The Heartbreak of Tax Breaks

As many Austinites already know, our fair city – once known as a laid back haven for slackers, musicians, students, and escapees of the Dallas and Houston lifestyle – is becoming increasingly unlivable and unaffordable.  Unfortunately, the beauty and quality of life in Austin has attracted thousands of new residents who have driven up property values and pushed apartment occupancy to 95 or 96 percent, thereby raising rents. Supply and demand at work – high five to Adam Smith!

home prices

But, as the housing market has hit the boiling point, our property tax appraisals (based on market value) have risen accordingly. So, even if you want to stay in the same house you’ve cared for and loved for 30 years, many now question whether they can continue paying their property tax bills, particularly those on a fixed income. It’s not uncommon anymore to hear of lifelong Austin residents who significantly reduced their property taxes by moving no further than a town or two down the highway from Austin.

To make matters worse, we Austinites have done such a good job of conserving water lately, the City-owned electric and water utility is raising rates again to pay its bills for certain infrastructure that must be paid, water use or no water use. Plus, we may be hit with a “drought fee” to finance the search for more water because Lakes Travis and Buchanan that we have historically relied upon are drying up – currently they are only 36% full!

lake travis

And consider that the average homeowner’s tax bill includes about $200 a year so that the University of Texas can build a medical school. That homeowner also pays about $150 a year toward the Austin Community College District, and we’ll soon have the opportunity to vote on adding some extra dollars to all these assessments to finance a light rail system, which won’t provide transportation options where I live or anywhere near here.

With that backdrop, imagine how much I enjoyed Pete Winstead’s special contributor opinion piece in the Austin-American about giving tax breaks to big companies who want to relocate in Austin. In fact the headline, “Resting on our ‘cool’ laurels won’t keep Austin booming,” made me gag. He wrote that he wants to “build an even stronger and cooler Austin.” Still gagging over that.

winstead

Chairman of Opportunity Austin, Pete Winstead, you see, is a lawyer who honed his legal chops and civic involvement in Dallas. He did so well there, he moved here in 1987 to start an Austin branch of his law firm and work his “magic” on us. In the opinion of at least one former Dallasite I spoke with, Pete wants to Dallasify our city.

In his article, Pete makes compelling arguments for continuing the practice of giving tax breaks to companies that relocate to Austin. I say “compelling” if you believe in his trickle-down theory — that the opportunities these companies provide will enrich the rest of us in a variety of ways. He also argues that unless we offer these companies tax breaks, the City will be powerless to negotiate with them.

Negotiate? What Pete really means is the Winstead firm will be powerless to negotiate FOR the companies and AGAINST the City and Austin’s taxpayers. On his firm biography, for example, he states that the Winstead firm “guided Dell Computer Corporation through its initial public offering and its dealing with municipalities on the concessions related to the company’s relocation to Round Rock, Texas.”  And I love this sentence:  “His major involvement in civic, political and philanthropic matters in the Austin area has made him a ‘go to’ person to secure the award of various projects from political entities in the region or just to position a client to understand and succeed in the Central Texas area.”

Meanwhile, long-time Austin residents and business owners, must shoulder the price of government, watching our tax bills get bigger so we can pay for his wheeling and dealing to “position” his clients to get the biggest tax break possible.  Who wouldn’t have a few thoughts about where he could “go to.”

All of this is why I was glad to read Bill Aleshire’s piece in the Austin-American the next week, countering Pete’s thoughts on the subject. Bill moved to Austin in 1970, about the same time as Willie Nelson. Unlike Pete, Bill actually remembers when the town was “cool” (to use Pete’s word), i.e., when there was an Armadillo, Split Rail, Liberty Lunch, and a Threadgill’s Tavern featuring Janice Joplin. Bill has the perspective and, as former Tax Assessor/Collector and County Judge, the credibility to speak about what makes Austin livable – and it’s not incentives to entice big companies to move here and do business tax free!aleshire

In his own words, Bill says, “Recruiting tax dodgers to locate here has not made, and will not make, Austin more affordable for the rest of us. Stoking the red-hot fire of growth with tax giveaways is not the path to sustainable growth.” Moreover, he continues, the growth that Pete wants to see “is not the solution to traffic congestion, high rent and home prices or strains on education; wild growth is largely the cause of the current crisis in those areas.”

He effectively disputes the trickle-down delusion Pete lives under, i.e., that we all will be better off by allowing some privileged few to avoid a tax bill. Bill writes, “. . . no law of economics says that a lower cost of living will result when the wild growth inflates housing costs and drives up taxes and fees [in reaction to] the sudden strain on infrastructure, all while exempting new companies from paying taxes.”

And Pete’s ears had to burn when Bill explained about the few who benefit from this kind of growth: “. . . we now have a type of tax-incentive/political complex in Austin, where enormous political influence is wielded by those who benefit from the transactions that come along with recruiting big companies to Austin . . . [those who] make money off the relocation transaction, regardless of the net effect on the community at large.”

Does this make anyone else wonder how much did the Winstead firm earn from negotiating the Dell deal in Round Rock?

As a lifelong Austin resident, I understand that there is a price to pay for living here, but it’s a price that everyone within the City limits should have to shoulder proportionately. Companies need to pay their fair share as an act of corporate citizenship. Surely, if corporations can have free speech rights, they can have civic virtues.

City council

My hope is that, when elected, our new city council with members from single-member districts will be outsiders to the tax-incentive/political complex and be advocates for their constituents on the issue of affordability rather than growth at all costs. Maybe a majority of council members will take the approach that Austin’s leadership has been like a teenager with a new car and has negligently failed to do the appropriate maintenance, thereby  allowing the vehicle to deteriorate.   For the sake of current residents and taxpayers, I hope they will take back the keys until that teenager has matured and started showing evidence of responsible municipal stewardship.

To all of you who haven’t moved here yet, let me suggest that you don’t. Austin doesn’t deserve you. Until we can find a place for your car on the road, can assure you of tax fairness, and promise that you can find affordable rents and housing, we aren’t entitled to all of the special things you might bring to our world. It will be our loss, and your gain in the long run. Unless we get our act together, Austin will only break your heart along with your bank account.

 

 

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About nowandthenadays

Observer of life who writes about Austin, women's issues, history, and politics. I retired as a Texas Assistant Attorney General after almost 40 years in state government in May, 2013.
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5 Responses to The Heartbreak of Tax Breaks

  1. Colonel Allison says:

    Another enjoyable post.

  2. Mary S. Black says:

    Excellent work, Jeffee!

  3. Anonymous says:

    Wow, Jeffee. Great article!!!!! I knew all of that but never saw it put together so well in one place. I agree that the corporations and businesses that relocate here are providing a much needed job market, making Austin one of the most requested destinations for some of the major national moving companies. But they should have to pay their fair share of property taxes. Is it possible to quote you on some of the information? I would love to share some of your thoughts with some of my customers. You really hit the nail on the head. Being a fourth generation Austinite and born right here in the Deep Eddy area, I am so unhappy with the huge growth in population and costs that we are experiencing, and yes, Austin is losing so much of it’s charm and Weirdness!! I just sold a home for a gentleman that lived in the Deep Eddy area and has been there for years and just could not afford the taxes anymore on his retirement income. So sad, but we found a really cute home for him in central South Austin that he really likes, but of course, would have preferred not to move. He loved living in Central Austin for so many years.

    • Hi “Anonymous!” Thanks for your comment!!! I have no problem with your sharing my thoughts with your clients, understanding that I’m not an expert on anything except my thoughts!! I’m sorry to hear of another move by a long-time resident because of taxes. We ought to be able to stay in the home we love. I’m glad to hear, however, that you found him a cute place in South Austin. I think the soul of Austin is moving to that area.

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