Point Austin: Budget Puzzles

We're a week off from the official opening of city budget season – the May 24 council policy discussion, intended to set budget priorities for the coming fiscal year – but the poor-mouthing has already begun. According to the city staff budget mavens (in their May 3 five-year forecast to the council), the 2008 budget will show a nominal $27.5 million gap between income and expenditures – that is, for a projected general funds budget of $595.8 million, we'll have an income of $568.3 million, leaving a $27.5 million shortfall. Magically waving "additional" tax revenue of $10.9 million – that is, revenue that the city will raise even while lowering the current tax rate, because of rising property values – will bring that deficit down to a relatively paltry $16.6 million. So the council was duly put on notice by City Manager Toby Futrell and Budget Officer Greg Canally that it will begin its 2008 budget deliberations at least $16.6 million in the hole.

That's called taking control of the conversation. The deficit figure itself, $16.6 million, is only about 2.7% of the entire general funds budget, and from that perspective it may not seem like much. But the big total number, $595.8 million, has so many structural costs built into it that a council member begins by bumping up against financial limits that appear immovable: Don't ask for any more money for anything, because it's already spent. Moreover, on the expenditure side, the "forecast assumptions" include $7 million in new spending that Futrell is calling "core service investments" necessitated by growth: graffiti abatement; permitting, plan review, and building inspection; urban design; EMS peak load unit; parks facility preventative maintenance; and library materials. Setting aside for the moment whether all those items match your own notions of "core services," effectively the manager is telling the council that the official wish list is already submitted – your only job is to find me $16.6 million of wiggle room, elsewhere.

I suppose one council response might be, "Even after my raise, they're not paying me enough to be a budget officer." But here's hoping the members are instead digging through those long lists of last year's numbers and this year's projections – and trying to find out what happened to the Austin boom.

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Waiting for Good Dough

As my colleague Wells Dunbar pointed out last week ("Beside the Point: Set Forecast to Stun") the biggest puzzle in these numbers is the curious relation of the city's exploding growth to its budgeting structure. At Samsung-wooing time, we're told that without such "economic development" (i.e., corporate tax giveaways) the city as we know it will wither away and die; at budget-presentation time, we're warned that all this growth is producing runaway "cost drivers" that mean we're deeper in the hole than we thought we were at this time last year. Is it truly impolite to ask, which is it? Or as Dunbar put it eloquently last week, "Why are we being asked to go to the well to further prioritize the instruments of gentrification and growth, when the city is apparently incapable of channeling our current boom to the city's financial advantage? Doesn't high-speed growth, as we're repeatedly assured, 'pay for itself'?"

The inevitable rejoinder is that, indeed, growth does pay for itself, only with a lag time not immediately reflected in the current budget projections. If that's true, then why does the city's five-year forecast show similar deficits for the next five years, through 2012? (The before-tax deficits are, respectively, in millions: $27.5, $20.0, $16.1, $24.1, $25.4.) Presumably by that time, the Downtown condo craze will have crested, and the city will only have to turn on the golden spigots from the high-rises to fill its coffers to bursting. No?

On that latter note, even hired forecaster John Hockenyos was skeptical, as he warned that at least a few things in the Austin economy had begun to look a little (as he called it) "bubblish." "I wonder if we really are going to have enough people move to town that can afford half-a-million-dollar condos going forward. That is something I wonder about," he wondered. "I would be happy to be proven wrong, but I wonder about it."

So do we all.

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Whose Priorities?

Whatever the arithmetic, I would feel a good deal more confident, entering the budget season, if this council would take the bull by the horns, shake down all these numbers, kick the requisite tires, etc. – and try to communicate to city staff and thereupon to citizens if there is any way that, as a city, we can get off this economic treadmill that keeps us running ever faster, just to stay in the same place. So we are told, for example, that an additional 39 police officers (over and above expected hires) will be needed to keep pace with population growth, and a policy standard of two officers per thousand population. Yet to my knowledge, nobody has ever even tried to explain why two officers per thousand is a magic number that magically translates into more effective public safety. Some cities do worse with more; some better with less. That's just one question in a thousand, and I hope the council can do more than send e-mailed questions to the budget office in hopes of an eventual online response. I'd like to know, for example, how "graffiti abatement" – i.e., getting tag removal down to 48 hours, when it is currently resting comfortably at about a week – became No. 1 in a list of needed "core services." (For just one counterexample: Didn't last year's council declare improved mental-health services a priority "core service"?) And I'd like to know why "permitting and plan review" as well as "urban design" indeed cannot be made literally to pay for themselves, on a real-estate fee basis, if indeed these things are a consequence of population-growth "cost drivers" for which the citizens at large instead must pay. Those are just a couple of questions about new expenditures; on a line-item basis for the whole budget, I'm sure there are plenty more.

Just a thought: Maybe the council needs its own budget officers, to review – and check-and-balance – the assumptions rising up from the city agencies with a very vested interest in the eventual outcome. That's a core service I'd certainly be willing to pay for.