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Growth, fuel costs increase costs for city departments

Friday, August 8, 2008 by Mark Richardson

Soaring fuel prices and an expanding customer base were common themes from some of the city’s enterprise departments, as they presented highlights of their 2009 budget proposals to City Council on Thursday. Solid Waste Services, the Aviation Department, the Austin Water Utility and the Convention Center, as well as the quasi department known as the Austin Convention and Visitors Bureau are all asking for more money in 2009 to meet their challenges.


Each is called an “enterprise department” because it operates on revenues provided through the services provided rather than on money from the general fund.


Council Member Mike Martinez noted that increasing fuel costs are a challenge to all city departments.


“We need to be doing everything possible to find ways to deal with” fuel increases,” he said. “We need to look at creative ways to deal with it. Find new technologies, like putting pick-up devices on both sides of the garbage truck so you only go down a street once. We need to look for those kind of innovations.”


The Solid Waste Services department has seen a significant increase in its workload in recent years, with its customer base growing from 131,238 in 1997 to almost 175,000 in 2009. At the same time, its workforce has only grown from 365 to 463 people.


According to Assistant City Manager Robert Goode, there has been a significant increase in the demand for code enforcement services, with a move towards a preventative-education based model rather than an enforcement model in the department.


But the biggest challenge in the department, Goode said, is the rising cost of fuel. Fuel costs have risen steadily since 1997, from about $600,000 to more than $2.9 million in 2008. With current trends, the department predicts spending $4.9 million in 2009.


Projected revenues for 2009 are $66.7 million, with 62 percent of it coming from the Pay As You Throw program, and 29 percent coming from the Anti-Litter Program. Projected expenses for the department are $66.6 million for 2009, with 37 percent going to Pay As You Throw, 20 percent for debt and transfers and 15 percent for litter abatement.


The city’s Aviation Department faces another year of operating in an uncertain business climate, Goode said, as the airline industry faces major challenges due to escalating fuel costs.


Austin Bergstrom International Airport continues to grow despite cuts by the airline industry. ABIA passenger traffic is up 6 percent over 2007, with an expanding number of non-stop flights.


However, Goode said ABIA will face a continuing challenge of providing top quality service to airlines in an atmosphere of route cuts and spiraling costs.


ABIA is budgeting for 2009 revenues of 93.1 million, with 38 percent of that coming from the airlines. In addition, 34 percent will come from parking and 16 percent from concessions. The airport is also projecting $93.1 million in expenses with 26 percent  going to operations, 24 percent to debt service, and 16 percent transfers to Capital Fund.


Goode said despite a projected 10 to 12 percent reduction in the number of flights to ABIA, no layoffs are projected.


Like Solid Waste Services, the Austin Water Utility has seen a huge growth in its customer base, growing from 156,000 in 1997 to 207,000 projected for 2009. The utility will raise the average customer’s rates by $4.25 in 2009 as a part of a progressive rate increase scheduled through 2013.


And like other departments, expenses are going up. The cost of water treatment is up $62 million, distribution and collection, up $37.1 million, growth and planning is up $14.3 million conservation costs are 10.6 million.


Expenditures for 2009 are projected to be $414.8 million. Debt service continues to be AWU’s biggest expense at 39 percent. Transfers take up 20 percent, treatment is 15 percent and transfers to capital improvement projects are 11 percent.


Revenues are projected to be $405.5 million, almost evenly divided between Water Services at 48 percent, and wastewater services at 47 percent.


The Convention Center is recovering from a turbulent year that saw new management and new challenges, according to Assistant City Manager Rudy Garza. With travel expenses up, the competition for conventions and trade shows in sharper than ever, he said.


The department is projecting revenues of $55 million in 2009. The Hotel Occupancy Tax accounts for 61 percent, facility revenue is 15 percent and the car rental tax is 12 percent. Expenditures are projected at $69.1 million, with event operations taking up 38 percent, debt service at 30 percent and transfer to CIP at 16 percent.

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