Turning Around Our Affordability Failure

It is increasingly unlikely that city council will stop a tax increase. Here is the affordability campaign San Antonio is owed instead.

When government raises its own cost, it creates an obligation to lower everyone else's. Photo courtesy of the City of San Antonio.

There isn’t enough political will to stop a tax increase.

On August 13, City Manager Erik Walsh outlined a proposed $4.4 billion budget featuring the city’s first property tax rate increase since 1993, up 3.9%. Council Member Marc Whyte immediately argued to kill the rate increase on the spot. Only Council Members Marina Alderete Gavito and Misty Spears joined him.

And so, no member of council voted for a tax increase, but no member had to—and we will likely get one anyway. Once a budget is built based on increased taxes, reversing the increase requires some kind of consensus as to which spending programs will be reduced. This council rarely reaches consensus on anything, let alone spending cuts. Case in point: Mayor Jones was more afraid of what could be cut without a rate increase than the rate increase itself, voting for the trial budget proposal despite months of statements about affordability. Freezing the rate now, she argued, would force cuts before council understood what the city would lose. In this way, the hard choice was outsourced to arithmetic.

Read our coverage of the trial budget presentation here.

In June we said that good governance is the discipline of making tough decisions. By that measure, August 13 was a failure. A decision avoided is its own kind of decision, and the result is that some variation of this rate increase will likely pass next month.

But council still has a chance to lead, and it goes beyond a good faith attempt to reduce the rate increase between now and September 17.

San Antonio is becoming increasingly expensive, and while raising the rate is the headline, this budget will also include more than 100 new or increased fees. When combined with rate hikes from other taxing entities, there is one clear direction of travel. But worry not: “I don’t think there’s any major reductions to services that people feel,” Walsh told local media outlets regarding the $89.6 million in reductions associated with the increase. San Antonio’s ceiling of ambition is that you will not realize if things get worse.

This is not what San Antonio owes itself. When government raises its own cost, it creates an obligation to lower everyone else’s cost, an actual affordability campaign pursued aggressively by our leadership. And there are countless ways to be more affordable; a city can always find efficiency. But three areas matter most, and the city holds the cards in all three.

First, make it cheaper to build here. In every way. The state is already acting where the city won’t: since last September, San Antonio cannot demand more than one parking space per home in qualifying small-lot subdivisions. The city’s own reforms stop only part of the way there, with minimums waived downtown and halved near transit. So the city concedes it is good policy, but stops short of extending it. Every mandated space is a tax on housing, we should make parking reform widespread. The city can also fix the permit timeline—a national index recently ranked San Antonio 383rd of 500 cities for permitting red tape. All of this directly contributes to the cost of doing business here. We should identify every unreasonable obstacle to building and endeavor to remove them. And we should run the same audit on the cost of starting a business: every fee, license, hoop to jump through, and wait time standing between an idea and a new or expanded business should be benchmarked and attacked as a barrier for growth.

Second, make a serious effort to raise the baseline income. Affordability has two sides: what things cost and what people earn—San Antonio has under-built what people earn for decades. We have sixteen chambers of commerce, Port San Antonio, greater:SATX, UTSA, the city’s Economic Development department, the county’s, and on and on. The mayor—or a working majority of council—should call every one of these groups into one room and hammer out a genuine vision for what San Antonio is working to become. We need one unified strategy for getting there, one that lasts beyond anyone’s term. High-wage jobs are the enduring answer to affordability and we won’t get there if we have dozens of different groups splitting their efforts and resources.

Finally, we must make government cheaper to run, and the city already took a first step. At Councilman Whyte’s urging, we adopted a hybrid zero-based budgeting model, and the cost savings for this year’s budget is undoubtedly a result of that model. But if we were able to cut nearly $90 million and there won’t be “any major reductions to services that people feel,” there is a lot more meat on the bone. Upgrade it to a full audit of the city on a fixed schedule, every program and every delegate agency justifying itself on published results, reviewed by someone accountable to city council. And take notes from Austin: last month its auditor investigated public funds going to local nonprofits and found that in 19 of 25 contracts reviewed, the organization missed at least one performance target. Austin is still deciding what to do about it but San Antonio should go a step further and tie renewal to results from the start.

Getting out of the way of builders and business, unifying our strategic vision towards raising incomes, and making our government less wasteful. This may sound like it is simply the proper governance of a city, because it is. All of this is largely work that has clearly fallen by the wayside here, one deferred decision at a time. The specific prescriptions can be nitpicked, but the overarching need for San Antonio to make a serious effort to make itself more affordable cannot.

Council was presented with a binary choice: stop the tax increase, or don’t, and they failed. But we choose to be optimistic. Let’s use the opportunity of failure to grow, and to make San Antonio better than it was before it cost more.