It's a Good Economy, Stupid

Austin Plays Weak Catch-Up in Boom Times

"I tell thee," said madame, "that although it is a long time on the road, it is on the road and coming. I tell thee it never retreats, and never stops."

-- A Tale of Two Cities

Yup, it is the best of times; it is the worst of times. Austin is wealthier than ever before, yet the proposed 1996-97 city budget depicts a government heading for a cathartic transformation, if not a trainwreck. This is a city of two tales. The Maalox is likely now flowing at the Municipal Building, as at least a dozen city staff members hit their speed-dials to tell us the city is not in a budget crisis. Fair enough. This year's budget combines a windfall of rapid-growth revenue with a nearly invisible tax increase to achieve some modest, but important, increases in service. We have seen far worse. Indeed, this is about as good as it's bound to get anytime soon, and therein lies the trouble.

It is a fairly depressing certainty that even if the Austin economy keeps growing well past the turn of the millenium, it will become next to impossible for the City of Austin to continue providing the level of service we want at a price we are willing to pay. Next year's budget projects the highest tax collections, both sales and property, in Austin history, yet there is no surplus, no comfortable command of current service needs, and no investment in the tools needed to manage the growth of the future.

Instead, the boom dividend is going to fund yesterday's needs, still unmet. The new revenue to be generated from the marginal proposed tax increase -- about $10 for the year for the celebrated "average Austin home," valued at a bit over $100,000 -- will fund debt service for a $40 million bond sale, set for next month. Those bonds will go toward capital projects -- libraries, fire stations, information systems -- that we already need, and have needed for years, but won't get until the next century. Before the city found out its property values had jumped in a year by more than $2 billion, City Manager Jesus Garza and Finance Director Betty Dunkerley had aimed for a more red-blooded tax increase to pay for the new facilities going on line next year, some of which were first approved by voters a decade ago and needed five years before that. We are, shall we say, a bit behind, and there's plenty more backlog -- like $33 million in street repair -- with no visible means of support.

So that's where the money's going; in order to meet current service needs, city departments are still having to pinch pennies, shuffle staff and indulge in creative accounting. In order to provide More Cops on the Street (such a familiar demand that we can abbreviate it: M-COTS), the Police Department is having to gut its Community Services division -- short-staffing the neighborhood centers to the point of irrelevance, "suspending" Drug Abuse Resistance Education (DARE) and the Police Activities League, and so on. This after Chief Elizabeth Watson put her career on the line to bring community policing to our fair burg. Those officers will now be M-COTS, bringing the department's sworn strength of "uniformed first responders" to the level previously approved by the City Council, which at least one councilmember and de facto mayoral candidate has already squawked is no longer sufficient. (Yet, according to last year's budget study, which is based on national studies, there is no known correlation between the number of police officers on the street and the amount of crimes committed.)

Some of the cuts and restructurings in the new budget fall within the bounds of Garza's large-scale initative to reinvent Austin government, dubbed the Affordability Strategy. This is to be lauded, but it doesn't mean that the budget is free of good old-fashioned clear-cutting, even within the departments that have already been affordabili-cized. (Over the next five years, Garza and his management team will shake the reinventing-government chicken bones over every city department.) Check out the first department covered in the new budget, Development Review and Inspection -- one of the seven new departments to spring from the ashes of the old Planning, Public Works and Environmental departments. Just four pages into the budget document, we're reading about how response time for zoning complaints -- already less than speedy -- will drop with the elimination of two inspector positions, and how the workload per full-time employee has increased 89% since1990-91. By the time you get to the Health and Human Services budget, we are treated to tart assessments like "Eliminate two positions, which impedes the progress of the community planning process."

Now, chances are most of you will not pack up the U-Haul as a result of these cuts. But if your government isn't going to live large, albeit responsibly so, during the biggest boom in our lifetimes, then when, exactly, will it? Garza is already projecting, even with the Affordability Strategy, that the city will face a $26 million General Fund shortfall by the year 2001. So when will departments get to add the staff they need? When will we wipe out that $33 million street-maintenance backlog? When will we be able to start planning for the parks and libraries and fire stations we'll need tomorrow, instead of the ones we needed in the Carter Administration? And how, exactly, do we plan to swing the real big stuff -- the capital projects that everyone calls boondoggles until they find one that they like, be it a baseball stadium or a fiber-optic network or a flood-diversion tunnel for Waller Creek, one of which may actually be essential to the Austin we envision for tomorrow?

Tax hikes? Get real. Someday, we may see a tax increase that amounts to more than the cost of a 12-pack, but it won't be in the 20th century. If the city raised taxes as much as it could, on its own, each year -- known as the Peveto rate -- we'd add between 10 and 15 cents to the property tax rate by the year 2000, which would, as Garza and Dunkerley point out repeatedly in the budget, bring us more in line with what citizens pay throughout most of urban Texas. We might as well hope for a renewal of the Stamp Act. Witness the cries of highway robbery over Capitol Metro's quarter-cent hike in the sales tax, which adds a whopping $44 to the price of a new Toyota Corolla. And witness the flood of Austin tax refugees migrating to Williamson and Hays Counties.

Austin's traditional tools for balancing its lower-than-average tax rates are surely being wrenched from its hands. Our reputation as the bond-debt capital of America is grossly exaggerated, but public animosity toward "boondoggles" and contempt of city management competence don't bode well for the major bond election the City Council is contemplating for next year. (What of the success in passing the AISD bonds, you ask? Which embarrasses you more -- our decrepit schools or our decrepit streets? Which do you feel more personal responsibility to fix? I thought so. Think, instead, of El Paso, where voters in 1994 sent a $100 million-plus, NAFTA-fueled public-improvement bond package to ignominious defeat.)

The other two widgets in Austin's fiscal toolbox -- rampant annexation and the markup of utility rates -- are likewise out the door. Many of the plump, juicy subdivisions in the MUD Belt would rather be annexed by Tulsa than Austin, and many central-city slow-growthers would rather de-annex everything north of U.S. 183 anyway. Plus, our suburbs are now competitors with, rather than camp followers of, the Austin economy. (Property values in the county beyond the city limits are higher and growing faster than within.) And come deregulation, the utility transfer will inexorably drop even if the city flouts its consultants' advice to cut it in half, since it's based not on what the General Fund needs but what the utility has left over.

And these are the best of times. How will we survive them? Since the city is not allowed to play the lottery, we seem stuck with the usual flavors of tonic for our budget dyspepsia -- excise all waste and lard from city government, make the "hard choices" needed to set honest and effective budget priorities, and maybe in the process convince Austinites that their government is not completely run by idiots. As one councilmember puts it: "A good start would be to not screw up over and over and over. If we run out and proclaim a baseball emergency, how do we expect to be trusted?"

Which brings us back to the Affordability Strategy, Garza's effort to further all three of these goals. To best understand it, we should forget what it's called, since "affordability," conjure word though it has become, is really up to us to decide -- not the city bureaucracy. How do we objectively determine what service levels we will accept, and what price we can afford? Who knows? (Not the city staff, any of several council members, or the Chamber of Commerce, apparently, because we asked them.) So better to understand the Affordability Strategy as a reinventing-government initiative, and, truth be told, a rather late one. Of the four components of the strategy, two -- program-based budgeting and the ongoing department review -- have precedent at the state-government level. In both cases, the state process seems to be more successful than the city's, even though the jury is still clearly out on the latter.

For example, Garza's department review is analogous to state-level Sunset Review, except that at no point does the city manager reserve a place in his process for the customers -- not Joe Crank the tax protester, but the people who use Program X's services every day. (The state's Sunset Advisory Commission does everything but pay your cabfare.) Instead, the management team gets help from consultants, UT academics, and "local corporate executives recruited by the City Manager." Hmm. Not even the relevant boards and commissions get to kibitz -- they are merely "informed" of the results of the review. As was seen last year with the restructuring of Public Works et al., not even the Council is guaranteed a vote on the recommendations. Undemocratic? Yes, but perhaps it shouldn't be. How do you know what your customers want, and are willing to pay, unless you ask them?

Likewise, Garza has converted the city to a program budget -- where, instead of allocating X-thousand dollars for "supplies," the Council allots the specified sum to, say, 911 service. The necessary catalog of programs is larger than the budget itself. Each program has objectives, and each department has strategies, just like in state agency budgets. However, outcome measures -- de rigeur at the Capitol -- are mostly absent, and linkages between what programs are doing, how well they're doing it, and how much money they're getting are hard to discern. "It's very difficult to look at specific items and say, with any degree of confidence, that Program X is overfunded," says John Gilvar, aide to Councilmember Beverly Griffith. "We don't have the expertise, nor the time, to say to an assistant city manager that they don't need that much money. And they know that's how the game is played."

So there's some consensus that, as councilmember Daryl Slusher puts it, "What Jesus Garza is doing is legitimate and necessary, but it doesn't go far enough." The Council's new designated kvetch would like to see, for example, a full-on Sunset Review with public input, although he cautions that such a process puts an onus on all parties, including you and me. "In the city manager's defense, he has said that the community has to make a lot of decisions about how their budget is supposed to work," Slusher says. "We had one speaker at the public hearing about new fees." (That would have been former council candidate and uber-activist Mary Arnold.)

The two new council arrivals -- Slusher and Griffith -- have been giving staff the most headaches during work sessions, asking deeper and more complicated questions than their colleagues. Slusher dwells on the need to find "real alternative sources of revenue," whether that be an early jump on new airport revenue or additional transfers from Capitol Metro, the non-electric utilities, or the Travis County budget -- "People in the city already help pay for services out in the county; our taxes are paying for their roads and such. There's got to be ways that the reverse could be true."

Griffith, on the other hand, has decided on a more narrow focus. "There's been a glacier of paperwork and we've been playing catch-up," Gilvar explains. "So we decided to draw the line and settle on one big issue, and this is it."

"It" is Griffith's crusade to have the Parks and Recreation Department re-identified as a public-safety program -- thus immunizing it from any real cuts, at least in the current climate -- and making PARD the front-line department in dealing with juvenile crime and at-risk youth. Since juvenile crime is the only area of misfeasance that truly causes much concern, this puts Griffith squarely at odds with the M-COTS crowd, notably Ronney Reynolds, who's already proclaimed a civic emergency in law enforcement. It also makes Griffith and Gilvar less than sympathetic to the plight of DARE and other APD community-service programs, which in theory fill much the same role she envisions for PARD. "She's not making a specific proposal to take money from APD, but wants to look at the trend," Gilvar says. "You look at programs like DARE and you don't get a lot of bang for your buck; that's confirmed by teachers and school board members and police departments all over the country. With parks-based programs, you do. We want to get away from the image of Beverly as The Parks Lady, (she used to be chair of the Parks Board), but mayors and councils everywhere see how the parks infrastructure is more important to prevention."

And where, exactly, does this money come from, since PARD's budget has been shrinking for years and continues to do so? "What it comes down to," says Gilvar, "is that the money has to come from somewhere." Right now, that would seem to imply horse trading, which doesn't do anything to address the long-term fiscal outlook, a point Gilvar concedes. "We'll see about seven-tenths of a cent (the proposed tax increase) when push comes to shove," he says. "We can't dramatically increase law-enforcement funding and re-establish PARD's ability to deal with at-risk youth and keep Pioneer Farm open. The Statesman and Ronney Reynolds seem to think you can, without a tax increase. At some point, something's gotta give -- we can't be all things to all people. Do we really need to make it extra-easy to pay your traffic fines at the Municipal Court? We need to ask ourselves about priorities. Somehow, we have to make it work."

To coin a phrase, it would be a far, far better thing to do, than we have ever done. n

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