Fat and Mostly Healthy
City Rolls Out Brave New Budget
Let's take a look at the two major questions of any budget cycle: Where is the money coming from? And where is it going - in particular, where hasn't it gone before? First, let's look at the income side of the ledger.
A Bigger Pie
The proposed budget hews to the state-mandated effective property tax rate - that being what the city can levy without raising the actual tax bill on the "average home." That average home jumped about 5% in value, so Austin's property tax rate - already, as the city reminds us every year, the lowest in a major Texas city - drops more than two-and-a-half cents, to 51.42 cents per $100 valuation. Since the effective rate is based not on the total, but the average, value of property on the tax roll, it rewards cities that sprawl and annex. That includes us, so our property tax collections have increased mightily in the last decade, and substantially in the last year, even though the tax rate has remained largely flat.
The property tax then gets split into two parts - operations (i.e., General Fund) and debt service. The General Fund portion has more than doubled in the last decade, and sales tax collections have grown even more. So how come the overall General Fund, which pays for most of the big-deal services like public safety, parks and libraries, and health and human services, has increased at just half that rate? Much has been made about the "reduction" in the transfer from Austin Energy and the other city utilities into the General Fund, but that refers to a percentage of the overall utility revenue. In absolute terms, the utility transfers have likewise increased since 1989 - in Water and Wastewater's case as fast as tax revenue has. So where did the money go?
Much of it went into city overhead, which encompasses a lot of worthwhile city functions, but which deserves to be acknowledged more clearly than the budget usually does. Back in fiscal 1989, almost all of the city's "indirect costs" came straight out of the General Fund, which included units like the law department and the city manager's office. That's why the total "transfers" figure for 1989 is higher than the "transfers" figure today; it included $23 million in reimbursements into the General Fund from other departments (utilities, airport, etc.) for these indirect costs.
Under the last two city managers, Camille Barnett and currently Jesus Garza, this has been inverted; in the fiscal 1999 budget proposal, $29 million heads out of the General Fund, into a separate sorta-off-budget Support Services Fund, to pay for those same functions, as well as others that didn't exist 10 years ago (such as the Austin Music Network). That's on top of about $27 million in reimbursements from the non-General Fund departments. Today's Support Services Fund budget is more than double the combined 1989 budget of its constituent departments.
There are other internal service funds as well, and all told, the funding specifically devoted to internal services, separate from the department budgets, has increased by a whopping 275%, to nearly $100 million, in the last decade. That's not counting costs that are still being borne in the departments, particularly the utilities. Both Austin Energy and Water and Wastewater have been operating under tight-ship mandates in recent years to reduce their overhead, leading to cuts and layoffs, even as the rest of city government adds staff.
Now, it's hard (actually, when looking at the old city budgeting system, nearly impossible) to tell how much of that $100 million has simply been transferred without increase from the departments - for example, in the next fiscal year, maintenance at Robert Mueller Airport will move from the Aviation Department into the Support Services Fund. So don't get too excited and conclude that "275% increase" means exactly what it sounds like. But the amount of city money, including General Fund money, going to overhead in the last decade is definitely both large and growing.
More importantly, as citizens you should all be aware of how money flows through the collective municipal hands here in Austin, City of Many Funds. Damn near all important (and many unimportant) city projects are now graced with their own funds - the One Texas Center Fund, the Telecommunity Fund, the Municipal Court Security Fund, ad infinitum - making budget-reading a nightmare. Most of these funds exist specifically to send and/or receive money from other funds, which means they can hold onto their balances from one year to the next without going back to whatever well they drink from.
But this serves to, at the very least, make the city's budget more opaque, with some departments being supported by a welter of different funds with inscrutable rationales, located in widely separate sections of the six-volume budget document and appearing in some tables but not in others. Austin is lucky to have a chief financial officer, Betty Dunkerley, whose skills and scruples are judged to be without flaw by most everybody, because in less competent or more slippery hands, Austin's budget would be an excellent pitch for a spirited game of Hide-the-Funding-Weenie.
For example, amuse yourself with a similar game, Follow the Bed Tax. Ready? Okay, hop aboard; for simplicity's sake, we've numbered the funds to correspond to the chart below. Bed tax collections go into Fund #1 (Hotel/Motel Bed Tax Fund), from which they're distributed into Funds #2 (Tourism and Promotion Fund), #3 (Cultural Arts Fund), #4 (Convention Center Tax Fund), and #5 (Venue Project Fund). The Convention Center Tax Fund sends the bed tax on to Funds #6 (Hotel Tax Revenue Bond Redemption Fund) and #7 (Convention Center Revenue Fund); from the Convention Center Revenue Fund, money goes on to Funds #8 (Convention Center Bond Redemption Fund), #9 (Convention Center Operating Fund), and #10 (Convention Center Operating Reserve Fund). Money also goes from the Venue Project Fund to the Hotel Tax Revenue Bond Redemption Fund and the Convention Center Bond Redemption Fund, and from the Convention Center Operating Fund to the Convention Center Operating Reserve Fund. Funds #2 (Tourism and Promotion Fund) and #7 (Convention Center Revenue Fund) are the only ones that receive any money from sources other than the bed tax. All but three of these funds are tied specifically to the Convention Center and have come to life in the last eight years; Fund #5 (the Venue Project Fund), which captures the new bed tax revenue spawned by Proposition 1 on the May ballot, is of course new in fiscal 1999.
This ain't quite so humorous when you transfer your attention to those funds that aren't being fed with other people's money. The non-General funds that are fed by genuine customer revenue, like the utilities - the so-called "enterprise funds," though the city uses the term more liberally than we have - have grown since 1989 by just 39% (which means that, in constant dollars, they've actually shrunk). The other non-General funds, fed by various distributions of your taxes and spurious "user fees" like the Transportation Fee, have grown by more than 1,000%. As should be news to almost nobody, while your tax burden has stayed within bounds during the last 10 years of growth, your "fee load" has gotten kinda weighty-like. (This year's contribution is the Drainage Fee, up 21%, though that's mostly felt by commercial, rather than residential, "customers.")
As should likewise be news to few, the city's (and especially the City Council's) big talking point for the last five years, at least, has been "basic services." If you ask where the money - from whatever source - went, you'll hear about M-COTS (more cops on the street), or new EMS stations, or new library branches and parks, or street repair, Austin politics' ongoing re-enactment of the myth of Sisyphus. You'll also hear about how we haven't been able to capitalize on our boom dividend because ex-Mayor So-and-So and ex-City Manager Son-of-a-Bitch wasted our money on The B-Word while our basic needs went begging.
Fair enough. Is catch-up time over, then? Perhaps, or at least the fixation on basic services has abated, largely because most of the groaning big-ticket bogeymen - streets, park maintenance, and so on - have been dumped into the September bond package. Instead, in this budget, pride of place goes to the dozen "major initiatives."
Let's Talk Initiatives
Now, to paraphrase the late Senator Dirksen, you take $3 million here and $1.7 million there, and pretty soon you're talking real money. But there's less real money - or real new money, at least - here than it would appear. The largest single major-initiative line item, annexation, is actually last year's a priori major initiative; that $14.1 million is the cost of city services to the annexed areas, who are paying for them with their taxes and customer charges just like everyone else. It appears that the annexed areas, due to increases in population and value, will end up paying more in taxes and fees than was assumed when the city adopted them, though it's too early to tell whether their contribution to the city's coffers will exceed the cost of the services provided them; the city merely commits to "meeting 100% of its service obligations under the law."
Much the same story is happening with some of the other major initiatives. The Housing Initiative, for example, is "new money" in the sense that the specific federal grants that support it did not exist last year, but projects like SCIP II are still being funded, and other new housing projects are being exchanged for prior ones, so the actual increase in output is probably less than the $4 million figure would imply. What has changed, rather, are the goals, objectives, and organization of the City's Neighborhood Housing and Community Development Office (NHCD), which is being reconceived to "develop a more coordinated continuum of housing services and realign the housing agenda."
This is the sort of reinventing-government stuff (in NHCD's case, devolved from the ongoing reinvention of its federal funders) that City Manager Jesus Garza formerly tried to accomplish with his now-dormant and much-maligned Affordability Strategy audits of city departments. In this budget, the departments appear to be on their own, with altogether more impressive results; for all its ReGoSpeak, the Housing Initiative as described in the budget makes at least some sense. So do the latest incarnations of community policing, involving a wholesale reorganization of the Austin Police Department, Smart Growth, and the "Homeless Self-Sufficiency and Responsibility Initiative," to use its full, somewhat oxymoronic title.
But despite their inclusion at the very beginning of the budget, the mostly elaborate major initiatives often include no new funding, or even no funding at all, for their many near-term and long-term policy components. In at least two cases - workforce development and the Austin Public Library - funding for some elements of the initiatives has actually decreased, though the total "new money" ends up on the plus side. As a whole, the ratio of big talk to big bucks - especially with something like Smart Growth - ends up on the side of talk.
That's not always a bad thing; in the last boom, we lived through days when money moved faster than thought toward the city's initiatives du jour, which is how we all got familiar with the word "boondoggle." And you can't please everyone, one supposes; even though most all the city departments who've been bestowed ownership of major initiatives would surely like more money, they may just have to wait. The one initiative that really includes a sizable slab of new funds, to be spent on things we don't have now, is the city's attempt to head off the Millennium Bug before January 1. Which has an immediate and obvious impact: If we don't fix our Year 2000 problems, we can't have a budget next year.