Point Austin: Unbalancing the Budget

I'd feel a lot more sympathy for City Council's predicament over the FY 2017 budget if they hadn't been such collaborators in their own entrapment. Right now they're arguing over the relative nickels and dimes left over in the nearly billion-dollar proposed General Fund budget, but they prepared this box for themselves as long ago as the 2014 campaign, when more than half of them – including Mayor Steve Adler – ran on enacting (or phasing in) a 20% property tax homestead exemption. Along with the "throw the bums out" 10-1 campaign, the exemption became the headline chicken-in-every-pot that would bring "affordability" to every homeowner.

Even setting aside the fact that most Austinites are not homeowners, the primary effects of the exemption (currently at 8%) have been two: 1) a transfer of wealth (in laughable individual amounts) from Eastside to West; and 2) a steady tightening of Council's budget options at crunch time. That most of the council realized this from last year (when they enacted the 6% exemption) to this (when they added the 2%) is not reassuring. The exemption left them roughly $15 million in the hole before they even began their work – enough that would have paid for all the high-priority items on their current to-do list (see "Council: If We Had Budget Enough, and Time").

Those highest-priority items are not a "wish list" of unnecessary luxuries. The "Spirit of East Austin" Initiative represents an official commitment by City Hall to address historic geographic and economic inequities that threaten to drive away more minority residents and to undermine the city's broader prosperity. In addition to three of the next priority items – Austin ISD programs, the scandalous backlog of forensic DNA analyses, and the just-approved tenant relocation assistance program – they would cost, in total, less than $9 million. The DNA situation, including thousands of delayed rape prosecutions, constitutes a public emergency; and the support for AISD actually represents a break for taxpayers, because the city's spending is not subject to state recapture (now approaching $400 million for the school district).

Wouldn't it help to have that additional $15 million?

Peter vs. Paul

For "affordability" advocates, the term has only a single meaning: "tax cuts." As the mayor has belatedly begun emphasizing in recent months, the city tax burden on local residents is marginal compared to costs associated with housing and transportation (the latter making his argument for the November transportation bond). The corollary myth is that city taxes only increase; in fact, since 2000, the property tax rate has ranged from a low of 40.12 cents (per $100 in value) in FY 2009 to a high of 50.29 in FY 2013 – and right now, at 45.89, is about at the historic average. Homeowners with rising equity (myself included) respond that our property valuations continue their inexorable ascent. To Austin renters increasingly locked out of the market, we must sound like the Yankees complaining that the team's payroll is too high.

Some of this predicament is beyond Council's reach. If we're ever going to achieve a rational level of school taxes (now more than 50% of the local burden), we'll need a Legislature seriously committed to public school finance and a statewide tax system that reasonably shares the load – still a distant hope. Right in front of us is a more obvious conundrum: Public safety costs now consume more than 70% of the GF budget, and both consultants (the Matrix report) and advocates are arguing we need more staffing to enable publicly engaged "community policing." Even if a majority agrees – although the public is increasingly polarized on police spending – where is that money supposed to come from?

The Texas Context

Talking to reporters last week, the mayor suggested that he will try to put together a task force of some kind to consider public safety spending in a proactive manner, to get an earlier handle on the overall budget, and to get some perspective beyond the annual budget treadmill. "If we're going to address the public safety budget," he said, "we'll have to get involved earlier. We have to respond to too many budget requests throughout the year, without the larger context. There has got to be a way to consider these things in an overall context."

The Legislature seriously constrains the ability of cities to do what the mayor is advocating: State law imposes rigid and arbitrary limits on rational taxation (e.g., the "rollback rate"), arbitrary deadlines (e.g., the homestead exemption), and recklessly unfunded mandates. Of the latter, the school (non)funding system is only the most flagrant; we should add the mental health responsibilities defaulted to police officers and EMS, and neglected health care costs in general, for which Austin has responded with the Central Health Care District. It's no surprise that City Council begins and ends its budgeting work with more obligations than it should have to handle. But it's also frustrating when council members make their work even more difficult than it needs to be.

"Point Austin" is taking a break for a couple of weeks, and will be back Sept. 30.