The Audit and Finance Committee unanimously recommended to the full Austin City Council a policy framework and decision tree for pursuing a tax-rate election (TRE).

Council Member Ryan Alter moved to recommend a TRE policy consistent with staff presentation and the committee’s decision tree; Council Member Vela seconded. The committee adopted the motion without objection.

Carrie Lang, director of the Budget and Organizational Excellence Office, presented staff recommendations and the decision tree. Lang said the city’s five-year financial forecast showed a $33,400,000 deficit in fiscal year 2026 and noted a projected voter-approval rate of 57.01 cents per $100 of taxable value as shown in the forecast. Lang also said American Rescue Plan Act funds must be spent by the end of calendar year 2026 and that staff had identified $18,100,000 in programs that departmental staff recommend be continued as ongoing funding, primarily in homeless services and some public health and economic development programs.

Staff put forward four primary policy recommendations:

1) The city manager shall present a proposed operating budget each year that is balanced at a property tax rate equal to or less than the projected voter-approval rate; the city manager may periodically conduct a comprehensive analysis of general fund programs and services to identify areas for potential TRE funding.

2) A TRE should occur no more frequently than once every four years, except when a TRE is needed to respond to a financial emergency caused by sustained economic conditions, a natural disaster, or a significant and unexpected reduction or limitation in funding from federal or state action that cannot responsibly be addressed with general fund emergency or budget stabilization reserves.

3) The city shall clearly identify the level of programming or services that additional revenue above the voter-approval rate would fund and provide an accounting of expected service levels should the election fail. Staff recommended that TREs not be used to cover baseline cost drivers but may be proposed to address identified service gaps and new or expanded services.

4) A proposed TRE should include a balance of one-time and ongoing expenditures to sustain investments over the medium term while also funding one-time start-up costs tied to expanded operations.

Lang illustrated how staff would build possible TRE packages, describing comprehensive and strategic approaches. Staff used forecast figures to show that a 1¢ tax-rate increase would generate approximately $21,000,000 and a 2¢ increase approximately $42,000,000 based on that forecast; Lang noted those figures would change as the proposed budget is finalized.

Discussion by committee members touched on enforcement of attendance rules (separate item), whether the policy requires a comprehensive package versus a targeted package, the timeline for putting a TRE on the ballot (the group noted that a TRE must be timed with the November uniform election because it sets the tax rate for the next fiscal year), and how staff will scrubs budgets and identify program priorities before asking voters for additional revenue. Council members expressed interest in transparency about the services that would be funded and what would be cut if a TRE failed.

The committee’s vote forwards the policy framework to the full council for consideration.