Austin City Council members received sobering news about next year’s budget Wednesday. Figures presented by city Budget Officer Rudy Garza show a $77 million gap between expenses and revenues. Even taking into account the nearly $19 million in the city’s fund balance—what budget writers project will remain in the bank at the end of the current fiscal year—the Council would still have to deal with a $58 million shortfall for the 2003-04 fiscal year.

“To put that in perspective,” said City Manager Toby Futrell, “that is larger than the entire budget of Health and Human Services and our library system. Those budgets together do not make up this gap.”

Like last year, the city is facing rising costs for public safety, combined with falling sales tax revenues. Sales tax returns from both October and November were lower than projected, and the city is now revising its expectations for the rest of the year. Originally, budget planners had predicted an overall 2 percent increase in sales tax revenue compared to last year. But now they’re forecasting an overall decrease of 3.5 percent, which means about $4.1 million less for this year’s budget.

Commercial property valuations are also expected to be lower for the first time in several years. In addition, the city is dealing with important needs in its drainage system as well as a federal directive to improve the sewer system.

The demands on this year’s budget and the amount of the potential shortfall for next year are prompting Council members and staff to begin the budget process much earlier than usual. “The perception that budgeting is a cyclical activity is pretty much out of focus,” said Garza. “We haven’t stopped. We’ve continued, especially knowing the challenges that we were facing.” City employees are already being asked to come forward with suggestions on cutting costs, and the city is prolonging a strategic hiring freeze on most open positions. The Council is set to go on a budget retreat in February to discuss policy direction for the City Manager’s office on spending priorities. Futrell will meet with individual department heads in February and March, and the Council will be presented with another financial forecast in April before a second budget retreat in May. There will also be ample opportunities for public input on which areas of the budget to cut.

“The choices are important enough that we want the citizens to help us look at their priorities as we go through those choices,” said Futrell. “So you’re going to see a lot of public discussion and questioning about which of our services are most important to citizens. What we are starting with is with lowering expenditures.”

Avoiding a property tax hike will likely be a high priority for Council members, as will avoiding layoffs of city staff. The decline in commercial property tax valuations will make it difficult to meet both of those goals. Figures from the Budget Office show that in order to bring in the same amount of revenue in FY 2003-04 as the current year, the tax rate would need to be raised from 45.96 cents per $100 of property value to 47.97 cents.

However, those figures do not account for new construction in Austin, which is one of several pieces of information that Council members have requested. One sign of the difficult decisions that may be facing the Council this summer came from Council Member Daryl Slusher, who asked for information about both the effective tax rate and the rollback rate.

By Bob Ocho a

The City of Kyle, assessed a $130,000 fine in October for overpumping its ground water permit with the Barton Springs/Edwards Aquifer Conservation District by an estimated 89 million gallons, is getting a second shot today to possibly reach a negotiated settlement with the district and reduce the fine.

A rehearing on the case is scheduled for 6 p.m. at the district’s Manchaca office. But a settlement is not expected to result immediately, said district board president Jim Camp.

“My guess is there hasn’t been anything settled between the staffs and that’s where we may move to continue this into February,” Camp said. “I don’t know how the other board members feel. They may move to go forward with the enforcement order (imposing the full fine), but I don’t think that will happen.”

Kyle has taken the position that the district does not have the legal authority to impose penalties beyond the basic cost of the amount of water overpumped, and is seeking to reduce its fine by about $86,000.

The case extends back to August when district staff discovered the city had overpumped its permit on a well located on the southern edge of the district’s boundary in Hays County. The overpumpage was among the largest in the district’s history.

The city has acknowledged the overpumpage and that it never voluntarily reported it to the district nor sought to amend its permit. To make matters worse, Kyle was the only major user outside the district, which has become an equally major sore point with several in-district permittees.

“We have some perfectly well-considered people calling us up who are very angry,” the district’s longest serving board member, Jack Goodman, said on Wednesday. “We want to make sure these people are not treated any differently than, let’s say, other permittees have been in the past.”

Goodman has repeatedly reminded Kyle officials that the district granted the city a 55-million gallon annual withdrawal permit four years ago as a “good neighbor” gesture to help mitigate its fast-growing demand for water. Consistently poor communication from the city and a “defiant” attitude since the overpumpage, he said, has not helped the city’s cause.

“We’ve gotten some information from them on their water system and that sort of thing, but thus far I haven’t seen any kind of substantive proposals to us to correct the situation, to conserve water. I haven’t seen a whole lot of movement,” Goodman said.

Camp said Wednesday he had spoken recently with Kyle Mayor James Adkins and at least three city council members about possible criteria for a settlement, but he had yet to see any formal responses or proposals.

A multi-part settlement, Camp explained, might include “a serious leak detection effort” (there are estimates that Kyle may be losing as much as 100 million gallons a year to water line leaks), a conservation program and, longer term, an aquifer storage recovery project. “We want to see if they will work with a pilot study: find a place near Kyle and pump water in high flow conditions and store it for times of drought.”

Camp said his talks with Kyle officials have not addressed any specific dollar-figure reduction in the $130,000 fine. Under the district final order of last October, the first of four payments of $32,000 was due in mid-November, which was postponed when the rehearing was granted.

Asked this week if the city was insisting on an $86,000 reduction before agreeing to a settlement, Kyle City Councilman Troy Bearden said, “I have not heard that.”

Goodman said it would be difficult for him to agree to a significant reduction in the fine, particularly since it is believed that Kyle made a sizable profit on the resale of the water it overpumped.

“The profits they made from the water they took, that’s a whole other question,” Goodman said. “The net result (of a $130,000 fine to the city) would be a loss of $20,000. It’s another quandary in this case that I have. As of today I haven’t made up my mind on what I will do. I have an open mind.”

The Texas Hillel Foundation received approval from an enthusiastic Board of Adjustment for a series of variances concerning the proposed remodeling of the foundation’s building at 2105 San Antonio near the UT Campus. The non-profit group for Jewish students has been in the building since 1949. The variances would affect the number of required parking spaces, setbacks and compatibility requirements related to building height. They drew support from a lengthy list of surrounding property owners, including other religious groups.

“We’ve got Catholics to the south, Lutherans and Methodists to the west, Baptists and Presbyterians to the north,” said Rabbi David Kessel. “We are all partners and friends, and we thank our neighbors for their involvement in our planning process and for their overwhelming support in favor of this project.”

Now that the group has secured variances from the Board of Adjustment, it will move on to the Zoning and Platting Commission to seek a zoning change from MF-4 to CS. “We were caught in kind of a Catch-22,” said agent Amelia Lopez-Phelps. “In order to design what we wanted for zoning, we needed to be sure we were going to get the variances. If I would have gone through zoning and then come back and not received the variances, the zoning would have been a moot point anyway. So we felt like since money is very, very tight now, especially for non-profits, we needed to make the best financial decision on which direction to proceed first.”

Board Member Frank Fuentes praised the group and its consulting staff for their hard work in preparing the application. “You’ve got more support than I’ve ever seen for any project that’s come before us,” he said. “I don’t have a problem with this variance at all.” Fuentes’ motion to approve was seconded by Vice Chair Betty Edgemond and passed by a vote of 4-0.

Wednesday, Thursday, Friday.

© 2003 In Fact News, Inc. All rights reserved.

Campaign finance reports in . . . Yesterday was the deadline for candidates and officeholders to file campaign finance reports covering the past six months. By late afternoon, the City Clerk’s Office had received reports from six City Council members. Council Member Will Wynn, a candidate for Mayor, reported raising $8,750, with no expenditures . . . Mayor Gus Garcia reported no contributions and about $500 in expenditures, most of which were spent at Alff’s Florist . . . Council Member Raul Alvarez, who plans to announce his candidacy for re-election early next month, reported raising more than $7,000. The figure includes a $750 loan from Alvarez to the campaign. His expenditures include $2,000 to Mike Blizzard’ s consulting company, Grassroots Solutions . . . Council Member Betty Dunkerley reported that she raised $500, which she paid to herself to reduce the loan she made to her campaign last year . . . Council Member Danny Thomas reported raising no money and spending none . . . Council Member Daryl Slusher reported an expenditure of $480, including a $400 reimbursement to himself for previous expenditures. Slusher noted that he had incurred $17,208 in legal fees when opponent Kirk Mitchell sued to keep his name off the ballot. “I am seeking legal advice as to whether these fees can be paid through a legal defense fund or source other than political contributions,” Slusher wrote . . . Brewster McCracken, candidate for Place 5, and Jennifer Gale, candidate for Mayor, each filed reports showing no contributions collected and no expenditures for the past six months . . . Birthday celebration . . . Mayor Gus Garcia will be celebrating his 69th birthday in Washington, DC next week, but his staff and friends decided to have a party this week. The Mayor will be honored with a cake and mariachi music at today’s City Council meeting. Next Thursday, Garcia will be lobbying for federal money to facilitate Austin’s water reclamation project . . . Renewable energy facts . . . Austin is more than half-way to its goal of providing five percent of its power through renewable energy sources by 2005, according to Roger Duncan of Austin Energy. Duncan told Council members at yesterday’s work session that it may be difficult to meet the goal because the state lacks sufficient transmission lines to bring wind power from West Texas . . . Going home again . . . Dominic Chavez, who left the Real Estate Council of Austin last fall in search of bigger challenges, has returned to RECA. Executive Director Janice Cartwright says she feels very lucky to have Chavez back in the fold. For now, his title is government relations liaison . . . Moving on . . . Attorney Veronica Rivera, formerly with Minter Joseph and Thornhill, has joined the law firm of Sheets & Crossfield in Round Rock. The firm has been city attorney for Round Rock since 1977 . . . Dr. Gloom . . . City Manager Toby Futrell dubbed Budget Officer Rudy Garza ‘Dr. Gloom’ during Wednesday’s work session before his presentation . . . Showing that his knowledge covers more than just numbers, Garza concluded his remarks with a quote from President Franklin D. Roosevelt: “We have to do the best we know how at the moment. If it doesn’t turn out right, we can modify it as we go along.” More gloom came from another source. According to Acting Assistant City Manager John Stephens, sales taxes aren’t the only tax revenues that are down in Austin. Revenue from the city’s 5 percent tax on automobile rentals has also been declining. That fund is used for construction of the Palmer Civic Center, parking garage, and park on Town Lake. While the economic slowdown won’t affect the current phase of the project, which has already been funded, it does mean the next two phases will likely need to be paid for by other sources. The city has already spent $2.2 million on the project that was originally slated to come from private donations.

© 2003 In Fact News, Inc. All rights reserved.