Proposed budget includes tax increase, city employee furloughs

City Manager Marc Ott and his budget staff presented their proposed 2009-2010 budget to Council Members this morning, which included recommendations to increase the property tax rate, and force city employees to take unpaid furloughs and forgo their longevity pay. 

 

The City Manager was faced with reducing April’s $645 million forecast budget for the general fund to $631.4 million.  The city managed to find $13.6 million in savings by working with the Police and EMS unions to defer their pay raises, as well as lower than anticipated insurance premiums and fuel costs. The EMS union has already agreed to give up this year’s scheduled pay raise and the police union is currently voting on the plan.  The rest comes from right of way changes and other adjustments. The total cut was around $31.7 million.

 

The rest of the cuts, a total of $18.1 million, require some tough choices from Council Members. The departmental budget cuts will save the city’s general fund $8.4 million, the suspension of longevity pay (an annual bonus given to employees after five years) will save the city $1.7 million, and the furlough program would save $700,000 from the general fund (and $3.4 million if done citywide). The rest of the savings come from reducing transfers to transportation, housing and capital project management.

 

The proposed tax rate would be increased from 40.12 cents per $100 property evaluation to 43.28 cents. It’s only a modest tax bill jump for most Austinites — $6 per month on average. However, Council Member Randi Shade said taxpayers would also have to pay increased fees for water and garbage pickup, putting the total average increase at roughly $12-15 per month.

 

The furloughs, which could hit all city employees that are not in the public safety departments, has caused the greatest immediate backlash. AFSCME Business Manager Greg Powell said his discussions with Council Members make him hopeful that they will reject the furloughs.

 

“What Council Members have heard from us is that city employees have contributed their fair share,” said Powell. He said employees have already lost $60 million, in lost raises and other expected pay adjustments based on market studies. (The city has indefinitely postponed doing some market studies.) Powell said the union is also opposed to the longevity pay cuts, pointing out that it disproportionately affects the employees who have been with the city the longest. One-third of employees would not be impacted by that decision because they have been with the city less than five years. Incentive pay goes up after seven years and again after 10 years. 

 

Mayor Lee Leffingwell said he feels the employees’ pain, but he said the cut in longevity pay is not a pay cut. “In essence it’s a pay raise, a seniority pay raise,” he said. “We are proposing to defer that. I know it’s very painful. I know the non civil service unions are very disturbed about that. But the way I look at it, if there were a way to do that I would give them their seniority pay, but it’s not a pay cut. A lot of people at this stage are looking at pay cuts. So I think the fact that we can present a budget that doesn’t have any pay cuts, I think that is good. As for the furlough thing—we’re going to try to take that out.”

 

Council Member Chris Riley said last time the city did this some employees ended up taking additional overtime. He wondered if the city had looked at that previous experience to find out whether the strategy would actually save money.

 

Council Member Sheryl Cole said she “shares the concerns about the furloughs on behalf of the employees.”

 

And Mayor Pro Tem Mike Martinez said, “While I certainly believe that everybody needs to do their fair share, I’m concerned the burden is a little heavy on our civilian employees and moving forward I think we need to strike a better balance on that.”

 

Shade told In Fact Daily she would probably support furloughs for city employees, because Austinites in the private sector are being asked to take furloughs also.  Shade said she was especially happy that city budget writers rejected the idea of increasing fees for city employees’ health insurance benefits. “My biggest concern is that we were able to maintain all the support we have for our health care benefits, because I see that as a very common occurrence in the private sector and other places where they’re asking employees to increase their participation,” she said.

 

There will be more budget presentations on August 19 and a budget public hearing on August 20. The Council is expected to approve the budget September 14-16.