AUSTIN (KXAN) -- After Austin Mayor Kirk Watson announced the city would change the way it works on its budget, the Audit and Finance committee met Wednesday to better understand Austin's financial landscape. The city is starting its budget conversations with elected leaders earlier than usual th is year so it can plug holes created by federal funding cuts -- not just the loss of grant funding but also congressional earmarks and the possible elimination of federal tax exemption on municipal bonds. Staff will also need to react to legislation passed by state leaders and deal with its running out of American Rescue Plan Act (ARPA) funding. Inside Austin’s Agenda: Mayor looks to beef up budget process amid financial uncertainty Watson has previously referred to these hurdles as “budget asteroids." State legislation the city is watching According to city of Austin staff, roughly 2,400 bills have been filed so far that impact cities, including ours. A number of those focus on how local government can budget taxpayer dollars. Carrie Rogers, Austin's intergovernmental relations officer, flagged legislation that could restrict how much debt cities can accrue, cap expenditures based on population growth and change the transfer of enterprise funds, such as Austin Energy. "Looking at these particular bills, and understanding what the environment is overall related to financial impacts to the city... I think what we can expect is additional attention and impact to local government work in the financial realm," Rogers said. Tax rate election policy Watson is asking the city to produce a policy and procedure for tax rate elections (TRE). Currently, a taxing entity may not raise its property tax revenue by more than 3.5% from the year prior. When an entity decides to exceed that threshold, it must go to an election for a majority of the voters to decide. According to Carrie Lang, Austin's budget officer, that rate previously hovered between 6-7% in the city of Austin. It means the city relies heavily on its sales tax revenue instead, something discussed widely last budget cycle. City staff recommended TREs not go before taxpayers more frequently than once every four years to avoid "voter fatigue." "My sense right now, and again this is a gut sense, is that I would rather get a TRE out -- I appreciate the four-year cycle, I don't want to be going to the voters every year, every other year, to nitpick, and voter fatigue and those kinds of things like that -- but I think every four-year cycle makes a lot of sense and it feels like the launch date for that cycle is coming up sooner than later," Council Member Chito Vela said. City staff are working to bring the TRE policy back to the Audit and Finance Committee as its next step. How much you still owe for bonds Austin leaders are still eyeing a comprehensive bond package to be voted on in 2026. The 2026 Bond Election Advisory Task Force is working through what may be included in that ask to taxpayers. But the city is still paying off a number of public improvement bonds going all the way back to 2006, including significant money for mobility bonds and most recently the $350 million approved by voters for affordable housing in 2022. "Not even talking about a future bond election, the tax rate and the amount that impacts the typical tax payer will go up," said Kimberly Olivares, director of financial services. Olivares said the city has $1.9 billion in general obligation debt that has been authorized but not issued, $1.4 billion of that being voter-approved debt. For the average Austin homeowner, that means even without a 2026 bond package, your property tax rate is expected to go up. The debt service property tax rate for the average homeowner in Austin is $396.29 for 2025, Olivares said. It's expected to be $541.41 in 2029. ...read more read less