How Austin Baby Boomers' Tax Perk Hurts Texas' Bottom Line
January usually marks a mad rush to the local tax office to pay property taxes. If you are a homeowner turning 65 years old, you can apply for a property tax exemption from Travis County and for a cap to your school taxes. It's a perk for taxpayers that could affect local school districts.
First, it’s important to note that thousands of Austinites will be turning 65 this year. That’s why last May, Austin Mayor Lee Leffingwell appointed task force on aging. Angela Atwood serves on the task force. She say “aging is the issue of our time and Austin and Central Texas is an epicenter nationally.”
The city has the fastest growing population between 55 and 64 and the second fastest growing number of those who are 65 and older. Longtime Austinite Gus Herzik is 99. His school property taxes were capped almost 25 years ago. “When I tell folks what my school tax is now, they can’t believe it.” Herzik jokes he doesn’t want a tax person to read his comments, but he goes on saying if his school taxes were not frozen “[they] would be – maybe 10 times what [they are].”
As more people turn 65, they, like Herzik, will be the envy of their neighbors. But, how might property tax caps affect the Austin Independent School District? Would they mean less money flowing into AISD coffers?
The Center for Public Policy Priorities’ Dick Lavine says no. CPPP is a liberal state policy think-tank. Lavine explains “from the point of view of the school district, it really doesn’t matter that they are giving this higher exemption and that they are freezing taxes.”
School districts in Texas, regardless of whether they are property rich or not, receive a set amount of money established by the state’s Legislature. “But, somebody has to pay to educate all these kids” says Lavine “and if the schools aren’t doing it through property taxes that are limited because people are turning 65, then the state has to pay.”
Right now, a Travis County judge is hearing several lawsuits filed by school districts challenging Texas’ system for funding public schools. A decision is expected later this year. And it could change the way the state pays to educate Texas children.