By James Quintero, TPPF
Declining Student Enrollment a Symptom of Much Larger Tax Problem
Austin Independent School District Interim Superintendent Paul Cruz recently updated the community on the health and outlook of the state’s 5th largest school district, and the prognosis was far from perfect.
Among the major challenges facing AISD, both now and moving forward, is declining student enrollment. The disappearing district estimates that there are 1,200 fewer students this school year compared to one year ago and AISD’s projections suggest that it will get smaller still over a 10-year period.
In his address, Cruz was quick to identify a driving force behind the decline: housing affordability.
“As housing costs soar, some of our families are being displaced and moving outside of Austin,” said Cruz in his address. And, of course, he’s right.
Owning and renting a home in the Austin area has become an expensive proposition for many Texans. So much so that a growing number of families and single parents, as well as their children, are fleeing to places beyond the city limits where the cost of living is considerably lower—and where the cost of government, a la the property tax, is much more reasonable.
While Central Texans are no strangers to high and fast-growing property taxes, the burden has become much more pronounced in recent years, to the point where the average family, in many cases, can no longer afford to live here, as evidenced by AISD’s shrinking student population. Consider some recent tax data from the City of Austin.
According to the city’s proposed budget for 2014-15, the average home in the Austin area has a taxable value of $196,500. For a home of this value, the projected property tax bill, net of the homestead exemption, is thought to look like this:
- City of Austin: $945
- Travis County: $750
- Austin Independent School District: $2,221
- Austin Community College: $182
- Healthcare District: $203
- TOTAL: $4,300
For many middle- and fixed-income Austinites, property taxes on the order of $4,300 annually or $358 monthly simply cut too deep into the family budget or are altogether unworkable. And, troublingly, things are likely to get worse.
Past trends show explosive growth in Austin’s property tax burden. In 2008, the average Central Texas homeowner paid property taxes totaling $3,072 annually, representing 4.4 percent of the median family income. Just a few years later, in 2015, the average tax burden had jumped by 40 percent to $4,300 annually, consuming 5.6 percent of the average family’ income. Population growth in the Austin area grew by just 14 percent over the period.
Future prospects don’t look good for taxpayers either. Several big tax-and-spend proposals are on-deck awaiting voter approval across the next several years, including the Austin rail bond election, several Austin Community College proposals, a potential Travis County bond election, and a tax rate election being considered by AISD. And if you think that these are being pitched to voters haphazardly, think again.
Local governments are organizing to maximize their chances to raise your taxes and go deeper into debt. From the city’s proposed budget: “The region’s taxing entities are also working together to coordinate with regard to the timing and scope of prospective bond or tax rate elections.” This sort of coordination does not bode well for those already concerned about the heft of the region’s tax burden.
High and fast-growing property taxes in Central Texas represent a major stumbling block that we, as a community, must begin to address if AISD is to attract students, if homeowners and renters are to live without financial hardship in Austin, and if the local economy is to continue to attract employers and investment. To that end, it’s time that our local leaders begin discussing real reforms, such as revenue restrictions and tax-and-expenditure limitations, to keep Austin affordable.
James Quintero is the Director of the Center for Local Governance at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin.