Here's How Austin's Last-Minute City Budget Battles Played Out
How advocates' calls for action were and weren't answered
By Austin Sanders, Fri., Aug. 25, 2023
By the morning of Aug. 16, the day City Council was set to approve a budget for fiscal year 2023-24, much of the $5.5 billion spending plan had been cemented.
About $1.4 billion would be allocated to the General Fund, which pays for city services like police, fire, emergency medical services, parks, libraries, and housing assistance. GF expenditures are largely outlined by city management following a months-long budget-writing process that begins in February. For this year, the GF includes budget line items proposed by Interim City Manager Jesús Garza, such as: $80.9 million to respond to homelessness, $6.1 million to buy generators for city facilities used as shelters during extreme weather events, and $4 million devoted to improving the city's permit review and Land Development Code amendment processes.
Council members – and the advocacy organizations that lobby them – get to fight over a much smaller portion of available GF revenues. A week before the budget adoption meeting, Council's budget wish list, represented in the form of budget amendments, totaled around $18.7 million in ongoing expenditures. By the morning of the adoption meeting, the list shrank to around $10 million – slightly more than the $7.8 million in newly discovered revenue identified by staff that Council could use to fund priorities not included in Garza's base budget, proposed in July.
Some of the notable and noncontroversial additions to the budget include: $1.3 million to continue a guaranteed income program that will pay $1,000 per month to 85 households over the next year, with no strings attached (proposed by Council Member Vanessa Fuentes); additional funding to ensure the Austin Police Department can continue employing 10 Victim Services counselors, who are currently paid through federal grants (proposed by CM Alison Alter); and an additional $1.8 million in one-time funds added to the $210,000 proposed by Garza that will be used to build shade structures in city parks (proposed by CM Chito Vela).
But Council members weren't in total agreement with one another on which of their budget amendments should be added into the budget, or even on all of Garza's proposed spending priorities. Unlike in previous budget years, little of that debate occurred on budget adoption day – instead, it played out behind the scenes and in previous budget workshops. By 3:30pm on Aug. 16, the budget had been adopted on a 10-1 vote. (CM Mackenzie Kelly voted against, saying that "certain budget items" deviated from the city's "core priorities.")
But the final hours leading up to Council's adoption of the budget did produce a frenzy over three issues prioritized by a coalition of progressive advocates: a reduced allocation to the city's emergency reserve fund, more funding for rental assistance, and the cancellation of a personnel transfer that would move 37 civilian positions into the Austin Police Department. As Council heard from public speakers throughout the morning portion of the meeting, advocates including Chris Harris, Kathy Mitchell, Alycia Castillo, Awais Azhar, JP Connolly, and others – all of whom largely operate under the Equity Action banner – huddled together in the atrium at City Hall strategizing over how to persuade at least six CMs to support their aims.
Paying Rent
First, let's begin with the Emergency Reserve Fund. To close the gap on the money needed to fund amendments, Council began tussling over how much cash should be stowed away in the city's two reserve funds – the Budget Stabilization Reserve Fund and the Emergency Reserve Fund. The former is maintained through transfers from General Fund departments and is intended to ensure city services can operate smoothly in the event of economic downturn; the latter will be shored up with reimbursements from the Federal Emergency Management Agency and Travis County and is reserved for disaster response ($15.3 million was drawn from the fund to respond to Winter Storm Mara).
Until 2021, city policy mandated that allocations to both reserve funds total 12% of all ongoing General Fund expenditures. In 2021, Council – acting on a staff recommendation post-Winter Storm Uri – raised the reserve fund allocation to 14% of GF expenditures. In the FY 24 budget, staff recommended increasing the BSRF allocation again, to 17%, with 10% going to the Emergency Reserve Fund and 7% to the BSRF.
The allocations would total $134.1 million and $91.4 million, respectively. Staff advised Council that the increase was necessary due to the increasing occurrence of extreme weather events, requiring expensive disaster response that takes a long time to reimburse (the city expects some pandemic expenditures will not be reimbursed by FEMA until next fiscal year) and that maintaining a larger reserve could help Austin increase its credit rating, which was recently downgraded.
A 3-percentage-point increase may not seem like a lot, but in real dollars it's substantial: about $40 million – or, put another way, more than enough to have funded all of Council's budget amendments. Advocates pressing for a lower reserve allocation argued that reducing the total transfer into each fund – even 1 or 2 percentage points – could free up tens of millions of dollars that could be spent on community needs that exist now. That immediate need should be prioritized, they say, especially while the national and local economy are strong.
Council did agree to lower the reserve fund allocations, but only by a little. The FY 24 adopted budget will have the city maintain a reserve fund totaling 16.6% of GF expenditures, which freed up another $4.7 million to use on services in this year's budget. The push from staff to increase the reserve fund allocation by a few percentage points may seem trifling, but it reflects the sort of self-imposed budget austerity that justice advocates say harms low-income Austinites in urgent need of relief.
Take the $1.6 million Council ultimately approved for the city-funded rental assistance program called I Belong in Austin. A coalition of progressive advocates first pressed Council to allocate $12 million in rental assistance, but they knew that would be a stretch. When Garza's proposed budget offered just $250,000 for the program, advocates pushed for $7.8 million – equivalent to what Council approved in the last budget. The number was knocked down, again, to around $4 million before Council consensus around the $1.6 million allocation was reached.
But tenant advocates fear that renters struggling to avoid eviction will suffer from the lower allocation, especially as federal- and state-funded rent programs dry up. El Buen Samaritano, the nonprofit that has administered IBIA since 2021, reports having served 385 households with $1.7 million during that time (from 2020 to 2022, the Relief of Emergency Needs for Tenants federal program delivered about $77 million to nearly 19,000 households in need of rent relief). Most of the IBIA funds were given to households earning 30% or less of Austin's median family income ($20,800 for a single person), with 35% going to Black Austinites and 37% to Latinos. Nearly all of the funds were delivered to households on the Eastside.
The city said it could not provide a singular estimate for the amount of monthly rental assistance needed in Austin because "many variables exist when determining vulnerable tenants' need for rental assistance," such as "medical needs, job loss, [and] disasters." But a budget amendment form submitted by Vela says Housing Department staff estimated the amount of funding needed at $1 million per month, based on disbursements from similar programs in the past. Beyond that, a 2022 HousingWorks report found that 50% of Austin residents are renters and 35% of renters (so, a little over 160,000 Austinites) spend more than 30% of their income on housing. In June, El Buen had to pause intake for IBIA because the program ran out of money.
To meet the clear need for rental relief, Council authorized a contract extension with El Buen to continue IBIA for another three years, at a total cost of $17.8 million. The first year of the contract ($7.8 million) is fully funded thanks to the IBIA allocation in the FY 23 budget, but year two ($5 million) is only 32% funded through the $1.6 million allocated in FY 24, and year three is completely unfunded. If Council doesn't authorize more funds before the current allocations run out (likely sometime next summer), then the program will once again go dark. El Buen anticipates intake to resume no later than early September; with the $9.4 million in funding available to them, they expect to serve about 1,670 families.
For Awais Azhar, a housing advocate at City Hall last week, the new rental assistance funding Council approved is welcome, but not enough. "As a community, it is critical to ensure that we expand funding for IBIA so these services are provided without a gap to vulnerable Austin residents who may otherwise be forced to leave their homes and communities because they do not have money to pay rent or relocate to housing nearby."
Who Keeps APD’s Receipts?
If Council failed to fund rental assistance at the scale of community need, as advocated for by progressive groups, they did respond to community organizations skeptical of Garza's plan to transfer a number of civilian positions into APD. In his proposed budget, Garza suggested moving into APD 25½ positions from Human Resources, eight positions from Building Services, and four positions from the Public Information Office.
The stated reason from Garza's administration for the transfers was to improve operational efficiency. At the budget adoption meeting, Assistant City Manager Bruce Mills, who oversees the city's three public safety departments, said that shortly after he was brought on, some officers did not receive their overtime pay on time. Mills and Garza recommended moving the HR employees – who were mostly working on APD payroll anyway – into the police department to prevent something like that from happening again. Similar reasoning was applied to the Building Services and PIO positions.
But advocates with Equity Action, the coalition of progressive advocates that authored the Austin Police Oversight Act approved by voters in May, were skeptical. They argued that by creating more internal recordkeeping positions, APD could block the Office of Police Oversight from accessing some of those records based on one interpretation of Chapter 143 of the Texas Local Government Code, which broadly outlines what civilian oversight of police can look like in Texas.
The city's Law Department disagreed with this legal interpretation, but CM Chito Vela pushed for a budget amendment to cancel the personnel transfer. Mayor Kirk Watson, who told his colleagues that he didn't think the transfer would "make changes to the openness and transparency" of APD records, voted against the amendment – along with CMs Leslie Pool, Alison Alter, and Mackenzie Kelly.
The successful defeat of the Garza-initiated transfer is interesting for another reason: because it offered a small view into the increasing tensions over how Garza thinks the city of Austin government ought to be run and how some of his bosses – the 11 elected members of the City Council – think it should be run.
"Let me weigh in a little bit," Garza said, preparing to launch into the kind of mini civics lesson that he has delivered to his bosses on occasion. Two decades ago, when Garza was city manager the first time, organizational shuffles like this "would be consent and routine," Garza said, because "under the Charter, the manager has complete and total control over personnel policies." This Council doesn't seem to grasp this, from Garza's perspective. "While you have that power," Garza continued, "it really undermines this form of government. Whoever sits in this seat after I leave has to be able to move the boxes the way they need to move them so that this organization is responsive and meets the demands of not just some of the public, but all of the public."
Despite Garza's chastising, the Vela amendment was approved. It marked the one outright victory progressive advocates secured in their final push for a budget that, from their perspective, better meets the needs of the Austin community. They also secured more rental assistance than staff initially offered, but not enough to sustain the program through the fiscal year. They failed to convince city leaders to sock less money away in savings so that more could be spent serving the Austin community now.
"It's a needlessly austere budget," Austin Justice Coalition Policy Director Chris Harris told us. "With the increase to the reserve fund and the increase to the police department budget, we now have millions of dollars that are harder or impossible to access. When you compare the amount of funds taken off the table by staff with what Council approved through budget amendments, it's a real pittance. A small amount of money was ultimately put toward community investments."
In the future, Harris continued, "Council should better engage with stakeholders in how these funds are allocated before making these decisions that are very hard or impossible to reverse."
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