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City manager presents Council balanced 2011 budget

Thursday, July 29, 2010 by Michelle Jimenez

City Manager Marc Ott and his staff managed to wipe out, within the past few months, an anticipated double-digit deficit in the 2011 budget — and to do so without pushing the upper limits of the property tax rate.

 

Ott unveiled the $2.8 billion spending plan to the City Council during a work session Wednesday. It was the first update Council members have received since April, when staff presented an initial budget forecast.

 

The deficit was in the General Fund, which covers the cost of daily operations for core public safety and community services. The proposed spending in that account is $650.2 million for next year, up from $614.9 million this fiscal year. The increase is due to a proposed pay raise, additional police officers, and new Emergency Medical Services stations, among other factors.

 

“The projected deficit that we told you about, which was between $11 and $28 million dollars, has, in fact, been balanced with no disruption in services, without dipping into reserves, and for the first time since 2006, with a tax rate that is below the maximum rollback calculation,” Ott told Council members. “I’m smiling because I’m really pleased to be in a position to say that to you this morning.”

 

Staff members told the Council that higher-than-expected sales tax revenues were a key factor in balancing the budget. Revised projections put sales tax revenue 3 percent higher this fiscal year, and the city predicts another 3 percent increase next year. In April, city staff projected a 4 percent decline in sales tax revenues for this fiscal year and a 2.5 percent increase in 2011, Budget Officer Ed Van Eenoo said.

 

In addition, staff scrubbed the budget and reduced line-item amounts to better align with how much money had actually been spent in those areas in previous years. This shaved $8.7 million in spending. The city also plans to cut back on money it transfers to the Transportation Fund. Next year, instead of approximately $5 million, it will transfer $1.8 million to the fund, which pays for street maintenance, striping, and other transportation projects.

 

The proposed budget maintains the initial proposals for a 2.5 percent pay raise for all civilian employees and a 3 percent pay increase, an amount required by contract, for sworn employees in the fire, police, and emergency medical services departments; $800,000 to help lower the euthanasia rate at the Animal Center; and $500,000 for new library materials.

 

The latest version also includes adding a total of 48 police officers, 30 paramedics, and 10 firefighters. The initial budget included fewer additions — 13 officers, 12 paramedics, and five firefighters. The revised budget also includes two new medic units to provide service to the Harrisglenn Drive and Harris Branch areas, in addition to a unit included in the initial budget to cover the Avery Ranch area.

 

The property tax rate would increase under the proposed budget, though not to the maximum amount, as it has in previous years, Ott said. In the past, the city has raised the rate as high as it could — to what is called the “rollback” rate — without opening itself up to a potential election seeking voter approval for the increase.

 

The proposed tax rate is, however, higher than the “effective” rate, or the rate at which the city would bring in the same amount of revenue it did last year.

 

Officials say that’s due largely to a drop in property tax values, an issue Travis County officials are facing, as well, as they craft their 2011 spending plan. The city’s total tax roll dropped by 3.8 percent. 

 

The city’s current total tax rate is 42.09 cents per $100 of assessed property value. The proposed rate is 45.71 cents. For a resident with a median taxable home value of $184,484, the increase would be $4.37 per month.

 

The proposed rate could increase in the next couple of months as the budget process continues, depending on whether Council members choose to add items to the budget, Ott told reporters after the work session.

 

The highest rate the city could set without opening itself up to a possible election is 46.93 cents, a rate that would generate an additional $9.2 million in revenue.

 

Council Member Bill Spelman told In Fact Daily he wants to be careful about raising the tax rate any more than necessary.

 

“We’re still in the middle of the worst recession that we’ve been in years and years, and it’s a bad time to spend money we absolutely don’t need to spend,” Spelman said.

 

Due to a state-imposed fee, residents will also see an increase in their utility bills under the proposed budget. Typical ratepayers would see their water bill increase by $3.84 a month, while Austin Energy customers would see an increase of less than a dollar.

 

The Council is scheduled to hold budget work sessions on August 18 and 25. Public hearings on the tax rate are scheduled for August 19 and 26.

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