Adler urges caution on budget

Despite Austin’s robust economy, City Council is facing budget season with difficult decisions ahead. Because of commitments made by Council when members voted on the current budget, there’s little room in the 2017 budget for increased spending or further property tax exemptions.

After hearing a preliminary forecast from the city’s budget staff on Wednesday, Mayor Steve Adler told the Austin Monitor, “Based on the forecast that’s presented by the staff, the dollars are tight. If we go up to the rollback rate, which is the highest we could go, we’re basically on top of the forecasted expenses (in the city).”

By increasing the tax rate to the rollback rate, which is the highest rate the city can charge without facing a rollback election, and factoring in sales tax revenues, fees and other revenues, the city would bring in an additional $56 million.

Chief Financial Officer Elaine Hart said the financial services staff always makes its projections based on very conservative analysis and that a variety of circumstances change before staff puts out its final budget document in the summer. At this point, she said the city would have an extra $2 million to address other cost increases.

Adler pointed out that a 5 percent increase in the general homestead exemption would cost an additional $9.1 million and that additional spending for Development Services as outlined in the Zucker Report would cost $1.1 million. Various Council resolutions about increasing health and human services and social services would cost an additional $8.3 million. So it’s clear that some of this won’t be happening.

Although the financial staff used 2.4 percent as a base city employee salary increase, Hart said the number could be anywhere between 2 percent and 4 percent.

Deputy Chief Financial Officer Ed Van Eenoo told Council that Austin’s sales tax has grown by 5.4 percent so far this fiscal year, less than the projected 5.7 percent. That means there is $600,000 less in city coffers than projected when the budget was written last year.

Van Eenoo asked Council to let the budget staff know whether they should lower their projections for future sales tax growth to 5.1 percent, the more conservative figure.

Adler and Mayor Pro Tem Kathie Tovo both said it would be a good idea to use 5.1 percent.

Nevertheless, several Council members expressed their commitment to increasing funding for social services. Council Member Delia Garza told her colleagues that she would not support an increase in the homestead exemption because it would not generally be beneficial to residents of her district.

Council Member Sheri Gallo said, “I really believe the city can impact affordability with reducing utility bills and taxes — or at least holding them the same. … That will be my goal. It’s also my intent to do everything I can to help seniors and the disabled population.”

Gallo said she supports an increase in the homestead exemption for homeowners over 65 to match the increase in property values.

Tovo and Council members Greg Casar and Ann Kitchen said they want to do more to assist the homeless population.

Council Member Ora Houston said she has received several complaints from people who had inherited homes from parents and grandparents but could not afford to live in them because of property taxes. The heirs receive a shock when they get their tax bill and realize how much higher it is than what their parents or grandparents were paying.

Houston later told the Monitor, “Anybody that’s over 65 realizes at some point they’re going to die and then the family, daughter, grandchildren, they’re not going to be able to live in the house because they can’t pay the taxes. … People don’t think about it because they don’t like to think about death, but wherever you are in the city, your child can’t come in there … and have the senior homestead exemption. If we could just do something to just try to minimize the tax hike,” it would help a lot of residents.

Van Eenoo told her that he wasn’t sure that the city could do that and would have to check with someone in the law department for advice.