Energy costs driving up Travis budget estimates

The high cost of energy is making the already tight Travis County budget that much harder to write this year. County budget officials began meeting this week with county departments to talk about budget requests.

Over the last couple of weeks, the budget parameters have rolled out slowly. Two weeks ago, the Auditor’s Office presented broad brush revenue forecast that put the revenue going into this year’s budget at about the same place it was last year.

The auditor’s estimate builds in a more conservative framework than prior years. First, interest rates are low, which is great to sell bonds, but it definitely doesn’t help the county on interest revenue. The office also is conservative on property tax collections. Given the current economic conditions, tax collections will be based on a collection rate of 98.5 percent, rather than the 99.5 percent the county has used in more flush economic times.

At last week’s Commissioners Court meeting, Rodney Rhoades, executive manager of the Planning and Budget Office, talked about the expenditure side of the equation. By the time Rhoades was finished, this was the exchange with County Judge Sam Biscoe.

“So the preliminary work for the departments is money is incredibly tight,” Biscoe said. “Yes, sir,” agreed Rhoades. “Much tighter than it’s been during recent budget cycles,” Biscoe noted. “Yes, sir,” said Rhoades.

“And that’s the reality that we have to deal with,” Biscoe said. “And the economy is looking – fuel and energy costs increasing – it may well get even tighter between now and markup.”

“Yes, sir,” Rhoades said.

The city budget – based more heavily on sales tax revenue – has been volatile in recent years. Now, with the downturn in the housing market, the county is facing the heat. The vast majority of the county budget will come from property taxes, although the Auditor’s office is predicting an increase in revenues from things like auto registration fees.

Even as the county’s revenue remains somewhat stagnant, requests continue to roll in from various departments. Rhoades said his office had received 436 requests across county departments, totaling $48.7 million. Those requests include an additional 384 employees. Some will staff the new expanded county jail facility, which comes online this month.

Fuel has been one key factor in driving new budget requests, Rhoades said. To date, the county had received an additional $1.45 million in additional fuel cost requests. Utility requests have risen by $1.2 million. Start-up and operation costs on a new county court-at-law approved by Commissioners Court will cost $1.8 million. And budget requests also include staffing for the county’s new jail facility and juvenile detention center.

“We included, at this time, existing employee pay raises in the recommended budget that we’re working on that this point,” Rhoades said. “We went back and took a look at the CPI (consumer price index) from April ’07 to April ’08. CPI is running about 3.9 percent. We do not have the full CPI included in the budget, but we’re getting as close as we can at this point.”

Staffing for the county’s new financial system is not in the budget, Rhoades said.

“Obviously that’s a priority,” Rhoades said. “We support it fully, but at this point we do not have sufficient resources to cover the cost to staff the new financial system, based on a budget that is 2.05 percent above the effective tax rate.”

The bottom line is that the balance — after the first revenue estimate and anticipated expenditures – is about $1.1 million, Rhoades said. Planning and Budget Office staff continues to scrub the numbers to get them down, but that $1 million is where the county stands right now.

The 2.05 percent increase would represent a $29 increase in taxes on the average home. The average home in Travis County is estimated to be $274,016.

County commissioners likely will appoint a fuel and utility working committee to attempt to minimize the impact of rising fuel prices. One point that has been raised and will be considered by the committee is a possible four-day work week for the county. Biscoe said a four-day week might make sense for some job categories but not for others.