Point Austin: The Costs of Community

Much of the inherent futility of the now-collapsing legislative special session is summed up in a quote this week from Austin's District 48 Rep. Todd Baxter, who has been defending the Eanes school district from the leveling ravages of Robin Hood. "What we need to focus on," said Baxter sagely, "is creating a system that ties reducing recapture to increasing equity." It's a touching sentiment – but alas, with rather less logic than George W. Bush's legendary exhortation to "make the pie higher." Property tax recapture – that is, moving education funding from where there is much, to where there is little – is equity, so to reduce the one while increasing the other can have only one meaning: cutting Peter loose from his financial obligations so Paul, Tom, Dick, Harry, José, and Olivia can share the little that's left. The only way to do that is to allow the wealthiest school districts – Eanes, Highland Park, Alamo Heights, even Austin – to keep their lion's share of the pie, and let everybody else fight (equitably, of course) over the crumbs.

In fairness, it's hardly just Baxter who wants to continue the state's fuzzy math. When Gov. Ricky declared cutting property taxes his priority, and was joined by the Lege leadership in insisting any new tax bill had to be "revenue neutral," any real hope of either increasing school funding or improving statewide equity was doomed by design. The "Two billion dollars in new money" that has been press-release boilerplate for months is an impolite fiction, and even if it existed it would be barely enough to cover the state's annual crop of 75,000 additional new students. Politicians (and the business interests that underwrite them) never tire of dancing to the music of "growth," and never fail to disappear when it comes time to pay the piper.

---

Home Accounting

Well, if we can all tear our eyes away for a bit from that riveting spectacle – and by the time you read this, we should know if we'll be treated to weeks more of additional side-splitting fun – it's time to take a look again at local matters, as the new City Council returns from its summer hiatus and gets down to nuts and bolts again on the inevitable subject: money. The Fiscal Year 2006 budget will be under the lights for the next few weeks, and following behind it like a cat stalking a canary is the next bond package, anticipated to take shape over the next several months before it is trotted out before the voters sometime next year.

The budget news is both mixed and ambiguous. Sales tax receipts are up, statewide and locally, as are anticipated property tax revenues, so the council should be breathing a bit easier as it tries to decide how to restore or adjust radical cuts it made during the post-9/11 downturn years. According to the staff's draft policy budget (available on the city's Web site), without touching the current property tax rate – that is, leaving it at the "nominal" rate of 44.30 cents per $100 – rising property values would mean an automatic bump of $6.9 million (about $25 per residence) on a base budget of roughly $450 million (2005). With projected expenditures under current policies expected to jump roughly $27 million while overall revenues rise only $21 million, it would certainly be nice to have another $7 million on the nightstand to play with.

Meanwhile, the council has verbally committed to adding back full library hours and "some" of the community and social services that have gone begging for three years and also to slowly rein in the runaway percentage of the budget that is going to "public safety" – expected to hit 75% of all expenditures in the next couple of years. Staff estimates approximately $8 million for recommended "add-backs." That would seem to argue for at least a modest tax increase, in addition to recommended bumps in utility rates (mostly for infrastructure investment) spread over the next five years.

Nobody is raising that flag just yet, so you can wait to sneer or salute.

---

Funny Money?

The problem, of course, would be defending any tax increase this year under the shadow of coming back next year and asking for a bond package approval that might add several hundred million in debt – and a couple more cents to the tax rate over the next two or three years. The city's "wish list" – the overall "needs assessment" that has been given to the citizens bond committee for weeping, blessing, gnawing, and cutting – tops out at $770 million, although nobody is anticipating the actual package will approach that figure. The trouble is, there isn't anything on the list, from drainage improvements to new central library to affordable housing initiatives, that leaps out as frivolous or unnecessary. (The Statesman's Rich Oppel has already and predictably targeted additional open-land acquisition as wasteful and readily transferred to development-subsidizing East Austin infrastructure, cheerfully preparing to re-open polarizing wounds.)

Not to mention the county bond package (smaller but further along than the city's), which ideally will overlap to a degree with the city projects.

In light of all these potential expenses, Mayor Wynn has already begun suggesting that to enhance prospects for the bond election, the city's property tax rate should instead be lowered to the "effective" rate – that is, with rising values, a 42.97 cent rate that would generate the same amount as last year. (In boxing parlance, I believe this is known as "leading with your head.") While the council ponders this maneuver, may I also suggest they look very, very closely at the "reserve" and "emergency" and "stabilization" dollar numbers buried in the city manager's draft policy budget?

For example, the staff is recommending increasing the emergency reserve fund from $15 million to $40 million, which just may have something to do with the fact that the projected "ending balance" for this year is at $43.4 million, a jump of almost $15 million over FY 2004 – abruptly shuffled into the column labeled "one-time critical capital expenditures." This is all over and above the 1% "contingency reserve" (sounds like a dollop, but it's $4 million-5 million of wiggle room). I'm still puzzling over the numbers, but I have a sneaky feeling that the $8 million recommended in "add-backs" is at least partly money that's already been buried by design in the projected expenditures, and may in fact suggest not that there's plenty of money to go around – but that the austerity frenzy of the last few years was a trifle overzealous. Or, as one budget maven suggested bluntly to me about the previous council last week, "They cut too much!"

Those are a few curious things for the new council to ponder, as we enter the meteorological and financial dog days. It may not be as exciting as saving the collective Austin homestead from the Evil Specter of Eminent Domain, but it could be helping to create (and pay for) a city that's worth living in, for us and for our children.

---

*Oops! The following correction ran in the August 5, 2005 issue: Michael King's July 22 "Point Austin" column cited a published statement from Rep. Todd Baxter, R-Austin – "What we need to focus on is creating a system that ties reducing recapture to increasing equity" – but neglected to give a source. Baxter was quoted July 19 by reporters Mike Ward and Jason Embry in the Austin American-Statesman. We regret the oversight.