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City manager presents balanced budget proposal

Thursday, July 24, 2008 by Austin Monitor

Despite a slowing economy and rising inflation, City Manager Marc Ott on Wednesday proposed a balanced $2.8 billion operating budget for 2009 to members of the City Council. Ott and his staff managed to cut $25 million through selected service cuts, higher fees for some services and delaying raises for most of the city’s non-public safety employees. There are no proposed employee layoffs but some vacant positions will not be filled.


Funds for street maintenance and library hours will be cut, along with funds for the Affordable Housing Trust Fund. These items are sure to come up again during the next six weeks as the Council works to satisfy constituents without breaking the bank.


“It’s the ultimate exercise in forced tradeoffs and there are clearly some spots in the budget that everybody would agree were skinny,” said Mayor Will Wynn, who noted that this would be his ninth city budget. “I would suggest the road maintenance — it’s a glaring need and at the same time I can’t just say I want to throw $2 million more at road maintenance without saying I want to take $2 million from somewhere else. I’ve gone through budgets that were a lot worse.” The proposed budget would fund repair of 8 percent of the city’s streets, as compared to more than 9 percent this year, a reflection of increased costs.


Staff is also proposing to use $10.5 million from the budget stabilization fund in order to arrive at a balanced budget and purchase some items such as fire trucks.


The proposed $621 million General Fund, which pays for most of the city’s services, came in about 4.6 percent higher than last year. The budget is based on a 40.28-cent property tax rate per $100 assessed valuation, slightly lower than the current rate of 40.34 cents. However, because of rising property taxes, most taxpayers will see a net increase in their tax bills. The rate is known as the rollback rate because even a small fraction of a cent higher could trigger an election to roll the rate back.


Ott said that Council members have major decisions to make. “Like most cities across the country, we continue to face increasing costs for services and more demands for quality programs in the face of an increasingly inadequate revenue base,” he said.


Council faces more challenges in the future


“In the future, we will continue to face higher energy and labor costs, aging infrastructure, as well as mobility and air quality issues from our continuing growth. Ultimately, these fiscal challenges will require city management, the City Council and citizens to engage in substantive discussions regarding revenue policy,” the manager predicted.


Ott said he hopes that changes in the process helped get Council members involved earlier.


“I certainly get the impression that the budget process that we’ve gone through so far is different from what the city has been accustomed to,” Ott said. “In other cities I’ve been in, it’s been similar. I probably, given my previous experience, incorporated more work sessions with the legislative body because I think that’s important that they have the opportunity to participate on the front end. When we’re shaping and sculpting the budget, I think the Mayor and the Council and the citizens should be part of that.”


The budget calls for funding for 24 additional police officers, social services and transportation and infrastructure improvements. It also adds money for growth planning and neighborhood initiatives. However, it also includes cuts in the number of hours at branch libraries, increased utility fees, and delays in employee raises.


Utility customers will see increases in the amount they pay for trash collection, water and wastewater. City trash collection customers will pay about $5 to $6 a month more, depending on the size of their trash cart. The average water bill will also go up about $4.25 a month. However, Austin Energy will not increase the rates it charges for electricity.


The 2009 budget is nearly 12 percent larger than the 2008 budget and was written to anticipate a period of falling sales tax revenues.


One area where Ott held the line was pay increases for city employees.  The budget includes a 2.5 percent average raise for nonpublic safety city staff, down from 3.5 percent this year, and delays those raises until December 2008. Normally, they would go into effect in October when the fiscal year begins.


In a memo to city employees, Ott said despite the delay in getting the funds, employees’ job are relatively safe.


“Even with the economic downturn, the local economy continues to outpace other Texas cities,” he wrote. “The budget development process has required us to review and fine tune our service delivery model. We are better for the process.”


Ott also noted that in addition to the delayed raise, he is proposing a Service Incentive Pay Enhancement of 1 percent, to be paid in early December.


Council comments


Like the Mayor, Council Member Lee Leffingwell said he was concerned about reducing street repairs below 10 percent of the city’s lane miles. He said it would cause greater problems in the future if the city falls behind now. “And we will be back in pothole alley like we were in the past,” he said.


Council Member Sheryl Cole said, “The good thing is that we were still able to give a 2.5 percent pay increase (for city employees).” She added, “We’re still providing core city services. Despite the fact that Austin’s economy is still declining, it’s still better than the rest of the nation. And we have to be glad of that.”


Council Member Randi Shade indicated a concern about leaving positions vacant. While City Manager Marc Ott is confident it will not negatively affect city services, Shade said that she would like more information on how the city would manage without filling those vacant positions.


“You’ve got to operate in the good times for the bad times. We’ve got to be lean all the time,” she said. “Now that we’re in a budget shortfall, is the way that we’re going to solve it by not filling vacancies that need to be filled?  My question is…what are the implications of not filing them? When we’re in good times, we should not blow up our staffing either. We should be operating consistently.”


Arguments over public safety


However, the city is still in negotiations with the city’s police, fire and EMS unions. If those unions will not accept the same 2.5 percent raise, Ott says the Council will have to cut more out of the General Fund to cover the difference. For the past few years, public safety workers have a received a raise that is at least 2 percent higher that rank-and-file employees.


The budget also proposes an increase in the number of Austin Police officers, based on the projected growth rate of the city’s population, based on the full-purpose service area. 


According to the city’s web site, population growth for the City of Austin is projected to grow at a reduced rate in 2009 (1.75 percent) and 2010 (1.5 percent). The growth rate for 2008 is projected to be 2.1 percent, compared to growth of 2.25 percent in 2007 and 2.64 percent in 2006. That is an increase of 13,123 persons between 2008 and 2009; and 11,444 by the end of 2010. This is important because of the city’s policy of hiring 2.0 officers per 1000 residents. Under that policy, adding 24 officers would take care of an additional 12,000 residents.


Council Member Mike Martinez was not convinced the city should be using such a low growth rate. He said based on what the city traditionally uses as the projected growth rate, 3.4 to 3.5 percent, population should increase by about 25,000 increase—double the figures the city is using. That would mean 50 new police officers, not 24.


The city did experience a decreased growth rate during the economic slowdown of 2002-2005, with a low of .64 percent in 2004. Growth for Travis County is projected at 3 percent for 2009 and 2010, down from this year’s projected rate of 3.25 percent.


Council Member Brewster McCracken said although he was “very impressed” by the staff’s work on the budget he did not agree with the idea of cutting all the funding ($1 million) from the Housing Trust Fund.


Martinez expressed concern about library closures, saying he expects to hear complaints about that proposal. He also said he had concerns about increased fees charged developers for reviewing their plans. Higher fees would be fine, Martinez said, if it could guarantee better and quicker service with fewer errors. However, he said developers would balk at paying more without getting more in return.


Council Member Laura Morrison said she thought the budget “was nicely laid out,” and compared understanding it to peeling an onion. She said she would continue to go through it layer by layer. “The one thing that I’ve asked the budget office for already, and they’re in the process of preparing it, is, how do we reflect the different savings from each department in context?”


To view the proposed budget, go to

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