Last week City Manager Toby Futrell presented her proposed 2006-07 city budget to the City Council, and the news was basically good. The state and local economy are doing well; we have more money in the official till than last year and the year before, surprisingly even more money than anticipated just last quarter. At that time, Futrell had estimated the “effective” tax rate – the rate that would bring in the same amount of revenue as last year – at 40.66 cents per $100 assessed property valuation, or 3.64 cents lower than the current (“nominal”) rate of 44.30. That number survived into her budget transmittal letter, but in the meantime, the revenue picture has continued to improve so that the effective rate is now nearly a full cent lower, at 39.85 cents. Similarly, the “rollback” rate – the limit above last year’s income (as defined in state law) that would trigger a potential tax election – dropped from 42.14 cents to 41.26 (still roughly 7% below the current 44.30 per $100).
That good news prompted most of the council members to ask, during the policy discussion June 25, that staff present the new budget as balanced at the rollback rate, allowing additional spending on community needs even while cutting the tax rate. As Brewster McCracken put it, “The reason why we build the tax base is so that we can achieve through prosperity the things that the community wants, as opposed to raising the tax rates. And if … you are not using that prosperity to improve the community, what you are basically saying is that this is as good as it can ever get.” Mayor Will Wynn “bit his tongue” (as he put it to me) on the question, but Lee Leffingwell and Betty Dunkerley concurred with McCracken’s suggestion. Jennifer Kim chimed in, “How would that work if you have strategic adds? We are asking you to do more, balancing the budget at the higher rate.”
No Huevos
Kim’s question was as much a political one as financial, especially since the Statesman editors promptly pounded the council for threatening to “raise taxes” when in fact they were proposing the opposite. Indeed, as McCracken argued, the idea is to build upon the “economic development” that the Statesman editors never tire of promoting as the only possible way to public prosperity – until, that is, it comes time to actually pay for public investment. In any case, what the council is considering is allowing rising property values to add roughly $25 a year to the tax bill on a $175,000 home, hardly an overwhelming burden.
But apparently Futrell was paying closer attention to the next day’s Statesman than to the council discussion, because the budget she presented last week was once again balanced at the effective rate, thereby punting to council the decisions on any additional add-backs slashed during the last recession, not to mention a second round of political heat. She called hers a “meat and potatoes” budget – a bemused Leffingwell concurred with that description, adding, “maybe just rice and beans.” He said he was “surprised” that it was proposed at the lower rate, but surmised charitably that the continuing increase in sales-tax income persuaded the staff that they could bring in the budget at the lower rate while still restoring some crucial cuts. While he would have “preferred” a rollback-rate budget, he said, “I’m assuming she had good reasons for what she did.”
Kim was similarly forgiving, saying that while she wants to make certain that additional street-maintenance funds (at $2 million, no small potatoes) definitely make it into the final package, if the discussion were to begin at the rollback rate it would just mean arguing over what had to be cut if something else were added, “and that’s very painful.” In retrospect, she said, “I’m glad [Futrell] came in below the rollback rate.”
The mayor, at JFK Airport en route to Turkey in search of sister cities, said he’s fine with the budget as presented and doesn’t doubt the citizens will weigh in with plenty of additions during the public hearings. He’s mainly concerned that the council not “take our eye off the ball” of job creation, “because it takes the pressure off homeowner property taxes … when it comes to fundamentally what has begun to get us out of the pain we have been in these past several years.” Of the proposed budget, “I like the format,” he said, “because it shows the community that we can have a balanced budget at the effective tax rate that measurably repairs some of those frayed edges. Now let’s take that and see if maybe we want to do a little bit more.”
McCracken, by contrast, was unapologetically annoyed. “We have a lot of responsibilities in the community that we need to be investing in now,” he told me. “Simply doing the budget at the effective tax rate, which means pretty much the same as last year – that doesn’t get us anywhere near where we need to be as a community.”
It’s Your Budget Now
This tug-of-war between city staff (particularly the city manager) and the council is hardly new, and at budget time the tension is aggravated by the inevitable division of labor between those elected officials setting broad policies and the staff charged with running the actual numbers. At bottom the decision on the tax rate and the specific budgeting decisions will only be made after the upcoming hearings and additional public input clarify which of the spending options are the highest community priorities. “To [Futrell’s] credit,” noted Leffingwell, “she also presented the results of the community focus-group study, and it showed a great deal of public support for the $25-a-year increase for the average homeowner, and for the things we need to spend it on.” (Indeed, the study showed public support at more than 80% for “at least an additional $20 per year for … strategic adds.”)
There will certainly be plenty of additions to consider, “strategic” or not. Mike Martinez, who wasn’t yet on the dais for the policy discussion, made it clear that he’s not satisfied with the budget as it stands. He emphasized a few critical needs, including the numerous vacancies in EMS, underfunded street maintenance, and a persistent city habit of shoving what should be operations and maintenance spending into (borrowed) bond packages. “We need to be funding ongoing maintenance out of operating funds,” he said, “not with four- and five-year bond packages.”
McCracken was the testiest on the budget presentation and called it a question of city priorities. “So far the focus has been on the tax rate. We as a body will be focusing very strongly on the community needs. We’re looking at – for a cost of a few dollars a month – we can start looking forward again as a community. That’s a real small cost for a great return on investment. My position is totally unchanged where it was two months ago,” he concluded. “If I’m going to choose between spending $2 a month and investing in the community or saving $2 a month and turning our backs on the community – afterschool programs, social services, investing in the future – I’m going to choose spending the $2 a month and investing in these pressing community needs.”
For more details on the proposed city budget, see p.20.
This article appears in August 4 • 2006.
