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Eckhardt talks revenue caps, Palm School negotiation in State of the County address

Friday, February 21, 2020 by Chad Swiatecki

At several turns during her State of the County address Thursday, Travis County Judge Sarah Eckhardt reminded listeners that in many respects, the county operates as an extension of Texas’ state government. The pluses and minuses of that framework, she said, are numerous.

Among the challenges are finding ways to manage land use in fast-growing rural areas, or funding various efforts in transportation, health and human services, and certain services related to law enforcement without revenue from local property taxes. “One thing about these constraints is it makes county government super-creative,” Eckhardt told interviewer Judy Maggio, noting that the Commissioners Court has been forced to look in some unusual places to find funding for increased transportation capacity.

“We are finding ways to make investments in transportation around populations with low opportunity and so we’re making it a health and human service issue rather than a transportation issue,” she said. “We look for low-opportunity census tracts where we pull down grants from the federal government and find other means of funding. I think toll revenue is a very appropriate revenue source for transit infrastructure.”

Throughout the hourlong conversation, Eckhardt touted the positives for the county: growing median incomes, low poverty rates and reducing the county portion of local property taxes for several years following the recovery from the 2008-09 recession.

She also expressed pride in the county’s creation of a public defender’s office, which was funded in part by a $25 million grant from a nonprofit aligned with assisting the indigent.

Returning often to the importance of programs for health and human services, Eckhardt said she’d like to add roughly $2.5 million to the county’s annual $22 million HHS budget so the county could expand and improve its services related to mental health and substance abuse. Her preferred funding source would come from the county’s plan to develop most of the historic downtown Palm School property – an idea at odds with the city’s plans to preserve the school and the green area surrounding it.

This divergence of views has put the two governments into early negotiations for a possible land swap that would likely involve the city’s property that includes the Travis County Expo Center in East Austin.

“We still believe there is significant economic value in that (Palm School) block and we could turn that significant economic value into long-term and deeper investment into health and human services,” she said.

“We’ve been working with the city on that and the city would like to see it as a park. There are two other parks immediately adjacent to it. I’m sure we can come to some sort of agreement and I’d like to invite the public sector in to help us look at how we could re-envision that corner and still find significant reinvestment in health and human services using that property.”

While praising work the county, city and assorted nonprofits have done to spin up job training programs aimed at filling more middle-skill jobs in tech, health care and skilled trades, Eckhardt said there are financial storm clouds ahead for local governments across the state. Those come from the recently passed revenue caps put in effect by the state, which limit the annual increase in property tax levies to 3.5 percent unless voters approve a higher rate.

Those limits are expected to translate into $33 million less revenue for the county over the next five years, and an effective end to the county’s practice of lowering its annual property tax levy rate whenever possible.

“With such a low cap now, the 3.5 percent, we will no longer be able to have a real-time reduction in tax rate as the economy gets better. We will need to reserve money in case we have an economic downturn because we don’t have the flexibility of an 8 percent rollback,” she said. “It’s a big problem for us. We’d assumed that by 2025 we’d have $33 million more in tax capacity without the 3.5 percent rollback. Now with the rollback rates we’re scrambling to figure out how to pay for stuff because we have $33 million less than our planning horizon anticipated.”

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