Monthly Archives: May 2014

1,070 Days And Counting – Let’s Urge The City To Fix The Problem!

By Bill Oakey – May 31, 2014

When KXAN aired their investigative report this week on staff shortages at the City’s 911 Call Center, I assumed that the problems with burned out workers, call takers putting citizens on hold, and high overtime costs for taxpayers were a relatively recent problem.

Sadly, I was wrong.  The Austin American-Statesman ran a story on June 27, 2011 with the headline, “An Emergency at the City’s 911 Call Center?”  Here are the first two sentences from that story:

“Austin 911 officials say they are so strapped for operators that they have routinely spent $1 million or more for overtime and for temporary workers to fill shifts, even as thousands of callers waited on hold sometimes for minutes at a time because no one could immediately answer.”

“The city has not added any new operator positions to a staff of about 200 in nearly a decade, despite nearly 25 percent more calls to the center and repeated requests from call center managers. ”

Nearly three years later, just this past week, we heard this from Robert Maxwell at KXAN:

“Records show Austin 911 paid out nearly $1 million in overtime and for temporary workers this fiscal year. Some of the overtime was aimed at curbing the staff shortage problem due to scheduling issues or staff calling in sick.”

There is talk swirling around in some quarters that a new report to address the problems may be coming.  KXAN has seen a draft of this report, but no one at City Hall seems to know if or when it will be released.  Meanwhile, the City Manager’s formal budget proposal is due to be presented to the City Council in late July.

This morning at the Citizens Forum at the City Council, I made an attempt to jump-start some relief for the beleaguered 911 Call Center workers and a chance at better efficiency for the taxpayers.  Here is a KXAN website report on that.  The story should run on this evening’s 6:00 PM news.  (Saturday)

We need to rally our friends to contact the City Council and ask them to do a budget amendment from surplus funds to hire some new 911 Call Center staff.  If you agree that 1,070 consecutive days is long enough to wait for this critical public safety issue to be resolved, you can email all 7 City Council Members here with a single click.

Another Huge City Management Failure – The 911 Call Center Fiasco

By Bill Oakey – May 29, 2014

Update: Please see City staff response at the end of this posting.

In two recent blog postings, I pointed out the fact that the City operated from last summer through the end of December with over 900 vacant staff positions funded in the budget.  And yet, here we are eight months into the fiscal year with the 911 Call Center seriously understaffed.  The workers are so severely stressed that they have a 20% turnover rate for call takers and 25% for dispatchers.  Overtime costs are soaring, citizen wait times for emergency calls have increased, and the City Manager has allowed the situation to continue.

For the past two years in the budget process, the Emergency Communications Division, which is under the Police Department, has requested more staff.  Both times the requests were denied. Now, as we approach the third budget cycle, we learn that finally, a new City report is forthcoming that will highlight the seriousness of the issue.  The Public Safety Commission will include this topic on their agenda at their June 2nd meeting.

On yesterday’s news broadcasts, a KXAN investigative report based on seven months of research spelled out the troubling details.  You can watch the KXAN video and read about it here.  The broadcast revealed high amounts of staff absences for sick leave and stressful overtime requirements.  It is not cost effective to operate a critical public safety office in such a manner. Having to constantly rehire and train new people does not serve the taxpayers well.  Especially in an environment where over 900 citywide staff vacancies were fully funded in this year’s budget.

It is long past time for someone at City Hall to step up and deal with this problem.  How much worse does it have to get before they take action?  This issue illustrates one more reason why we desperately need new leadership, both at the management and City Council levels.

Update: City Staff Unmet Service Demand Dated May 20th

As part of the annual budget process, City financial staff has made a recommendation for 61 new non-sworn police staff positions.  These include some new staff for the 911 Call Center, although the exact number is not specified.  See Page 33, Item 5 in the staff recommendation. This provides hope that some relief may be coming in October.  In the meantime, at the Citizens Forum on Saturday, I will ask the City Council to transfer at least $1 million in surplus funds to pay for new staff between now and the end of September.

Hold On To Your Wallets – Here Comes ACC!

By Bill Oakey – May 28th, 2014

When it comes to local entities that impact your property taxes, Austin Community College often flies under the radar.  They do not garner nearly the publicity nor the public scrutiny that Central Health, Travis County, or the City of Austin gets.

But now the cat is out of the bag and all of that is about to change.

Richard Rhodes, the President and CEO of ACC is calling for a November bond election to the tune of just under a half billion dollars – $475 million, to be exact.  This article in today’s Austin American-Statesman tells the story.

It’s as if all of the dictionaries in all of the libraries at ACC somehow had the word “affordability” stripped out of them.  Even if that were the case, where has Mr. Rhodes, the advisory panel that recommended the huge bond package, and the ACC Board of Trustees been lately?  If they have been anywhere near the City of Austin, they must know that taxpayer here are tapped out.

In the laid back days of the 70’s and 80’s, the governmental entities had a standard process for bond proposals.  They would appoint a citizens advisory panel and ask for suggestions on what would make a good bond package.  The wish list items would quickly pile up, and the committee would recommend nearly all of them.  Why not, they figured.  Austinites always approve bond elections.

The tide began to turn last year.  AISD was shocked into reality when half of their bonds failed at the polls.  This year, the public’s appetite for big spending projects is even less than it was a year ago.  Affordability has risen to the top tier for virtually every candidate running in the new 10-1 district City Council races.

The smartest thing ACC could do is cut their construction and renovation wish list by half or two-thirds.  Then it might have some chance of passage.  Otherwise, they will be set back by another year or longer, causing their most critical needs to be delayed.

What ACC is up against is the very simplest of all economic realities.  People can only afford what their incomes and their budgets will allow.  In a local environment where realtors are telling their neighbors that far too many Austinites are having to sell their homes because they can no longer afford to live here, everyone needs to sit up and take notice.

Since ACC, for whatever reason, has not gotten the message, you can help with that right now.  Send an email message to Richard Rhodes, their President and CEO, using the link below:

mailto:rrhodes@austincc.edu

Huge Rate Increase Could Cripple Austin’s Water Utility

By Bill Oakey – May 21, 2014

If you have been recently stunned by the tax appraisal notice on your house, how would you feel about a 30% increase in your water rates next year?  And then, how about a new “drought fee” on top of that base rate increase?  As hard as that sounds to swallow, it is actually possible unless the City Council listens to citizen appeals to take other measures to help the Water Utility.

On May 7th, the Austin American-Statesman published a sobering article that details the scenarios for what seems like unimaginable rate shock coming to City water customers.

The utility plans to increase its base water rates next year, resulting in a monthly bill of $49.12 for the typical homeowner, up from $38.35 this year — a 30 percent jump.”

And that’s just the beginning.  While you are reading this, a new committee is reviewing options for calculating the new “drought fee” that would accompany the base rate increase.  Below are the five options being considered.  Be sure to keep reading to the end, because there are some ways that the City can avoid clobbering the ratepayers with such punitive and onerous rates.

Options for the Proposed Drought Fee

Option 1

Fee of $1 (Stage 3) or $2.75 (Stage 4) for every 1,000 gallons that any customer (a home or business) uses.

Fee for typical homeowner (who uses 7,000 gallons a month): $7 (Stage 3) or $19.25 (Stage 4)

Total water bill: $56.12 (Stage 3) or $68.37 (Stage 4)

Option 2

Different fees for each type of customer (single-family homes, apartment complexes, smaller businesses and larger companies/agencies) for every 1,000 gallons used.

Fee for typical homeowner: $5.18 (Stage 3) or $18.41 (Stage 4)

Total water bill: $54.30 (Stage 3) or $67.53 (Stage 4)

Option 3

Similar to Dallas’ program. For residential customers, fee would kick in only if they use more than 11,000 gallons per month. All nonresidential customers would pay a fee regardless of how much water they use.

Fee for typical homeowner: $0 (Stage 3 or Stage 4)

Total water bill: $49.12 (Stage 3 or Stage 4)

Option 4

Different fees for homes and businesses; fees also based on amount of water used.

Fee for typical homeowner: $5 (Stage 3) or $22.50 (Stage 4)

Total water bill: $54.12 (Stage 3) or $71.62 (Stage 4)

Option 5

Different, flat fee for each type of customer (single-family homes, apartment complexes, smaller businesses and larger companies/agencies).

Fee for typical homeowner in Stage 3: $4 (Stage 3) or $12 (Stage 4)

Total water bill: $53.12 (Stage 3) or $61.12 (Stage 4)

How Can the City Help the Water Utility and Avoid the Devastating Rate Shock?

Earlier this year, the City announced that there was a $14.2 million budget surplus in the General Fund.  Readers of this blog rallied to the defense of taxpayers and convinced the City Council not to spend this surplus.  I have made a proposal to the City Council, asking them to transfer the budget surplus to the Water Utility to help hold down any forthcoming rate increase.  (See the previous blog entry, “A Possible Breakthrough for the City’s $14.2 Million Budget Surplus.”)

In addition, the budget surplus should be even higher by the time the City Council begins budget deliberations early next month.  I have asked the Council to itemize the large amount of leftover funds from 900 unfilled staff positions that were funded in the current year’s budget.  Unless most of those positions have been filled since early January, then the City should have an additional surplus that could be transferred to the Water Utility.  For long-term accountability to the taxpayers, I have recommended that the City follow the policies of other cities, such as Honolulu and Portland.  These cities do not allow individual departments to stockpile large amounts of money from unfilled positions.  The danger is that the money can easily be spent for other projects.  We need better oversight of taxpayer money, and the City Council needs to exercise its authority over the budget process.

The final option that the City can use to help the Water Utility is to sell some unused and unneeded land that the was purchased by the utility.  Why should ratepayers be saddled with huge rate increases, while the hot summer wind blows over many acres of unused property that the City could sell for a handsome profit?

How Does the Fitch Bond Rating Service Feel About Our Water Rates?

The Fitch Bond Rating Service has made their position clear in their May 19th review of the Water Utility’s bonds.  Below is an excerpt from their report:

DECLINING RATE AFFORDABILITY

“Fitch considers AWU’s combined water and wastewater rates somewhat high relative to income levels of city residents, and in comparison to other large urban systems. Although rate hikes on a combined percentage basis have been fairly modest over the last several years, the city’s total monthly residential bill currently amounts to about $88, equal to an above average 2.1% of median household income.”

“The Rating Outlook for the series 2014 bonds and outstanding parity water and wastewater revenue bonds is revised to Negative from Stable.”

Now, we just have to wonder…Is anybody down there at City Hall listening…?

City Council To Host Citizens Forum – Saturday May 31st

By Bill Oakey – May 20, 2014

Austin taxpayers have a rare opportunity to let their voices be heard at a special Citizens Forum hosted by the City Council.  We are only about 10 days away from the start of Budget Season.  So, we need to let them know that “holding the line” does not mean keeping the tax rate within a fraction of a penny of where it is now.  We need full accountability on what the true budget surplus is, including the original $14.2 million plus the money left over from all those vacant staff positions.  And we should ask them to use that surplus to cover the revenue shortfall in the Water Utility – instead of passing a gigantic rate increase that would do nothing to encourage conservation.

My suggestion is to bring your tax appraisal notices to the forum.  Bring your utility bills and your property tax bills.  Let the City Council know that “business as usual” will not be tolerated in the upcoming budget.

We have Council Member Kathie Tovo to thank as the sponsor of this Citizens Forum.  Last month, she was the recipient of the AustinAffordability.com “Above and Beyond” award.   Below you will see her picture with the award, followed by the official announcement of the Saturday forum.  You and your neighbors and friends can contact the City Clerk’s office (512-974-2210), and make plans to fill the Council Chambers on May 31st with a resounding message on affordability.  Let’s tell them with a unified voice that the current spending path is simply not sustainable.

Kathie Tovo With "Above and Beyond" Award

Kathie Tovo With “Above and Beyond” Award

CITY COUNCIL TO HOST CITIZEN FORUM SATURDAY, MAY 31

Forum will be held at 9 a.m. Saturday, May 31, 2014.

The Austin City Council will host a three-hour Citizens Forum, 9 a.m. Saturday, May 31, 2014, at Austin City Hall (301 W. Second St.).

Council invites the community to come and speak directly about any topic or issue they feel the Council needs to hear about or address.

“City Hall and city government should be accessible to everyone,” said Council Member Kathie Tovo. “Austinites with daytime jobs and those with children cannot always make it Downtown during the week to make their voices heard. I’m committed to creating opportunities for everyone to be able to address the Council on issues important to them.”

Tovo’s co-sponsors agree that having a weekend meeting could be more accessible for some people who cannot attend the regular Thursday Council sessions.

“We recognize there is a need for alternative opportunities for all constituents of Austin to be able to be heard by their City representatives, and I look forward to hearing from new voices as a result of this Citizens Forum,” Mayor Pro Tem Sheryl Cole said.

“We all recognize that attending Council meetings on Thursdays isn’t possible for everyone who works and has a family, but might want to come speak on an issue,” Council Member Mike Martinez said. “We should be taking steps like this to ensure that every citizen has the opportunity to address Council and make their voices heard.”

There are two ways residents can sign up to speak:

  • General Citizen Communication:  There are 20 slots available under General Citizen Communication and require registration in advance of the meeting. Sign up begins May 9 either by contacting the City Clerk’s office at (512) 974-2210, in-person at City Hall or by email at citizens.communication@austintexas.gov. Pre-registration closes May 23. These registrations will be posted on the agenda and citizens will be asked to provide a topic in advance to allow Council to engage in a full discussion of the topic. The same rules regarding registration during regular council meetings apply.
  • Open Citizens’ Communication: Participants may register using the City’s Speaker Sign-up kiosks located in the lobby of City Hall.  Participants may also register in person beginning at Noon on Wednesday, May 28 through the day of the forum. The number of speakers is limited by the noon meeting deadline or until all the speakers have spoken. Council will only be able to listen to these topics and not engage in a dialogue with the citizens.

For both General Citizen Communications and Open Citizens’ Communications, speakers have three minutes, and no time can be donated to be used by someone else.

Travel Resources:

The address for City Hall is 301 W. Second Street.  The following Cap Metro routes offer downtown service: 3, 4, 17, 22 or 801. Find schedules and complete route information at capmetro.org or by calling 512-474-1200. Get step-by-step travel directions for using Capital Metro routes with Trip Planner.

The Big Set Of Numbers That Don’t Add Up – City Projects 33.6% Property Tax Revenue Increase!

By Bill Oakey – May 19, 2014

The City of Austin has released a very strange set of numbers.  Maybe you can help me figure them out.  if it’s just me who’s crazy, then the rest of you can breathe easier and I’ll go find something else to do.

On April 24th, the City’s financial staff released a Five Year Financial Forecast for all City departments.  The strange phenomenon that I discovered involves the number of new employees projected to be added annually for each department.

Let’s Look at How the City Introduces the Numbers

Here is a brief introduction to the staffing projections, taken from Page 7 of the report:

Staffing Projections

“Staffing costs represent the single largest component of the City’s Budget, and an accurate projection of future staffing levels is essential to forecasting expenditure growth. This section details existing positions and projected changes in the City’s Financial Forecast. ”

My comment:  Take careful note of the portion that I underlined in the first sentence.  You will want to come back later and read it again.

Now Let’s Look at Their Description of the Numbers

From Page 7, Third Paragraph:

“Staffing projections for General Fund departments do not include any positions required to implement new programs or enhance service levels. However positions have been included to address service demands arising from newly annexed areas, a growing population, and the opening of new facilities.”

My comment:  Those sentences sound a little fuzzy.  But not nearly as fuzzy as the numbers.

Now Let’s Take a Look at the Numbers…Click each link below:

Five Year Staffing Projections – Page 8

Five Year Staffing Projections – Page 9

Here Comes the Brain-Twister…Do These Numbers Make Any Sense?

The following City departments are projected to see no change at all in staffing levels for six years in a row, including this year:

Animal Services, Fire (Non-Sworn), Health & Human Services, Parks & Recreation, Planning & Development Review…(Really?), Police (Non-Sworn), Austin Convention Center, Economic Development, Juvenile Case Manager Fund, Neighborhood Housing & Community Development, Parks & Recreation – Golf, Traffic Safety Fund

These City departments are projected to see no change in staffing levels over the five years from 2015 – 2019:

EMS (Non-Sworn), EMS (Sworn), Austin Transportation –  Parking Management, Austin Transportation – Transportation Fund, Aviation, Child Safety, Public Works – Capital Projects Management, Public Works – Transportation Fund. (Note: The last two departments each lose staff from 2014 to 2015)

Of course, there are several departments that are projected to see increased staffing levels. These include the new downtown library, police and fire, Austin Energy and the Water Utility. The Water Utility’s staffing numbers look pretty disturbing, considering the fact that Austinites have heeded the call for conservation and are using less water.  Even further usage reductions are forecast over the next five years.  And yet, the Water Utility plans to add 136.75 new positions, second only to the 187 for new police officers.  The forecast suggests that the drought will continue, but it blindly assumes that water restrictions will remain at Stage 2.  For an explanation of the projections for the Water Utility, see Pages 29 – 31 in the City report.

What’s the Bottom Line for You As a Taxpayer?

How About a 33.6% Increase in City Property Tax Revenue…

The official projections for tax, utility and fee increases do not look good.  On Page 17 of the report, you will see that home appraisals are forecast to increase by at least 5% each year.  You can see the ominous progression of increasing taxes here:

Five Years of Escalating Tax Increases

The most shocking thing about this chart is that it shows Austin’s total property tax revenue increasing a staggering 33.6%, from $355.3 million to $474.8 million!  The tax rate, which would cost you more even if it stayed the same, is projected to steadily increase. Then you have to pile on utility rate increases, a parade of add-on fee increases, and all the other area taxes that you pay.  As scary as that sounds, the stark reality is probably much worse.  If anyone believes the projections that all those City staff positions will remain flat for five to six consecutive years, can we talk about that bridge that I have for sale?

The best solution to this strange conundrum of numbers that don’t look reliable is to work with our new City Council candidates and ask them to commit to much better transparency and accountability in the whole process of budget, planning, audit and finance.  The oversight role of the City Council and their authority over the budget is crucial.

Beyond that, the current City Council should take a good hard look at whether they should continue to rely on the current City Manager, or send him on his way and appoint an interim manager to take his place.  A six month internal transition before the new City Council takes office might be the best first step to getting the City’s fiscal house in order.

Coming Monday: A Big Set Of Numbers That Don’t Add Up – Except To A Disaster Waiting To Happen

By Bill Oakey – May 16, 2014

If I had kids in the house, I would be having a good little talk with a fifth grader.  Sometimes fresh young minds can see things that are right in front of them that we can’t see.  In this case, I have stared at the same set of numbers several times, only to discover that they don’t add up.  The passing of the weekend will not cause those numbers to make logical sense, any more than rubbing my eyes and looking at them again could.

But I can tell you one thing for sure….

You are going to find them very interesting.

So, bookmark this blog.  If you are using a portable device, add it to your home screen as an icon.  (That nerd sitting next to you can show you how to do it).

Have a good weekend.  Don’t use too much water.  And don’t forget to pay your electric bill.

Try listening to the new album by Martina McBride…You won’t be able to listen to “Come See About Me” without wanting to get up and dance.

See you on Monday.

Could Austin Be Headed For Another Budget Surplus?

By Bill Oakey – May 14, 2014

Just two months ago, Austin taxpayers narrowly escaped a stance by some City Council members to dip into a $14.2 million budget surplus.  Thanks in part to the efforts of readers of this blog, citizens spoke out and the money did not get spent.

Now it appears possible that we could see an additional budget surplus, just in time for the annual budget discussions that will commence early next month.  The new surplus could arise from stepped up efforts to reduce the high number of staff vacancies still remaining in the current fiscal year’s budget.

In my message to the City Council on Monday, I urged them to cut back and regulate the number of unfilled positions.  Since then, even more information has come into focus on that issue.  The City Manager and his top budget staff have been very inconsistent in their handling of vacancies, and in their response to Council Members’ attempts to cut taxes by reducing them.

Last Summer’s Battle of the Bulge In the Budget

A great boxing match took place late last summer, when Council Member Mike Martinez took center stage on the issue.  See the Austin Chronicle article, “City Budget: Open Season On Vacancies,” from last August 23rd.  Martinez stepped into the ring, gunning for victory in one of the final rounds in the annual face-off with the staff.   But it may not have been an even fight.  Martinez was outnumbered and out-maneuvered, or so it seemed.  One by one, budget staff came out swinging, and they parsed the 930 citywide vacancies into categories.  Blow after blow was struck at the heart of any attempt to reduce the cost of the unfilled jobs.

The math that was used in that hot summer standoff conflicts with a new spin on essentially the same set of numbers, just five months later.  The official line from last August was that the City’s overall average vacancy rate was 5% to 8%.  On January 10th of this year, the same City Manager (Marc Ott) cited a vacancy level of 900 positions and labeled that number “quite frankly, far too high.”  This time a new kind of math pegged the vacancy level at 9.7%.  (A relevant paragraph from the City Manager’s January memo will be attached to the end of this posting).

But here’s what’s interesting.  When you peel back the surface coating of the numbers and look a little deeper, suddenly you see a whole new picture.  Between October 1st when the new budget took effect and January 10th, the needle had barely moved on the total number of vacancies.  So, at that point, a little over 25% of the fiscal year had passed without any of those staff funds needing to be spent.   Even if all of the vacancies were filled by February 1st, only two-thirds of the fiscal year would be left by then.  So, what happens to the leftover budgeted funds?

A hint can be found in the January City Manager’s memo…

Long-term vacancies not approved to be filled will be eliminated or repurposed in the upcoming budget process to meet other priorities.”

We can only wonder how much money is actually left over and “repurposed” each year.  Other cities have established reasonable levels of staff vacancies.  Portland’s is about 5%, according to this article in the Portland Oregonian.

What Will It Take to Finally Fix the Problem?

What will it take for all of this money that is being juggled around to be accounted for in a more transparent manner?  The answer can be summed up in one simple statement:

The City Council must exercise its authority over the budgeting process, and not concede another inch on a prudent set of fiscal directives to the City Manager.

Here are a few friendly suggestions on how they might go about doing that:

1. Ask for a full accounting of all unspent funds from vacant positions from all City Departments.  Consider asking for regular updates on a quarterly basis.

2. Label those funds and post them to the City’s website on a chart that the citizens can see.

3. Include in the same chart a listing of surplus funds from the previous budget from increased sales taxes and user fees.

4. Establish a clear policy on how leftover funds from vacant positions can be allocated.  The Council may decide that some departments have backlogs and should receive additional funding.  Or that some funds should be transferred to one of the utilities to hold down a rate increase.  Or set aside to reduce taxes in the next budget.  But, however the process is set, it should be much less fuzzy and squiggly than the system we have today.

The bottom line now is that we should be in line for a budget surplus in excess of the $14.2 million that was announced in March.  Hopefully, we will be allowed to see exactly how much it is and where it ends up.

The City Manager’s January Budget Memo

Below is the key paragraph on staff vacancies from City Manager, Marc Ott’s January 10th memo to Department Directors.  The subject of the memo was “FY 2015 Budget Planning.”

“Another area that we must closely examine in the months ahead is how we manage and budget for our vacant positions. As of the end of December, there were more than 900 vacant non-uniformed positions across City departments. This represents a City-wide civilian vacancy rate of 9.7%, which, quite frankly, is far too high. Nearly 400 new positions were approved by Council back in September with the adoption of the fiscal year 2014 Budget. It is imperative that these new positions be filled as soon as qualified candidates can be identified so that we can fulfill the many new initiatives and service enhancements to which we have committed. With respect to longer term vacancies, effective immediately, all positions vacant more than 180 days will be frozen and will require both ACM and City Manager approval to fill. This review process will remain in place at least through the end of June, when it will be reevaluated. Long-term vacancies not approved to be filled will be eliminated or repurposed in the upcoming budget process to meet other priorities. Moreover, I have directed budget staff to reassess how we budget for vacancies with an eye towards better aligning budgeted vacancy savings with actual long-term trends.”

Something Doesn’t Smell Right At City Hall – And We Need To Get To The Bottom Of It!

By Bill Oakey – May 13, 2014

I was enjoying the gentle breeze while waiting at a table outside Jo’s on Second Street last week when City Council Member Mike Martinez showed up for our meeting.   He introduced two new critical words into the Austin affordability discussion…

Vacant Positions

Mr. Martinez said he was concerned that City Manager, Marc Ott, had left too many vacant positions in the City Budget.  How many is too many?  Well, how about 900 of them?

As I mentioned in my recent blog posting, the City Council has a big problem on its hands, going into the new budget cycle that begins in earnest within a couple of weeks.  They need to double down on affordability if they expect to gain any hope of confidence among beleaguered taxpayers.  So, what are they doing with 900 vacant positions on the books?

Such a large number of vacancies can add up to quite a bit of money.  And once it’s in the budget, those funds can easily be shifted to other purposes by the individual departments.  As it turns out, this very same issue began brewing in the City of Honolulu in 2010.  In their case, it was 1,000 vacant positions that added up to almost $40 million.  See “City Budgets $38.8 Million for 1,000 Vacant Positions” in the Honolulu City Beat.

There was great debate in between the luaus, and it took their city three years to resolve the issue.  Questions were asked about why that much money was “borrowed” from the taxpayers, and whether some of it was being used as a slush fund.  After all, once money finds its way into the budget, people can always find a way to spend it on something other than what it was originally intended for.  As a veteran accountant, I can tell you that one can accomplish such a switch by changing an object code, a cost center, or some other designated code.

Last year Honolulu abandoned the practice of allowing individual departments to “manage” large sums of money budgeted for vacant positions.  Those duties were assigned to a centralized staff person, who now disburses unused funds for approved hiring purposes.  The funds are held in a provisional account.  And they don’t keep $40 million on hand.

While at Austin City Hall yesterday, I asked City Council Member Kathie Tovo to please look into this issue.  I also asked her one important question.  Can departments spend money allocated for vacant positions on other things?  Her answer was simply…

“Yes.”

I have also learned that some members of the City Council attempted to address this problem during last year’s budget deliberations.  As of last August 1st, there were 934 unfilled staff vacancies, with only 76 of them posted for applicants to apply, according to the Austin Business Journal.  So, in September the City Council approved the new fiscal year 2014 budget.  Some of them thought they had fixed the problem with the huge pile of taxpayer money being posted to the books as “unfilled positions.”

Come January 10th, City Manager Marc Ott sent a memo addressed to all departments heads.  In it, he states that there were no less than 900 vacant positions, and he concedes that is “quite frankly, far too high.”  What happened to the “fix” that the City Council thought they had done?

I concur with the Honolulu Council Member who had this to say about huge piles of taxpayer money being stacked up for vacant positions and potentially being spent for other purposes:

“In essence, it’s a no interest loan in favor of the city,” said Anderson. “The city is saying, ‘We took your money this year, no we didn’t use it, thanks a lot for letting us borrow it, and no you can’t have it back.”

As of today, we do not know what has happened to the extra money that was bottled up at Austin City Hall in early January.   But we do know that we paid for it in the property tax bills that we sent to the Travis County Tax Office.

I have asked the City Council for a full accounting from every department on the status of all funds originally allocated for vacant positions since the beginning of this fiscal year last October 1st.  And I have also asked them to consider adopting the Honolulu model of assigning the duties of disbursing vacant position funds from a centralized office.  That office should report the status of these funds to the regular meetings of the City Council’s Audit and Finance Committee.

I am reminded of the fishing trip that my parents took us on when I was a young child.  As we were about to leave the driveway, my mom asked me to do something.

“Billy, please run back in and grab the thermos bottle.  And rinse it out first.”  When I pulled the thermos bottle out of the cupboard and popped the cork off, I gagged and took a few steps back.  Somebody had put it away the last time when it was still full of milk.  Needless to say, it didn’t smell very good.

Something doesn’t smell right today down at City Hall.  And somebody needs to do something about it.

A Major Challenge For The Austin City Council: It’s Time To Double Down On Affordability

By Bill Oakey – May 11, 2014

The new City Council candidates have begun talking themselves and hearing from citizens about fresh ideas, bold reforms, and a new perspective that comes with district representation.  But affordability is one issue that should not be kept on ice until next January when the new Council gets sworn into office.

Many indications have come to light that the players in the upcoming budget cycle are not on track to deliver meaningful affordability-related results.  Below you will see the problems.  We need action on both short term and longer term efforts.

The City Manager Does Not “Get” Affordability

City Manager, Marc Ott, sent a memo to “Department Directors” this past January 10th.  Entitled, “FY 2015 Budget Planning,” some of its pronouncements do not bode well for taxpayers.  Direct quotes from the memo are included, along with my observations.

1. “In light of this renewed focus on affordability, we will institute new guidelines for the submission of unmet service demands. For the fiscal year 2015 budget cycle, unmet service demand requests in the General Fund will be limited to those that can be funded by new or increased fees or those that are of such high priority that your department would recommend reallocating existing resources to address them.”

Observation – The only type of fee that would help the typical taxpayer would be a user fee that is only paid by the person using a particular service.  The memo does not specifically address this type of “user fees.”  But every standard utility charge and every single add-on fee paid by Austin utility ratepayers has been jacked up for the upcoming budget in the Financial Forecast released by the City on May 8th.  (See Page 8).  These increases total up to $11.03 per month for a “typical homeowner.”

2. The City Manager continues to flaunt the highly misleading use of the term “tax rate” to refer to changes in your property taxes.  In this memo, he took the added step of dressing up his message in all capital letters:

Accordingly, I have but one pronouncement for next year’s budget: NO INCREASE IN THE PROPERTY TAX RATE.”

Observation – The City Manager knows DARNED WELL that your property taxes will go up significantly if your tax appraisal went up a lot.  That’s true even if the tax rate stays the same, or goes down 7/10 of a cent, as the latest City Financial Forecast now suggests.  The overall taxable value of Travis County residential property went up an estimated 8%, as reported by the Austin American-Statesman.  Many homeowners will hit the 10% appraisal cap.

3. The January memo addresses the issue of hundreds of staff vacancies.

As of the end of December, there were more than 900 vacant non-uniformed positions across City departments. This represents a City-wide civilian vacancy rate of 9.7%.”

Observation – This problem tends to continue on a year-round basis.  Last year on August 1st, the Austin Business Journal reported that the City had 934 vacancies, with only 76 of them advertised to be filled.  The implications of these perpetually unfilled positions are huge.  All staff positions, or FTE’s as they are officially called, are funded by the annual budget.  If hundreds of them go unfilled, what happens to the money that was budgeted for them?  How many of them could be cut, so that taxes could be lowered?

In April of 2013, the City Council of Honolulu put a stop to the staff practice of controlling millions of dalliers for vacant positions.  Council Member Ann Kobayashi took action to move the funds to a provisional account, as she explained to KITV.  “So it doesn’t become like a slush fund for the departments, and it’ll be even more transparent,” said Kobayashi. “The taxpayer can see what vacant positions have been filled, and where the money is.”

How Can the City Council Double Down on Affordability?

Here are some proposals that should be considered by the current City Council:

1. Transfer this year’s $14 million budget surplus to the Water Utility.  This could help hold down any potential rate increase.  The small rate increase outlined in the City’s Financial Forecast mentioned above is just the tip of the iceberg.  A new Joint Committee On Austin Water Utility’s Financial Plan is hard at work reviewing a series of rate structure changes that will dramatically increase water rates.  Much of the need is attributed to the severe drought and the high debt cost of the poorly timed and ill advised Water Treatment Plant #4.  See my previous blog entry, “A Possible Breakthrough for the City’s $14 Million Budget Surplus.”

2. Take action on Council Member Kathie Tovo’s resolution to review special event fee waivers and consider creating a new Special Events Fund.  This would relieve taxpayers from the burden of subsidizing large public events promoted by for-profit companies.  See my previous blog entry, “Should the City Wave Goodbye to Special Event Fee Waivers?”

3. Create a new policy to strictly regulate all other City fee waivers, including those for construction, permitting, and anything else.  Fee waivers should become the exception rather than the rule, with an eye toward saving money for the taxpayers.  Full transparency on the City website for all fee waivers granted should also be part of this reform.  The first step would be to ask the City Manager for a complete list and dollar amount of all fee waivers given for the past 24 months.  See my previous blog entry, “Why Does the City Give Away Millions of Dollars in Fee Waivers?”

4. Follow the Honolulu model to establish a centralized provisional fund for staff vacancies.  In Austin, a designated staff official could handle disbursements from a provisional account, and report regularly to the City Council’s Audit and Finance Committee.  Full transparency to the taxpayers should be provided on the City website.

5. The City Council should ask for a full accounting from each City department with unfilled positions, to determine how or whether any of the budgeted funds for those positions has been spent.  The unfilled positions should be reviewed for possible cuts to help the taxpayers.  Any unspent funds should be remitted back to the General Fund or to a centralized fund that can be overseen by the City Manager and City Council until the upcoming budget process is complete.

6. The City should conduct a review of all unused and unneeded City-owned land.  These real estate holdings should be considered for possible sale, so that the citizens can realize some value from them.  The proceeds can be used to fund City services and City enterprises, thus holding down taxes and utility rate increases.  Shoring up the financial positions of our reserve funds and our enterprise funds could improve our bond ratings and lower the interest payments on our debt.

7. Finally, the City Council should consider holding one or more Affordability Work Sessions to consider these and other ideas for bringing meaningful tax, utility and fee relief to homeowners, renters and businesses.  Any long-term affordability strategies that Council Members, staff members, and other citizens in the community can put forth now will go a long way towards helping the new Mayor and City Council that takes office early next year.