📰 CivicIn7 Austin
Wednesday, October 8, 2025
⚡ Today’s Focus: Proposition Q — Austin’s Property-Tax Rate Election
⚡ TL;DR — What to Know in 30 Seconds
Austin City Council approved a budget that maintains current services only if the city can raise another $100M from home owners. (There is a contingency to reduce services if Prop Q doesn’t pass).
Austin voters decide Nov 4 whether to raise the city property-tax rate ≈ 20 % ($0.4776 → $0.5740).
City leaders say Prop Q is needed to maintain current services amid rising pay, inflation, and lost federal funds.
Opponents argue the city should find savings first and that the increase becomes permanent.
Because Texas bans local income taxes and caps sales taxes, property tax is Austin’s only revenue lever.
A “Yes” vote keeps funding steady; a “No” vote forces budget cuts ≈ $100 M and pressures the city to analyze spending.
🧭 Why This Exists
Under Texas Tax Code § 26.07, cities can’t raise property-tax revenue more than 3.5 % per year without voter approval.
Texas law also prohibits local income taxes and caps city sales taxes at 2 ¢ — leaving property tax as Austin’s only major revenue lever.
Proposition Q asks voters to approve a property-tax rate of $0.574017 per $100 valuation — up from $0.4776 last year (≈ 20 % increase) — to fund the city’s 2026 budget.
💰 The Numbers
Current rate: $0.4776 per $100 (FY 2024–25)
Proposed rate: $0.574017 per $100 (FY 2025–26) (+ 5 ¢ above voter-approval rate)
Added annual revenue: ≈ $110 million (source: City press release)
Typical homeowner impact: ≈ $302 per year (≈ $25 per month)
📊 Budget Context — Where the Money Goes
Austin’s total FY 2025–26 budget = $6.3 B, but only ≈ $1.4 B — the General Fund — covers everyday services.
Category | Share of General Fund | Approx. $ |
|---|---|---|
Police | 35 % | $490 M |
Fire + EMS | 29 % | $405 M |
Parks & Libraries | 15 % | $210 M |
Public Health & Human Services | 7 % | $100 M |
All Other Depts. | 14 % | $195 M |
🧩 Perspective: Prop Q’s $110 M is ≈ 7 – 8 % of the General Fund but only ≈ 1 – 2 % of Austin’s total budget.
(Source: City of Austin FY 2025–26 Adopted Budget Book & Five-Year Forecast)
🗳️ What Happens If …
If Prop Q passes: The FY 2025–26 budget (adopted in August) is funded at the higher rate, which then becomes the new baseline for future years.
If Prop Q fails: Council must re-open the budget under Resolution No. 20250813-023 and determine reductions to balance within existing revenues.
🧾 What’s Driving the Ask
Austin’s FY 2025–26 budget was built to maintain the same level of services as the previous year — no new programs or expansions. Even so, it came up ≈ $100 M short because:
Labor & pay increases: Police, Fire, and EMS contracts and COLA raises added millions in recurring costs.
Inflation: Fuel, equipment, and utilities rose 5–8 %.
Federal funding expiration: Pandemic-era grants for housing and homelessness expired.
Limited revenue tools: Texas law bars cities from income or business taxes and caps sales-tax collections at 2 ¢ — so property tax is the only lever left.
Overtime costs: ≈ $50 M (APD) + $20 M (AFD) last year — ≈ 40 % higher than 2020 — as staffing shortages drive mandatory 1.5× overtime.
🌎 How Other Cities Handle It
Austin isn’t the only fast-growing city under tax limits — but other metros have more tools to raise revenue.
City | State | Income Tax? | How They Bridge the Gap |
|---|---|---|---|
Nashville | TN | 🚫 No | Raised property tax 34 % (2020); added hotel & tourism fees. |
Orlando | FL | 🚫 No | Adds Public Service Tax (up to 10 %) on utilities + impact fees. |
Phoenix | AZ | 🚫 No | Uses a Transaction Privilege Tax (gross-receipts tax on business). |
Seattle | WA | 🚫 No (statewide) | Adds payroll and business-occupation tax on large employers. |
Denver | CO | ✅ Yes | Uses local income and sales surcharges to spread the load. |
🧩 Why it matters: Texas law forbids all of these tools — no local income, payroll, or business taxes and a hard sales-tax cap — leaving property tax as Austin’s only flexible lever to fund rising costs.
🗣️ The Debate
Supporters say:
Prop Q preserves core services without cuts.
Inflation and federal funding losses left a structural gap beyond local control.
Texas law limits Austin’s revenue options to property taxes.
Opponents say:
A 20 % rate hike adds to affordability pressures.
The City should re-prioritize and control overtime first.
The higher rate is permanent and raises future baselines.
🧭 Who Pays / Who Uses
Property owners pay directly; renters pay indirectly through rent.
Austin’s renter population is large and diverse — many cost-burdened households but also a growing share of high-income tech and remote workers renting rather than owning. That creates a debate over who benefits most from city services versus who pays into them.
⚖️ Legal Note
The Texas Supreme Court dismissed a lawsuit challenging Prop Q’s ballot language in September 2025, allowing the vote to proceed. Justice Evan A. Young acknowledged concerns but ruled that “voters must decide.”
🗓️ How to Vote
Voter Registration Deadline: Oct 6 (verify at VoteTexas.gov)
Early Voting: Oct 20 – 31 (Travis County Elections)
Election Day: Tue Nov 4, 7 AM – 7 PM
🧠 CivicIn7 Summary
Austin’s FY 2026 budget holds services steady — no new programs — yet still faces a $100 million gap from rising personnel and operating costs.
Because Texas law bans local income taxes and caps sales taxes, property tax is the only lever available for new revenue.
Proposition Q asks voters to decide whether to:
Raise the property-tax rate ≈ 20 % to preserve existing service levels, or
Hold the current rate and press city leaders to tighten budgets, reduce overtime, and re-prioritize within the existing $1.4 B General Fund.
Either choice carries trade-offs for affordability, staffing, and service reliability — and will shape how Austin manages growth under state-imposed limits.
📅 Civic Calendar
🗓️ Oct 9 — City Council Regular Meeting Agenda
🗓️ Oct 20 – 31 — Early Voting Period
🗓️ Nov 4 — Election Day (Prop Q on the Ballot)
📚 Primary Sources
City of Austin FY 2025–26 Adopted Budget Book ✅ • Resolution No. 20250813-023 ✅ • Texas Tax Code § 26.07 ✅ • Travis County Elections ✅ • Texas Supreme Court Order (Sep 2025) ⚠️ •
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