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Cost of Government Continues to Significantly Outpace Incomes

June 8, 2015

It’s no secret that Austin is suffering from an affordability crisis, where the average family’s cost of living — and especially of housing — is rising faster than its income. Those housing costs include the property taxes we pay to keep our local governments running. And, as shown by RECA’s latest findings, that tax burden is also outpacing many Austinites’ ability to pay.

In the 24th annual Combined Cost of Government Index, RECA shows that in 2014, while the median income for a family of four rose by 3 percent, the local cost of government to the average household grew by 5.5 percent. (The index accounts for property taxes paid to all local taxing entities, City of Austin and Capital Metro sales taxes, and transfers from utility ratepayers to the City of Austin general fund.)

This worrisome disparity continues a trend since 2009; over that six year-period, the cost of government per household has increased by more than 20 percent, while median incomes have only increased 9 percent. The tax burden now consumes 9.7 percent of the median income, an all-time high for RECA’s Cost of Government Index.

So what are we going to do about this? Obviously, much of what is being funded by this tax burden is essential, from our first responders to our children’s classrooms to the roads and buses that allow us to get around. Our local leaders need to continue to be vigilant, however, to how their combined decisions impact the bottom lines of working families. We need to do a better job of prioritizing not only within but also between local government budgets, looking for smart ways to collaborate, and delivering services in a way that is financially sustainable.

Just as important, however, will be Austin’s ability to harness its growth to spread its cost of government across more taxpayers and improve the efficiency of its infrastructure and services. That’s the fiscal reality behind RECA’s advocacy for the “compact and connected” land-use and mobility vision of the Imagine Austin Comprehensive Plan, and for all the ways to bring that vision to life, from the CodeNEXT effort to common-sense regulations for granny flats.

The high-profile initiatives that the City Council has undertaken in recent weeks — increasing its homestead exemption and challenging the commercial tax roll — are attempts to redistribute the existing cost of government in ways that council members find more fair or politically palatable. They are not serious efforts to reduce the cost of government. Right now, we don’t expect that the 2015 Cost of Government Index will show a reversal of the current troubling trend. But we’d loved to be proved wrong.

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