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City may seek more funds to restore services

Friday, May 26, 2006 by

Council to weigh two-cent tax hike for next year’s budget

With the Austin economy turning the corner, the pressure is on for Council to approve a two-cent tax increase to restore a number of city services and positions that were cut during Austin’s economic downturn.

Choosing to set the tax rate at 42 cents per $100 valuation next year would technically, but not literally, be a tax rate increase for many Austinites. That is because most tax rates are pegged off an effective tax. According to city calculations, a 40-cent tax rate next year should raise the same amount of revenue that a 44-cent tax rate raised this year. That is because property values have risen. By splitting the difference, and setting a tax rate of 42 cents, Council could enjoy a bump in revenue that could cover some of the strategic additions City Manager Toby Futrell wants to make to the budget.

"We could cut the tax rate by 2.2 cents and still capture all the efforts we’ve made on this Council, and the community has made, to build our tax base," suggested Council Member Brewster McCracken. "The reason why we build the tax base is so we can achieve, through prosperity, the things the community wants, as opposed to raising tax rates."

The more property value growth a property saw, the more it would pay under the "reduced" tax rate. That means that commercial and multi-family residential properties – which saw double-digit increases in value in the last year – likely will pay a bigger portion of tax increases than those who live in single-family homes or own open land in the city.

Futrell has some specific ideas about what the community would want to add back to the city budget: an additional day labor site in South Austin; additional technicians in the crime lab and library system; supplements to social service providers who will face cuts to community block grant development funds; and more inspectors, security and parks personnel. Futrell also wants to raise salaries for high-vacancy areas, such as emergency medics. Futrell’s total wish list of "strategic adds" is $7.2 million.

This list, however, is only the new expenditures – culled from more than $23 million in requests – which Futrell has picked for budget additions. She has another $40 million in what she calls "cost drivers" that must be incorporated into the budget: the cost of opening new facilities; pay-for-performance measures; and increased health insurance costs. Almost half of that $40 million, however, is the amount necessary to keep up with the city’s policy of two police officers for every 1,000 residents.

Those cost drivers mean the city will start the year – all other things being equal – about $2.2 million in the hole, Futrell said. While that’s not exactly the best financial situation for the city, it’s far better than where the city has started out in any of the last five budget years.

McCracken noted that the personnel additions over the next three years were heavy in the public safety area, with the exception of 2007. In the upcoming year, 19 of the 47 new positions will be parks department positions, intended to handle upgrades to Town Lake Park and the opening of the Mexican-American Cultural Center. Beyond that, though, public safety dominates. McCracken noted that 71 of 81 positions in 2008 and 71 of 77 positions in 2009 would go to the area of public safety.

Futrell has additional considerations on the revenue and expenditure side of the equations. On the revenue side, the city anticipates a 10 percent increase in sales tax revenues this year, as opposed to the fallow recent years when sales taxes actually were in decline. City officials are likely to review fees once more – they were reviewed two years ago – and consider whether the current level of budget transfers from Austin Energy and the Water and Wastewater Utility are appropriate.

Given the bond market’s positive response to the city’s steady hand on budget transfers, bumping rates appears unlikely. As Council Member Lee Leffingwell noted, the city will save between $7 million and $12 million in bond costs this year because of the rating agencies’ decision to raise the bond ratings on Austin Energy bonds.

The city also could choose to use some amount of its budget stabilization fund, otherwise known as the city’s "rainy day fund" or fund balance. Last year, however, Council set new policy that dictates that only a third of the city’s fund balance can be used in any year to address one-time budget expenditures. That new policy means $13.6 million is available this year for one-time expenditures.

Futrell has a list of $16.7 million in one-time and ongoing needs, which include vehicle replacement, technology upgrades and a commitment to increase the city’s retirement contribution.

On the expenditure side, City Council will have additional policy decisions to weigh during budget hearings over the next two months. Yesterday’s Council meeting outlined budget parameters. Budget Officer Greg Canally promised he would bring a "bare bones" budget to Council at the end of July. Council will hear budget presentations through August, with the intention of taking the three budget readings the second week of September.

Council hears potential cost of Prop 6 benefits

The city’s Budget Office on Thursday warned Council Members to expect a 10 percent jump in the cost of health insurance for non-public safety employees next year. The increase of nearly $1 million is due to market forces and will be factored into the City Manager’s Draft Policy Budget presented in July.

However, City Manager Toby Futrell also cautioned the Council that the increase did not take into account the recent approval of Proposition 6 by Austin voters, clearing the way for the city to begin offering health insurance coverage for the same-sex partners of city employees.

Expanding the coverage to people currently not allowed in the program, Futrell said, would carry an additional cost of anywhere between $250,000 and $1.2 million depending upon the guidelines of the new program.

"When you’re looking at a ‘Plus One’ kind of program, sort of the ‘Cadillac’ program… you could add a spouse, a same-sex domestic partner, an adult relative, an opposite-sex domestic partner, or a roommate. It is one adult…anyone who lives in your home for more than six months and contributes to the household. That is, at a minimum, about $1.2 million. I need to tell you that our actuary does not recommend this program."

A slightly more selective program with stricter guidelines would cost about $900,000. That cost estimate is for allowing employees to add a spouse, same-sex domestic partner, or adult relative. A third option would allow only the addition of spouses or same-sex domestic partners. "That is the least expensive, and that’s about $250,000," said Futrell.

Actuarial consultant Michael Rodriguez with the firm of Towers Perrin said the increased costs were the natural result of adding more people to the coverage pool. "What I would like to do is leave you with one key impression for all of this. This program is about risk," he said. "This is a risk to the city. You’re adding people to your plan, so you’re automatically adding risk to your plan."

Council Members debated the level of risk, and the level of cost, they would be willing to consider this summer as part of next year’s budget.

"The one that gives me some pause is the adult relative of the employee," said Council Member Jennifer Kim. "We’re going to be trying that for the first time, and I think it’s harder to take something away than it is to expand something later. I would like to look at how much it would cost us to just include parents and adult children, and later on if we see that it works we could add other relatives."

But Council Member Lee Leffingwell said he would be willing to consider that option. "I think that our goal should be to extend health coverage as broadly as possible to family and loved ones of city employees," he said. "Roommates may be going a little too far…but I would advocate proceeding on the basis of option number two ($950,000), at least for planning purposes. Saying that we’re not even going to consider adult relatives…I don’t want to make that decision today."

Council Member Brewster McCracken, who campaigned in favor of Proposition 6, seemed to be the most willing to consider the $1.2 million dollar option, described as being similar to the "Plus One" program offered to employees of Travis County. "While we do have a responsibility to be mindful of the costs of this, we are talking about health insurance. I think in the grand scheme of what our total budget responsibilities are, for the small cost we are able to really improve the lives, the finances, and the well-being of our city workforce by doing this…and I think it’s a good investment."

The Council instructed Futrell to begin making provisions for expanding the health insurance coverage for city employees in line with the public’s approval of Proposition 6, but did not choose a specific option. Instead, they requested Futrell to develop more specific financial information about the various options for their consideration as part of the overall budget process.

Bond backers seek housing, open space, library

Council to set ballot June 8

Members of the public got their last shot Thursday night at convincing City Council members to include their favorite project in the proposed November bond package.

This week’s public hearing got off to a much earlier start than last week’s which began shortly after midnight. Last night’s public hearing kicked off about 6:45pm and by 10:15pm, about 50 people had given their opinion on the bond program.

Council members have heard a broad range of staff suggestions for the bond package, totaling around $534 million. That number could grow or shrink depending on the final contents of the bond package.

Speakers touted more than a dozen projects, but three items– affordable housing bonds, the new central library, and acquisition of open space—came up most often. Other projects mentioned included the Mexic-Arte Museum, the Susannah Dickinson House, flood control on Boggy Creek, the Asian American Resource Center, and the expansion of the Zachary Scott Theatre. A few people spoke to criticize the city’s bond process.

The widest variety of speakers touched on affordable housing issues. A group of disabled individuals pleaded with the Council to keep the entire $67.5 million for housing in the package.

"We need money," said Wayne Spann, through an interpreter. "It is very hard to find accessible housing. For people who are low income, below 30 percent, it is very hard to find what we need. We also need more sidewalks and curb cuts."

LeeAnn Vargas, a social worker at an Austin elementary school, said she works to support the rights of some 100 homeless children who attend her school.

"The federal government passed a low requiring school districts to review laws and remove barriers to homeless children attending public schools," she said. "But they did not require state or local government housing for these children. Nor did they provide for school supplies, physical, dental, and mental health. Many of the children live in emergency shelters; some families double up in homes or apartments. The lack of resources makes it difficult to help them."

The proposed new Central Library, a project some think may be vulnerable, drew a large number of proponents.

Former Mayor Bruce Todd echoed the backer’s slogan that "Great cities have great libraries."

"It may be a matter of finances, but it is money well spent," he said. "The library needs to grow along with the community."

Peggy Rudd with the Texas State Library system says it is a matter of degrees.

"Right now, Austin has a good library system," she said. "But is could be a great library system. There is a hunger for information and cultural awareness. I attended a meeting where Chicago Mayor Richard Daley talked about urban revitalization and he said every community needs two things: grocery stores and a library. Well, we have Whole Foods, now we need a library to match."

Council members took no action last night on deciding which items will be on the Bond Election ballot in November. They plan to select ballot items and set the ballot language at the June 8 Council Meeting.

Austin honors departing chief

Ellison to take over department Monday

Sunday will be Austin Police Chief Stan Knee’s final day on the job. The City Council approved a resolution appointing Assistant Chief Cathy Ellison as Acting Chief, effective Monday, and also presented Chief Knee with a Distinguished Service Award honoring his nearly nine-year tenure with the department.

"It is a very difficult job, and this man has served this community with such integrity and courage and vision and passion…and I can tell you from 30 years in local government and public service he’s the best I’ve seen," said City Manager Toby Futrell. "He’s going to be very, very difficult to replace for this community."

Chief Knee, who has attended several receptions in his honor this week, thanked his staff and the community for helping to keep Austin safe. "A police department is not one individual, it is a group of individuals all focused on one single purpose…and that purpose is to make all of us safe," he said. "And the Austin Police Department is the best at it I’ve ever seen and I’ve spent over 37 years in this business. I am deeply saddened by the fact that I am leaving, but I believe it was a good choice…and I believe it was a good choice because Cathy Ellison is standing in, going to step into my shoes and sit behind my desk. I guarantee you she will not miss a beat."

Earlier in the day, the Council approved a resolution confirming Futrell’s decision to appoint Ellison as Acting Chief. The Council also moved up the start date for Ellison from June 4 to May 29, as Chief Knee will be using up some remaining vacation time next week. "I’m excited, but I’m nervously excited…and it’s a week sooner than I anticipated," Ellison said. "But I’m ready to go."

The Council also honored another outgoing high-ranking city employee. Office of Emergency Management Director Steve Collier is retiring after 17 years with the department. "He’s been on the scene for us from Y2K, 9/11, Katrina, Rita, through the building of our combined emergency center," said Futrell. "He couldn’t have done a better job for us in a very, very tough environment."

©2006 In Fact News, Inc. All rights reserved.

New lobby registrations. . . There have been a flurry of new registrations since In Fact Daily started noting them. On Thursday, the city received registrations from Ron Thrower, who works for a number of clients seeking mostly zoning changes, and Joe Garcia, who registered as a lobbyist for Yellow Cab. . . Incidentally, the Council approved transfer of Roy’s Taxi franchise from the current owner to Yellow Cab on second reading yesterday. Mayor Will Wynn and Mayor Pro Tem Danny Thomas voted against the motion . . . Wait until next month . . . Council members postponed several issues on this week’s agenda until the next scheduled meeting on June 8. That meeting will be the last for two members, Mayor Pro Tem Danny Thomas and Council Member Raul Alvarez. Postponed until then were items on the city’s MBE/WBE program and Mobile Food vendors. A hearing on Historic District regulations was put off until June 22 . . . New jobs . . . Amy Everhart, who managed the successful campaigns of both Council Member Jennifer Kim and Council Member-elect Mike Martinez, will begin her new job as manager of District 50 State Rep. Mark Strama’s re-election campaign next week. Democrat Strama is running for re-election against Republican Jeff Fleece in November . . . Council Member-elect Sheryl Cole says she is still working on choosing staff for the Place 6 office. She said she plans to hire Kenny Thompson, her campaign manager, as her aide and she is considering bringing in a second aide also . . . A carrot for you . . . Shudde Fath, one of the matriarchs of the environmental community, addressed the Council—and AMD CEO Hector Ruiz—during citizens communications on Thursday. Fath spoke on behalf of the Save Barton Creek Association, which has pledged to put up a plaque shaming Ruiz for his part in a projected ruination of Barton Springs and well water in the Edwards Aquifer. Fath and SBCA, among others, believe Ruiz’ plans to build the new AMD campus on the Lantana property will spur rampant new development over the sensitive watershed. . Yesterday, Fath added a carrot, saying she would volunteer to chair a fundraising campaign to erect a statute honoring Ruiz if he decides to move AMD’s headquarters off of the aquifer . . . Moon rock to be shown. . . Veteran newsman Walter Cronkite’s moon rock will be on display at UT’s Texas Memorial Museum June 1 – August 31. Cronkite was honored in February by the National Aeronautics and Space Administration (NASA) with the prestigious Ambassador of Exploration Award for his coverage of America’s space program. He was presented with the only moon rock ever given to a non-astronaut or non-NASA individual. The rock came from the Apollo 11 space mission that put the first human on the moon. Cronkite immediately donated the lunar sample to UT’s Center for American History (CAH), the archival home of the Walter Cronkite papers . . . Memorial Day closings . . . Most city, county, state and federal government offices will be closed on Monday, but there will be some exceptions. The city will collect garbage on its regular schedule, and most city pools will be open . . . In Fact Daily will be taking the holiday off. We’ll be back, tanned, rested and ready, on Tuesday, May 30. We'll also be ready to show off our new web site.

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