by Daryl Slusher
You really have to give the folks down at City Hall credit. They live in their
own little world, and they’re not going to let anything blast them out of it.
No unwanted message or analysis can pierce their cocoon. Consider two of the
latest developments — a consultant proposal to nearly double the size of the
Austin Convention Center by the end of the decade, and an audit of city
government spending being conducted by none other than top level city
management.
Auditor/Auditee
Let’s start with management’s comprehensive audit of itself. As reported in“Council Watch” two weeks ago, City Manager Jesus Garza is leading a five-year
review of nearly every portion of the city budget. The manager will head a
nine-member steering committee, seven of whom will be top-level city management
staff, and two of whom will be city “middle managers.” A small team of graduate
students from the LBJ School of Public Affairs will provide research
“support.”
The idea began with Councilmember Brigid Shea as a comprehensive audit of the
city budget. Shea wanted the State Comptrollers to do the audit, but legal
problems prevented that. The LBJ students were suggested as a way to bring in
the comptroller, but that fell through, and the idea for the management audit
committee emerged. All in all, it was a tortured little path that shows how
city management can mangle anything that has the potential of cutting the
budget or identifying waste.
The Garza-led committee plans to spend five years poring over every aspect of
the city budget. They’ll study whether the cost of local government is too
high, whether city bureaucracy is top-heavy, see if services are being provided
as efficiently as possible, and look for cost savings. They’ll continue the
manager’s alleged processes of “flattening” the organization and “delayering,”
defined as “removing management layers.”
Few would argue that such an effort is necessary and long overdue. The big
question, however, is whether city management is the appropriate group to take
on this massive task. The clich� of the fox guarding the hen house comes
to mind, but it doesn’t quite work. This is more like asking the fox to give a
count of how many hens he has eaten from the coop, and how many he plans to
take in the future.
Maybe I’m wrong. I hope I am. Perhaps this project will truly identify fat and
waste, eliminate excess management layers, and streamline “customer service.”
The endeavor would be a lot more confidence-inspiring, however, if the audit
committee were just a bit more broad-based. For example, it might have been
wise to include a few everyday taxpayers, since it is they who foot the
overwhelming majority of the bills for city government. It might have been a
good idea to include some business people who could bring their expertise into
play. And there are certainly some folks around somewhere who have participated
in government cost savings programs on other fronts.
Still another key group that could certainly offer valuable suggestions on
efficiency and cost savings would be front-line city employees who carry out
basic city services. Bill Spelman, the professor overseeing the LBJ students,
suggested that front-line employees be given a larger role, but his advice was
ignored. Garza explained it like this to Chronicle reporter Alex de
Marban: “Bottom line workers will be interviewed,” he said, but “They won’t be
doing the work. We’re not going to pull people from the field.”
Well, call me crazy, but that sounds to me like the front-line employees are
performing services so essential that they can’t be spared for duty on a
committee, while management employees have so much more time on their hands
that they can. And it’s rather difficult to believe that this management
committee is really going to “flatten” and “delayer” themselves.
The really scary thing about the comprehensive audit, however, is its
five-year length. I’m worried that every time during the next five years that
anyone — be it a citizen, a councilmember, a city employee — identifies any
alleged wasteful spending, the city manager will say, “That comes up in year
three (or four, or five) of the city audit, and we will look at it very
carefully then.” Remember, you heard it here first.
The Debt Burden
Just in case the audit is a serious endeavor, here are a few matters for thecommittee to ponder. Official projections hold that Austin will double in size
over the next 25 years to become a city of one million. That is entirely
possible, seeing as how the city doubled in size during the previous 25 years.
As the population doubled, though, the total city budget increased tenfold —
from $122.5 million in 1970 to $1.2 billion today. That’s a rate of increase
faster than both the rates of inflation and population growth combined. If that
happens again during the next 25 years, Austin is in big trouble, and will
probably never make it to a million in population. More likely, people will
move away in droves due to the high cost of living, while those remaining here
will live at a reduced standard.
The city’s bond debt contributes a big part to the budget increases. Austin
regularly ranks near the top in the nation for per capita bond debt. That
ranking is often defended on the grounds that Austin, unlike many cities,
operates its own electric and water utilities. Well, Austin ranks high even in
non-utility bonds, but here let’s examine the claim that our overall ranking
comes from having both an electric and water/wastewater utility.
The only other major city in Texas that has both is San Antonio, which also
has a natural gas utility. As shown in the charts below, San Antonio’s total
utility debt, including the gas utility, is not much higher than Austin’s,
though the city is almost twice the size. Based on 1995 population estimates,
in fact, Austin’s per capita utility debt is 52% higher than San Antonio’s.
Total Utility Debt
San Antonio Austin
Population 980,000 526,000
Utility Debt $3.3 billion $2.7 billion
Per Capita Debt $3,367 $5,133 The most glaring discrepancy is between the water/wastewater utilities of the
two cities. Austin’s water/wastewater utility debt is actually higher than San
Antonio’s — not just on a per capita basis, but on a straight dollar basis.
And on a per-customer basis, our debt more than two and a half times that of
our southern neighbor.
Water/Wastewater Debt
San Antonio Austin
WWW Customers 268,000 143,000
Water/WW Debt $686 million $980 million
Per Customer Debt $2,559 $6,853 Just a little tiny piece of that water/wastewater debt helps make the Circle C
subdivision possible. I’m speaking of that sovereign state out over the Barton
Springs/Edwards Aquifer Recharge Zone run by Gary Bradley and Freeport-McMoRan
— the development at the end of the state-funded MoPac Expressway, the
development for which federal taxpayers ate $90 million in loans. As I’ve
mentioned before, previous city councils agreed to fund $35 million in Circle C
water and wastewater bonds. The debt service payment this fiscal year, paid by
Austinites, is $3.04 million. Maybe that doesn’t seem like a large enough
figure to get upset about, but when you consider that public funding for the
Community Action Network, Austin’s primary social service system, is only $9.8
million this year — you start to question the city’s priorities. Expand It and They Will Come Meanwhile, a $75,000 consultant study on the Austin Convention Center is in,
and the consultants are calling for the city to nearly double the size of the
center by the end of the decade. The estimated price tag is $70 million, one
million more than the amount of bonds voters approved for the current center in
1989.
The expansion rationale is based on projections of 2-6% annual growth in
convention center demand. These increases, consultants say, will leave the city
short on space by the end of the decade. Also, argue expansion backers, a
larger convention center would help spark the coming of a new downtown hotel.
Now, maybe it’s just me, but something doesn’t seem quite right here, and the
consultant report raises more questions than it answers. First of all, the
projected demand pattern isn’t consistent with the current pattern. An
Austin American-Statesman analysis found that the center was booked less
during the 1995 fiscal year than in 1994 (an average of 53% occupancy in 1995,
down from 62% in 1994). Doesn’t it seem logical that this decline in bookings
should get some attention before the city considers expansion?
As to the hotel, I’ll bet there’s one thought which hasn’t occurred to most
taxpayers, and that is, “Dang, Austin sure could use another downtown hotel.”
Even if it would be a good thing, it sure looks like the consultants have the
schedule backwards. I mean, why should the city incur more debt in hopes of
creating business for a new hotel? In the free enterprise system, aren’t
private businesses supposed to take risks in hopes of generating future
profits? In this plan, the city takes the risk — with taxpayer funds — and
the hotels profit if the city’s venture is successful. If the expansion is not
successful, it’s no problem for the hotels, just for the taxpayers.
Expansion advocates argue that more guests in hotels generate more bed tax for
the city, and more revenue for at least some local businesses. These arguments
may be true, but they are based on assumptions that the expanded center will be
successful in attracting enough additional business to make the $70 million
investment worthwhile, as well as assumptions that subsidizing the convention
industry is the best use for the bed tax. (State law permits the bed tax to be
used for promotion of tourism and conventions, with a small portion going to
the arts.)
Ultimately, it comes down to the priorities thing. Don’t forget that this is
the same city council, and the same city management, that thought a private
baseball stadium was a public “emergency.” It’s beginning to look like the
message from the baseball election hasn’t gotten through.
This article appears in December 8 • 1995 and December 8 • 1995 (Cover).