Council adopts budget based on lower tax rate

By Jo Clifton and Tyler Whitson

City Council adopted a balanced $3.5 billion Fiscal Year 2015-16 budget on Thursday that reduces the anticipated property tax burden for owners of median-valued homes by about $14. With an overall jump in utility rates and fees, however, those hypothetical Austinites will likely still see an approximately $4 increase in their total monthly expenses.

Though Council voted on the operating budget twice, it ultimately passed on a 9-2 vote, with Council Members Ellen Troxclair and Don Zimmerman dissenting.

Mayor Steve Adler made a few brief remarks after the original vote was taken. “I would dare suggest that there were few in this city eight months ago that would have predicted we would have accomplished that,” he said to applause from those in the Council chambers.

Council initially passed the budget on a 10-1 vote, with Zimmerman dissenting. That changed after Council revisited the item to make room for the issuance of temporary food permits for events – an amendment that passed unanimously – and Troxclair reconsidered her decision.

“I am really torn about it, because I think there are so many good things in the budget, but I was reminded of a pledge I took to not support a budget that isn’t at the effective tax rate,” Troxclair said.

The effective tax rate is the amount needed to bring in the same amount of revenue from property taxes that the city currently receives.

The budget process is not completely over, however, as Council has not actually adopted a property tax rate, which it will do on Sept. 22 due to a delay in the certification of the tax roll.

The budget figures all assume that Council will adopt city staff’s new proposed property tax rate of 45.89 cents per $100 of taxable valuation, which is substantially lower than the 48.09 cent rate for the current fiscal year.

Avid budget followers will also notice that the new proposed tax rate is slightly lower than the one that city staff proposed after the city received its certified tax roll in August.

That is due to a proposal that Troxclair made Thursday afternoon to pull $1 million from the city’s budget stabilization reserve fund that will ultimately save the median-valued homeowner an additional $2 in the next fiscal year.

The median-valued home is estimated at $217,367.

In an interview with the Austin Monitor, Deputy Chief Financial Officer Ed Van Eenoo explained that during this year’s budget deliberations, Council pulled from the fund – which exists to ensure that the budget remains stable without overly impacting taxpayers – to the full extent allowed by city policy.

“They do have policies in place, their own policies that say they shouldn’t use more than one-third of that stabilization reserve in any given year,” Van Eenoo said

. “They don’t want to draw it all down in one year – they want to save some of it for future year needs, and so the million dollars took it to the full extent of the one-third drawdown.”

Council began considering city staff’s proposed and amended budget on Tuesday and tacked on a considerable number of amendments before adopting it.

Major amendments include more than $7 million in additional Health and Human Services Department funding and social service contracts, a $10,000 increase in the senior and disabled homestead exemption, $3 million in funding for an Austin Police Department body camera pilot program and a $13.03 living wage for all city employees effective Jan. 1.

Council also reduced the number of proposed new sworn APD officers in the budget to 50 and provided funding to help Austin-Travis County Emergency Medical Services ambulance providers transition from a 48- to a 42-hour workweek.

Council did not limit or reduce staff’s proposed 3 percent across-the-board wage increase, as some staff members had feared, though it did vote Thursday to delay by one month the implementation of a civilian market analysis that will increase wages for certain city staff members in order to save $348,401 in the General Fund and $550,563 in other funds.

Most of the emphasis Thursday morning was on eliminating expenditures to end up with a balanced budget at the end of the day.

City Manager Marc Ott noted that he has two assistant city manager vacancies. In order to help balance the budget, Ott said he would be reorganizing his management staff and downgrading one position from assistant city manager to assistant to the city manager. Although the terms are similar, the lower-level position will cost the city $173,791 less than the higher position, he said.

Ott never filled the position of deputy city manager after the retirement of Michael McDonald at the end of 2014, and he has not filled the post of assistant city manager previously held by Anthony Snipes. Mark Washington, director of Human Resources, has been filling in as an acting assistant city manager since Snipes’ departure this summer. It is not clear whether Washington will remain in the city manager’s office or return to Human Resources.

Mayor Pro Tem Kathie Tovo also continued in budget-cutting mode with a proposal to cut $30,000 from the Development Services Department. Staff had requested the funds in order to purchase memberships in various development-related organizations, an idea promoted by the Zucker report.

Council Member Sheri Gallo protested. She said the department could afford the cost since Council had voted on Wednesday to charge developers and others 100 percent of the cost of the department’s services, almost $1.4 million. “So I think if we’ve enhanced the revenue … (and) if there are areas where they can actively engage all parts of the population in the community, I think it’s important to try to do that,” she said.

If the city does not see a benefit from such investment the first year, she said, “I doubt if I would support it next year.” In addition, Gallo pointed out that Council had removed one proposed public information officer from the department already, thus limiting public engagement.

Department Director Rodney Gonzales asked Council to keep the funding and said that it was one of the “best practices” used by other departments to keep up with the industry.

But Tovo argued that many organizations would welcome city staff to their events and that industry-related groups, such as the contractors associations, might offer benefits to contractors that would not apply to city employees. She also said that those groups sometimes engaged in lobbying at the Legislature, taking positions that the city might not agree with.

Heidi Gerbracht of the Real Estate Council of Austin told the Monitor that her organization had invited city staff and Council members to many of its informational lunches and other events on a complimentary basis.

“It’s in our best interest,” she said, for RECA to make its information “available to people who are making decisions.”

Adler tried to keep the money in the budget by moving it from the General Fund to one-time funds. After a confusing vote on his amendment, the Council as a whole decided to strike the funds on a vote of 8-3, with Adler, Gallo and Council Member Pio Renteria the only ones who wanted to keep the funding.

The new budget will go into effect on Oct. 1.