My letter to the City’s Deputy Chief Financial Officer requesting changes to budget presentations.
An example: this much-reported chart from the City budget office doesn’t include sales tax impacts.
Dear Mr. Van Eenoo,
Congratulations on completing this year’s budget adoption cycle in a smooth and expeditious fashion. There was much uncertainty about the process and Council priorities coming into the new budget cycle and you helped steer that to a timely conclusion.
I am hoping that as we move towards adoption of the final property tax rate, your office might consider making three important changes to the way it presents data to policymakers and the public.
1. Describe property tax shifts amongst property class types by decile
Within your office’s response to the Council’s concept menu, there was an announcement of the increase in taxable value that facilitated the adopted budget’s mix of property tax rate cuts and increased spending.
However, it was unclear to the public and some advocates where exactly the surge in valuation occurred. Was it in single-family, or multi-family, or commercial? And was it a similar surge within each property of the type class or did, say, properties in the lower deciles of valuation experience a surge disproportionate to the rest of the property class.
It is my hope that moving forward – definitely before the final property tax rate adoption vote – that you will provide the public and policymakers with a previous year and current year, class-specific (e.g. single-family vs. commercial) distribution of taxable property value by deciles.
Such visualizations would help provide clarity about the economic fairness of revenue policy, as well as reduce confusion about the budget.
The ensuing political “spin” about the budget has left many friends and council-watchers asking a basic question “how can taxes be going down and spending up? What are they not telling us?”
Empowering the public (and media) by providing the distribution on property tax shifts would help provide an easy-to-understand explanation for this seemingly contradictory budget development.
2. Include sales tax impacts for ‘typical’ Austinite
As you are aware, there are only a handful reporters that cover the budget happenings of the City. Their coverage is how most of the public gets their news about Council’s budget-making. And they are all quite dependent on the data you provide to fill-out their stories. While it’s not quite just a cut-and-paste of your documents, the information you provide is the foundation of the quantitative aspects in their reporting.
Unfortunately, while the sales tax is the 2nd largest source of revenue for the general fund, it really didn’t feature in your presentations about the impact of what the “”typical” Austinite will pay. I’m attaching an image that is an example of this concern [Note: it’s at top of this post]. While the state sets the base of 6.25%, Council is choosing to tack on its 1%. Given the deeply regressive effects of this tax on the lowest-income Austin households, it seems that this Council choice should be framed as an explicit one, instead of just left to inertia, or worse, be made invisible in the conversation.
I encourage you to develop presentations where the impact of the 1% sales tax policy by Council is clearly explained as a choice; this is especially important for documents likely to serve as the basis for reporting on Council budget proceedings.
3. Add complementary scenarios to “median homestead property tax bill”
As you know, Austin is a majority renter city with real economic segregation and poverty issues. There are also many middle- and upper-middle class households who are experiencing assessment growth that vastly outpaces their income growth.
The analytical focus of budget document reference points on the median homestead property tax bill’s year-over-year change flattens the discussion of revenue policy and enables the confusing, contradictory, potentially trust-eroding narrative of “lower taxes while boosting spending”.
An alternative is to create a few more scenarios on top of the median homestead, such as a homestead at the top 20% of valuation and one at the bottom 20%. Additionally, it might be beneficial to create specific scenarios about the impact to renters (that includes sales tax) and business operators instead of leaving it up to a consumer of your documents to guess what the change might be. Such a grid of scenarios would provide a fuller picture of the affordability impacts of revenue policy.
Finally, for the homestead and renter scenarios, it could prove useful to incorporate the previous council’s work on an income-based affordability benchmark. Specifically, the expected shift in income share captured by the local revenue tool being examined. At certain points, the policymakers seemed to conflate growth in property assessments with underlying income growth. This would help ameliorate such confusion.
These three recommendations build on top of the already rich, high-quality documentation you and your staff share with the public and policymakers. I am confident they will help improve the quality of discussion and reporting on budget policy.
I can’t stress enough how much credibility the budget staff documentation has with the press and policymakers, so if your analysis doesn’t incorporate it, it essentially renders a reference point (and hence the class of Austinites it represents) invisible in data-driven budget policy discussions.
Thank you for considering these changes. And thanks again for the hard work you do on behalf of the people of Austin.
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