The Chips Are Down

Budget balancing picks up speed – and it's anything but fun and games

The Chips Are Down

About 150 or so people gathered on the gymnasium floor of the Northwest Recreation Center for a game earlier this month – but not the basketball or volleyball contests that normally occupy the court. Instead, at 16 tables set up on the hardwood, groups of citizens hunched over a printout of 32 of the most controversial or substantial items from City Manager Marc Ott's recently released "menu" of some 240 proposed cuts and fee increases to the city's fiscal year 2010 budget. Using poker-style chips (the city primly calls them "discs") on each item representing their budgetary financial values, the exercise was for each table to agree on $13 million in reductions and fee increases. OK with the cut? Move the chips to the green "accept" column on the right. Don't like it? Send them to the orange "reject" column on the left.

At my table, the first two items – reducing maintenance of city facilities and increasing early-pay parking fines – both moved easily into the accept column. The third, "MC-2" (i.e., the second municipal court proposal) – "changes to current Spanish-language interpreter services" – hung fire for a bit. The proposal, to cut unfilled interpreter positions by securing a bilingual judge for an all-Spanish-speaking docket, was postponed until we had the definition of "associate judge." Was this a part-time position, meaning Spanish speakers would have an undue wait before seeing the judge? No, a municipal court employee who shuttled to our table assured us. With that, the chip shifted to the accept column.

And so it went for the next half-hour or so. "You're hitting us with the kids and the seniors now!" said Bill, the table's de facto leader, when we reached NH-3 (Neighborhood Housing and Community Development), cutting contributions to senior services and youth services.

"No!" boomed the whole table.

Processing the Priorities

"It was a good turnout," new Mayor Lee Leffingwell said of the first of three similar town halls. "I think the real value of that is when people get down and actually start working with 'it's either this, or it's that.' Instead of just saying, 'I want this – period,' you have to say, 'If I want this, what do I have to give up to get it?' And so it brings folks into that discussion, which is really what it's all about. It's not a matter of trying to line out what you want; it's really a matter of trying to line out what your priorities are – which is something I talked about throughout the campaign."

The public budgeting task only touched on a portion of the city manager's entire recommendations. "All 240-some-odd items that are on there, I sat and listened to the discussions," says Doug Matthews, chief communications director, saying he then "gleaned from that the ones that seemed to have the biggest public impact, the biggest service-level impact, and came back with probably 40, 45." After additional staff discussions, the list was further refined to those proposals they believed "had the biggest service-level impact but were generally higher on the list, which meant they were probably more likely to be taken." (In the complete list of reductions – "the big book" to city staff – items were ranked by ease of implementation; for instance, police proposals to cut unneeded debt service ranked first, while canceling this year's cadet class came in last.)

Simply put, the city's budget shortfall is caused by the General Fund's expenditures outpacing the General Fund's revenues. The city has $645 million in costs, but, even if the city sets property taxes at the higher rollback rate, it only collects $615.4 million in revenues, creating a $29.6 million imbalance. If City Council opts for the effective tax rate – an increasingly shrinking proposition – the gap widens to $43.1 million.
Simply put, the city's budget shortfall is caused by the General Fund's expenditures outpacing the General Fund's revenues. The city has $645 million in costs, but, even if the city sets property taxes at the higher rollback rate, it only collects $615.4 million in revenues, creating a $29.6 million imbalance. If City Council opts for the effective tax rate – an increasingly shrinking proposition – the gap widens to $43.1 million.

How much actual impact will the public meetings have? At the end of each session, Ott made a strong pitch for their seriousness, as well as the city's transparency and involvement this budget cycle. "I would challenge anyone to look back and find a time," he says, "a period during which this much information and involvement and input was provided to everyone well in advance of the manager's [budget] recommendation." Emphasizing that the menu of potential cuts was released June 8 and he doesn't deliver his proposed budget to City Council until July 23, he noted, "More than a month in advance, there's been a tremendous amount of information put out there." Virtually testifying to the audience at the Northwest town hall, Ott insisted: "There is no facade here. This is real. You hear me?"

It may seem cynical to distrust the city's early outreach on the budget this year – especially compared to the process under previous City Manager Toby Futrell, during which the budget preparation was a tightly scripted, secretive process with scant public input, and the council was basically left to fight over scraps at the end of the sequence. The public forum discussions have indeed been freewheeling, as citizens could voice any of their concerns. (And so they did: Reverberations from the Stop Domain Subsidies campaign, in the voice of ChangeAustin and others, were persistent, along with the increasingly vocal protests against fluoridating the city's water, as well as singular defenses of favorite programs such as job training or youth recreation.) Nevertheless, the formal activities lacked public input on two very touchy topics: the eventual property-tax rate and prospective pay for city employees, especially the most well-compensated.

The Tax Question

The city's property-tax rate is currently set at 40.12 cents per $100 property valuation, and state law, set by the Texas Legislature, is strict about potential increases. The largest hike possible without a special election is to the "rollback" tax rate: i.e., the current rate plus 8%. (The long-term effect has been a financial stranglehold on growing cities like Austin, which strain at the service-limiting effect of ideologically conceived legislation – services simply can't keep up with the growth.) A more conservative option would be the "effective" tax rate, which is adjusted to bring in the same funding as last year. (The "nominal" rate, which maintains the same property-tax rate as last year – in spite of a shrinking tax base – isn't being seriously considered this year by anyone other than the most jaded Ron Paul-ite.)

Since the rate is still to be set by council, city staff is working with two potential projections of the shortfall: $29.6 million (at the rollback rate) and $43.1 million (at the effective rate). The entirety of the 240 potential cuts (Download the full list here.) could conceivably encompass the broader gap, as they total $45 million worth of potential reductions – yet as town hall participants were asked to identify from $10 million to $13 million in savings, it's hard to see the city closing the broader gap using the public recommendations alone. (Either would be short of the shortfall, obviously, but staff feels that other less-controversial proposals from the longer list will close the gap.) In fact, if the town hall list already exempts $10 million out of the total list of $45 million, then the city would still have to make almost all of the remaining 208 cuts just to reach the midpoint of the tax-rate options.

Although budget-cutting has become an annual city process, this year's proposed reductions are far broader in size and scope than in recent years. That has also meant that the tax rate – which may finally determine which programs are cut or will survive – has generated more discussion than usual. "There should be some relationship between decisions about spending and decisions about the tax rate," commented former Chronicle City Editor Mike Clark-Madison, who spent many years writing about city budgets. "That's what 'balancing' the budget really means." Moreover, he argues, not facing up to the costs of running rapidly expanding Austin has left the city in the lurch for years. "The craven decision of City Hall to not raise taxes in the [Mayor Kirk] Watson years is the reason why we have spent this entire decade in municipal fiscal crisis. We would have weathered the current and 2001-02 downturns much better if we weren't effectively starting out deep in the hole," Clark-Madison continued. "The council needs to go right to the rollback rate for, like, the next decade if it wants any cuts made this year to be truly 'temporary.' ... Otherwise, we just need to go into this cycle acknowledging that we're looking at permanent reductions and stop playing the ameliorative games."

Making Changes That Last

On the question of permanent reductions, the city has repeatedly characterized its proposals as "sustainable" and "structural" savings – meaning, recession willing, they don't plan to be going through the same routine next year. Describing the shortfall as a "structural deficiency" and far from a "one-time blip," Budget Officer Ed Van Eenoo has characterized city proposals as "permanent, sustainable reductions" that, if smartly implemented, mean Austin should be "good for the next five years." While consolidating or cutting unstaffed positions, shuttering inefficient programs, and generally sussing out waste are all noble endeavors, what of the uglier choices: cutting library hours, closing city pools, and canning funding for parks and youth programs? Are these also structural changes we're going to have to learn to live with?

Ott responds that the city has sought structural efficiencies with regard to its bureaucratic expenses, but doing so elsewhere "could result in a dramatic change in terms of what the city provides in terms of programs and services, maybe even investment in infrastructure. And I suspect, politically and otherwise, that just wouldn't be palatable. So I think the answer lies somewhere between some structural applications and other types of cost-saving things that would have the one-time impact."

Marc Ott
Marc Ott (Photo by Shelley Hiam)

There's also the looming question – not featured on the board game but raised by several players – of pay rates for city officials. Outgoing Council Member Brewster McCrack­en broached the possibility of pay cuts for the highest-paid city employees in his unsuccessful campaign for mayor. The idea has also resurfaced – with passion sometimes outstripping the complainants' facts – in the town hall comment periods, where citizens rise to tell Ott that the city officials need to share the burden. "That ignores the fact that I've already called upon the employees to make sacrifices," says Ott, noting that he cut a proposed 3.5% employee pay raise last year to 2.5%, eliminated a program which would bring employee salaries in line with market rates, and, for this budget cycle, took pay raises off the table entirely. "I'm giving you three examples here where we have impacted the take-home pay of employees, and yet, people are not acknowledging that."

In addition, the city is considering "furloughs" – unpaid time off for city staff – totaling about $1.1 million in savings. "If we do that, we'll probably facilitate it in such a way that those who make the most [pay] will incur more furlough days than those who make considerably less," Ott says. "That impacts wages and what people take home to sustain the quality of their lives. ... At the end of the day," he judges, "we can't, nor should we, solve this problem or balance the budget substantially on the backs of employees."

Of course, any budgeting is always in a state of flux, subject to the whims of the economy, from the national forecast on down. A state report showing local sales-tax figures were down 8% in April was in fact a slight improvement over what had been projected: The budget anticipates a 10% sales-tax decline for the year, and April data lessens the year-to-date loss from 9.9% to 9.6%.

It's a mark of how bad this current economy is, that a report that sales tax was down "only" 8% was greeted with cautious optimism.

Public Safety: Giving and Taking

Entering the budget process, what are likely to be the city's priorities? "I am fairly confident that based on what I've seen in the past, it's going to turn out to be, as it's always been before, that the top priorities are going to be public safety: fire, police, and EMS services," says Leffingwell.

City surveys routinely show that public safety and rapid public safety response times rank very high among citizen priorities. Paradoxically, another perennial handwringer is the overall cost of police, fire, and emergency services. Public safety currently consumes 65% of the budget's General Fund – the cash that must also cover costs such as parks, libraries, and health and human services. So the dilemma of each budget cycle is that public safety is always a top priority – but by dint of its enormous cost, mostly in salaries, the budget can't be balanced without making cuts there.

Yet this year it seems that common sense may prevail. To contribute to the $45 million of proposed reductions, Ott asked the public safety departments to identify savings of 3.5% in their budgets. (All other departments were asked for 7%.) Several of the proposals are relatively uncontroversial: cost-saving reclassifications, eliminating vacant positions, staffing changes on Christmas Day to save on holiday pay. The biggest potential cost-saver has also been the most debated: canceling this year's cadet class, scheduled to begin in Octo­ber (after already being delayed from March as part of the city's midyear cuts). While the savings would be considerable – $5.2 million, or more than a sixth of the overall targeted $30 million – the Police Department has said further delay would effectively result in dropping personnel below full staffing.

City discussions have focused on the General Fund, the pot of money that pays for city services like public safety. However, it’s just a portion of the city’s entire budget, which this current fiscal year totals $2.8 billion. (The overall total for the entire budget being discussed isn’t available yet.) Operating city utilities such as Austin Energy and Austin Water Utility make up the bulk of expenses, along with funding city debt and other services, such as transfers out to internal city operations separate of the General Fund. A question raised at the city’s town halls is whether the city should have encouraged participants to look more broadly at the budget process.
City discussions have focused on the General Fund, the pot of money that pays for city services like public safety. However, it’s just a portion of the city’s entire budget, which this current fiscal year totals $2.8 billion. (The overall total for the entire budget being discussed isn’t available yet.) Operating city utilities such as Austin Energy and Austin Water Utility make up the bulk of expenses, along with funding city debt and other services, such as transfers out to internal city operations separate of the General Fund. A question raised at the city’s town halls is whether the city should have encouraged participants to look more broadly at the budget process.

The cancellation controversy may already be moot. Earlier this month, Wayne Vincent, president of the Austin Police Association, contacted city management to say the union is willing to renegotiate its current contract and forsake agreed raises – the implication being, the money saved could be used to salvage the cadet class. (Unionized police and EMS membership have contracts stipulating raises this fiscal year, which they must voluntarily agree to forsake. No raises are planned for city employees as a whole; indeed, with the city considering furloughs, some could be in for a pay cut.)

"Right now, the first step in this process is to formally acknowledge to the city that we're willing to sit down and talk about our contract, the focal point of which will probably be the 2.75 percent raise the members have been promised for 2010," says Vincent. "As far as the cadet class is concerned, whether we reach an agreement or not, we're gonna fight for that class. It's critical we have that." Leffingwell, who personally facilitated the discussion behind the scenes, says negotiations will be delicate, both between union members and their leadership and the union and the city. "I think the prerequisite for even entering into [the discussions] is, it has to be based on trust. It's gonna require a measure of trust on the part of the union. There can't actually, to the best of my knowledge, be any formal quid pro quo that 'you do this, and we'll do that'" – that is, explicitly using the money slated for raises instead on the cadet class. "They have to be willing to believe and trust in the fact that if they give up this pay raise, that's what that money will be used for." Leffingwell adds: "I've made my personal commitment that that's what it'll be used for. To the extent that I have influence over it," since city management and the whole council would have to agree. The Austin Police Associaton negotiations began this week.

The spirit of collaboration is spreading: Soon after the police announcement, EMS union leaders said they are also amenable to renegotiating their contracts, including planned raises. While they face no structural cuts as deep as the police cadet class, they could potentially see halved an Austin Com­mun­ity College program designed to recruit minority paramedics. The largest change to the EMS budget has already transpired, and it wasn't a cut; earlier this month, City Council approved a fee hike for ambulance transport services, estimated to pull in an extra $3.7 mi­llion. (With that decision, the public "menu" dropped from 32 items to 31, similarly reducing the financial target.)

The Fire Department, as it happens, has no raises to surrender. Last November, after a split in its negotiating committee, the Austin Firefighters Association voted to reject the city's contract offer – no contract means no raises. However, Fire Chief Rhoda Mae Kerr says the department proposes to make additional sacrifices: discontinuing its LBJ Fire Academy ($118,000) and eliminating four unfilled investigator positions ($460,000). "Ninety-two percent of our budget, to start with, is personnel costs, then the other 7 percent is fixed costs, like utilities and fuel," Kerr says. "The money, when we look for a $4.3 million reduction" – the department's 3.5% target – "is gonna impact people. My primary concern was finding ways that didn't involve layoffs." The department may also trade two fire engines, which are expensive to maintain, for medical response units (saving $1.2 million). More than 70% of fire calls are in fact medical, so it makes sense to match response to need; however, Kerr warns, with two fewer engines, "it could take longer for us to assemble the same number of units that we assemble at a structure fire."

Largely absent from the Fire Department's financial discussion has been the question of staffing in the senior ranks. With vacancies among the assistant chiefs, Kerr made the case to council for five assistant chief positions, one more than the traditional four. Balking at the additional cost, council postponed its decision, and at this point, Kerr is only asking for four. Saying there "isn't any immediate plan" to bring the request back, Kerr says she's "still considering it – it's just a difficult time, and I certainly understood council's concern."

What's Left: Libraries, Parks, Human Services

The dilemma, often noted this budget season, is that when times are tight, people avail themselves more of city services. So exactly when these services – parks and libraries, not to mention city-funded nonprofits tending to basic needs, education, and job training – see the most demand, they're likely to get the least funding. "During the campaign," says Leffingwell, "I talked pretty consistently about the need to maintain the present level of commitment to human services. These are actually needs that increase during tough times, more needed in tough times than they are during prosperous times."

A well-worn budget-balancing standby has been cutting library hours, some of which were returned to the libraries only during the last budget cycle. This year, the Library Department proposed several different options – opening all branch libraries an hour later (saving $350,000) and/or closing them an hour earlier ($350,000) and conceivably doing the same to the Downtown Central Library ($130,000). There's also talk of reducing custodial service and maintenance of the facilities ($180,000) and reducing the budget for book purchases ($160,000), although it's already below the national average.

Town hall participants take a stab at cutting the budget.
Town hall participants take a stab at cutting the budget. (Photo by Jana Birchum)

Parks & Recreation proposals are more varied. Eleven of 26 free summer parks playground programs would be eliminated, saving $100,000 and affecting roughly one-fourth of the children who currently use them. A $5 charge for the Trail of Lights most nights for revelers 11 and older is expected to offset the event's cost by $250,000. But most community discussion has revolved around a $160,000 proposal to close nine city pools, two the city describes as "low usage" and seven the city says use an antiquated "fill and draw" system (requiring the fresh water to be regularly changed). The plan is eventually to replace the pools with "splash pads," fountainlike water features that kids can enjoy. (The city acknowledges that process could take a while.) Another proposal, not highlighted by the city on its board menu but pulling opponents out to the town halls, would begin charging four private youth sports clubs – Balcones Youth Association, Lonestar Soccer Club, Oak Hill Youth Sports Association, and West Austin Youth Association – for the lights at their games. It would save $200,000 – but advocates say it could shut down their programs entirely.

Health and Human Services proposals would shift funding for animal sterilizations and microchipping from the city to (less reliable) donations and would also save $200,000 – but the prospect has drawn howls from animal advocate groups like Emancipet, which calls it penny-wise and pound-foolish because animal intake would inevitably increase at the shelter. Health and Human Services has also proposed shifting $300,000 worth of funding for a summer youth program that works with 750 kids (115 of them disabled) to Workforce Solutions and potential (but likely one-time) federal stimulus dollars, as well as permanent closure of the temporarily shuttered second day labor site in South Austin – for another $200,000. Youth advocates are already out in force, defending the program as it stands.

What hasn't yet been a part of the city's highlighted proposals are $1.1 million in cuts to the city's social service contracts. Mostly, it's a reduction in unallocated funding for various entities and causes – youth services, HIV service providers, and others – plus a reduction in funding for Ending Community Homelessness Coalition and cuts to the food bank Caritas, funding the city hopes to replace with federal stimulus money.

With dozens of varying needs, it will be difficult to prioritize what survives and what doesn't, but Leffingwell insists "basics" will come first. "I have been primarily focused in that area on basic needs, the social service contracts that we give to the nonprofit organizations. ... And I realize there will be some kinds of cutbacks on summer programs. And that's unfortunate, and we want to try to preserve that to the extent that we can. But that is, in my mind, at least, a slightly lower priority than basic human need."

Nothing to Fear ...

At the final town hall, in the giant cinder block that is the Toney Burger Activity Center – as one audience member pointed out, technically located in Sunset Valley – the crowds were back. At 20 fully filled tables, four more than the first meeting, participants diligently pushed their chips across their menus; in case there were any questions, virtually every assistant city manager, along with the fire chief, the police chief, and a large group of miscellaneous city stewards milled about, either acting as direct facilitators or providing answers on demand – it's impressive watching the new fire chief explain the effect of an equipment shift to a small group of inquiring citizens. At one table sat incoming Council Member Chris Riley, intently debating the adjustments with his fellow citizens (other members had attended earlier forums).

The activists opposed to particular cuts had also caught the scent. ChangeAustin, still harping on the Domain, had a sign-up table at the entryway, while Emancipet passed out fliers asking participants specifically to "reject budget reduction HS-1." The anti-fluoride activists were also out in force, fliers in hand, with advocates seeded at tables throughout the room. Defenders of youth baseball – although their proposed cuts were not explicit on this menu – gathered in the bleachers, applauding an impassioned speech from a father/coach. A few more meetings and every special interest group in Austin would've been represented, digging a rhetorical moat around one or another proposition.

At the conclusion of the menu exercise, Ott struck a somewhat defensive tone, citing complaints from a previous meeting that only a portion of the city's recommendations were literally on the table. (He pointed out simply that some issues required more input than others and that the full list would simply have been unwieldy for such a large group in a limited time.) Another participant had questioned the broader purpose of the forums, arguing that by getting the public to sign off on specific cuts, citizens were in effect providing the council political cover to make those cuts over any opposition. And to some extent, it seemed the broad-brush presence of so many city officials was akin to "embedding" reporters with the people they're supposed to cover – in this case, a full-court press from the very officials who had created the menu. After all, if you had a question about, say, the Transportation Department's planned fee increases, when the Transportation director came to your table, was he going to say, "No, the money isn't needed that badly"?

Responding to complaints that these issues somehow made the public process itself "disingenuous," Ott said bluntly: "I reject that assessment. We mean what we say." Despite the extraordinary number of programs and services at stake, Ott concluded: "We have nothing to fear. I am fearless, and I want you to be fearless with me."

The city has added a fourth town hall budget meeting, Tuesday, June 30, 6:30pm, at the Givens Recreation Center, 3811 E. 12th.

FY 2010 Summary of Potential Budget Reductions

General FundOne-timeOngoingTotal
Emergency Medical Services0$1,648,405$1,648,405
Health & Human Services$$200,000$2,712,846$2,912,846
Municipal Court0$943,628$943,628
Neighborhood Planning & Zoning0$388,305$388,305
Parks & Recreation$356,617$2,401,122$2,757,739
Watershed Protection0$1,073,541$1,073,541
Support Services
City Clerk0$124,202$124,202
Communications and Public Information0$153,876$153,876
Financial & Administrative Services0$1,971,709$1,971,709
Government Relations Office0$86,553$86,553
Human Resources0$586,106$586,106
Law 0$575,264$575,264
Management Services0$335,136$335,136
Office of the City Auditor0$146,500$146,500
Small & Minority Business Resources0$197,878$197,878
Communications & Technology Management0$2,669,359$2,669,359
Fleet Services0$269,735$269,735
Grand Total$5,788,550$26,031,996$31,820,546
Capital Projects Management0$1,250,000$1,250,000
Transportation Fund0$3,500,000$3,500,000
EMS fees0$3,700,000$3,700,000
Development fees0$370,750$370,750
Employee furlough$1,100,0000$1,100,000
Service incentive pay (nonuniformed staff)0$2,094,203$2,094,203
Total Citywide$6,888,550$38,144,197$45,032,747

Got something to say on the subject? Send a letter to the editor.

A note to readers: Bold and uncensored, The Austin Chronicle has been Austin’s independent news source for over 40 years, expressing the community’s political and environmental concerns and supporting its active cultural scene. Now more than ever, we need your support to continue supplying Austin with independent, free press. If real news is important to you, please consider making a donation of $5, $10 or whatever you can afford, to help keep our journalism on stands.

Support the Chronicle  

More city budget
Breathing Room for the City Budget
Breathing Room for the City Budget
Proposed FY 2019 city budget features sunnier projections

Michael King, Aug. 10, 2018

Strategizing a City Budget
Strategizing a City Budget
Finance staff delivers tentative 2019 forecast

Michael King, April 13, 2018

More by Wells Dunbar
Top 10 City Council Stories
Top 10 City Council Stories
Dais and months

Jan. 6, 2012

City Hall Hustle: The Hustle Bids Farewell ...
City Hall Hustle: The Hustle Bids Farewell ...
To the beating hearts of a great city

Dec. 30, 2011


city budget, City Council, Marc Ott

One click gets you all the newsletters listed below

Breaking news, arts coverage, and daily events

Keep up with happenings around town

Kevin Curtin's bimonthly cannabis musings

Austin's queerest news and events

Eric Goodman's Austin FC column, other soccer news

Information is power. Support the free press, so we can support Austin.   Support the Chronicle