In 2026, Austin residents will hear a lot about a possible bond package. The city has announced that GO Bonds could fund major community projects-streets, libraries, open spaces-without taking money away from essential services. But voters already experienced a different tool last year: Proposition Q, a tax rate election that was turned down in November 2025. Understanding the difference between these two approaches is key to knowing how the city plans to balance growth and budget.
A tax rate election, or TRE, asks voters to approve or reject raising the property tax rate above a state-set threshold. In Texas, that threshold is the voter-approval tax rate, which would increase revenue by 3.5 % over the previous year. The additional money would support day-to-day operations, staff, programs, and the city’s tax-supported debts for the coming year.
City officials explained, “A tax rate election asks voters of a local area (such as a city or county) to approve or reject a proposal to raise the property tax rate above a threshold set by the state. In Texas, this threshold – known as the “voter-approval tax rate” – is the rate that would raise 3.5% more property tax revenue than last year for the City’s day-to-day operations, as well as the revenue necessary for the City to pay its tax-supported debts in the coming year.”
By contrast, a bond election allows the city to borrow money for capital improvement projects that cannot be funded under a pay-as-you-go model. Projects include building affordable housing, parks, and major road improvements across the city. The debt is repaid over time through property taxes, but the funds are earmarked for the physical structure rather than ongoing operations.
A member of the bond election advisory task force said, “My whole tax bill last year, the city was about a quarter of it. And that one quarter splits up. Part of it was for maintenance and operations, that’s what buys the books and helps pay the staff at the library… The city took out the debt to build the library and it pays back that debt. So we’re not talking about the staff and the programming and the books at the library, we’re talking about the building.”
The key distinction lies in purpose and timing. A tax rate increase provides immediate cash for daily operations, while a bond provides a lump-sum for a specific project that will be paid back over many years. Voters in 2025 rejected the tax hike, preferring to keep the current rate, but the city is now exploring bonds to fund long-term improvements without raising the daily tax burden.
With GO Bonds, the repayment mechanism is the same property tax system that funds routine services. The city’s property tax bill will rise gradually as the debt is serviced, but the increase is spread over the life of the bond and is tied to the project’s benefits. This approach is designed to avoid a sudden spike in taxes that could deter residents.
Proposition Q failed largely because voters were wary of a direct tax hike that would affect their monthly bills. The bond route, however, offers a way to finance large projects without immediate tax increases, making it more palatable to the electorate.
As the city prepares to propose a bond package in 2026, residents can expect to see detailed plans outlining how the funds will be used and how the repayment schedule will impact their property taxes. Understanding the mechanics of bonds versus tax rate elections will help voters make informed decisions about the city’s future.
Ultimately, Austin’s challenge is to balance the need for capital improvements with fiscal responsibility. By distinguishing between operational funding through tax rate elections and capital investment via bonds, the city aims to grow while keeping residents’ tax burdens predictable.
