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Point Austin: The Best of Times

Cutting a city budget easier said than done

By Michael King, Fri., May 9, 2014

"I can't find any reason not to say the Austin area is the strongest regional economy in the country." – Jon Hockenyos

This week the City Council gets down to details on the proposed city budget, a process that takes the rest of the summer and will culminate in a final vote on the big numbers and the property tax rate in Sep­tem­ber. Overall, the news is good, even better than good, as consultant Jon Hock­en­yos described in his annual economic forecast to a Council work session last week. Calling the local economy "arguably the strongest regional economy among major metros across the nation," he noted that every single sector is showing remarkable growth, having rebounded from the relatively bad years of the recession. Job expansion is particularly notable – at 37,100 new jobs last year, a rate of 4.5% – and he added it's a pace that "cannot be sustained without substantial in-migration," simply to fill the jobs which become available. He acknowledged that it's debatable whether such a rapid pace of growth is a good thing: "Some might say that is the problem."

Even Austinites who welcome newcomers might be feeling a little overwhelmed by that tidal wave, but it's one of the contradictions of living here that we owe much of our current prosperity to the folks who arrived after we did – as someone who makes his living in an industry built on consumption, I don't except myself. That growing economy is reflected in the city man­ag­er's proposed budget: It recommends cutting the property tax rate by an amount which, because of rising property values, will still result in a higher tax bill for the average homeowner, and increased revenues for the city.

That's likely to be small comfort to those receiving their property tax bills from Travis County this month, as there's already social media evidence of local sticker shock. And the supply-squeezed rental market – another phenomenon noted this year by Hockenyos – means that tenants will be hit not only with rising base prices, but also by whatever tax-related lagniappe landlords sprinkle on top.

Value for Money

The budget details will be scrutinized more thoroughly over the next months, but the big numbers are worth an early overview. The 0.7-cent reduction in the property tax rate (49.57 cents/$100 evaluation), if sustained by Council, would mean a $28/year increase in the bill for a median-value home ($193,000) – to roughly $960 annually. At the risk of provoking reflexive outrage, it does not seem to me an outrageous expectation to pay roughly $1,000 for city services on $200,000 or so in real estate.

It doesn't stop there, of course – what with electricity and water (the big monthly hits) and miscellaneous fees, our median homeowner is going to be spending another $3,000 or so in annual upkeep. But in our never-ending "affordability" debate, I find it difficult to blame city taxes for the rising cost of living in Austin. It seems to me rather like blaming the neighbor's garden-rooting dog for having too big a tail.

Even considering the all-jurisdiction local property tax bill, the city – at 22.5% of the total – comes out rather modestly. The county represents roughly 18%, ACC and the new health care district nearly 9%. That leaves Austin ISD, of course, where more than 51% of the bill (above $2,100 for our symbolic median home) originates. Without wandering into a tangent on the vexed nature of Texas public education politics, I'll just note that Austin taxpayers' willingness to pick up the slack from a Legislature that refuses to adequately or equitably fund the public schools is nothing to be ashamed of.

The Carpenter's Rule

As Council enters its extended budget review – and we all want to help them set priorities – let's look at the other side of the ledger for a moment. Of a projected $840.6 million General Funds budget, just above 70% is expected to go to public safety (police, fire, EMS). Even brave budget slashers go weak in the knees when it comes to cutting that 70%. (On the current Council, only Bill Spelman has seriously attempted the task, largely in vain.) Moreover, over the next couple of years we're already planning to hire 59 new police officers (187 over five years) and 52 new firefighters (throw in a couple of paramedics). They're all included in that 70%.

If you're still with me, that leaves everything from Parks and Rec to Health and Human Services to Municipal Court (arguably 2.4% more for public safety) to fight over. The big exception would be 68 new positions (between Fiscal Years 2016 and 2018) associated with the 2016 opening of the new Central Library. I suppose, to save money, we could just mothball the place, but since the Library and Parks together devour all of 12.7% of the GF budget, it seems a shame not to welcome all those new Austinites and their children to a city that substantively values education and recreation.

Point being, my taxpaying friends, that it's much easier to complain about rising property taxes than it is to know certainly what we can manage to do without – the task before Council for the next four months. Austin is in nearly a unique position nationwide, in that we aren't being forced to cut basic services simply to make ends meet. An old carpenter's rule is always useful as we begin public exercises in setting priorities: Make sure you measure before you cut.

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