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Council members consider funding to save local service economy

Wednesday, September 16, 2020 by Ryan Thornton

Without significant intervention, economists are predicting a “K-shaped” Covid-19 recovery trajectory, a scenario where “high-skill” professionals thrive while the service sector continues in a rapid decline.

City Council hopes to prevent the further demise of our local music and arts venues, restaurants, bars and child care centers with a new concept called SAVES, or Save Austin’s Vital Economic Sectors. If approved Thursday, a resolution will direct the city manager to prepare an ordinance with viable funding sources for the relief program by Council’s Sept. 29 meeting.

With the city already up against its budgetary limits, Mayor Steve Adler said the city will need “to look in the cushions” at every possibility, to find spare dollars for SAVES.

The draft resolution includes exploring federal, state or county assistance, General Fund reserves, certificates of obligation or contractual obligations, sales taxes, convention center reserves or interest, property tax abatements or dollars approved in the upcoming fiscal year budget.

On Tuesday, Council Member Kathie Tovo proposed an amendment with four additional revenue sources that flow into the General Fund and could net “upwards of $30 million” for relocation assistance for businesses displaced by the convention center expansion or relief for venues and bars affected by Covid-19. The amendment includes reallocation of temporary use of right-of-way fees, alley vacation sales payments, street vacation sales and encroachment fees into a new SAVES fund.

“We really need to turn over every stone in this process,” Tovo said. “I’m interested in contemplating things that we may have not thought were viable solutions in the past but in a time of hard choices we’re ready to make them now.”

Alternatively, Mayor Pro Tem Delia Garza floated the concept of creating philanthropic opportunities for tourists or residents. Garza offered the example of working with Airbnb so that visitors have an option to add an extra $5 for local service sector businesses when booking a reservation. Along those lines, residents could be given the opportunity to pay an extra dollar on a monthly utility bill or grocery delivery fee to help the local economy.

“There’s not enough money,” Garza said. “In fact, the state keeps taking away our ability to provide more services. I always am concerned about organizations thinking that it’s always the city that’s going to solve all of this because we really need state help, we really need federal help and we even more need philanthropic help if it’s possible.”

Given the uncertainty over how long the pandemic will last, Council Member Alison Alter said it may be better to consider funding sources like certificates of obligation that may be less volatile than sales tax. Ed Van Eenoo, the city’s deputy chief financial officer, acknowledged that the contraction in sales taxes has been significantly smaller than initially expected but added the caveat that the pandemic is also likely to last longer than anticipated. The city has so far received $12 million more than planned for in sales taxes, but it may ultimately have to give a portion of it back if local sales do not soon recover.

Council Member Ann Kitchen is proposing the creation of a Visitor Information Center Acquisition fund, with at least $10 million in Hotel Occupancy Tax revenue for purchase of at-risk music and arts venues.

“It is time for Austin to be creative. It is time for us to consider how the HOT provision could support local businesses unique to Austin, that promote tourism and the hotel and convention industry by defining the character and brand that is Austin,” Kitchen wrote on the Council Message Board on Monday.

Council members Leslie Pool and Jimmy Flannigan each offered amendments intended to expand the reach of the SAVES dollars. Pool specified that staging companies, artist service organizations and studio spaces are also key elements of the cultural ecosystem and eligible recipients. Flannigan clarified that crew workers and others who sustain the service industries – musicians, sound and lighting technicians, stagehands, designers and artisans – are all equally worthy of the relief funds.

Regarding Tovo’s proposal to reallocate Austin Transportation’s temporary use of right-of-way fees, Director Robert Spillar said the department is willing to work with the city manager to pitch in for the program.

“We directly invest temporary right-of-way fees – and many of the fees that we collect that were mentioned – to do everything from Vision Zero to discourage dangerous driving behaviors like driving while intoxicated, to running the signals and keeping the electricity on,” Spillar explained. “But we’ll be team players and work with the manager to figure out what we can do to help.”

Pool thanked Spillar for leading by example and for his “creativity and support for these efforts.”

“To the extent that this is temporary and we are pulling out all the stops in order to rescue and provide relief for sectors of the city’s economy that haven’t been touched in more than six months of trying, I think we should all be putting in everything,” Pool said. “And I’ll just remind everybody about the vast amounts of money, the hundreds of millions of dollars, that have come to our Transportation Department over the last two mobility bonds. There will be more coming to the Austin Transportation Department if Prop. B passes.”

This story has been corrected to reflect the term “high skill” is one used by economists, not the Austin Monitor.Photo made available through a Creative Commons license.

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