Point Austin: Partly Cloudy With a Chance of Meatballs

City Hall begins budget prep with a fair-to-middling forecast

Point Austin: Partly Cloudy With a Chance of Meatballs

This week City Council began in earnest its annual grind of budget preparation, kicked off with Wednesday's work session presentation of the FY 2019 budget forecast. That's about a month earlier than last year, in Council's annual attempt to "reinvent" the budget process. Wed­nes­day's forecast at City Hall was followed by an afternoon session at the Central Lib­ra­ry, devoted to continuing discussion of aligning spending with Council's six declared "strategic outcomes": "safety," "health and environment," "culture and lifelong learning," "government that works," "economic opportunity and affordability," and "mobility."

This column is being written in the middle of those deliberations, so it also looks backward, to similar discussions last year and to the projections that more or less came due. Last spring, budget guru Ed Van Eenoo told Council (in paraphrase) that for FY 2018, "costs are expected to rise about five percent, and incoming revenue is anticipated to rise by less than five percent." Wednesday he confirmed that, with a few adjustments. The FY 2017 budget year concluded with overall General Fund spending at a little less than 99% of the projected budget, and Development Services revenue (a "growth bonus"?) was about $2.9 million higher than expected. With that little bit of help, about $15 million could be transferred into the city's reserve fund ($6.1 million over projections), providing some cushion for this year.

At the same time, non-property tax revenues – primarily sales taxes and those same development fees – have continued to level off from the high boom years (when the sales tax bump could reach 6%), and instead of meeting already lowered estimates, are beginning to come in lower – for sales taxes, 2.9% above last year, but below the budget estimate of 3.3%. For development services, the numbers are similarly leveling off, now budgeted to equalize the city's expenses.

Simultaneously, labor costs – somewhat thanks to currently busted meet-and-confer negotiations – are lower than expected, overall resulting in an anticipated "surplus" for FY 2018 of $750,000 (i.e., not much wiggle room).

External Considerations

Before I descend completely into financial waters far too murky for my inexpert abilities, we'll revisit the big numbers next week, after the forecast dust settles and Council has had a chance to ask questions and mull the projections. Most things won't change much, year to year – while expenses continue to rise, the city's continuing prosperity will cover base costs while allowing for at least some new Council initiatives. As always, in August Council will find itself earnestly fussing over small expenditures. Last year's tug-of-war was over all of about $5 million within a $1 billion GF budget.

Another thing that won't change is the imbalance of power between the city's attempts to manage its own finances and the state's persistent threat to undermine those finances by flagrantly political pandering on property taxes. Van Eenoo's forecast includes projections based on an 8% "rollback" property tax rate increase (at the upper limit without an election), as well as a 4% projection (the 2017 legislative proposal), under which the city could not meet its basic expenses and would have to find substantial ways to cut costs.

But in fact, the latest threat emanating from the Capitol is Gov. Greg Abbott's recent proposal of a 2.5%* cap on municipal property tax increases, a level that wouldn't even allow for normal inflation. His announcement was couched with various qualifications, but serves notice to local officials, once again, that local government remains at the mercy of state Republican political priorities.

The Arguments Continue ...

Beyond those external considerations are the ongoing tensions among local interest groups over annual budget decisions. The extended debate, during the March 22 Council meeting, over a largely symbolic resolution to confirm the funding of 12 already authorized new police officer positions, was a case in point. Nobody on the dais actually opposed the funding, though some members thought it jumped the gun on formal budget planning. More salient was the issue of just what sort of spending qualifies as "public safety." Currently, 67% of the GF spending is on public safety departments (about 40% is specifically APD), and under Council's new "strategic outcome" categories, the percentage is similarly figured at 68%. Some members (and certainly local justice advocates) say more of that funding should be going to other forms of "safety" – social service contracts, community development, programs that keep young people out of the criminal justice pipeline. Simul­tan­eously, other influential advocates – notably the Greater Austin Crime Commission and their many allies – insist the police staffing "shortfall" is as high as 300 officers. The draft five-year staffing plan (also presented Wednes­day) proposes reaching that level of new officers by 2023 – at which point, the GACC will no doubt be calling for another 100 or so more.

Settle in for a few months of those kinds of arguments, not to mention affordable housing bonds, and oh yes ... that little matter of a new land use code. As Roseanne Roseannadanna liked to say: "It's always something."

*Correction: Originally read, incorrectly, "2%."

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