Point Austin: Budget in a Box
Council sharpens pencils over city budget forecast
I'm writing this column with the reassuring drone of ATXN.TV in the background, as the city's budget administrators deliver the annual financial and budget forecast to the new City Council. It's a fairly elementary presentation – not only because this Council is virtually all rookies, but because these are very preliminary numbers, and the firmer ones won't arrive for some weeks. The morning began with economic consultant Jon Hockenyos' annual economic forecast – perhaps not quite as rosy as in recent years, but still describing the Central Texas economy as equally strong or stronger than any in the country. That doesn't always help budget writers or Council members – they work with the money they have, not general prosperity – but it's certainly better than the recession years, when the only choices were what to cut.
We'll get into that in due course, but in the spirit of Wednesday's basic exposition, I thought it would be helpful to go over a few broad categories in preparation for the later detail work. For this discussion, I'll use last year's gross budget numbers – though one thing we learned today from Deputy Chief Financial Officer Ed Van Eenoo is that while the annual numbers will inevitably rise over the next five years, "the ratio of spending by category is projected to remain relatively constant."
The largest numbers are impressive, but can be misleading or beside the budgeters' main focus. For the current fiscal year (FY 2014-15), the "All Funds" Budget totals $3.5 billion, but that "all funds" number includes all the "enterprise" departments (Austin Energy, Austin Water, Convention Center, etc.) that are basically self-operating and (after expenses) bring in money for the city. That's not the budget over which Council spends most of its time sweating the numbers. So when you hear that grand number cited as justification for "tax relief" – from income as well as expenses – take it with a large grain of salt.
The actual expense budget (i.e., "General Funds," at $854 million this year) represents only about a quarter of that All Funds number – but when it gets down to the nut-cutting, that's where Council does most of its work. It's also where you can see the practical limits of Council's choices in a given budget year.
Public Safety vs. All Else
The strongest division in the GF budget is between public safety (police, fire, EMS) and everything else; as you can see in the thumbnail pie chart reproduced on the previous page, in our current fiscal year (ending Oct. 1) we'll spend just shy of 70% (69.7%) in those three high-profile categories alone (a little over 40% is for APD). It's not higher mathematics to project 30% for everything else: Parks & Rec (8.3%), public health (7.5%), libraries (4.3%), planning and development (4.2%), diminishing percentages thereafter.
It's not surprising to see those ratios in the numbers – Austinites routinely rank police and public safety highest on the city's annual survey of priorities – but it also suggests the parameters within which Council will operate as it takes up FY 2016's numbers in the coming months. Similarly, Council and staff want to beef up the numbers in permitting and development review – more staff costs more money. The city is already committed to hiring more police officers and firefighters over the next several years, and to incremental pay increases for "sworn and non-sworn" personnel (public safety vs. civilians), and anticipates (as we all do) increases in health care costs – the annual "cost drivers" addressed in every budget year.
All this means, whether (as a Council member) you might think of yourself as a "fiscal conservative" or a "tax-and-spend liberal": Entering the budget season, you don't have a lot of wiggle room – although what wiggle room there is always tends to translate to "cutting parks and libraries." Expect more of that in the coming weeks.
The Tools They Have
There are, of course, external factors hovering over these discussions. There was brief talk Wednesday of some members' desire to enact a 20% property tax homestead exemption, with Mayor Steve Adler reprising his suggestion of a four-year phase-in, which should at least be easier to swallow. The Lege is blustering, once again, about throwing Austin Energy (and us) before the tender mercies of the "free market" – thereby eliminating our reserve utility income, and putting even more upward pressure on property taxes. And the whole budget season will proceed under the shadow of the city's ongoing "affordability" conversation. Next to the state's utterly inadequate and inequitable school funding system, city taxes are in fact only a small part of that broad economic predicament – but they happen to be the part over which elected Council members have some say. We'll soon begin to hear them say it.