Travis County budget outlook for FY 2011 still grim

On Tuesday Travis County Planning and Budget Executive Director Rodney Rhoades confirmed for County Commissioners what they had already dreaded – further budget woes for the county’s coffers.

 

The primary indicator of yet another year of cost cutting is the lack of new construction starts in the county – fees from which provide an important source of county revenue. In FY 09, Rhoades said, there was $3.9 billion in new construction certified; that dropped to $2.9 billion in 2010 and is expected to further decline to $1.2 billion in FY 11. This could mean a decrease of more than $7 million in new ongoing revenue for the county. Interest earnings are also anticipated to drop as much as $2.5 million.

 

Rhoades said the county was projecting other revenue to be flat for planning purposes. “We are once again going to be looking at asking departments to submit some budget reductions … once again to tow the line, work with us through one more year, and let’s try to weather this storm.” This year the county projects a gap of about $8 million in the budget. Last year it was about $3 million.

 

Leroy Nellis, budget officer for the Planning and Budget Office, took the microphone to lay to rest any sense of optimism commissioners may have had brewing after last week’s Austin Business Journal story, which projected new construction starts in 2010 to be up 30 percent and Austin to play a leading role in the nation’s recovery.

 

“I would just remind you that from the point that you get a development and a plan approved, which is when they are starting the development process, it’s about three years before you actually realize the new construction. So we are looking, according to our chief appraiser Patrick Brown, at about two more years of decreases in new construction with two years of recovery,” Nellis said. He noted that the last few recessions in the 80s and early 2000s took seven to eight years to pull out of entirely.

 

Nellis said, “Essentially the state and the cities have been hurt quicker than we have, but they will recover faster than we will because once you take the construction cranes down, it takes a while for the commercial construction to get back up to the same level.”

 

He said the PBO staff is again recommending county departments submit another 5 percent budget reduction plan to be implemented this year. However, many of the departments already submitted 5 percent cuts for this year, which Nellis said could carry over if the same cuts were renewed. Departments that did not have a 5 percent cut approved in FY 10 will have to try again this year. The deadline for those proposed cuts is April 26.

 

“Our goal, as it was for 2010, is to ensure that we try to minimize the service level impact for the current programs that we’re funding and, obviously, avoid layoffs at all costs,” Rhoades said.

 

The $8 million is in both ongoing and one-time revenues and continuing and one-time expenses. Pct. 4 Commissioner Margaret Gomez said, “Since we don’t do deficit spending here, those are significant numbers.” Staff noted that over the past 20 years, one-time revenues have been injected into the budget. Pct. 1 Commissioner Ron Davis pointed out, “When we run out of ongoing money and there is one-time money there, we have shown the flexibility to use it.” In fact, the county has been spending $2 million in one-time money every year for ongoing expenses.

 

Other problems loom for the county. Health insurance expenditures are running about 25 percent above the same period last year, commissioners learned, partly due to H1N1. Also, it was noted that the county is projecting a deficit in funds for emergency assistance programs, which have been hit hard during the recession.

 

Judge Sam Biscoe said he would need another week to look over the new guidelines for the budget before they voted on a course of action. County department heads will have until March 26 to collect proposals for cuts.