Tax swap: Robin Hood workaround or revenge for SB 6?

Where the other half lives in Travis County

UPDATE: Tax swap proposal on hold (at least for now). More.

In a move being billed as a way for Austin ISD to get around a high amount of "recaptured" funds under the state "Robin Hood" school funding scheme, the Austin City Council voted 6-4 this month to initiate part 1 of a "tax swap" plan with the school district.

But could the tax swap also be retaliation against the Texas Legislature's recent action to reign-in big city annexation powers? A Republican House member suggests it may be related (see below).

The first step of the tax swap plan, which the City took on Aug. 10, raises the city’s property tax rate to 46.51 cents per $100 in appraised property value. It's a move that had bipartisan opposition, with Council members Ellen Troxclair (R), Jimmy Flannigan (D), Delia Garza (D) and Ora Houston (D, with fiscal conservative sympathies at times) voting no.

Step two: What's known as an interlocal agreement between the city of Austin and the Austin ISD to do the swap would have to be approved by both entities. This seems like a done deal -- Austin ISD will gladly lower its tax rates to keep Robin Hood away and the City would provide some services to the school (which hearkens back to the days before Independent School Districts became the norm in Texas public education -- more on that little irony in a future article).

Here's step three: That tax hike happens to be 2 cents higher than what's known as the "rollback rate" of 44.51 cents. It amounts to an increase of around 14 percent over the current budget year, by the way. That means the taxpayers, if they successfully circulate a petition with enough signatures (38,000, we understand), will defer final approval of the tax rate to the voters in a yet-to-be-scheduled rollback election (rumor has it on the March primary ballot).

Confused yet? Here's what it all boils down to: According to KXAN-TV, it's a move that may save Austinites money, but every other resident in the non-Austin ISD portions of the city (see chart above) will be stuck with the full 14 percent tax hike (though Mayor Steve Adler is promising perks for neighboring hamlets like funds for a youth center for Del Valle).

Under any of version of a tax swap currently proposed, [taxpayers] outside of AISD would pay more in property taxes. Under one of the proposed scenarios, a typical AISD homeowner would save $8.33. Anyone outside AISD would pay $44.97 more. [...] If city council approves a property tax increase as part of a tax swap [it did, at 14.4 percent], 2 cents higher than the rollback tax, voters may petition for an election.

Said Rep. Tony Dale upon news of the proposal:

... the City of Austin voted on a potential property tax rate increase of 14.4%. Property taxes continue to be a high priority for homeowners in this area. Austin claims they will do some sort of "tax swap" with AISD as it relates to taxes. Sounds fishy to me. AISD isn't the only school district in Austin's territory. They apparently don't plan to bring tax relief to my constituents in Austin who live in RRISD and LISD, just a 14% property tax increase. 

Which he followed with ...

... Saturday [Aug. 12] the House will be debating limiting how high cities can raise taxes without voter approval [SB 6, which was signed by Gov. Abbott and goes into effect Dec. 1]. I look forward to the debate.

SB 6 will require the consent of the residents being annexed by a nearby city through either an election or petition process. Additionally, the soon-to-be-law reduces bureaucracy to speed up voluntary annexation when cities and land owners can agree on services. It only affects cities of 500,000 or more in population.

The City of Austin saw this annexation fight coming months -- if not years -- ago. Could the tax swap be a pre-emptive strike against Austin suburbs and unincorporated areas who are about to make it much more difficult for the Capital City to swallow them whole?

We'll keep tracking this, but in the meantime we'd love to hear what you think in our comments section. Oh, and at at a city budget hearing on Aug. 31 where your opinion could make a greater impact. From the Travis County GOP Events calendar:

City of Austin Public Hearing on Budget, starts at 4 p.m., Austin City Hall, Council Chambers. This is the final public hearing on the budget and possible AISD Tax Swap. Make your voice heard! For more information on how to testify and any updates see the Aug. 31 square on our Events calendar at http://www.traviscountygop.org/events. ...