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Council not solid in support of November bond election

Wednesday, April 28, 2010 by Michael Kanin

Three City Council members expressed doubts Tuesday about whether the city should be moving at full steam toward a November 2010 bond election. Council Members Sheryl Cole, Laura Morrison, and Bill Spelman took the opportunity to air their concerns about the pace of things at yesterday’s meeting of the Audit and Finance Committee.


The backdrop for their comments was a staff explanation of the decline in average property valuation (see In Fact Daily, April 22, 2010), leading to a drop in bonding capacity at current tax rates. Previously estimated at $200 million, that figure is now $170 million, according to Deputy Chief Financial Officer Greg Canally.


Mayor Lee Leffingwell had said he wanted a transportation election to offer projects equal to about half of that bonding capacity this year. So, that figure has declined from $100 million to around $85 million.


Thanks to prior direction from the City Council, city staff has been operating under the assumption that there will be a November 2010 bond election. The pending fissure would put these efforts squarely in the middle of a political fight.


Morrison told the committee that how the city handles its bonding efforts “really speaks to our approach to (economic) sustainability.” She then focused her line of questioning around the tax implications associated with bond efforts.


Canally said that, because capacity is tied to the city’s property tax income, a rise in property valuations would produce a rise in the city’s available bonding — and vice versa, as evidenced by the decline.


Canally added that another way of increasing Austin’s ability to bond would be to raise taxes. “We calculated … that for every penny added to the tax rate, that could support approximately $100 million in additional bonds,” he said.


Morrison expressed concern about adding any pennies to the city’s tax rate. “When we do that we’re making our community less affordable because people are having to pay more taxes,” she said.


Spelman honed in on a potential rise in a pair of statistics that are considered key by the companies that issue the very important ratings for the city’s bonds.


Cole raised the question of how much an election would cost the city. After the hearing, City Clerk Shirley Gentry told In Fact Daily that the 2010 bond proposition would cost the city more than $560,000. The cost of a city election coupled with elections in Travis and Williamson counties is lower than an election held without other jurisdictions.


Cole and Spelman wanted to instruct staff to come up with a “comprehensive bond plan” that would detail the next handful of bond elections. “I think we need to look at (the bond picture) closely and have a long-term plan,” she said.


“It doesn’t mean that we’re not going out now,” Cole added. “It just means that we’re going to think carefully about how we’re going out … but we can’t do that without a recommendation from staff.” Cole, the chair of the committee, then asked for a motion to that effect.


But Assistant City Manager Robert Goode came forward to say that he was “fairly uncomfortable with the direction” the committee was taking.


“We have a staff directive from Council — 7-0 vote — to prepare for this election,” Goode said. “So without a differing direction from that body, we’re going to be uncomfortable coming back and saying we don’t think that was the right way to do it.”


In the end, the committee made no recommendation. Instead, Spelman suggested a Council-sponsored item to address the trio’s concerns in the very near future.


“Staff may have misinterpreted the resolution that all of us supported,” Spelman told In Fact Daily. “Seven of us supported that staff go back and take a look at what … (it) would look like if we went up to $100 million in transportation projects. It did not answer that we all were in favor of (that potential bonding).”


“I don’t know if I’m in support of it or not because I don’t know what it looks like yet,” he added.


Leffingwell told In Fact Daily that he expects that the $85 million figure that’s been plugged in for the 2010 and 2011 bonds would go up by 2011 “unless the AV (valuations) really goes down a lot more.”


He added that though urban rail will still likely be considered part of the 2011 offering, his office had “never anticipated that it would be totally within the bonding capacity.” That would mean an eventual tax increase.


As for the potential 2013 bond election, Leffingwell anticipates asking Austinites for a figure on par with the 2006 version. “The 2006 (bond) was $567 million … so I would anticipate (2013) would be somewhere along that order — $600 million,” he said, “minus what we’ve already done” for transportation. He suggested that election would be about items such as affordable housing, parks, libraries, and open space.

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