City Council Contemplates $100 Million Homeless Spending Plan

Homeless camping in Austin (photo by John Anderson)

As City Hall kicks into high gear in the months leading up to adoption of the city’s budget, the Homeless Strategy Office has laid out a $100 million spending plan. They say the plan would allocate money to programs at every stage of the homeless response system in a way that will reduce the number of people forced to live on Austin’s streets.

In a presentation at a special called joint meeting of Council’s Public Health and Audit & Finance committees, HSO Director David Gray laid out why the city needs that money and how it would be used. Gray explained that the $100 million total could be viewed in three distinct categories: one-third of the funding would be to continue programs paid for with one-time dollars (primarily via the federal American Rescue Plan, which sent $188 million to the city that has all been spent or earmarked already); one-third would build on those programs with new investments; and one-third would fund programs and services covered by other organizations that provide homeless services in Austin.

In total, that means the city’s end of the new investment plan works out to about $56 million, which would cover existing programs paid for with one-time dollars (like $8 million to continue operating the 300-bed Marshalling Yard Emergency Shelter and $2 million for contracts with organizations that run street outreach initiatives). It would also pay for expanded services (like $23 million for rapid rehousing programs that place unhoused individuals in apartments for stays that typically last 12-18 months), and $7.9 million to provide services at permanent supportive housing (PSH) units that are currently under construction.

But, as the city’s financial analysts have warned again and again, Austin is facing a budget deficit that could spiral into a budget crisis in the coming years. By next year, the city is expecting to face a revenue shortfall of about $33 million. To maintain the current level of funding for homelessness programs in next year’s budget, the city will need at least $55 million in new revenue.

“There’s really only one method to [that] new revenue to the city,” CM Ryan Alter said at the meeting, “and that’s to ask the taxpayers to invest in our community and in this priority” through a tax rate election. But, Alter continued, raising taxes – especially during an uncertain economy – is fraught. “If we ask for this significant investment and don’t deliver, I’m afraid we’ll never get the chance again,” Alter said.

Ensuring that the programs funded by one-time-use dollars are maintained is a top priority for Council members. “I’m absolutely sure that I do not want to do less than we did last year,” CM Chito Vela said at the meeting. “We’ve got to continue to do what we’re doing right now.”

Gray also pointed out that Council deciding to expand the city’s investment in homelessness spending could reduce the likelihood that they end up in a situation similar to the one they are in now, where CMs are scrambling to continue programs funded with one-time dollars – particularly when it comes to the transitional apartment units, which are effective at helping people facing chronic homelessness, but are costly.

“The PSH units are here to stay,” Gray said. “We need to match our ongoing investments with ongoing funding,” the director continued. (The Homeless Strategy Office estimates that it costs about $20,000 annually to provide services at every unit of PSH.) “Paying for ongoing investments with one-time funding is going to get us right back in the hole we found ourselves in as the [American Rescue Plan] dollars began to transition out.”