope, David White and Ross Peavey for $75,000 each. The total for this team is $540,000, compared to $570,000 for the team hired last year. Franco said it is possible that she will decide that she needs to hire an additional person, but she isn’t ready to do that yet.

The team in Washington will include Capital Edge for $90,000 and Infra Strategies for $42,000, Franco said, for a total of $132,000, compared to last year’s team, which cost $174,000.

Photo by Ed Uthman [CC BY 3.0], from Wikimedia Commons.

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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.

Austin Energy: As a municipally-owned electric utility, Austin Energy is a rarity in the largely deregulated State of Texas. It's annual budget clocks in at over $1 billion. The utility's annual direct transfer of a Council-determined percentage of its revenues offers the city a notable revenue stream.

Texas Legislature: The state’s legislative governing body composed of the House and Senate.

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