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.”

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