Council: Budget Curtain Rises
APD requesting 82 new officers; Zimm looks for cuts
Although local armadillos are predicting at least six more weeks of summer, City Council returns from its July hiatus this morning (July 30) to plunge into the detail work of budget review and preparation. In today's work session, City Manager Marc Ott and the Financial Services staff will formally present to Council the proposed FY 2016 city budget; in the coming weeks, individual departments will present their own pieces of the larger pie, and Council members will begin crunching the numbers, making sense of it all, and establishing their own budgetary priorities in concert with their colleagues. (Regular Council meetings resume next Thursday, Aug. 6; work session Aug. 4.)
First, a reprise: In April, the budget staff gave Council a preliminary forecast, featuring the big numbers that might be expected if the local economy continued to chug briskly along. They included a jump in real estate values (a median home valuation of $221,000, up from $202,000 last year), about a 5-6% increase in the General Fund (operating expenses) to $904 million, and an estimated $18/month increase in overall property taxes and fees (about $217 annually on that same median home). Today we'll begin to find out how close those numbers approach FY 2016 reality – pending Council review and adjustment or confirmation.
There are also a couple of new wild cards in the mix. Council has already approved a 6% homestead exemption on property taxes (the first step toward an eventual 20% exemption); in combination with the $5,000 flat exemption enacted by the previous Council, that's estimated to cost about $7.6 million at the outset. The second complicating factor is a consequence of the city's brief face-off with the Travis Central Appraisal District over commercial valuations. Although the city's protest was formally withdrawn – to be diverted to state district court – Deputy Chief Financial Officer Ed Van Eenoo says that the certified appraisal numbers that are normally available at the end of July won't be ready this year until late August, and could in theory wobble a bit because of protests and other factors.
So the numbers delivered today will be slightly more speculative than usual, although Van Eenoo is not expecting dramatic changes. He said that while Austin is still doing relatively well, especially in comparison to the rest of the country, the post-recession economic turnaround has not been as vigorous as following earlier recessions. "Our sales tax revenue, for example, is up about 6.5% from last year, year-to-date, so we're conservatively estimating a 5% increase overall. That's good, but it's quite a bit lower than the 8 to 9% increases after earlier recessions." Revenue from new development has been good as well, he noted, but cautioned that it's cyclical and can't be relied upon as an annual cushion. "That leaves property taxes," he said, "which remains our most stable source of income," generally amounting to a little over 40% of the city's annual revenue.
And Van Eenoo is also professionally wary of the structural cost-drivers that the new budget addresses every year: wage increases for the city's 13,000 employees,* [Correction: originally read 14,000] rising health care costs (spring projections were +13.5%), and projected increases in sworn staff (police, fire, EMS). "As I tell people every year," he said, "if our costs increase 5%, we need to find the equivalent of 5% in revenue to cover those costs."
Once Van Eenoo and his colleagues deliver their financial overview, the individual department heads will troop into subsequent work sessions to preview their agency budgets. "We've got Aug. 10 and 12 scheduled for those presentations," Van Eenoo said, "but I wouldn't be surprised, based on Council's requests in the spring, if we add a day or two for that work." The biggest numbers (nearly 70% of the General Fund) inevitably derive from public safety departments; the working request from the Austin Police Department is for 82 new officers in this budget cycle alone, and the Department of Justice consent decree now governing the Austin Fire Department means its hiring logjam is also about to break. And in addition to the negotiated raises under public safety contracts, management is expected to recommend a 3% raise for civilian employees.
This will be the first budget review by the new 10-1 Council, and the more conservative members have vowed to be a countervailing force against rising city costs. Although Mayor Steve Adler proposed adjusting the property tax rate upward to pay for the new homestead exemption, some CMs are pushing back. For example, District 6 Council Member Don Zimmerman, the self-designated "most fiscally conservative" CM, has said he'd rather cut city management, and District 8's Ellen Troxclair has pledged to advocate the "effective" tax rate – that is, the rate that would bring in the same revenue as last year, plus new construction. (Both have proposed sharply reduced raises for city staff.) Earlier in the year, budget staff estimated that taxing at the effective rate would mean a budget gap – income against costs – of roughly $30 million.
Zimmerman had an answer for that too, telling the Statesman last week that if Austin needs more cops, it might require fewer librarians – he's been strongly critical of the new Downtown library and its projected staffing, repeatedly suggesting that smartphones have made libraries obsolete. Whether he and his colleagues can find $30 million – which would mean not just eliminating Downtown library staff, but city libraries altogether – remains to be seen.
July 30: Formal staff presentation of proposed FY 2016 budget
Aug. 10 & 12: Council work sessions on departmental budgets
Aug. 20 & 27: Public hearings on budget, tax rates
Sept. 8-10: Budget adoption
Anticipated Structural Cost Increases
Public safety hires: 82 new police officers
Civilian staff: 3% base wage increase
EMS staff: 1% base wage increase (plus step/longevity pay)
APD officers: 2% base wage increase (plus step/longevity pay)
AFD firefighters: 3.5% base wage increase
Health care expenses: + 13.5% (FY 2016)
Retirement funding: Stable (slight increases)
Fleet services: Fuel savings ($5.6 million); + 3% maintenance