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Brigid Shea, running for mayor of Austin against incumbent Lee Leffingwell and activist Clay Dafoe, sent a mailer we spotted May 7, 2012, including a double-digit claim about hizzoner and taxes.
"Lee raised property taxes 20 percent in three years," the mailer says.
All that much, and by his lonesome?
Fortuitously, we had in hand a chart provided by the Travis Central Appraisal District showing the tax rate set by the Austin City Council each year from 1990-91 through 2011-12.
Before Leffingwell was elected mayor, the council set a rate of 40.12 cents per $100 of appraised value for 2008-09, meaning the fiscal year through September 2009. Last year, the Leffingwell-led council set a rate of 48.11 cents for 2011-12. Put another way, the liability on a property valued at $100,000 before Leffingwell became mayor was $401.20. The liability in 2011-12 was $481.10.
On its face, that’s a 20 percent increase over three years -- as referenced on the flip side of Shea's mailer, which says: "Lee voted to raise your property tax rate 20 percent in three years."
But no mayor can set a tax rate on his or her own, which Shea knows because she’s a former council member. Each year, the seven-member council votes on the rate as it completes the city’s budget. In Austin’s form of government, the mayor has one vote, like fellow council members. Asked by email about Shea’s claim, the mayor’s campaign consultant, Mark Littlefield, said: "Lee did not raise these taxes — the Austin City Council raised these taxes."
Another wrinkle: Leffingwell, a retired airline pilot, was on the council before he ran for mayor and had a vote on city tax rates set for every budget starting in 2005-06. Through his council tenure, the tax rate has dipped and gone up, according to the appraisal district’s breakdown. In Leffingwell’s first year on the council, members kept the previous year’s rate of 44.30 cents per $100 in appraised value. Members cut the rate each of the next three years before raising it each of the next three years.
Ed Van Eenoo, the city’s budget officer, told us the council voted 7-0 for the three tax-rate changes — all increases — with Leffingwell as mayor.
However, tax-rate changes alone don’t reveal the pocketbook impact of city property taxes.
Notably, for instance, Leffingwell said recently that Austin has the lowest tax rate by far of the five biggest Texas cities. That’s so, but we rated his claim Half True after pointing out that any touting of tax rates is incomplete if it fails to fold in how much property-owners actually pay out.
That’s because property valuations and tax exemptions also influence what property owners pay. To gauge the property taxes owed the city, for instance, take your house’s dollar value; subtract any homestead or other exemptions; divide by 100; then multiply by the tax rate — with the tax rate expressed in dollars; for example, 0.4811 rather than "48.11 cents."
Van Eenoo put it this way in an email reply to our inquiries about changes in the rates on the mayor’s watch: "Simply looking at tax rates does not provide a complete analysis as tax rates are heavily influenced by home values. When property values go up, the revenue needed to maintain operations can generally be achieved at a lower tax rate. Vice versa when values go down as they did in 2010 and 2011."
One way to evaluate property tax rates without ignoring the role of home values, Van Eenoo said, is to compare the tax rate adopted by the council with what’s known as the "rollback rate." That’s the maximum rate the city is allowed to set under state law without triggering a voter referendum. The rollback rate, Van Eenoo told us, is calculated as the rate that would bring in 8 percent more in revenue for operations and maintenance than in the previous year, plus enough money to pay the coming year’s debt service.
In keeping with the time period behind Shea’s claim, let’s focus on Leffingwell’s mayoral years.
In his first year leading the council, the tax rate set by the council was the rollback rate, as it had been for the previous three years. In the latter two years of Leffingwell’s mayorship, the adopted tax rates were lower than the rollback rate, Van Eenoo said. In those years, then, the council didn’t raise taxes as much as it could have.
Yet another measure that takes into account changes in property values is the "effective tax rate." That’s the rate that the city would have to set to bring in roughly the same amount of revenue it received the year before on properties taxed in both years. In each year of Leffingwell’s mayoral term, according to city data, the council’s adopted tax rate exceeded the effective rate; on average, the rate was nearly 4 percent higher.
Looking beyond rates, we wondered how much typical homeowners’ city property tax bills had changed in the years Leffingwell has been mayor -- though we should note, of course, that the city is only one of the entities taxing Austin properties. Others include school districts, county government and community colleges.
To support her statement that Leffingwell "raised property taxes 20 percent in three years," Shea sent us data that she said showed tax bills for Austin homeowners had increased more than that amount since Leffingwell became mayor.
Shea’s analysis, which does not take into account exemptions, calculates annual tax bills using two different measures for home values: the median and average prices of homes sold in February of each year. Shea obtained the sales price information from the Texas A&M University Real Estate Center, which gathers data from real estate professionals across the state.
Because averages can be skewed by a few very high or low values, taking the median value offers a way to dampen the effect of those extremes. Medians represent a "middle" value — median sales price would be the dollar amount at which half the city's homes sold for more and half sold for less.
For this reason, we put aside Shea’s data on average sale price and stuck with her figures for the median. Those show that the city tax bill for a home valued at the February median sales price increased about 23 percent from 2008-09 ($753) to 2011-12 ($924).
Still, Shea’s data relies on the prices of homes sold in a single month each year. That’s a small pool. We wondered whether there was a better representation of a typical Austin homeowner’s property value.
We found one in data from the city: annual "median taxable value." Samantha Park, a city spokeswoman, told us that the "taxable value" of a home is the amount on which the city can actually tax. It’s based on the appraised value, determined by the county’s assessment, minus exemptions. The "median taxable value," then, is the value at which half the city's homes were valued at more and half were valued at less.
Next, we used the city’s data to calculate how much the city taxes on a home with the median taxable value had changed during Leffingwell’s mayoral term. Our calculations found an increase of about 25 percent from 2008-09 ($700) to 2011-12 ($877). That’s greater than the 20 percent Shea cited on her mailer.
Another factor to consider: inflation.
Adjusting Shea’s tax bill figures for inflation reduces the size of the increase during Leffingwell’s mayorship to about 18 percent. Doing the same to the figures in our analysis of city data reduces the property tax increase to about 20 percent.
We ran our work by the city. Park told us that our calculations of the city-provided data were fine, but that she had a quibble with our use of the Bureau of Labor Statistics’ Consumer Price Index to account for inflation in property tax increases.
The CPI, Park said, "takes into account the change in price for goods and services purchased by households, not government services that are provided," which is what taxpayers are funding through their property tax bills. And she suggested that rising prices may be hitting governments harder than consumers. To illustrate her point, she noted that the price of a gallon of milk rises more slowly than the price of health care services for city employees.
Also, she said, our analysis does not consider the cost of "improvements in service delivery." As an example, she pointed to the City Council’s decision to turn the the city’s animal shelter into a "no-kill facility." We take this as saying the city chose to do more things — and those had costs.
In response to the city’s concern about the CPI, we used a different index — one from the federal Bureau of Economic Analysis that gauges inflation for state and local governments — to adjust the tax bill figures in Shea’s and our data. That reduces the increases by only half a percentage point compared to our calculations using the CPI.
Mindful that tax rates alone paint an incomplete picture of the impact of property taxes, which are also driven by changes in property values, we found that what a typical Austin homeowner — one with the median-value home — paid in taxes went up 25 percent in the three years that Leffingwell’s served as Austin mayor. Adjusted for inflation, that figure drops somewhat, but is still about 20 percent.
So, taxes went up 20 percent, or more, with Leffingwell as mayor.
However, no Austin mayor can raise taxes solo commando. Leffingwell had one of the seven votes that were cast each year in setting the city’s rates. This significant perspective is absent from Shea’s statement, making her claim Half True.
Travis County Central Appraisal District, spreadsheet, historical city tax Rates, 1989-90 through 2011-12, (received April 26, 2012)
Emails (excerpts) from Ed Van Eenoo, city budget officer, City of Austin, May 8, 2012
City of Austin, spreadsheet, historical property tax data (received May 8, 2012)
PolitiFact Texas, Truth-O-Meter article, "Lee Leffingwell says Austin has lowest property tax rate of Texas’ five biggest cities," May 1, 2012
Brigid Shea, spreadsheet, city property tax information (received May 9, 2012)
Email (excerpted) and telephone interviews, Samantha Park, public information specialist, City of Austin, May 9-10, 2012
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