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City staff finds new money, suggests rate cuts for 2010
Thursday, August 20, 2009 by Austin Monitor
Like their colleagues, Council Members Bill Spelman and Sheryl Cole were both pleased with the news Budget Officer Ed Van Eenoo brought them Wednesday on the 2009 city budget. But they did not necessarily agree about the next step.
Van Eenoo reported that new information would mean a reduction in the tax rate after receiving the certified tax rolls from the Travis Central Appraisal District.
Austin Energy also received $1 million more in revenue than expected this summer as customers use additional power to cool their homes during the record heat.
The two factors together would provide enough funds to ensure that city employees would receive the longevity pay for known as SIPs. It would also mean no furloughs for employees making less than $40,000 a year and six months’ breathing room to study whether higher paid employees would have to take furloughs. Expect a re-evaluation of furloughs for those employees next March or April.
In a memo to all employees, City Manager Marc Ott said, “One good result from the unprecedented heat wave is a higher than expected revenue transfer from the electric utility to the general fund. We also received a certified tax roll that was higher than expected, which will result in more property tax revenue and a lower property tax rate. With this good news, we were able to make changes to our initial budget recommendations that will directly benefit our workforce.”
The city found an additional $644,000 in next year’s budget, based on newly certified property values from the Travis Central Appraisal District. Budget officials proposed a lower 2009 tax rate than they had earlier — 42.09 cents per $100 of property value, as opposed to 43.28 cents. That means a reduction of about $22 on the average home valued at $261,452.
The electric utility also agreed Tuesday to forgo a 60 cent surcharge, cutting some $5 million in rate increases, while the Solid Waste Services Department backed away from another $1.1 million in garbage collection fee increases.
Spelman said the big number for him is that $6.1 million. That’s the amount (from Austin Energy and SWS) that ratepayers will not be paying in the coming year.
“So basically, we (as ratepayers) are $6.1 million better off that we were two weeks ago,” he said. However, he said he wants enough cuts in the General Fund to take the city back from the rollback rate.
Asked how much of a cut he was seeking, Spelman said, “I’m thinking a couple of million bucks would be the kind of number we’d be looking for.” He said he needs to ask some more questions before providing specifics on things that could be cut.
Asked her reaction, Cole said, “Our current tax rate is 40 cents basically. The original tax rate in the budget was 43 cents and the revised proposed tax rate is 42 cents. So we basically decreased our proposed tax rate by one cent,” she said. “A $2 million decrease from the General Fund would result in approximately one-quarter of one cent reduction in the tax rate. I would have to know the specifics of the proposed cut to state whether I would support this to reduce the tax rate. It is real important to recognize that it takes large sums of money to make an even slight decrease in the tax rate.”
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