Point Austin: Budget Finish Line

Council ponders final adjustments to General Fund

Point Austin

"If we can't hold the line on taxes when our economy is doing better than almost anybody's in the country, when can we hold the line?"

That was Mayor Lee Leffingwell's refrain in a Tuesday background briefing for reporters, and he reiterated that perspective in Tuesday afternoon's Council budget work session. Leffingwell is taking the position that Council should not raise FY 2014 property taxes beyond the "nominal" rate – the current 50.29 cents per $100 of assessed value. Because of Austin's steadily rising property values, the nominal rate would still raise additional funds, and is indeed under state law considered a tax increase.

Early on, the city's finance department drafted a budget that proposed a 0.85 cent property tax rate increase (to 51.14); Council has already voted not to go any higher than 51.14. Whether it can do better than that is the subject of the next few days, to be decided formally next week at official "budget readings" (Monday, and if needed, through Wednesday). At Tuesday's work session, Council directed staff to return with various alternatives that might raise additional funds or cut more expenses to get nearer the magic tax number of 50.29.

In the meantime, Leffingwell had drawn a line in the fiscal sand: "I will not vote for a budget," he told reporters, "that raises taxes above the nominal rate."

Watch That Knife

It's worth noting that other Council members (several of whom are considering 2014 runs to succeed Leffingwell) are not exactly champing at the bit to raise taxes (even a relatively paltry 0.85 cents), and staff projections revised from the spring estimates they began with appear to be making the task – essentially finding about $7 million in combined revenue and cuts – somewhat easier. Current property tax income and development fees are running a bit higher than anticipated (an estimated $2.4 million), and budget officials, having deeply sniffed the parsimonious Council air, have suggested a handful of tactics that might bring projected expenditures closer to expected revenues.

All of these were on display Tuesday afternoon, with roughly $4 million in potential revenue enhancements and $11 million in potential cuts listed by the budget staff – and Council members debating which of each might be the least painful. Leffingwell himself had raised the possibility of a 1% across-the-board cut for all non-public safety departments (representing a little more than one-third of the General Funds budget); other members searched here and there for possible expenses the city could do without.

It won't be an easy or mechanical task. One council member's fat is another one's lean – occasionally it's even the same member on both sides of the knife.

The previous pounding of department heads, led by CM Mike Martinez, for "vacancy" savings has apparently born some fruit – staff has identified about $1.5 million in additional FTE job lines that might be eliminated. Some economic development funding may be cut back to the tune of another million or two. And so on.

One of the most popular "cuts" would be eliminating "fee waivers" to certain private or quasi-private events; the city forgoes about $2 million annually in potential fees for events ranging from the large (SXSW Festival: $553,000) to the small (MLK Day Parade: $7,200), often for additional police protection. (Not all of that money might be realizable; some large events might choose to do without some expenses now charged to the city, and quite a few smaller, nonprofit events might not take place at all without city co-sponsorship.)

At any rate, next week's horse-trading will involve weighing certain traditional city investments against holding down expenses (and the tax rate) overall.

Wish Lists

Also under consideration is about $1 million in additional spending, ranging from a child care voucher program to an already approved (not yet funded) city employee leave bank. There is considerable talk of substantially more money for parks; where to find that money remains lost in the woods. Some predictable sparks flew over public safety spending; Leffingwell argued for no public safety cuts at all, while other members seemed ready to scuttle as unnecessary the half-million dollars budgeted for overtime police night patrols on the 24-hour bicycle trails pilot program.

Of more general interest to non-public safety employees was the discussion of raises. Council seemed disposed to meet halfway the AFSCME request for a 3% increase, rather than the 1.5% raise proposed in the original budget. Staff was asked to find an affordable salary midpoint – around $40,000 – below which employees would receive 3%, while their better-off colleagues would see only 1.5%. CM Laura Morrison proposed sweetening the deal with a $600 across-the-board bonus. Staff will run the numbers to bring total costs back to Council on Monday, when members can decide the meaning of "affordable."

Larger fights still loom – CM Bill Spelman remains unconvinced that APD's budget has been sufficiently scrubbed, or that the city's getting the best use of its police dollars. But that's not a one-budget argument, and will continue through the fiscal years. In light of rising fees, last fall's bond votes (especially Central Health), and looming bond votes likely this fall (affordable housing) and next (transportation) – not to mention the uncertainty of next year's 10-1 election free-for-all – it's understandable that Council would be especially reluctant to raise property taxes. As the dust settles, we'll know in a few days if they managed to hold the line.

Posted here is the Sept. 3 presentation to City Council by the budget staff, reflecting suggested revenue and expenditure adjustments to be considered before final budget adoption.

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