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Council agrees to maintain property taxes at nominal rate

Tuesday, September 10, 2013 by Michael Kanin

Following the lead of Mayor Lee Leffingwell, Austin City Council members moved quickly Monday to declare that they would leave the city’s property tax rate where it was for FY2013, at 50.29 cents per $100 of property tax valuation – the so-called nominal rate. They may, however, struggle to keep it there.


The nominal rate will raise more money for city coffers in 2014 than it did this year because property values have increased. Taxes are expected to increase by about $34 for the median value home, estimated to be about $185,000.


Monday’s action covered a wide swath of budget amendments proposed by Council members. Council is set to vote on what could be the final budget today, beginning at 9am.


Over nearly nine hours of work, Council members Monday added and subtracted funding for a host of programs. The fiscal consequences of their actions cascaded through city funds and departments. By the end of Monday, any FY2014 budget surplus was dwindling below the $500,000 mark. (Staff had shown them numerous ways to cut and they did eliminate a number of positions but then they added more back.)


That figure, however, could rise, depending largely on the work of city Parks and Recreation Department head Sara Hensley. Hensley is charged with the overnight task of putting together a phasing in of $4.75 million worth of additional parks funding pitched by local advocates over a period of years. That action could save Council members money in FY2014, but could also commit future councils to more parks funding in future years. (See below for more detailed explanation.)


Not to be lost in the budget scrum is a likely increase in Austin Energy customer bills associated with an increase in funding for solar rebates and energy efficiency programs. The solar program increase–an average charge of about 30 cents per month for a 1000KW customer– comes thanks to Council action urged by Council Member Chris Riley.  His proposal would increase the utility’s community benefits charge to cover $3.1 million for that program. Austin Energy Chief Financial Officer Ann Little told In Fact Daily that, should Council members ratify the change, average monthly bills would rise by roughly $1.11. (This paragraph has been corrected after receipt of new information.)


Meanwhile, Council members did not vote to increase Austin Water Utility bills to pay for a reallocation for $1.3 million for the city’s sustainability fund. Instead, they instructed the utility – pending final budget approval – to cut its reserves from 62 days to the minimum of 60 days of coverage. That move, coupled with a reduction in health insurance costs of more than $230,000 should cover for the change in funding.


Civilian employees, who had hoped to get a three percent salary increase, will instead have to settle for 1.5 percent plus a flat $750 figure added to their base pay. Though union reps had pushed for the full three percent, they appear satisfied with this compromise.


However, as it became apparent to Council members that they would need more revenue to balance the FY2014 budget, they voted to push off the $750 portion of the civilian wage increase by six months, an act that will save $1 million this coming year.


Over the past week, Mayor Lee Leffingwell has pressed both in the media and from the dais for his colleagues to hold the tax rate at the nominal figure. Council unanimously agreed to do so before starting the process of adding and cutting items. He was on the losing end of numerous 5-1-1 votes Monday, with Council Member Bill Spelman off the dais.


Spelman, who was slated to teach his first class of the fall semester Monday afternoon, presented a PowerPoint he shared with In Fact Daily last week. (See In Fact Daily, Sept. 4.)  With it, he made the argument Monday that city spending has risen precipitously, and that the bulk of that spending was on public safety. Spelman’s argument, however, stuck to the idea that the Austin Police Department was disproportionally responsible for the increase (see below.)


Spelman told his colleagues that he would not vote for any increase in expenditures. He will return to the dais this morning.


That could set up a much more contentious debate over spending increases. Spelman will join Leffingwell today as a hesitant block as Council members try to take final action in what has been a contentious budget season. They will need to convince other colleagues to join them if they are to have much impact on the budget overall.

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