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October 26, 2020

Prop. A: Property Tax Increases Looming

There’s a big concern for property owners in Austin, with the potential for their property taxes to see a large, permanent increase. Proposition A is a ballot measure that would provide partial funding for Project Connect. This project is a $7.1 billion public transit plan, but several business owners in Austin have spoken out about the timing of the proposed property tax increase and transit development. The biggest concern is, with the current pandemic and business already being slow, that a 25% increase in Austin property tax would mean that a lot of businesses end up closing their doors.

Travis County property tax has been manageable for businesses in the past, but companies have had to get creative in recent months in order to make ends meet. Local business owners who are struggling to pay their current rents and mortgage payments could quickly find that they wouldn’t be able to stay in business any longer if they’re asked to pay more. Even for companies that can handle an increase, there’s concern that they’ll never be able to catch up from where they are right now. Another spike in cases could mean that businesses that were open have to shut down again, or that occupancy levels will be reduced.

With so much going against businesses in the area right now, the owners of those businesses believe an Austin property tax isn’t the answer. But city leaders are concerned about the gridlock in the city, and how something needs to be done about it. Their concern is that, without more transit options, there’s going to be nothing but further problems in the city for those who need to commute through it. The Austin property tax, they argue, won’t be 25%. But even the city’s own calculations showed an increase of around 26% of the city portion of the property tax, with the average person’s bill going up over $330 per year.

That’s a concern for homeowners who are on fixed incomes or areas already struggling during the pandemic, but it’s an even bigger concern for business owners. Some of the biggest opponents of the property tax increase are business owners who have been involved with the Austin area for a lot of years. These long-time businesses are staples of their communities, and seeing them close up would be difficult for residents in the area that rely on them for goods and services. Even a modest Travis County property tax increase during an already difficult financial time could spell the end for these companies and their time in Austin.

The argument isn’t so much that there shouldn’t be any funding for transit or any property tax increase, but mostly that now is not the time for this kind of increase to take place. After the pandemic is over and life has returned to some semblance of normal, and after businesses have recovered from the struggles they’ve faced during this unprecedented time, might be a much more logical time to revisit expanding public transit options in the city of Austin.

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KE Andrews is a state and local tax firm founded in 1978 that provides services nationwide. Our core business units are property tax, severance tax, and sales & use tax.

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