The property tax rate is composed of two parts: the operations and maintenance rate and the debt service rate. The debt service rate is set according to the amount of revenue necessary to make the City’s payments for tax-supported debt, such as voter-approved general obligation bonds.
When voters approve bond propositions, the City does not issue all of the debt immediately. Instead, debt issuances are spread out over several years. By monitoring the annual spending needs and not issuing all the debt at one time, the City can reduce debt service costs and keep the debt service tax rate more stable from year to year.
City Council approved holding a November bond election during the 2012-13 fiscal year, when the City’s debt service rate was 12.08 cents per $100 of taxable property value. The debt service rate was subsequently reduced to 11.71 cents per $100 of taxable property value for the 2013-14 fiscal year. If the 2013 Affordable Housing Bond is approved by voters, the debt service rate is projected to return to 12.08 cents per $100 of taxable property value for the 2014-15 fiscal year. The average cost to the typical (median value) homeowner’s property tax bill is estimated at $8.75 per year over the life of the debt.
For additional tax impact and other financial information, please refer to the City’s budget documents available online at www.austintexas.gov/finance.