A superior technology industry, creativity, great music, drugs, a clothing optional policy, the occasional abusive police officer and expensive sandwiches are all defining features of our beautiful Austin.
This list of characteristics has not changed in some time, but we should consider adding a new member: "a growing difference between local taxes paid and annual income earned in Travis County," or, simply put, "higher taxes, lower income."
Late last month, Austin's Real Estate Council unveiled its 2007 Cost of Governments Index. The Index takes a look at property and sales tax rates from Travis County, Austin Independent School District, the city of Austin, Capital Metro, Austin Community College and the Travis County Hospital District. Though the property tax burden for Travis County and AISD has actually decreased since 2006, we have all picked up a larger tab through sales taxes for the city of Austin and CapMetro.
With all of these taxes combined, the average Austin household paid an obscene $5,934 last year for local government, a 0.8 percent raise from 2006 and an over 50 percent increase since 2000. In the face of an increasing local tax burden (and a slew of other problems at the federal level), the average income of an Austin family of four decreased to $69,300 - a 0.4 percent drop since 2006. The Index reflects an 18-year-old trend of a larger percentage of people's money going toward local taxes. Last year 8.6 percent of a family's total income went to fuel local government.
This portion has increased by nearly 24 percent since the index's inception in 1989.
The trend of higher taxes and lower income is also bad news for those of use who do not fit into the average, four-person Austin household (i.e., college students). While Travis County and AISD property tax burdens decreased for the households, a larger share of local tax collection is being shoved onto more of us through the city sales tax. And we non-householders earn considerably less than the average $69,300. Keep in mind, these local taxes are in addition to the obese behemoth we feed every year on April 14 and the smaller, dumber monster a good chunk of us feed every semester.
At least we can say we're paying for irreplaceable services the city provides, right? Unfortunately for the city of Austin, the city council received some troubling information earlier this month. Apparently we can expect a budget deficit $5 million larger than initially estimated, according to the June 4 budget work session on the city council's Web site, leaving the city $25.3 million in the hole. So it's really not just higher taxes and lower income, but higher taxes, lower income and lower tax revenue. What next? If we spend less money because we earn less money and because prices are increasing, the only way our local government can balance the budget is by raising taxes.
There is at least one person in charge who is not dim enough to follow that stream of logic. City Budget Officer Greg Canally places some of the blame on the Austin City Council. He says a surefire way to solve the problem is to take a look at the expenditures and simply not spend so much.
Good idea. If we are being forced to tighten our financial belts because of poor conditions, why doesn't our local government scale back on spending as well? Now is not the time to leech off the productive members of the community. And if we're in this economic mess because of government ineptness - whether local, state or federal (but especially federal) - why is one solution always to throw more money at the same government?
No one should be happy. For instance, as the token blue sprinkle on the frosting of a very red strawberry Texas cupcake, why stop at 8.6 percent of your income going toward local government? Why not push for a higher rate? 15 percent? 25 percent? If the trend documented in the Index continues, we will be there soon enough.
Entities bearing economic ill will are encroaching upon us from all directions. A terrible federal income tax, massive inflation, lower employment, higher prices - and our local government has the audacity of hope to kick us while we're down and siphon off more money gradually. During these rough times, it is best to just take a moment, stop, and try to focus on the things that make Austin amazing (please refer to first sentence).
Kumar is a business honors and economics senior.
