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No budget policies changed yet

Thursday, May 16, 2002 by

The Austin City Council reviewed options for balancing next year’s budget during a daylong retreat at Reicher Ranch on Wednesday. The Council is attempting to avoid both laying off city employees and increasing the property tax rate while making up for a projected $71.8 million gap between expenditures and revenues.

That gap was increased from the $67.9 million presented at last week’s work session (see In Fact Daily, May 9, 2002 ) after city staff adjusted the estimates of sales tax revenues for the rest of the year based on the most recent figures from the State Comptroller’s Office. Those numbers, delivered just 30 minutes prior to last Wednesday’s session, showed a larger-than-expected decline compared to the same time last year. That prompted staff in the city’s budget office to push back their estimates of when sales tax revenues would stop falling compared to last year. Economist John Hockenyos considered that a prudent step and he predicted a gradual recovery, rather than a dramatic resurgence. “I think it’s very appropriate to assume the worst, and be very conservative for policy purposes,” he said. “Being positive and surprised is whole lot better than being negatively surprised.”

While the Council did not change or set any policies Wednesday, Council members did go through a list of options to reallocate funds, trim spending and increase city revenues in an attempt to whittle down that $71.8 million dollar figure. The City Manager’s Office presented a list of four proposed changes to the city’s financial policies along with their anticipated financial impacts. One of the items that would have the largest impact is the disposition of the city’s fund balance at the end of the current fiscal year. Thanks to cost-cutting measures already in place, that amount is expected to be $25.9 million. By setting aside $13 million to help cover next year’s expenses, the Council could keep the remaining $12.9 million in reserve for the FY2003-04 budget.

Another potential source of funds is Austin Energy. Under existing city policy, a percentage of the revenues from the city-owned electric utility are diverted into the General Fund. That percentage can vary from 6.6% to 9.1%. The rate is currently set at 8.8%, which would yield $70.2 million during the next budget year. Going to the maximum transfer rate of 9.1% would produce an additional $2.5 million. Although the municipal bond-rating companies figure that transfer into their rating process, Public Financial Management advisor Bill Newman told Council members it was unlikely that the small alteration being considered would result in a downgrade to the bond rating of the city or the electric utility. The city also transfers money from the Water and Wastewater Utility into the General Fund, and that transfer rate could also be increased.

Council Members reviewed a list of ten proposed changes to budgetary policy, ranging from increasing property taxes to eliminating city jobs that have been vacant for the past year. Council Members seemed hesitant to touch the property tax rate of 45.97 cents per $100 of property valuation. “That’s a sensitive issue,” Mayor Gus Garcia said. “That’s headlines.” Information provided by city staff compared Austin’s property tax rate to the other major Texas cities, but Council Member Will Wynn also asked for figures on the average property tax bill paid by homeowners within the city limits. Since property values in Austin are higher than those in other cities, Wynn noted, homeowners could still pay comparable amounts despite the city’s relatively low property-tax rate. Council Member-elect Betty Dunkerley also pointed out that most other major cities in the state had a special district formed to cover health-care costs, while in Austin that cost comes from the city’s budget.

Council members were less hesitant in discussing a variety of other operational changes, including raising fees for some city services. While the staff had compiled a list of possible fee hikes that would generate nearly $8 million, City Manager Toby Futrell said she would only recommend a few of them. “Some of the items on this list are not right for this community,” Futrell said. “One of the downsides of raising fees is that it can limit the availability of some city services. We avoided all development-related fees in an effort to keep down the cost of housing.” The amount generated by the recommended fee hikes would be closer to $2.4 million

The Council seemed favorably inclined toward a proposal to divert money originally earmarked to replace aging city vehicles. That would mean no new vehicles for most city departments except those directly related to public safety. It would still allow for the purchase of 20 new patrol cars for the Austin Police Department while saving the city $3.9 million. However, it would be the second and likely final year that purchasing replacement vehicles for other departments is postponed because of the cost of additional maintenance on higher-mileage vehicles. The Council is also optimistic about saving money by consolidating functions of some city departments and continuing efforts to streamline other government functions.

City employees may see salary freeze

Raises for city employees could be another casualty in the budget balancing effort. A salary freeze, while saving the city $3.8 million, would also help avoid layoffs. “Our goal is to make sure people keep their jobs,” said Futrell. “But there will be impacts to employees, and there will be impacts to citizens. There’s no way to sugar-coat it.” Council Member Daryl Slusher agreed that it was an unattractive option, but one that would have to be considered. “When you have a $72 million gap, something’s got to go,” he said. “We looked at some things today that are really hard to look at . . . like the employee pay package. We may not be giving raises this year, but employees would be able to keep their jobs.” If the premium for health insurance for city employees goes up, that could result in employees actually receiving a decrease in their net take-home pay.

Another option affecting city employees will be to eliminate some of the city positions that have been left open since the city instituted a hiring freeze. “One of the goals is to try to avoid layoffs,” City Manager Futrell said. “Because we have held so many positions vacant, we have the ability to cut substantial amounts from our budget without reducing people.” Eliminating half of the currently vacant positions, some of which have been left unfilled for more than a year, would result in savings of $6 million.

At the end of the day, Council had identified policy changes that could potentially reduce the anticipated shortfall next year from $71.8 million to $28 million. However, Mayor Garcia stressed that not all members of the Council were comfortable with all of those measures, and any final budget decision would not be made for several more months. “All this is tentative,” Garcia said. “We will be looking at this budget with the view that we will share the burden given the difficult economic times. We’re trying to minimize the pain that anybody has to experience.” Another budget workshop is scheduled for next week.

Contracts approved to reduce summer jail population

Travis County may have to commit more than $500,000 this summer to handle the increased inmate load during what the Sheriff’s Office (TCSO) describes as “the busy season.”

With too many minimum security beds and too few maximum security spaces, TCSO expects to exceed the county’s bed supply by the end of the month.. Major David Balagia said jail occupancy could reach 2,900 inmates a day between now and November, an additional 150 inmates a day. County Judge Sam Biscoe estimated that the increase represents another $120,000 the county would have to spend each month. Assuming 150 inmates a day at a daily rate of $45, the total is closer to $202,500 a month, or a little more than $1 million for the five months between June and November.

The Texas Commission on Jail Standards has already slapped Travis County with a remedial order to get rid of many of the county’s allotted 700 variance beds. To meet this summer’s growing jail population, the county has drafted agreements with Limestone and Guadalupe Counties to house the additional inmates.

County commissioners approved contracts with the two counties—Limestone will house prisoners for $40 a day and Guadalupe for $45 a day—but with the caveat that nothing has yet to be funded. As Commissioner Karen Sonleitner told Balagia and Chief Deputy Dan Richards, shipping prisoners out to other counties “is not to be used as a crutch by those who don’t want to deal with the problem.”

And that problem, say commissioners, belongs on the backs of both the court system and the criminal justice system. But as Biscoe told his colleagues, some departments are not as serious about taking back the variance beds as they ought to be.

“Some are not dealing with this with the urgency necessary,” Biscoe said. “I’m not confident . . . I don’t know that we have the answers to any of the pertinent questions that we’ve been asking the last three, four, five months.”

The biggest question pertains to how the Travis County criminal justice system can be unclogged. One estimate determined that 55 percent of the inmates in Travis County jail are awaiting trial. Sonleitner pointed out that the $600,000 the county was about to spend on additional beds would certainly cover hiring 10 or 20 visiting court judges to handle the backlog that is facing Travis County court judges.

Commissioner Ron Davis said he was ready to see everyone at the table at the same time, from the District Attorney and judges to pre-trial services. Unfortunately, county departments have not been proactive on the issue.

“We need everyone here that’s a player in this so we can start looking at reducing the jail population,” Davis said. Richards agreed with Davis’ assessment.

“We in the Sheriff’s Office are willing to do whatever needs to be done,” Richards told Davis. “The committee meetings chaired by Judge Biscoe have been very valuable, but he’s completely correct in saying that not everybody has engaged themselves at a deep enough level yet.”

Budget staff is expected to pinpoint a funding source by next week. Commissioner Margaret Gomez told Balagia she respected that putting contracts in place was necessary, but did not want other essential services cut to fund criminal justice measures. Commissioners would prefer to see the additional funds come from the Sheriff’s Office budget, but Bill Derryberry of the Planning and Budget Office said that was unlikely. He described the current state of the sheriff’s budget as “walking a tightrope.”

The county already spends an estimated $35 per day on each inmate. That means the difference between what the county would spend and what it would take to ship inmates to other counties is, at most, $225,000 over 5 months.

Commissioners would like to shift the cost of housing state parole violators back to the state, but Assistant County Attorney Jim Connolly told the group that the cost should be born by the county. Sonleitner would like to see those prisoners shipped back to state facilities. Commissioners agreed to put the issue back on the county’s upcoming legislative agenda.

Reconsidering Stratus . . . Last night, the Environmental Board set up a subcommittee to consider rescinding its May 1 recommendation against Stratus Properties proposal for Circle C. Chair Lee Leffingwell appointed Vice-chair Tim Jones, Mary Gay Maxwell and Phil Moncada as members, with himself as subcommittee chair. Jones wanted to keep the recommendation, but other board members, along with some city staff, want to discuss rescinding the previous motion. City Environmental Officer Pat Murphy said the Watershed Protection and Development Review Department has more information for the Board. “Staff is ready, willing and able to work with the Board or subcommittee on this,” he said. Leffingwell said they would probably meet next week. Sierra Club Chair Karin Ascot, who authored the motion against Stratus’ proposal, was absent . . . Other Stratus news . . . The Save Our Springs Alliance advises that the local Sierra Club’s executive committee voted unanimously to oppose the current proposal to settle Stratus’ Ch. 245 claims by grandfathering an old site plan on 1,253 undeveloped acres over the Barton Springs watershed . . . Bubbas complain . . . Members of the South River City Citizens Neighborhood Association and other Southside residents made a return appearance to the Zoning and Platting Commission this week to discuss the proliferation of mobile fast-food stands along East Riverside. Commissioners heard about zoning issues relating to the food stands and asked for additional information from the Code Enforcement department at their June 4th meeting . . . Every Dollar Counts . . . Financial advisor Bill Newman attempted to lighten the mood during Wednesday’s budget meeting by offering the Council some financial help. “I've got ten dollars, and you’re welcome to it,” he joked . . . Welcome Visitors . . . Mayor Gus Garcia received a visit from officials with the Chinese Consulate during lunch on Thursday. Xishuangbanna, China is one of Austin’s sister cities . . . Unwelcome Visitor . . . City Council members and staff were occasionally distracted from the budget presentation by a wasp that made its way into the conference room in the Cana House at Reicher Ranch. That shouldn’t be a problem next week, as Council Member Daryl Slusher requested that the second budget workshop be held in one of the city’s regular meeting rooms, most likely the City Manager’s Conference Room on the 3rd floor of City Hall.

© 2002 In Fact News, Inc. All rights reserved.

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