AUSTIN, Texas — Austin leaders are preparing to unveil the city’s first budget proposal for the next fiscal year as they work to close a nearly $27 million deficit and weigh whether to raise property taxes or cut services.

The city is expected to release its first budget proposal this Friday. City staff previously outlined two potential paths in April: one that includes a 3.5% property tax increase — which would avoid a tax rate election — to help fund city services, and another that would not raise taxes but could lead to cuts to city services.

City Councilmember Marc Duchen, who represents District 10, said the city is facing difficult choices.

“We’re going to have to make increasingly tough and difficult decisions about how to make sure we deliver the best services we can,” Duchen said.

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Duchen said the council will make those decisions this summer after the proposal is released. “I’m thinking about how do we make sure that whatever we do, with our financial decisions, that we can keep people here,” he said.

Some residents and taxpayer advocates remain skeptical of any property tax increase.

“There’s a deficit of trust between taxpayers and City Hall. That’s pretty clear.” Matt Mackowiak, co-founder of Save Austin Now, said. “Give taxpayers a break for once.”

Mackowiak pointed to last year’s defeat of Proposition Q, which would have raised the city’s property tax rate to generate more money for city services. He said the outcome reflected broader frustration with city spending decisions.

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“You know, they’re just not making the mature, tough decisions that you have to make when you have a budget. You can’t fund everything. Money’s not limitless,” Mackowiak said.

Duchen said rebuilding public trust will be critical as the city moves forward.

“I think that’s paramount,” Duchen said. “I think it’s gonna be incredibly hard for the city to act on whether it’s individual projects or a bond or ask, you know, get public buy-in for the work that we’re doing without building that trust back up.”

Duchen also encouraged residents to stay engaged and share feedback with council as budget discussions continue. He said the city also has a large bond that could end up on the November ballot.