Good Tuesday afternoon --
We have lots of news today, and almost all of it should enrage you as a taxpayer.
Here are some updates:
Council to Consider Max 3.5% Property Tax Increase
State law allows cities to raise property taxes up to 3.5% each year WITHOUT VOTER APPROVAL. Cities can choose to raise any amount up to that amount, or even reduce taxes. As you might have guessed, Austin RAISES to the maximum pretty much every year. Because they can.
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From the Austin American-Statesman story last week:
Austin City Council members are divided over a proposed 3.5% property tax increase as debate begins on the city’s $6.6 billion budget.
By Chaya Tong
July 17, 2026
Austin American Statesman
A proposed 3.5% property tax increase emerged Thursday as one of the first major tension points in Austin’s budget debate, reviving tensions from last year’s fight over a much larger tax hike that voters rejected.
The divide surfaced as city council members got their first opportunity to publicly question City Manager T.C. Broadnax’s proposed $6.6 billion budget.
Released late Friday, the budget relies on higher taxes and fees – in addition to millions in cuts and reallocations – to balance a projected $26 million budget deficit. The manager’s budget also increased funding to priorities like homeless programs, public safety and employee pay and healthcare raises.
The 3.5% increase in property tax collections is the maximum the city can adopt under state law without seeking voter approval. The increase has become politically charged less than a year after Austinites rejected Proposition Q, which would have raised city property taxes by more than 20%.
Debates over social service cuts, police funding and higher tax rates have already emerged as potential key fights as council starts debating the budget over the next several weeks.
As proposed, the budget would increase property taxes and service fees for electricity, water, trash and drainage rates. Together, the increases would cost the average Austin homeowner nearly $346 a year (or about $29 a month).
Council Member Marc Duchen, the only council member to vote against the budget that led to last year’s property tax election, told the council he was surprised by the proposed budget and thought that it would have been more “reflective of some fiscal discipline after the tax rate election last year and instead it looks like we started off with the max.”
“It’s not really what I was expecting,” he added. “I thought after starting the conversation a couple months ago about zero based budgeting.
“When I look back for the last four years at the 3.5% that we approved, it sure looks like the state gave us a ceiling, but we treat it as a floor,” he said.
Mayor Kirk Watson highlighted his request to analyze a no new revenue version of the budget because he did not want council to jump to the conclusion that they would raise taxes by 3.5%.
“It would help us identify and I think, it would help the public identify, what happens if we do go to the full 3.5%,” he said.
But other council members – many of whom advocated for an even higher tax rate increase than what council put on the ballot this time last year – pushed back on the idea of going under a 3.5% raise.
Council Member Ryan Alter said that over the last year, the city’s inflation has been 3.5%.
“Keeping up with the cost of what we’ve been doing just over the past 12 months – not growing in the city, not doing anything new – costs 3.5% more,” he said.
At a press conference after the meeting, Budget Director Kerri Lang said that without the 3.5% increase, the city would anticipate $26 million more in cuts they would need to balance.
“If we do not go to the full 3.5% in each year we forever lose that revenue and so the growth is lower which makes it harder for us to balance out our ongoing needs in not just the current fiscal year but in future years,” she said.
Some council members also raised questions about cuts to social services and housing.
Council Member Mike Siegel echoed the concerns of the recently formed community budget coalition, which has advocated for cutting police funding and moving the money to social services.
“A lot of advocates, since the budget dropped, have been asking the question, how is it that we are raising the police budget by $25 million while we’re cutting social services? And that doesn’t feel good in terms of how we address the root causes of crime and violence,” he said.
Lang said after the meeting that most of the police budget was from contractual agreements with the union and the other half came from internal services costs to departments. The only brand new investment police received was one civilian position for recruiting, she added.
Budget Director Makes Absolutely Insane Statement
In case you missed it above, before the City Council last week, Austin Budget Director Kerri Lang said the following:
“If we do not go to the full 3.5% in each year we forever lose that revenue and so the growth is lower which makes it harder for us to balance out our ongoing needs in not just the current fiscal year but in future years,” she said.
That’s right, our city budget director sees not maximizing tax increases each year as “forever losing that revenue”.
A truly insane statement.
As long as we have city staff that see taxpayers as an infinite piggy bank, affordability will continue to worsen.
Internal Audit of 25 City-Funded Nonprofits
A city review of contracts with just 25 nonprofits found that 19 of them did not deliver on at least one of the performance expectations. That’s 76%.
And yes, all 25 nonprofits were fully paid.
And most enraging, the city says they WILL NOT RELEASE THE LIST!
From the KXAN story:
by: Grace Reader
Jul 20, 2026
A new audit from the city of Austin’s auditor’s office found the city is often paying nonprofits for “services that were not fully delivered.”
The auditor’s office looked at a sample of 25 family and social service contracts amounting to roughly $30 million (for context, the city spent roughly $100 million with 95 of those nonprofits during FY 2025).
They found of those contracts, 19 of the contracted nonprofits did not meet one or more performance expectations.
“For nonprofits that did not meet one or more performance expectations, there were significant deviations between what the City was expected to receive and what the nonprofit provided,” the report said. It continued: “For more than half of the performance expectations we reviewed, what was provided was more than 40% below the expected amount. As a result, the City is paying for services that were not fully delivered, and vulnerable residents may not get the services they are supposed to receive.”
One Voice Central Texas (OVCT), a group that says it represents more than 80 nonprofits, expressed concern about the audit report and the methods the city used to come to these conclusions.
“Nonprofits that receive taxpayer dollars should be held to high standards, and organizations that materially fail to meet contractual obligations should be held accountable. But accountability requires more than identifying ‘contract variances’. It requires complete evidence, meaningful context, and conclusions that are proportional to the facts,” the group wrote.
OVCT says it went to the city of Austin before the report was publicized to ask that nonprofits be given the chance to respond. They claim the city told them the report was only intended to look at the city’s methodologies and not to audit nonprofits. But still, the group believes the report unfairly leads the public to a false conclusion.
“The 2026 Report has already generated headlines defaming Austin’s entire nonprofit sector, which includes numerous high-performing nonprofits that have been trusted partners of this City for decades,” OVCT wrote.
You can read the audit here.
Breaking down the contracts
While the audit did identify which department oversaw the contracts pulled for this study, it did not identify the specific nonprofits involved. Departments overseeing those contracts included Public Health, Homeless Strategies and Operations, Community Court and Housing.
The city audit included two examples of contracts paid in full and highlighted the performance expectations missed.
Between those two contracts, the city expected 1,138 unduplicated clients to be served, according to the report. It shows 698 clients were actually served by the two groups, falling 440 clients short of the goals set in those two contracts.
The city also listed metrics for those two contracts like number of “individuals with improved mental health status” and “individuals who report improvement in physical, mental, emotional, or social functioning.”
“Although nonprofits must explain why they missed their targets, there are no consistent corrective actions or penalties in place to encourage better performance. As a result, the City fully paid nonprofits that did not meet most of their performance expectations,” the report said.
City leaders discuss report
In a special called Audit and Finance Committee meeting Monday, Austin Mayor Kirk Watson said he doesn’t want nonprofits to be unfairly punished, but does think the city needs to be smart about how it contracts and monitors nonprofits.
“No one is trying to punish nonprofits when they miss a number, the position is that the city has a duty to design fair contracts, fund them responsibly, monitor them intelligently and then make sure that vulnerable residents receive the services that the taxpayers are paying for. And that responsibility falls on the whole system,” Watson said.
Austin City Council Member Ryan Alter also asked city staff to explain why these contracts aren’t simply nixed and the services brought in-house.
Stephanie Hayden-Howard, the assistant city manager who oversees departments like Homeless Strategies and Operations and Austin Public Health, said in the 80s the city of Austin started tapping nonprofits for help because the groups had established trust in vulnerable communities and could move “more nimbly than the city government.”
She ultimately said many of these nonprofits have specialties and provide services that the city of Austin cannot provide without significant investment and additional staff. She used Integral Care as an example, the mental health authority.
“We have looked into some services that we could provide and bring them in-house, and to be transparent, it would cost the city more to provide the services if we brought them in-house,” Hayden-Howard said.
What may happen next
In a memo addressing the audit, city management overall agreed with many of its findings and committed to changes.
“Management agrees the performance of Nonprofit organizations and recipients of taxpayer dollars should be more effectively monitored, including addressing instances of noncompliance,” the memo says.
You can also read the memo here.
City Hiding Nonperforming Nonprofits
As seen above, the city WILL NOT be releasing the list of nonprofits who did not perform on their city contracts.
Experienced local attorney Bill Aleshire explains why they don’t have to and why our Outside Audit Charter Amendment requires public release of all audit materials.
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Bill Aleshire (@AleshireLaw)
Here’s another reason to support the SanPac Charter Audit Amendment.
If you ask the City for the audit papers that reveal the individual vendor contractors, they will withhold those records under the TPIA “audit working papers” exception to mandatory disclosure. While the TPIA allows them to withhold audit working papers, the Act also says that the TPIA does not limit what a governmental body may require to be disclosed by local law. So the Charter Audit Amendment includes a provision that requires City Contractors to be directly audited for expenditures and performance purposes, but it also includes a transparency provision making all the information gathered by the outside independent auditor subject to release to the public.
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SAVE AUSTIN NOW CITY HALL WATCHDOG SERIES: WHAT TO WATCH FOR AT THIS WEEK’S CITY COUNCIL MEETING
Here are council items of interest:
ITEM 4 — Approve a resolution directing the City Manager to prepare an ordinance for Council consideration to order a November 2026 bond election, including recommended bond measures, proposition language, categories, and amounts for public improvements. Funding: Approval of this resolution has no immediate fiscal impact. Should City Council vote to call a 2026 bond election, fiscal impacts will be noted at that time. (Link here).
Fiscal note: Fiscal impacts will be noted at that time of the Vote.
SAN view: A bond package should not be considered in lieu of the defeat of Proposition Q that the Voters of Austin overwhelmingly rejected, especially until the outside performance audit is completed.
ITEM 9: Authorize negotiation and execution of an amendment to the interlocal agreement with the Austin Economic Development Corporation, d/b/a Rally Austin, to provide $13,215,260 of City hotel occupancy tax funding to Rally Austin to be used to establish and fund the Historic Preservation Acquisition Fund program to identify, acquire, preserve, activate, and steward historic properties and related preservation activities that promote tourism and convention visitation in compliance with Texas Tax Code Section 351.101(a)(5) and fund Rally Austin’s administrative fees, for a revised total agreement amount not to exceed $58,355,260. Funding: $13,215,260 is available in the Fiscal Year 2025-2026 Austin Arts, Culture, Music and Entertainment Special Revenue Fund (Historic Preservation Fund). (Link here).
Fiscal note: $13,215,260
SAN view: This is an increase of $13.2M, bringing the total of the contract award to increase to $58,355,260 to " identify, acquire, preserve, activate, and steward historic properties and related preservation activities that promote tourism and convention visitation" with Rally Austin (https://www.rallyforaustin.com/about/ ). The funding source is the Hotel Occupancy Tax.
ITEM 28: Authorize an amendment to a contract for continued information technology professional services for a case management system for Austin Municipal Court with Luz A Lozano Jr. d/b/a Radiant Compass Advisory, to increase the amount by $67,600 for a revised total contract amount not to exceed $145,600. Funding: $67,600 is available in the Operating Budget of Austin Municipal Court. Funding for the remaining contract term is contingent upon available funding in future budgets. (Link here).
Fiscal note: $67,600
SAN view: This is an 85% increase to an IT contract for the Austin Municipal Court that has yet to expire.
ITEM 67: Ratify an amendment to an interlocal agreement with Austin-Travis County Mental Health and Mental Retardation Center, d/b/a Integral Care, for the Homeless Outreach Street Team program to provide street outreach services, to add $440,000 to the current term beginning on October 1, 2025, and to each of the remaining three 12-month extension options for a revised per extension option amount not to exceed $839,354, for a revised total agreement amount not to exceed $3,756,770. Funding: $440,000 is available in the Fiscal Year 2025-2026 Austin Homeless Strategies and Operations Social Services Budget. Funding for the remaining years of the agreement is contingent upon available funding in future budgets. (Link here).
Fiscal note: $440,000
SAN view: This is an 85% increase to an IT contract for the Austin Municipal Court that has yet to expire.
ITEM 68: Authorize negotiation and execution of an amendment to an agreement with Sunrise Community Church d/b/a Sunrise Homeless Navigation Center to provide street outreach and housing navigation services, to add one-time funding in an amount not to exceed $250,000, for a revised total agreement not to exceed $1,000,000. Funding: $250,000 is available in the Fiscal Year 2025-2026 House Our People Endowment fund. (Link here).
Fiscal note: $250,000
SAN view: This is the fourth amendment for agreement for Sunrise Community Church for a Homeless Navigation Center. What is causing increases that were unforeseen previously?
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