Austin City Council adopted a $6.3 billion budget for the next fiscal year and agreed to ask voters to approve a higher tax rate in November.
The budget includes millions of dollars for homelessness services, $2.5 million to support the Austin Infrastructure Academy, funding to enhance the EMS response system and a 4% pay increase for city staff.
Council Members debated the budget over two days, including what programs and other city services should be in the budget and tax rate increase package while maintaining a healthy reserve fund.
The council came to a consensus Thursday afternoon.
Council Member Zo Qadri said the budget protects the current and future needs of the city.
"That is what I hope this budget and the upcoming [tax rate election] will do," he said. "That we are going to be in a city that truly works for everyone."
When City Manager T.C. Broadnax put together the budget, the city was facing a $33 million shortfall due to a combination of flat sales tax revenue, limited property tax revenue and an end to some federal funding.
Broadnax's proposal includes money set aside for homelessness services, parks and public safety. To balance the budget, it also included a restructuring of the Austin Police Department and proposed reductions to fire truck staffing — both intended to reduce payouts for overtime.
The city also had to pull $14.1 million from its reserves for the next fiscal year.
While the budget addresses the looming deficit, many City Council members said it does not cover all the city's needs. The new budget relies on revenue from increased property taxes. The council set the property tax rate at 57.4 cents per $100 of taxable value, which is 5 cents above what state law allows without voter approval.
The measure triggers a tax rate election that will be put before voters this November.
The increased tax rate would generate nearly $110 million during the 2025-2026 fiscal year. City Council members approved the budget on the condition that a portion of this money would go toward firefighter overtime pay to help them maintain fire truck staffing that meets national standards.
Homeless Strategy Officer David Gray said in April that the city would need nearly $101 million to adequately fund emergency shelters and support services for the city’s unhoused population. With the increased tax rate, the city will be able to fully fund a plan his office put together.
“If Austinites care about their unhoused neighbors and they want to see the city and our partners do a better job and they want to get more people out of our parks and off of our streets and get them into housing and connected with the care," Gray said, "then these tax rate election dollars are going to be critical.”
If voters approve the property tax increase, the average homeowner will see their taxes go up by approximately $300 next year. The council also approved rate and fee increases for water, trash and other city services that will amount to an average increase of around $116.
Residents weighed in on these increases during nearly seven hours of testimony before council Wednesday.
Susana Almanza, a Southeast Austin resident and founder of environmental justice nonprofit PODER, spoke out against the increase.
"All city of Austin residents will feel the impact of increased taxes, electric rates, water rates," she said. "But the poor and the working poor will doubly feel the increase of these rates, whether they are homeowners or renters. ... It’s the council’s past decisions that have caused a budget crisis.”
Tayla Terry works with the nonprofit African American Youth Harvest Foundation, which provides support for the city's Black community and other at-risk youth and families.
Terry said a tax rate increase, in addition to money set aside in the budget, is needed to invest in nonprofits working on youth outreach. Other residents said the additional money would help address homelessness and gaps in child care.
“Funding us is not charity; it's equity. It's breaking cycles. It's saying yes, these young queens deserve the same access, the same chances and the same dignity as anyone else," said Terry, who primarily works with young girls. "Give us what we need to thrive.”
