Adler-O-Meter

Enact a 20 percent homestead exemption

Wants to "provide a 20 percent across-the-board tax exemption for homesteads."


Sources:

News article, "Adler calls for homestead exemption; opponents say it’s not that simple," Austin American-Statesman, posted online Aug. 4, 2014

Steve Adler campaign website (Aug. 4, 2014)

Subjects: Housing, Taxes

Updates

Steve Adler, shown here celebrating his win for Austin mayor in December 2014, made a homestead exemption promise newly rated as a Promise Broken on the PolitiFact Texas Adler-O-Meter (Jay Janner, Austin American-Statesman).
Steve Adler, shown here celebrating his win for Austin mayor in December 2014, made a homestead exemption promise newly rated as a Promise Broken on the PolitiFact Texas Adler-O-Meter (Jay Janner, Austin American-Statesman).

Austin's Steve Adler loses momentum on promise to reach 20 percent homestead exemption

Has Steve Adler's marquee 2014 campaign pledge, to create a 20 percent general homestead exemption in Austin, lost momentum?

We decided to revisit our June 2015 In the Works rating of Mayor Adler's promise on the PolitiFact Texas Adler-O-Meter after he and fellow Austin City Council members this summer didn't increase the exemption in advance of writing a city budget--the first decision not to raise the exemption since the council expanded to 11 members a couple years ago.

The exemption reduces the taxable value of an owner-occupied home for the purposes of calculating city taxes. Those city taxes make up about 20 percent of local homeowners' property tax tabs.

Past exemption increases

Led by Adler, the council in 2015 approved by a 7-4 margin an initial 6 percent exemption as part of a resolution that stated the council's "intent is to get to a full 20% homestead exemption within the next four years." The new exemption was a hike from the previous $5,000 exemption put in place in fall 2014.

Adler said as members acted in 2015: "I think that tonight the city of Austin is watching to see if we are serious about dealing with the affordability crisis in this city. I think they are watching to see if we can rise above ward politics and pitting one part of the city against another part of the city. We have an affordability crisis in this city which is affecting all parts of this city, and we need to deal with that."

The council followed up in 2016 by bumping up the exemption to 8 percent, though the vote to do that was 6-5, with Council Member Sabino "Pio" Renteria, who had backed the 6 percent exemption adopted the year before, voting "no." He cited concerns that the larger tax break would leave the city with less revenue for policing and other needed services.

A hitch in 2017

But this year, Adler and Council Member Leslie Pool, who had each voted for the increased exemptions in 2015 and 2016, said during an April council budget workshop they wouldn't support increasing it for the 2018 budget year because the city budget was already tight. Nor was there support from Council Members Alison Alter and Jimmy Flannigan, who last November defeated two of the council's homestead exemption champions, Sheri Gallo and Don Zimmerman.

According to a presentation to the council at the time, it would cost the city about $1.7 million in 2017-18 for each percentage point increase in the homestead exemption.

Subsequently, and weeks before this year's July 1 deadline to make a decision on the 2018 exemption, Council Member Ellen Troxclair all but begged her colleagues to at least discuss raising the exemption again, with two posts on a council message board; her posts drew no response from council colleagues.

Adler says postponement justified

Adler, in an interview after the April workshop, cited multiple factors--including uncertainty about legislative actions affecting city finances--convincing him that another increase in the exemption needed to be put off.

Those factors, Adler said then, include already-approved spending increases for items including a larger Central Library, body cameras for police officers and staff pay raises, all of which city staff have said will likely cause the city to increase property tax revenue by 8 percent -- the maximum amount possible without risking a roll-back vote by petition.

Adler said at the workshop: "We are in a really tight budget this time, so we don't have that same cushion that we've had the last couple years," when the council adopted the previous homestead exemption hikes.

Adler ultimately insisted that not bumping up the exemption a third time on his watch wouldn't stop his promise from getting fulfilled.

Our judgment: The council's failure to get even halfway to the promised 20 percent exemption to date leaves scant time for success before Adler likely seeks re-election, perhaps making fresh promises, in 2018.

On the Adler-O-Meter, we're downgrading our rating of this vow to Promise BROKEN.


Promise Broken  – The promise has not been fulfilled.

This previous now-outdated update, by reporter Andra Lim, posted on June 19, 2015:

Austin Mayor Steve Adler's marquee campaign pledge last year was to enact a 20 percent general homestead exemption, phased in over a few years, that would provide tax relief to homeowners.

As Adler put it to the Austin American-Statesman, the City Council "could have done (an exemption) four or six years ago, and it hasn't acted. We need to act."

Led by Adler, the recently elected City Council took the first step on June 5, 2015, approving a 6 percent exemption and signaling that it aims to phase in the maximum 20 percent allowed by state law over four years. The new exemption increased a $5,000 exemption put in place in fall 2014. Members acted after Adler said, in part: "We have an affordability crisis in this city which is affecting all parts of this city, and we need to deal with that."

Before approving the 6 percent exemption, the council voted against implementing a full 20 percent exemption; three council members supported that move.

Adler had called for the initial 6 percent exemption early in council talks about the city's next budget, which must be finalized by October 2015. Though other council members proposed alternatives--such as the full 20 percent exemption to take effect on homeowners' next tax bills, or a 5 percent exemption to take effect on homeowners' next tax bills plus funding for a rental assistance program--the council ultimately ended up at the middle ground he first suggested.

Worth noting: Since August 2014, the first time Adler spoke to the Statesman about the 20 percent exemption, he's said the 20 percent exemption could be phased in over four years and paid for by cutting city services or raising the property tax rate. (Adler's campaign website said the homestead exemption "should not be covered by cutting any essential services" and Adler proposed using budget surpluses to absorb the cost of the exemption, or raising the tax rate.)

It's yet to be determined how the City Council will pay for the 6 percent exemption that will appear on the next tax bills homeowners receive; Adler recently said his preference is raising the tax rate.

We're marking Adler's promise to phase in a 20 percent homestead exemption IN THE WORKS.

Sources:

Web page, "An Affordable Way Forward," Adler for Mayor campaign, September 2014

Phone interview, Austin Mayor Steve Adler, May 5, 2017

News stories, Austin American-Statesman, "Adler calls for homestead exemption; opponents say it's not that simple," posted online Aug. 4, 2014;  "Austin City Council approves $5,000 homestead property tax exemption,", Nov. 20, 2014; "Austin City Council approves 6 percent homestead exemption, June 5, 2015; "Tight budget, possible tax cap make Austin exemption increase unlikely," May 6, 2017; "Austin City Council narrowly approves larger homestead exemption," June 29, 2016; "Sorry, Austin homeowners: No increase in homestead exemption next year," July 3, 2017

Online messages, "Homestead Exemption," Austin City Council Member Ellen Troxclair, June 15, 2017

Transcripts, Austin City Council budget workshop, April 26, 2017; Austin City Council meeting, June 29, 2016