Council votes to drop tax change

For now, Austin residents won’t have to pay a tax levy to get street projects done.

The Austin City Council voted 7-0 Monday to drop the city’s research into switching from assessing property owners for nearby street infrastructure projects to paying a city-wide tax levy to fund future projects.

Finance Director Tom Dankert told the council a switch could have many benefits for the city, but would ultimately create too many problems in the short-term while not solving enough long-term issues.

“From my standpoint … it would be a phenomenal way to go,” Dankert said, as the switch would decrease staff time, hearings, objections to and litigation concerning assessed projects. “But the practicality of it is the problems with how do you treat everybody fair, how do you ramp up the tax levy? … That creates some potential challenges.”

Residents would have seen a substantial tax levy increase next year if the council pursued the switch, with the average owner seeing their city property taxes increase by at least 38 percent. That increase would have been built into subsequent levies, but city officials were concerned about potentially raising at least $1.1 million to fund 2013 street projects, let alone the estimated $4 million in funding needed for street projects in 2028, as they need is expected to grow steadily over the next 15 years.

In addition, council members would have to decide what to do with residents and businesses paying off assessments or who recently finished paying for assessed projects. While the city could have slowly weaned residents off assessments over a 15-year period or offered refunds, Dankert was concerned the city would need too much money in the short term to fund the switch, leaving the city with few options if the state Legislature decided to withdraw Local Government Aid.

“Some years it’s there, some years it’s not,” Dankert said. “If the staff has to cut $1 million, how are they going to make that million up?”

Mayor Tom Stiehm initially supported the idea when council member Jeremy Carolan brought it up at the council’s retreat last month, but he echoed city staff concerns Monday and said the city is better off as it is.

“I haven’t heard one comment from a citizen that was positive [about this issue], to be honest,” he told council members.

Council members agreed, saying it was a good idea on paper but not for Austin.

“For a new community, or one that’s revitalized, it would be a good way to go,” council member Judy Enright said. “We’re old.”

Dankert said the city could pursue other ways to lessen the burden on assessed properties, including a smaller tax levy increase which would cut costs on assessed projects.

The switch would not have affected property annexed into the city, such as the 209.5 property lots in what used to be Lansing Township. New residents would still have paid for the city to update the infrastructure and utilities on their property.

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