Budget: Staff says higher taxes needed
Even though Deputy Chief Financial Officer Ed Van Eenoo has already held 13 separate budget sessions and several retreats with City Council as well as numerous other meetings with boards and commissions and interested citizens, budget season begins in earnest today.
The bottom line for Austin taxpayers: A taxpayer who is not a senior citizen and who owns a median-priced home can expect his or her tax bill to increase by about $9.84 per month for the 2018 fiscal year, under the proposal Van Eenoo will present to Council this morning. The value of a median-priced home is now $305,510, up from about $278,000 last year.
Van Eenoo gave journalists a peek at the proposed Fiscal Year 2017-18 budget on Tuesday, so we could give you a peek as he is presenting it to the Council today. Staff anticipates Council will approve the final budget Sept. 11-13.
Civilian city employees can expect a 2.5 percent pay raise for the upcoming year, if Council approves the budget staff is envisioning. In addition, the city will pick up a 4 percent increase in employee health insurance premiums, but employees will also see a 4.7 percent increase in their premium contributions, Van Eenoo said.
In line with Council’s directive to increase pay for those on the bottom of the pay scale, the city will increase its lowest wage from $13.50 per hour to $14.
The tax rate is anticipated to be 44.51 cents per $100 valuation, up from 44.18 cents for the current year. This represents the current rollback rate, the highest rate the city can charge without the possibility of triggering a rollback election.
The city’s property tax bill on a median-priced home is estimated at about 1.6 percent of median family income, a decrease from last year’s 1.7 percent.
For the same homestead, the overall tax bill from all entities will increase by $531 next year, mostly because of increased taxes paid to the Austin Independent School District. Van Eenoo said AISD taxes will increase by $319 for the average homestead. And because the state recaptures more money from AISD each year, those taxes will continue to go up until the state changes the way it funds schools.
Nevertheless, Van Eenoo said the city is well aware that the Texas Legislature, currently meeting in special session, is likely to limit cities’ authority to raise taxes. One bill would set the rollback rate at 4 percent and another would set the rollback rate at 6 percent, so it seems likely that they might arrive at 5 percent. This would do nothing to cut the school district taxes however, he noted.
For the first time this decade, Austin Water Utility will not be raising its rates for the upcoming year, and although Austin Energy is not raising its rates, it will be collecting approximately $3.22 per month on the average bill for increased power supply and regulatory costs, Van Eenoo said.
In other years, Council has been able to add numerous items to the budget. This year, Van Eenoo said he can only offer it the chance to add about $5 million – unless it decides to cut something that is already funded. Mayor Steve Adler has said that Council members can add items to the budget concept menu without co-sponsors until Aug. 23. After that, they will need co-sponsors for their items.
Representatives of police officer, firefighter and EMS employee unions are currently negotiating with the city, but they are not expected to reach a final agreement until late September, Van Eenoo said.
In an overall budget of $3.9 billion, General Fund operations account for about 25 percent. That includes police, fire and emergency medical services, which are funded by taxpayer dollars, as well as parks, libraries, transportation, public works, watershed protection and the other things that all cities provide.
The $3.9 billion total also includes some things that only a few cities provide, such as electric service, water service, and trash and recycling pickup. In fact, Austin Energy accounts for about 32 percent of the overall budget and provides the city with millions of dollars every year to fund those other programs, such as parks and police. Austin Water, which also gives the city a dividend from its earnings, accounts for about 15 percent of the budget.
Last year, the city transferred $108 million from Austin Energy and $42.9 million from Austin Water to pay for General Fund items. Van Eenoo said he expects the transfer from the two utilities to go up about $4 million this year.
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