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Council kicks off budget process grappling with affordability issues

Friday, April 19, 2013 by Michael Kanin

With their first swipe at the city’s prospective fiscal year 2014 budget, Austin City Council members took aim Thursday at local affordability issues, the Austin Police Department’s force strength, and the city’s apparent inability to offer 3 percent raises to staff for at least four fiscal cycles.


Deputy Chief Financial Officer Ed Van Eenoo and Austin’s go-to consulting economist Jon Hockenyos assumed their traditional roles at a Thursday work session. There, Hockenyos laid out a relatively pretty financial forecast for Austin just before Van Eenoo illustrated a conservative fiscal plan for the city.


Their discussion kicks off the city’s formal budget process – a civic occasion that always comes with the potential of a property tax increase. According to city figures, the rollback rate – the maximum allowable without a tax election – for the owner of a $200,000 home would result in a 2014 tax bill of $1,031.40. For a $300,000 homeowner, that figure would rise to $1,574.10; $2,062.80 for a $400,000 home and $2,578.50 for a $500,000 place.


Those figures all represent the city’s portion of a property tax bill. Travis County or Williamson County, AISD and the health care district also assess taxes on homeowners.


As In Fact Daily reported yesterday, the expenditure side of this year’s budget is a fuzzier picture than it has been in the recent past. That is because of ongoing contract negotiations between the City of Austin and the three unions that represent Austin’s public safety officers.


Council Members quickly picked up on that point. Council Member Laura Morrison wondered when city management might be able to clear the picture. Deputy City Manager Michael McDonald responded that negotiations between the city and the unions were going well.


“Certainly our goal is to try and get those contracts completed around the time – (or) shortly thereafter – the City Manager presents his budget so you will have that information going in to August,” McDonald said before hedging back a bit. “Again, that doesn’t necessarily mean that can occur but that’s certainly our goal.”


Hockenyos’ report amounts to an annual contextualization of the city’s fiscal policies. This year, he pointed to massive growth in multi-family housing – a total of 7,584 units permitted in 2012. This point registered with most Council members.


Mayor Pro Tem Sheryl Cole put her thoughts bluntly. “I have some concerns about whether that is a reflection of a lack of affordable housing within the city,” she said.


Hockenyos replied in the affirmative. “Yeah, inevitably, it’s a portion of it,” he said, before reminding Cole that, “affordability is a complex calculation.”


Council Member Mike Martinez suggested that Austin’s focus on density – and the formalization of that policy – may also have brought on the multi-family housing boom. “I don’t want us to be quick to dismiss the policies that we’ve imparted as a Council as to the effect that it might have on the number of rental units that we’re seeing at an all-time high,” he said. “When you enact ordinances like McMansions – and I’m not saying it’s wrong to do that…just (that) we did it – I think it has that effect where, if you’re younger it’s going to cost you more to build that dream home under certain parameters and so you might wait longer.”


Martinez continued. “The other thing is creating core transit corridors and vertical mixed use – all of those things are factors in my mind in what we see in this spiking trend,” he said.


Spelman’s pitch for a change from Austin’s use of the 2.0 police officers for every 1,000 residents ratio is a familiar one for any Council observer who has taken in this process over the past couple of years. This year, Council Member Chris Riley, whose push for 24-hour hike-and-bike trail access brought on an APD call for even more officers, joined him.


“I’ll…point out that, regardless of the merits of the 2.0 per thousand metric, I don’t think that the proper metric is 2.0 per thousand plus something extra for trails that are open for 24 hours,” he said.


Riley’s statement was a reference to double counting. Spelman explained it to In Fact Daily. “We got a couple of trails which we want 24-hour staffing for, San Diego’s got other needs, Tucson’s got other special needs – that all ought to be embedded in…whatever metric you use.”


Spelman carefully noted that his repeated calls for a comprehensive and detailed presentation by APD of its operations and needs would not result in a less safe city. Rather, he suggested, such a business-style argument would make the department more efficient and could free up additional city resources.


City Manager Marc Ott and McDonald continued to defend the city’s approach. “Two per thousand has been in place for a while, and when you look at some of the stats – the metrics – Austin seems to, comparatively speaking, do pretty well,” said Ott.


Look for the discussion to continue throughout the budget process.


Council members also homed in on a graph presented by Van Eenoo that shows their inability to offer three percent across the board raises for city staff. “I think the assumption is pretty clear – we shouldn’t be negotiating at three percent,” said Martinez. “If that’s what we know now, that shouldn’t be our starting point…That was, to me, eye-opening. I’ll just leave it at that: it was eye-opening.”


Changes in this year’s budget process allow for Council members – and the general public – to view departmental budget presentations on-demand via the internet. Those post on April 25.


Council members are set for a detailed, department-level budget discussion on May 2. The process will conclude mid-September with a vote on both the budget and the city’s property tax rate.

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