Emails (excerpted), responses to PolitiFact Texas, Mark Nathan, manager, “Love Austin” bond campaign, Sept. 27 and 28 and Oct. 1, 2012

1017 pm

Sept. 27, 2012

The mayor's statement reflects the fact that the city's current debt service tax rate will not increase if voters approve all seven city bonds on the November 6th ballot.


This is based on the City of Austin’s Capital Planning and Budget Office staff projections of bond capacity.  Bond capacity means the amount of new bonds that the city can issue over a fixed term of years (usually six) without that issuance causing an increase in the City’s debt service tax rate.  The debt service tax rate (currently 12.0 cents per $100 of assessed valuation) is the portion of the ad valorem (property) tax rate that is reserved (and required by the city's bond covenants) to pay off general obligation bond debt.


For documentation regarding the impact of the 2012 bond package on the debt service tax rate, please see this "Needs Assesment" presentation made by the city's Capital Planning staff to the Council's Audit & Finance committee in Dec. 2011:


On page 29, you'll see a chart detailing the bonding capacity of 4 different tax rate scenarios – a "no increase" scenario, a 1-cent tax increase, a 2-cent tax increase, and a 3-cent tax increase.  (Note that at the time of this presentation in Dec. 2011, the city's bond debt tax rate was actually 12.6 cents; it has subsequently decreased to 12.0 cents, but the bond capacity figures remain accurate.)  You'll see here that the $385 million figure, which is the total amount of all seven city bonds on the November ballot, is assocated with the no increase scenario.


This presentation was covered by the Statesman on Dec. 17, 2011:


You can confirm this information with Greg Canally or Ed Van Eenoo in the Budget Office at the City of Austin...


Of course, as you already know, the tax RATE is half of the equation when it comes to the overall property tax bill.  The other half is assessed valuations.  


If you look at page 30 of the Capital Planning staff presentation, you'll see that the no increase scenario (holding the tax rate constant) associated with a $385 million bond package results in a projected $38 increase in the bill for a $200,000 home by 2016.  That is the result of a projected annual 3% increase in assessed valuations between now and then.


But, as you also know, the only half of the equation that the mayor and council (and in this case, the voters) have control over is the tax RATE.  That's why, in my experience, it's almost always the vernacular of elected officials, and very frequently of the media as well, to mean "tax rates" when speaking of "taxes".  [Nathan later said he means “frequently” in his reference to elected officials here, rather than “almost always.” -- wgs]


For example:


"The council wants a bond package no larger than $385 million because that number will not require a property tax increase."  


Even a fact check conducted by well-known local journalist earlier this year does not make a distinction between "taxes" and "tax rates" in reference to the tax impact of Austin's 2010 successful transportation bond election:



Mark Nathan

From: "Selby, Gardner (CMG-Austin)" <>

Date: Friday, September 28, 2012 11:04 AM

To: Mark Nathan

Subject: RE: PolitiFact Texas Inquiry


Do you have information on the tax impact of all or some of the propositions not winning approval?

408 pm

Sept. 28, 2012

The short answer is that if all seven bonds fail, it would result in a 2-cent tax decrease at the end of 5 years.  The long answer is that if all seven bonds fail, and the City issues the remaining bonds from previous bond programs as planned, and the City's assumptions about assessed valuations hold true, and the citizens authorize (and the City issues) no additional general obligation debt, the debt service tax rate would be an estimated 2 cents lower, 10.0 cents per $100 of AV, at the end of that 5-year forecast horizon.   Note that no change in the debt tax rate is projected in 2013 or 2014 regardless of the November 2012  bond propositions passing or failing because the rates in these years are driven by previously approved bond programs.



From: "Selby, Gardner (CMG-Austin)" <>

Date: Monday, October 1, 2012 10:29 AM

To: Mark Nathan

Subject: RE: PolitiFact Texas Inquiry


My sense now is that while no tax-rate increase would be required if the bond propositions pass, the city concedes that taxes paid by homeowners and others would still go up a bit, presuming projected increases in property valuations. As discussed, too, the mayor’s statement overlooks the fact that the debt rate would decrease two cents if the propositions are defeated.


Anything else you’d like us to weigh?

1053 am

Oct. 1, 2012

Yes, there is a presumption, but not a certainty, that valuations would go up.


The mayor didn't say on this occassion that the rate would decrease 2 cents by 2019 if the bonds are defeated.  He also didn't say on this occasion that the debt rate has actually gone down 9 cents in the last 14 years.