Council faces decisions on how to spend budget surplus

Austin Council members are set to make some hard decisions about what to do with a $14.3 million 2012 budget surplus as part of tomorrow’s work session. Staff has identified $12.3 million in one-time funding needs and another $3.5 million in possible recurring expenditures.

 

These range from contributions to affordable housing to additional personnel for under-staffed forensics lab at the Austin Police Department and more reviewers for the Planning and Development Review Department. Last week, In Fact Daily spoke with each Council member except Chris Riley, who was on vacation, about their priorities for the new money.

 

There is a range of ideas about what to do with the surplus. Two poles flank it: One, represented by Mayor Lee Leffingwell and Mayor Pro Tem Sheryl Cole would like to conserve as much of the budget surplus as possible. The other, represented by Council Member Laura Morrison would spend as much of it as staff has identified. Council Member Kathie Tovo, like Morrison, emphasized that she would like to allocate $10 million to affordable housing.   

 

“The numbers…are very, very, very conservative,” said Morrison, who sees a much rosier picture than Deputy CFO Ed Van Eenoo has projected. “Is this (spending) going to put us on the edge of where we want our reserves to be? The answer is no, based on the estimates of what we’re looking at in reality for sales tax, it’s really coming in at the 11 and 13 percent increase, and this is just moving us into the realm of one-and-a-half or two percent.”

 

Cole saw needs, but she also argued for budget conservation – something she said might help taxpayers down the line.

 

“One of my top priorities has been to address the backlog at Planning and Development Review and this mid-year budget work offers us the opportunity to fund the additional personnel that will help accomplish that,” she told In Fact Daily via email. “There’s also a strong case to be made for the almost 10 to 1 leveraging opportunity presented by state affordable housing tax credits. Beyond critical and time-sensitive items, though, I would prefer to use as much of the surplus for property tax relief as possible.”

 

Leffingwell maintained that it was imperative to keep away from future tax increases. “I think that’s the big question we have got to ask,” he said. “There’s an $8.6 million end-of-year balance that could be spent, so you’ve got to be careful about the out-years.”

 

The surplus became evident at the end of January. The bulk of it – $8.6 million  – comes from the city’s general fund. Other departments contributed about $4 million. That includes $1.4 million from support services, $2.6 million from the contractual obligations budget and $119,000 in unspent funds from the Sustainability Fund. On top of those figures, budget writers also have estimated a $2.2 million sales tax bump.

 

Roughly $12.3 million of surplus could be used for any one-time expense. The additional sales tax represents ongoing growth, and could be used to hire additional employees. (See In Fact Daily, Jan. 30, 2013.)

 

The November defeat of a $73 million affordable housing bond created a six-year funding gap for such projects. Council members could chose to address that issue with more than $10 million in immediate funding for various affordable housing efforts.

 

Those include roughly $4.6 million in local match funds for tax credits for up to two projects on the short list to receive tax credits from the state to build affordable housing units. The most likely recipient of those funds among the Austin projects seems to be Skyway Studios 110-unit supportive housing project by Foundation Communities. The local matching contribution for that project is $1.8 million.

 

However, the affordable housing projects are all ranked by a point system that heavily weighs local contributions. Should the city decline to back any of the efforts, it would severely limit the chances of it being funded.

 

To make things more complicated, the Austin-area projects are up against other, similar projects throughout the state. Only one or two of the local projects are likely to be approved. Council members have been told that, taking all of this in to account, it is only necessary to set aside the sum of the two most expensive matches – a total of $4.6 million.

 

Nevertheless, seven eligible affordable housing projects are on Council’s Thursday agenda. If they had their respective druthers, Morrison and Tovo would spend the entire $10 million-plus on affordable housing.

 

“To me, that’s the big ticket question,” Morrison told In Fact Daily.

 

She added that she would support allocating the entire amount requested to affordable housing efforts. “Clearly the tax credit properties are very important, but I think that it’s extremely important that we continue on with (the general) efforts we have in affordable housing.”

 

Of the other possible destinations for the surplus, adding more staff to the planning and development review department’s overtaxed plan review division rang with many Council members. Morrison and Cole, along with Council Members Mike Martinez and Bill Spelman each told In Fact Daily that they would be supportive of the idea.

 

Tovo called for more information about the situation. Leffingwell did not mention it. Council Member Chris Riley was kayaking through the Everglades, and was unavailable to comment on any of the potential surplus destinations.

 

Almost all members of the Council said they’d be supportive of the costs associated with the successful 10-1 and civil service bond initiatives. These amount to varying figures, all less than $300,000 annually, for various reimbursements and salaries for future commissioners. Supporting the charter amendments is not really optional so it seems unlikely that anyone will oppose those expenditures.

 

It appears as though just under $400,000 in FY2013 and nearly $100,000 annually thereafter for cemetery operations and upkeep will go forward for the simple reason that Council members are legally obliged to approve it. The contractor who was doing the job has quit under murky circumstances.

 

Several Council members indicated that they would support a $250,000 one-time request from the Arc of the Capital Area, which provides services to people with developmental disabilities.

 

Leffingwell made a strong case for additional police forensics staff. “It’s not a tolerable situation,” he said. “They have 10 month delays.”

 

Martinez also supports the idea. Morrison and Tovo each hinted that they had questions about those expenses, as did Spelman. Spelman suggested that overtime savings from APD could be put toward that effort. “It seems to me that they ought to be able to fund the forensics lab out of the funds that we’ve already allocated to the police department,” he said.

 

Still, the only program that lacks any clear measure of support is Riley’s pitch to keep three of the city’s hike and bike trails open around the clock. This idea lost momentum when APD hung a $3.7 million public safety price tag on it (see In Fact Daily, Feb. 1, 2013).

 

Council members will take up each of these issues as part of their Tuesday work session.