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County regroups, contemplates upcoming budget

Wednesday, May 20, 2020 by Jessi Devenyns

Budget season is well underway at Travis County. However, since the Travis County Commissioners Court approved budget guidelines in February, the coronavirus crisis has upended the initial projections from the county’s Planning and Budget Office.

Three months ago, the budget forecast anticipated a $22.7 million increase in revenue for 2021. Now, revised projections show the county will have a $35.5 million shortfall for the upcoming fiscal year. To help offset this impending deficit, county staffers are looking at cutting internal programs as well as potentially increasing property taxes for county residents.

In the forecasts presented to the Commissioners Court on May 19, the Planning and Budget Office noted that for every half percentage point of reduction in the tax rate, there’s a $3.4 million reduction in tax revenue. If the county is able to pursue a property tax rate increase at 6 percent, the budget shortfall will be reduced to $20.2 million. If the property tax rate is ratcheted up at an 8 percent increase, the budget shortfall will only be $8 million.

Currently, there is a debate over whether the county will be able to designate the property tax increase at 8 percent without approval by voters. After Gov. Greg Abbott declared a statewide disaster on March 13, legal experts opined that he activated a condition in Senate Bill 2 allowing local governments in the year of a disaster to designate the property tax rate increase at 8 percent. However, there is still uncertainty as to whether local governments will actually be able to implement this rate without an election to approve the rate hike.

“We believe we can use that rate based on the governor declaring a disaster,” Travis County Budget Director Travis Gatlin said. Julie Wheeler with the Intergovernmental Relations Office echoed his opinion, saying, “The statute is pretty clear that we are within our bounds to do so.”

Gatlin told the Commissioners Court that the final tax rate for the next fiscal year will have a pronounced impact on the amount of cost-cutting the county has to do internally.

While the county has already taken $10.3 million out of its anticipated expenditures for this year, there is still a gulf of financial deficit to bridge. Although there are many unknowns in the effort to craft a balanced budget, Gatlin said, “We’re going to do our very best that no filled positions become eliminated.” Instead, Travis County enacted a hiring freeze from April 14 to Sept. 29. In tandem with the hiring freeze, the county is halting its salary increases and health insurance rates for current employees. As personnel costs account for over half of the county’s expenditures, that will save $18.3 million for Travis County; health insurance is a $4.1 million in savings and the employee salary freeze accounts for $14 million.

Additionally, the county will free up $1 million by reducing departmental travel and training budgets by 25 percent. Gatlin said there is also an effort to cut costs by reducing departments’ office supplies budget by 25 percent to save an additional $1.2 million.

The county had already braced for a future under the Legislature-mandated 3.5 percent rollback rate cap enacted last October. As property taxes make up 77.4 percent of the county budget, the budget was already designed “conservatively” in order to account for lost revenue as compared to previous years.

Jessica Rio, the county executive in the Planning and Budget Office, said the county is currently in a “very good position,” but, “What we’re looking for is the utmost flexibility so we can bring you a balanced preliminary budget in July.”

To offer that flexibility, the commissioners voted unanimously to authorize the Planning and Budget Office to prepare a balanced preliminary budget using the necessary increase in tax rate after accounting for the impact of internal cost-cutting reductions. County staff recommended designing a budget for 2021 based on an 8 percent increase in the tax rate.

“We’re planning for the worst but hoping for the best,” said county spokesperson Hector Nieto, who clarified that the Commissioners Court will give the final direction on the tax rate.

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