Austinites will soon be voting on a tax rate increase that city officials say will help address some of the city’s thorniest issues.
In August, the Austin City Council approved a $6.3 billion budget but called on voters to approve a higher tax rate. On the November ballot as Proposition Q, the rate of 57.4 cents per $100 of taxable value would generate nearly $110 million for the 2025-26 fiscal year. That money would be used to help reduce homelessness, improve parks and enhance public safety.
Austin was already facing a $33 million budget shortfall that city officials have attributed to sales tax and property tax revenues not bouncing back following the COVID-19 pandemic.
There has also been a cut to some federal funding that the city depended on to help pay for critical services like emergency shelter for people who are unhoused and rental assistance programs. The council has said the city would need to foot the bill itself to keep these programs going.
But the ask is coming at a time when residents are already facing a rise in cost of living due to inflation and higher property tax rates across the Austin area.
Travis County approved a higher property tax to help pay for July flood damages and to financially prepare for future natural disaster needs. Austin Community College and Central Health, the local public hospital district, also increased property taxes. Austin ISD taxpayers, meanwhile, could see a decrease of nearly $500 – or more if voters approve a higher state homestead exemption this November.
If Prop Q is approved, the average homeowner with a home valued around $500,000 is looking at an additional $270 on their tax bill next year with all entities combined.
The $110 million will be split across several different city needs, including increasing affordable housing opportunities, reducing homelessness, improving parks and community recreation programs, and enhancing public safety and public health.
Homelessness funding
The largest chunk of the money is aimed at addressing affordability and homelessness. The city plans to allocate $35.5 million for permanent supportive housing, rental assistance, case management services and new shelter beds. There is also an additional $11.5 million to keep the Marshalling Yard and the 8th Street Shelter going and $1.9 million for re-entry workforce development programs.
In April, the city’s Homeless Strategy Office team told the City Council it would need nearly $101 million, of which $33 million would come from community partners, to effectively address homelessness by expanding emergency shelters and other support services.
David Gray, the office's director, told KUT that Prop Q's passing would help the office “jump-start” the plan.
“These dollars will help the city and our partners get people off the street, get them into shelter or housing, and get them to a point where they can live stably and securely on their own,” he said.
Parks, health and public safety
City leaders also set aside $22.6 million to improve public safety, including money to allow fire crews to keep at least four people on each truck, and to expand the city’s mental health response team to reach 24/7 coverage.
At least $7.7 million will go to public health services and community recreation, like vaccination and senior programs.
Another $10 million will help fund park improvements, and $1.3 million will go to city of Austin employee benefits, including a special fund to pay employees who are helping with bad weather efforts.
To approve, or not to approve
Increasing property taxes isn’t going to be an easy feat for the city, despite support from several groups that advocate for homelessness efforts and public safety.
Council Member Vanessa Fuentes said this was about providing high-quality, reliable city services.
“Our city touches a variety of things, from the roads you drive on to the sidewalks you take to the parks you visit to the health of our city, and of course safety,” Fuentes said. “Prop Q encompasses quite a bit of initiatives and services that Austinites rely upon.”
But several other organizations, including business groups like the Austin Chamber and the Real Estate Council of Austin, oppose the measure, citing the impacts on families already struggling to make ends meet.
Steven Brown, a board member with the Save Austin Now PAC, said his group agrees these issues need to be addressed but that putting it on the backs of taxpayers isn't the way forward.
“We want to work with the city to come up with new solutions and come up with a more fiscally responsible budget,” Brown said. “We have families being forced to choose between putting their kids in afterschool programs or giving their money to the city of Austin to solve problems they might never see happen.”
This also comes after a resident sued the city in August challenging the ballot language, alleging it was misleading to voters and did not specify how much money the city is committing to each project. That lawsuit eventually died after the petition was denied by the Texas Supreme Court.
Fuentes agreed that asking property owners to raise taxes as increases are happening in other areas is “simply, not ok” but said it was necessary to ensure a strong quality of life that all Austinites deserve.
“That is an area where we have to do better for Austinites,” she said. “We have to have better coordination amongst our governmental jurisdictions to ensure that we are in alignment … It's on us as public officials to ensure that we are thinking through how we can generate revenue that doesn't continue to tax our residents. We don’t want to price out our residents.”
Early voting begins on Monday and runs through Halloween. Election day is Nov. 4.
