Are You Typical?

A revealing moment in last Thursday's City Council budget work session concerned the definition of a "typical Austinite." The budget staff annually estimates the effect of tax and fee changes on the "typical homeowner" – generally defined as the owner of a "median-priced homestead." This year that figure is set at $232,272 (based on preliminary numbers from the Travis Central Appraisal District), and yields a proposed "typical" property tax and fee increase of 3.6%, or $11.30/month. Included in those monthly increases are a half-dozen fee hikes, ranging from 25 cents/month for the Clean Community fee to an anticipated $4.94/month increase in Mr. and Mrs. Typical's Austin Water bill. (At the staff-proposed property tax rate, that bill would rise $3.32/month, while the Austin Energy bill is expected to fall $2.22, a boon of falling fuel costs.)

The AW bump is the highest of the group, leading Mayor Steve Adler to press the budget staff on exactly what "typical" meant in that context. Obviously, how much your water bill rises depends not only on the rate, but on how much water you use, and Adler wanted to emphasize that average water usage in Austin has been declining over the last couple of years (in part because of conservation programs and regulations put in place by the utility). Chief Financial Officer Elaine Hart explained that the $4.94 estimate is based on a residential customer using 5,700 gallons of water and 4,000 gallons of wastewater (for a 2016 monthly bill of $78.72), the best "typical" estimates provided by the utility as recently as a few days before the meeting.

That wasn't quite good enough for the mayor, who reiterated that residents who were dutifully using less water could expect a lower bill – and thus the $11.30 total monthly bump would not apply to them. Hart responded gamely, yes, that was true, but the best estimate she had at the moment reflected the increase noted in the budget overview chart: a typical $4.94 a month (see "Major Rate and Fee Changes," below).

Depending on your perspective, they were both right. Hart was working with the numbers she had, and the numbers she had were as they were. Adler, thinking of the public perception of those numbers, wanted to make Council (and presumably the silent myriad watching ATXN-TV) aware that "$11.30/month" is a budgetary fiction that depends entirely on just how "typical" an Austin homeowner you are. (Renters are another matter, whose typicality inevitably disappears into their rent.)

That's about as deep as last week's discussion – under the implacable gazes of the budget staff – wandered into the woods, and most of the numbers delivered had long been adumbrated in the spring forecast. The General Fund projection was a little higher than forecast ($907.6 million, a 6.2% increase over FY 2015), but the All Funds total (i.e., including the enterprise departments) was virtually unchanged (at $3.5 billion, barely a rounding increase of $39 million, 1.1%). The major cost drivers – new hiring, wage increases, and health insurance – were roughly the same as anticipated, combining to generate a slight increase in the proposed property tax rate: to 48.14 cents/$100 valuation, up from 48.09.

All of these numbers remain preliminary – they are officially City Manager Marc Ott's proposed budget, subject entirely to Council review, adjustment, and eventual rejection or approval. And while the overall presentation went smoothly, the fault lines on the dais (more precisely, at the boards and commissions work tables) became visible soon enough. Ott is recommending 106 new hires (85 sworn officers) for the Austin Police Department, 48 for Libraries (primarily to begin staffing the new Central Library), 27 positions in Development Services (also the subject of a lengthy, detailed briefing at Tuesday's work session), and 22 in Transportation (not coincidentally, growth and traffic management were the two services most heavily criticized in the city's public outreach surveys).

Although departmental presentations are yet to come, the conservative wing (CMs Don Zimmerman, Ellen Troxclair, and Sheri Gallo) has already made evident their skepticism on library funding, and it seems likely that public safety numbers (that daunting proposal of 106 FTEs for APD) will be pitted against both libraries and social services in the coming deliberations. Zim­mer­man raised yet another eyebrow Thurs­day when budget staff reported that not only the city as a whole but both AE and AW were steadily restoring reserve funds that had been undermined by the Great Reces­sion. He understood the conservative purpose of reserve funds, he said, but he is concerned by a tendency of "governments" (a reflexive pejorative in his lexicon) to build up reserves and then "use the funds for something else." Whether that will be a new target for budget cuts (i.e., property tax cuts) remains to be seen.

More prominent as a flash point will be employee wages. As anticipated, this budget proposes a 3% across-the-board wage increase for non-public safety city employees (public safety raises are governed by contract, currently lower than 3%), along with an anticipated six-month "market adjustment" for some 30% of employees currently paid "below market" (IT staff are often mentioned in that context). Moreover, Council is in principle committed to establishing a living wage floor of $13.03/hour for all city employees (state law forbids municipal action on minimum wages for private-sector workers).

At an earlier meeting, Zimmerman declared that it is impossible to determine what any living wage should be. And he, Troxclair, Gallo, and (more surprisingly) CM Ora Houston have sponsored a resolution on today's agenda (Aug. 6) that would only authorize the full 3% for the lowest-paid city employees, with "tiered" wages higher on the scale – with the justification that the area-wide wages (the Austin-Round Rock-San Marcos statistical area) have not risen by that margin. The sponsors claim they can save roughly $6 million by this maneuver, although the numbers would be volatile in advance of actual budget discussions. Moreover, they will run into stiff opposition from AFSCME, the city employees union. Business manager Carol Guthrie called "ludicrous" the attempt to compare Austin wages (and cost of living) to Round Rock or San Marcos, and said the Council is unprepared to enact this proposal prior to reviewing the budget or wage structure details.

"Austin is enjoying good times," Guthrie told the Chronicle, "and city employees – all of them – deserve fair compensation. ... This is a premature proposal, and I think it is unfortunate that these individuals only want to find savings on the backs of city employees." She also noted that the proposed budget includes recommended increases in health insurance costs for all employees, making the anticipated wage increase even more important, "to help defray some of those costs."

That will be one argument to be continued throughout the budget discussions. Another will be the effect of Council's enactment of an initial 6% property tax homestead exemption, estimated by staff to cost (this year) $7.3 million. The mayor made a point of confirming that the proposed budget includes the exemption (with another $70,000 elderly and disabled exemption enacted earlier) "without cutting city services." On the day, staff concurred – although the question begged continuing discussions when the actual nut-cutting begins, somewhere about the last week of August, when many millions of dollars of service needs are competing for very few millions of remaining dollars.

Those are a few of the matters likely to be highlighted in the ongoing budget deliberations during the next few weeks. Earlier this week, Council members were still swimming through the 1,700 pages of detail, even while prepping for today's more quotidian matters, including how to pay for services already appropriated. Call it a typical budget year, with a still untypical City Council.

Major Rate and Fee Changes

Estimated impact of proposed rate and fee changes on "typical" residential rate payer: