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Futrell: Bare bones budget once more

Friday, June 11, 2004 by

Manager wants 3.5% raise for employees

City Manager Toby Futrell will use a combination of fee hikes, utility rate hikes, spending cuts and dipping into reserve funds in an attempt to close the estimated $19.5 million dollar gap between revenues and expenditures in the City's 2004-05 budget. But Futrell told Council members on Thursday that she would not recommend raising property taxes, preferring instead to stick with the effective tax rate. Since the total property valuation in the city's tax base is expected to be down slightly, the effective rate is projected to increase by less than 1 cent, from 49.28 cents per $100 of property value to 50.13 cents. However, the number actually appearing on tax bills would likely be lower since the city will be required to lower its tax rate by the amount that covers health care services. Those services are being taken over by the Travis County Hospital District, which will levy its own property tax to cover health care.

While citizens will not see a tax increase, they will feel the effect of the various fee and utility hikes. "We've done a very comprehensive look at all of our fees . . . and we're going to try to capture an additional revenue source of about $1.1 million through raising of some fees and adding of some fees," said Futrell. The City Manager is also planning for a combined rate hike for water and wastewater services of 11.8 percent, which would mean an increase of $5.16 per month on the average residential bill. Drainage fees would also go up by 6.98 percent for residential customers and 22.85 percent for commercial customers.

But raised fees and targeted cuts won't be enough to bring the budget in line. That's why Futrell is proposing to use some of the city's fund balance for capital expenditures. "We built up a contingency fund designed to help us come back after years of cutting, and as we're beginning to see signs of an up-tick I think it's appropriate for us to begin to draw on this balance," she said. As she prepares the proposed budget for presentation this summer, Futrell is planning on an $8 million infusion from that fund balance to help bridge the $19.5 million gap. The fund balance going into the 2004-05 fiscal year stands at $38 million.

While the economy is steadily recovering, as evidenced by positive sales tax figures released this week for Austin by the State Comptroller's Office, Futrell noted that the city was still facing the problem of structural imbalance in the city budget. "As our economy begins to recover and the natural revenue growth begins to happen, we should be matching up by 2006," she said. "We're looking at one more year where we're going to have to cut again to maintain structural balance." The time has not yet come, Futrell told In Fact Daily, to begin adding back items that had been cut in previous years.

But Futrell cautioned that the cuts made so far have left the city with few easy options, since services are suffering in several different departments including code enforcement, street repair, Municipal Court and support services at APD. "Everything's a little ragged around the edges—but what does that translate to?" She reiterated that new fingerprints are not entered into police department records for five days and traffic tickets are not registered as paid for five or more days after payment has actually been made. That leaves open a window of vulnerability to wrongful arrest to those who have just paid a ticket.

She also warned that the areas that are usually the first target for budget cuts have already been significantly scaled back. "In cutting so hard in administration and support, we really have reached an edge in our ability to support our operational functions," she said. "What that means is in internal control areas where you need a separation of duty, we're right on the edge. There are very few checks and balances in our system. There's a lack of depth in critical functions in the city . . . one person goes and there's no backup left."

One area where Futrell does not want to cut is the city's payroll. "Our general workforce has gone two years with no pay increase. In fact, they have taken pay decreases by absorbing fairly significant increases in health benefit costs," she said. "At the same time, all of our workforce has been working with significantly less resources." The budget calculations this summer will include the assumption of a 3.5 percent pay-for-performance increase for all employees who earn a rating of "meet expectations." In addition, Futrell said some employees would be eligible for a 1.5-percent lump sum payment if they receive a rating of "exceeds expectations."

Officers in the Police and Fire Departments are still in line for their 2-percent public safety pay premium. That amount is already outlined in the existing contract with the police union and will be a topic in the negotiations with the firefighters union once they begin under the new collective bargaining agreement. The budget will also include a commitment to maintain the ratio of two police officers per 1,000 residents, as well as the task force staffing levels for the Fire Department. And the budget will not include further delays for opening new facilities, which was a step taken in last year's budget to save on operating and maintenance costs.

Futrell will come back to the Council on July 29 with her official Proposed Budget for FY 2004-05. That will be followed by weekly budget presentations from various departments throughout the month of August. Council members listened to the presentation, which started after a lengthy executive session, but did not ask questions or comment on the City Manager’s projections. They will likely be talking to Futrell during individual meetings about their own hopes for this year’s budget. The Council is scheduled to take up the final budget vote by September 15.

County seeks health district board applicants

Travis County will soon join 140 other jurisdictions in the state that have a hospital district. Commissioners finalized an packet for potential applicants this week, following some of the guidelines they learned from the process of setting up the Regional Mobility Authority. Nominations will be accepted through July 1. County commissioners have set Tuesday, July 13 as the deadline to interview possible appointments to the Travis County Hospital District Board.

"This is kind of tight, but in my view, we should try to get this done by mid-July," County Judge Sam Biscoe told the court. "I'm not sure if it is fatal if it slips one week, but we need to set a goal since the Council only has one meeting in July."

Nine members will be appointed to the Travis County Hospital District Board: four from Travis County, four from the City of Austin and one serving as a joint appointment. Each member of the board will serve a three-year term.

On a draft list reviewed by the Commissioners Court this week, qualifications included: strong business achievement, an ability to work with the Central Texas health care community, experience recruiting and hiring senior management personnel and a commitment to devoting a significant amount of time to the creation of the district during the first two years. All board members must also be Travis County residents.

Commissioners Ron Davis and Gerald Daugherty both expressed their desire that the base of support be expanded to surrounding counties as soon as possible. Davis said the Court should look to the upcoming legislative session in January as a chance to amend the law so other counties can be added to the hospital district's tax base.

Daugherty wanted to make sure all potential billing would be pursued for patients from outlying counties. He doubted that outlying counties would want to come on board if Travis County were willing to provide indigent health care.

"Why buy the cow when you get the milk for free?" Daugherty asked.

Commissioner Karen Sonleitner, who serves with Biscoe as the court's representative in hospital district negotiations with the city, said the question of charging other counties is not as simple as it appears.

According to federal law, hospitals cannot turn away medical emergencies simply because the patient cannot pay. But state law only requires counties to compensate for medical care for those at or below 21 percent of the federal median income. That leaves a large gap for patients who are deemed too wealthy to be declared indigent but in fact too poor to afford health insurance.

In a recent ruling from Attorney General Greg Abbott's office, the Amarillo Hospital District was informed it could not ask patients to seek health insurance, even if the hospital district assumed the patient could afford it. The District argued that patients knowingly refused insurance in order to avoid co-payments.

According to the ruling, "It appears that some patients are knowingly refusing to accept health insurance available through their employer, to satisfy the [contractual requirement that the applicant have no third party payor], and receive public assistance. The result is to deprive UHS of insurance reimbursement for costs of treating the person that would otherwise be available, but for the patient's manipulation. Consequently, UHS proposes to amend the Agreement to provide that patients who have commercial insurance available through their employer would be required to provide insurance for themselves and their dependents as their primary payor. If the patient obtains services at a UHS facility, UHS will absorb the patient's insurance deductible or coinsurance through the indigent program as secondary payor. Persons who can provide evidence that employer-imposed premiums exceed 17 percent of the person's net income will be covered by the Indigent program and not (be) required to accept their employer's insurance plan."

Abbott's office wrote in the ruling that the law did not contemplate such a case. Because it was silent, the hospital district could not impose rules for patients.

The county's timeline is to accept applications through close of business on July 1. Commissioners Court will review and evaluate candidates for a short list by July 6. Interviews will be set up with the top candidates for July 13.

City to provide financial base for district

While representatives of the city and the county work to set up a board for the new health care district, they will have some help from city employees who have worked on indigent health care issues over the years. Mayor Pro Tem Jackie Goodman and Council Member Betty Dunkerley are leading the city effort, with the help of Chief Financial Officer John Stephens, health care administrators Trish Young and John Gilvar, Assistant City Manager Mike McDonald and Assistant City Attorney Sally Henly.

Stephens told the Council Thursday that he and other city staff would be preparing a budget for the district, which otherwise would begin operations without a financial plan. Both the city and the county must reduce their tax rates to allow the district to collect the same amount in taxes. Thus, the city’s tax rate is expected be the effective tax rate minus the amount generated for those services being taken over by the district.

The district will assume title to Brackenridge Hospital and the Children’s Hospital, as well as the rights and obligations set forth in leases with Seton and the UT Medical Branch at Galveston, which runs the 5th Floor Austin Women’s Hospital. The district will have to renegotiate with Seton and UTMB over the operation and funding for the women’s hospital. The district will also assume obligations and rights related to running the community clinics and administering charity care.

According to a staff report, the district will receive funds appropriated for the current fiscal year. The report states, “The city is not obligated to transfer any operating or capital reserves that were not appropriated in fiscal year 2003-2004. However, the city is considering appropriating for transfer to the district the operating and capital reserves that are estimated to remain in its Federally Qualified Health Center Fund at the end of fiscal year 2003-2004. These reserves are currently estimated to be between one and two million dollars.”

Goodman pointed out, “We’re trying to make a smooth transition, given that on Day X, (Oct. 1) our ability to tax and operate ends . . . We’ll have to hand over as much as we can. Everything’s going to happen very quickly.” She said at the time the district takes over operating the hospitals, “even though they can tax, they will have no tax money. So, we will have to figure out a loan mechanism. We have to get it nailed down very carefully. It’s really an important thing. It’s a new era after nearly a hundred years of the city taking the responsibility that is normally the county’s. Our assets—just Brackenridge was worth $38 million 10 years ago—so this is a significant transfer of assets that we pay for. And we right now take care of 90 percent of the patients,” which costs $24 million a year, “while the county spends $6 million. So it’s a major transference.” And the clock is ticking.

Council approves UNO, zoning for Central Austin neighborhoods

A plan to allow new high-rise development in West Campus won the first round of approval from the City Council Thursday evening, with a caveat from Council Members they would be paying close attention to the plan and dozens of contested re-zonings as they proceed onward toward second and third reading of the various parts of the proposal.

The Council approved the Central Austin Combined Neighborhood Plan and a series of rezonings on first reading, along with a set of recommendations from the Planning Commission. As with most neighborhood plans, there are dozens of contested cases where the property owners have filed valid petitions against the proposed zoning changes. The Council also passed those cases on first reading only. And the University Neighborhood Overlay (UNO), creating a new zoning district for West Campus that allows high-rise construction up to 175 feet, also won initial approval. The UNO should be ready for further consideration at the Council's June 24 meeting, with the contested rezoning cases likely posted for the July 29, the only meeting date that month.

Several property owners are protesting the proposals to change zoning of their property, and some are protesting the rezoning of adjacent properties. The West Campus Neighborhood Association, a relatively new group, has several concerns about the impact of allowing new high-rise construction, including problems with parking and traffic due to increased density in the area, blocking the view of the UT tower, and the affordability of new apartment units for students.

The neighborhood plan and overlay approved yesterday do not include provisions specifically addressing affordable housing. Council Member Raul Alvarez questioned staff on those requirements, but was assured that they would be brought forth for future readings. A member of the planning staff assured the Council that they would iron out those issues on second and third reading. "There are a few things that we are still tweaking that by second and third reading we'll have ready for your consideration."

Council Member Daryl Slusher offered some reassurances for those members of the audience with objections to the plan. "I was kept aware of this the whole time it was going on. When it gets on to our agenda, it's our responsibility to look at it very closely," he said. "I just want folks to know that I'm going to be out looking at this very closely, even more than I have so far, between first and third readings. I do think we have that responsibility. If we were to see something we want to change or there's tweaks, I don't want folks to be shocked or surprised. I can assure you that we're not going to let the central city…the center of the city we all represent…fall off the radar screen."

Appointments . . . The Council appointed Andrea Beleno to the Commission on Immigrant Affairs and Rosita Bradham to the Mexican American Cultural Center Advisory Board. Yolanda Aleman-Limon was reappointed to the Community Development Commission as the Rosewood/Zaragosa Blackland Neighborhood representative. Bruce Willenzik will continue to represent the Arts Commission on the Downtown Commission, and Council Member Dunkerley reappointed James Reed to the Ethics Review Commission. The Council appointed Nora Comstock, Latifah Taormina and Irene Williams to the Arts Center Stage Board of Trustees. Robert Edgecomb, Janis Morgan and Laura Wisdom were reappointed to the Renaissance Market Commission . . . Zoning for HEB approved . . . Representatives of Stratus Properties and neighborhoods close to Circle C were jubilant Thursday afternoon when the Council approved a zoning change to allow construction of an HEB grocery store at 5800 West Slaughter Lane. The property had been zoned to allow Stratus to develop more than 400 apartments. HEB had rejected a site originally planned for retail development because of accessibility, but readily acquired this property when it became clear that Escarpment Blvd. would be extended. Martin Otto, Senior Vice President and General Manager for HEB in Central Texas, said the closest store, at William Cannon and Brodie, is only 83,000 square feet and is too small to handle its current volume. The new store, which will be 93,000 square feet, should open in mid-2005, Otto said, noting that next year marks HEB’s 100th year in business. Stephanie Stone of the New Villages of Western Oaks said, “We’re excited it’s not a Target. The existing HEB is always crowded. The neighborhood is in desperate need of restaurants,” as well as a grocery store. Stone added that neighbors are especially happy that HEB has increased setbacks to 425 feet. In the previous plan, the setback was 200 feet. This represents the first zoning change since the Stratus plan was initially approved . . . Seminary wins zoning change . . . The Council granted a zoning change from multi-family to general office for the Episcopal Theological Seminary of the Southwest at Rathervue Place and Duval on first reading only because the ordinance had not yet been completed. Attorney Richard Suttle requested that the matter be scheduled for second and third reading next week.

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