A 20 percent tax exemption for Austin homeowners initially sounds great. Austin mayoral candidate Steve Adler is proposing this homestead exemption for Austin, but because most residents aren’t homeowners, the majority of the city wouldn’t benefit from this exemption. Renters make up more than 55 percent of Austin’s population, and because apartment complexes aren’t considered homesteads, many landlords wouldn’t receive this exemption, meaning that many renters wouldn’t, either. This fact alone isn’t necessarily detrimental to renters, but the city will have to make up the cost of the exemption somehow. Adler presents two options: either “find” the money in the budget or adjust the tax rate to ensure Austin’s revenue remains neutral. Adler says the current budget has a surplus that Austin could use to offset the exemption, which would cost the city $35.6 million of its $3.5 billion budget throughout the next year. But, of course, no one knows for sure whether future years will present a budget surplus or an opportunity to cut costs from other areas of the budget.
The unpredictability of depending on the budget to offset the exemption’s cost leaves us with the possibility of a property tax increase, which would cause the rent for the average two-bedroom, $1,200-per-month apartment to cost $80 more per year. Students may be looking at yet another cost-of-living increase, and because many student apartments already cost more in rent than the city’s average, the money students would indirectly lose to homeowners could be much more than $80. Adler’s attitude toward the possible rent increase appears to be that landlords would graciously absorb this cost themselves, an unlikely occurrence considering that landlords are notorious for nickel-and-diming students. Adler wrote on his website, “If the tax rate were adjusted upward to maintain revenue neutrality, it is unlikely that the resulting increased tax cost would be passed through to renters.”
The median value of an Austin house is about $200,000, so if the city’s budget absorbed the cost of the exemption, then homeowners would save an average of $189 per year, and renters wouldn’t be affected. However, if the city were to increase property taxes to offset the exemption, homeowners would save about $104 per year, and the average rent would increase by about $80 per year. While $80 a year isn’t much to some people, especially when compared to college students’ many rising expenses, it is a significant amount to others, and we’re disappointed that Adler, if elected, may try to increase renters’ costs in order to decrease costs for people who might hardly notice the difference.