Austin is subjected to a state law that caps tax rate increases at 3.5% without voter consent, prompting discussions among city officials about a potential election. Mayor Kirk Watson has emphasized the importance of planning for a tax rate election, aiming to provide the necessary funding for the city's budget. With projected deficits of $2 million looming in the upcoming fiscal year, city officials underscore the critical need for these funds to cover municipal expenses. Planning for the election must ensure that it does not occur more than once every four years to mitigate voter fatigue.
Under state law, Austin can only raise its tax rate by 3.5% without voter approval, and the city plans to address this by scheduling a tax election.
Budget Director Kerri Lang informed the committee that without additional revenues, Austin is projected to experience a $2 million deficit in the 2025-26 base budget.
Lang highlighted that the city lost $160.8 million in property tax revenue capacity this fiscal year due to the imposed 3.5% cap on tax rate increases.
Council will decide whether to fund specific expenditures with the tax rate election proceeds, ensuring that elections occur no more than every four years.
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