(Texas Scorecard) – The cost of living in Texas’ capital city appears to be a classic case of good and bad news.
On the plus side of the ledger, rental rates have continued their multi-year decline. As reported by KUT, rental rates eased by 4 percent compared to a year ago. This follows a similar decrease the year before. The primary cause of this reduction has been a surge in construction, aided by recent policy changes.
While Austin is often cited as an example of what not to do, the city has surprisingly taken the lead in relaxing development regulations. In 2023, the city council passed phase one of the HOME Act, which removed restrictions on certain types of construction. Also in 2023, the city eliminated mandated parking minimums. This allows the free market to determine parking, rather than costly government dictates that often lead to massive amounts of unused spaces. In 2024, the city passed phase two of the HOME Act, which reduced minimum lot size requirements. The net result is a far greater housing supply.
Unfortunately, the good news ends there.
Central Health, the local hospital district, has proposed a record-setting budget. According to Community Impact, the $884 million proposal is an 18 percent increase over last year’s budget. The Travis County Commissioners Court is expected to rubber stamp the budget proposal next week.
The proposed tax increase for Central Health is only one of many across taxing jurisdictions in Texas’ capitol.
Last month, Austin ISD voted to place a tax increase election on the November ballot. Before that, Travis County placed a tax increase election on the ballot, and the Austin City Council passed the largest tax increase possible (along with higher rates for electricity, trash, and water) without requiring an election. Together, these have been described as a “tax bloodbath” for residents of the state’s capital city.
Texas Comptroller Glenn Hegar recently released a report identifying development regulations and spending/taxes as obstacles to housing affordability. The Texas legislature is expected to re-examine both during its 2025 session.