Category Archives: General Affordability Updates

What You Haven’t Been Told About The ERCOT $16 Billion

By Bill Oakey – March 22, 2021

In just 32 hours, after the winter storm was over, ERCOT billed enough electricity charges to fund the entire annual budgets of Texas’ four biggest cities combined. Read on for further details…

We know that the Big Boys on Wall Street are thrilled with their massive windfall in ERCOT’s utility pricing overcharges. They and our governor would like everyone else to just butt out now, and leave well enough alone. The Chairman of the Public Utility Commission was caught on a recording, promising to protect the Wall Street profits. The Texas Tribune recently published an article entitled, “Experts Fear Reversing Electricity Charges Will Make Things Worse.”

Why? Because “That might have a chilling effect on companies wanting to come in and invest money in Texas.” Those same “experts” insist that consumers would not be affected if the overcharges were paid back. So, we pay more when the price goes up, but if it came down, with a huge price correction, we would get nothing. Huh?

In Austin, over a dozen people were hospitalized with frostbite. Eleven feet were amputated, and five people had both feet amputated. They will be disabled for the rest of their lives. 

How Much Is $16 Billion…Really?

1. Take a guess at how much this year’s entire city budgets for Austin, San Antonio, Dallas and Houston add up to. Here’s the simple math:

Austin: $4.2 billion
San Antonio: $2.9 billion
Dallas: $3.8 billion
Houston: $5.1 billion
Grand Total: $16 billion (Holy cow!)

2. If you laid a bunch of $10 bills end to end in a line, that line would have to wrap around the world 6 times to total up to $16 billion! Here’s the math:

The earth’s circumference at the equator is 24,901 miles
24,901 miles converts to 1,577,727,360 inches
1,577,727,360” divided by 6.12” (length of any U.S. bill) = 257,798,588

That’s roughly a quarter of a billion single dollar bills. Those would wrap around the world 4 times to reach $1 billion. So, it would take 4 times 16, which is 64 times around, to reach $16 billion with $1.00 bills. For $10 bills, it would be one-tenth of that, which is roughly 6 times.

3. Austin Energy’s annual budget is now $1 billion. So, at the current rate, a $16 billion windfall would keep the utility running for 16 years!

Just take a deep breath and try to swallow this – In just 32 hours, after the storm was over, ERCOT billed enough electricity charges to fund the entire annual budgets of Texas’ four biggest cities combined! If that doesn’t tell you that we need serious reform of our power grid pricing system, then nothing will.

Two interesting questions – How many fully weatherized new power plants could be built with $16 billion? And how much of that money, plus the profits earned during the storm actually be used for that purpose?

We’ve heard a lot about “winners and losers.”  So, who are the winners, and what are they going to do with all that money? We deserve a full accounting of what happened to the entire $16 billion, including the $12 billion or so that was supposedly “settled.”

For the Readers: A Simple Multiple Choice Question

The assertion that Texans should shrug off ERCOT’s $16 billion in overcharges, because it wouldn’t make any difference is:

A. Tommyrot
B. Poppycock
C. Balderdash
D. Bull-Malarkey
E. All of the above

If you answered “E,” then congratulations, you passed the exam. But don’t expect any kudos from ERCOT, the Public Utility Commission or the Governor’s office. They are all out to lunch!

Musical Accompaniment for This Blog Piece

1, “Money Makes the World Go Round” – Liza Minnelli
2. “Around the World” – Connie Francis
3. “Miss Otis Regrets” – Linda Ronstadt
4. “Money, Money, Money” – Abba
5. “For Your Sweet Love” – Rick Nelson

Get Ready For Something Nasty In Your Mailbox – Tax Appraisal Notices Are Coming!

By Bill Oakey – March 22, 2021

Birds are chirping. Spring is in the air. People are out frolicking, with hardly a care. High above that facade sits an unmerciful God. Reach into your mailbox…but only if you dare!

I offer both good news and bad news. You might qualify for a temporary property tax exemption if you sustained certain levels of damage during the February storm. The TCAD website lists all the details. The bad news is that the Chairman of the Appraisal Review Board has abruptly resigned, because of serious animosity towards him from other board members. That could throw a huge kink into this year’s rollicking tax protest season, which seems to set new records in numbers every single year. The appraisal review process has strained under heavy workloads in the recent past, leading to chaos and legal challenges.

Why Do Austin’s Tax Appraisals Keep Skyrocketing?

The simple answer is that the official mission of our once affordable city has morphed into something rather frightening for ordinary, hard-working, longtime residents. If you look in the City Budget, you will find an organization chart. The little box at the very top is labeled “Citizens of Austin.” The official wording in that box remains the same, as it has since Austin’s founding in 1839. But, unofficially, a single new word has been added.

You may recall a scene from George Orwell’s Animal Farm. The first time the animals walked by the big sign on the barn, it said, “All Animals Are Equal.” But the next time they saw it, the message had been altered – “All animals are equal, but some are more equal than others.” In the case of our City’s Organization Chart, just one single word has been added to describe the folks in the very top box – “Future Citizens of Austin.”

The powerful special interests who control the City have a mission for you and your neighbors as well – Make way for those wealthy newcomers, and the developers who want to bulldoze your house and turn it into multiple luxury units. For another analogy, think of the science fiction movie classic, “Invasion of the Body Snatchers.” Seed pods were placed outside people’s bedroom windows. Once you fell asleep, the seed pod would burst open to reveal a blank, alien body that had arrived to take the place of yours. The assembled army of new, sinister creatures then tried to brainwash the rest of the town into falling asleep and joining their herd.

That same scenario is playing out here in Austin. This time it’s called “Invasion of the Property Snatchers.” No family is safe, not even from its own members. If your wife comes to the breakfast table looking a bit odd, and speaks in a dull, lifeless tone, get ready to run. Especially, if she says something like, “Oh darling, we were so wrong! High density is wonderful for our neighborhood. It’s too late to stop it anyway. Let them have our lot. We should sell it, or maybe just give it to them…” Jump up from the table and run! As fast and as far as you can. But whatever you do, don’t fall asleep!

How to Open Your Tax Appraisal Notice

By Bill Oakey – Originally published March 26, 2014

Within just a matter of days, something will happen all over Austin that must be approached with utmost caution.  That thump and rustling sound that you hear outside your front door could evoke a cold sweat and the starkest feeling of sheer dread and fear.  “Could it be out there today?” you might wonder.  “Was that really the mailman, or just a bird trying to make another nest?”  “Should I actually go out there and look?”  “Do I have to?”

All of those are perfectly legitimate questions.  But sooner or later, you are going to have to open that door.  You are going to have to stick your hand in the mailbox, and find out if this is the day that you were hoping  would never come.  But I have a few suggestions that might help you get through the process.  There may be a way to do it and remain in one piece.

1. With any luck, the “bad envelope” will be buried inside a bundle of junk mail.  Grab the bundle and squeeze it tightly, so that you can take everything inside without looking at the envelopes.

2. Once your are safely inside the house, it’s OK to look through the envelopes.  But make sure you are sitting down first.

3. If you even think you see an envelope from the Travis Central Appraisal District, don’t open it right away and don’t panic!  Take a few deep breaths and look at the envelope again.  Make absolutely sure that you saw what you think you saw.  Our brains can play tricks on us sometimes.

4. If you are positively certain that what you are holding really is your tax appraisal notice, then you will have to make another decision.  When and how are you going to open it?

5. My advice is definitely not to do it alone!  If your significant other is not home yet, wait until you can share the memorable experience together.

6. If you don’t have a significant other, or if he/she is out with another significant other, just call a good friend.

7. Depending on your situation, you might want to pour a glass of wine or have some medication handy if needed.  I’ve always heard that aspirin is good for a stroke.

8. If the battery is low on your phone, plug it in.  You might need to call 911.

9. When you and at least one other supportive person are sure you are prepared, go ahead and get ready to open the envelope.  Do not attempt it with a sharp object like a knife or a letter opener.

10. Open your tax appraisal notice.

Sorry, I can’t help you any further.  We will all miss you when you leave.  Take those fond memories of Austin with you, and come back and see us sometime!

Musical Accompaniment for This Blog Piece

1. “Something’s Coming” – West Side Story, Original Broadway Cast
2. “Getting Ready for the Heartbreak” – Chuck Jackson
3. “Bad Moon Rising” – Creedence Clearwater Revival
4. “Taxman” – The Beatles
5. “Shutters and Boards” – Jerry Wallace
6. “In the Middle of the House” – Vaughn Monroe
7. “Make Way for a Better Man” – Willie Nelson
8. “Home of the Blues” – Johnny Cash
9. “I’m Gonna Move to the Outskirts of Town” – Ray Charles
10. “Little Boxes” – Pete Seeger

State Needs To Resolve ERCOT Billing Kerfuffle

By Bill Oakey – March 17,  2021

Almost every day, news reports pop up with a different twist on the confusing numbers. How much did ERCOT really overcharge Texas electric utilities? First, we heard the staggering figure of $16 billion. This amount came from Potomac Economics, who monitors ERCOT’s market functions. As I noted previously, $16 billion works out to roughly $552.00 for every man, woman and child in Texas.

Before the ink was even dry on the newsprint, you could hear the whimpers and the hollers. City officials squawked, utility companies balked. Suddenly, that $16 billion figure began to morph into something much smaller. All sorts of numbers were tossed around. If you mix hard numbers with politics and powerful special interests, they become soft and squishy. Like something you would not like to feel between your toes, while stepping through a cow pasture.

Let’s Make Our Way Through the ERCOT Shuffle

Everybody pick a partner and form a circle. But please stay 6 feet apart, and keep your masks on.

1. We are told that ERCOT overcharged customers by $16 billion – after the storm was over.(Shuffle to the left and swing your arms around. Keep the circle moving clockwise).

2. The Public Utility Commission doesn’t initially deny the number, but refuses to order ERCOT to fix the errors – It would only create winners and losers. It’s too hard to “unscramble the egg.” (Shuffle to the right, take two steps, and kick your left foot forward).

3. Lt. Gov. Dan Patrick calls on ERCOT to repay the $16 billion, plus additional overcharges billed above the approved maximum rate. He cites RRCOT’s own regulations. (Clap your hands and wiggle your hips. Then continue shuffling clockwise).

4. ERCOT’s monitor announces that only $5.1 billion needs to be refunded to consumers – later revised again to $4.something billion. The rest has already been settled with large providers. The PUC Chair claims that the remaining amount is not really an error, and blames it on a formula. (Shuffle sideways to the other side of the circle, and choose a new partner).

5. The PUC Chair tells the Lt. Gov. and a Senate committee that it would be illegal to change any of ERCOT’s billings, and stands by his assertion that the overcharges were not errors. (Face the center of the circle. Turn your backsides outward, and bend forward to your waist).

6. The Texas Senate votes in record time to order that the overcharges be repaid. But the House leadership slams on the brakes and hesitates. Big business leaders urge the State not to “meddle” with prices that were previously set. That translates to “We’re happy with the winners. To hell with the losers.” (That’s all the time for dancin, folks. Now, y’all come back and see us real soon, ya hear?)

The Drama Will Shift to the Courtroom

Regardless of what the State does, this big mess is headed for months, and possibly years of litigation. The cities of San Antonio and Denton have filed lawsuits, along with multiple private utilities. The Legislature should take some action soon to clarify the whole confusing situation. Somebody besides a court judge should tell us whether the big “settled” chunk of the $16 billion was settled accurately and fairly.

Of course, they should order ERCOT to pay back the remaining overcharges. Failing that, they could ask ERCOT’s independent monitor to assist in identifying who now has the unsettled money that was collected in error. Then, the State should pass legislation to retrieve that money and place it in an escrow account. That way, the courts will know that the money is really available to award to the parties that win the various lawsuits.

Will the Public Ever Have Confidence In Such a Crazy, Convoluted System?

Probably not, unless our State leadership is willing to ensure that we are given all the facts. They also need to establish clear guidelines on how ERCOT handles electricity pricing going forward. We are just one polar vortex away from another severe winter storm. But just leaving ERCOT to continue legalized price gouging is not a workable solution. The February storm and exorbitant pricing caused extraordinary financial harm to cities, businesses and citizens throughout the state. We need a whole new electricity pricing model that better reflects the actual cost of delivering the power, with nothing more than a reasonable amount of profit.

Blog Music Special Edition – Songs for the ERCOT Shuffle:

1. “Put Your Little Foot Right There” – Lawrence Welk
2. “It’s a Cowboy Lovin’ Night” – Tanya Tucker
3. “Dance In Circles” – Tim Ryan
4. “Copper Canyon” – Lisa Kirk
5. Do-Si-Do and Face the Sides – Square dance lesson
6. “Changing Partners” – Patti Page
7. “The Winner” – Bobby Bare
8. “Born to Lose” – Ray Charles

Lt. Gov. Dan Patrick Calls for Payback of ERCOT Overcharges

By Bill Oakey – March 9, 2021

The unbelievable $16 billion in utility overcharges that followed the February storm will have to be paid back by ERCOT, and the Public Utility Commission will not be able to stop it. Lt. Gov. Dan Patrick called for the action on Monday, citing ERCOT’s own regulations requiring the paybacks to be made within 30 days (Nodal Protocol Section 6.3 (6) (a).

“Unscrambling the egg” to make it happen will no doubt require armies of lawyers and rooms full of accountants. In addition to the large block of overcharges that happened after the storm was over, Patrick cited other billing errors that came from stratospheric pricing well beyond the State’s already high approved cap. The cap was set at $9,000 per megawatt-hour. But IMM, the outside firm that monitor’s ERCOT’s operations identified sporadic charges as high as $24,000 per megawatt hour. Those errors must now also be corrected.

In the meantime, heads are rolling at all level’s at the State’s utility authorities. On Monday, a second member of the three-member Public Utility Commission resigned. Shelly Botkin’s departure was effective immediately, leaving just Chairman Arthur D’Andrea in place. Then, early Tuesday morning, the Texas Observer reported that ERCOT is refusing to turn over records related to their preparedness and their response to the winter storm. They are seeking an opinion from the State Attorney General to avoid disclosing the information. ERCOT insists that it is not subject to the State’s open records laws because it is not a State agency. The result could be a long legal dispute that ends up at the Texas Supreme Court.

Stories of astronomical electric bills from ERCOT’s demand-based pricing system and the billing errors abound. On Monday, the City of Denton filed suit against ERCOT over an electric bill for $207 million. This compares to their entire annual budget of around $230 million. On a hopeful note, there is word emerging of a huge Tesla “secret battery” that is being constructed at a site close to the ERCOT grid. If all goes well, this could become part of a much needed solution to our power generation woes.

The Legislature is currently rolling out a bucketful of bills to deal with some of the immediate problems. I will not be surprised if they have to appoint a two-year interim committee to hammer out long term reforms to fix the entire tangled up mess. The question remains as to what might happen if we get another severe winter storm before enough current power generating facilities are sufficiently weatherized and enough new ones can be brought online. In my view, the best way to protect citizens from serious danger and costly water-related repairs would be to focus on strategies to implement effective rolling blackouts.

Good News From Austin Energy!

While many Texas utilities faced devastating losses during the storm, Austin Energy estimates that it earned $54 million. That’s because our City-owned utility has done an excellent job weathering its generating facilities. The actual amount of revenue that Austin energy receives, however, could be anywhere between minus $16 million and plus $104 million. It all depends on how well ERCOT “unscrambles the egg” to reprice the State’s power purchase transactions. In any case, our utility’s ratepayers should not be saying “yikes” to massive spikes in forthcoming bills.

But…wait! You might be wondering why we had to freeze in the dark if Austin Energy weatherized most of its power plants, and they were working during the storm. That’s because our electricity goes into the ETCOT grid, where it is sold statewide through a convoluted demand-based bidding process. A process that we now know can lead to other-worldly prices, and become riddled with pricing errors.

Where Is Austin Energy’s Reward for Weatherizing Power Plants?

Under the current system, why doesn’t Austin Energy get some kind of financial reward for better management of its facilities? This is definitely an issue that our City Council and our Legislative delegation needs to look into. The reward for well-managed utilities could come in the form of discounts applied to power purchased from the grid. Or, the State could hold some revenue in reserve from power that is sold. Then, they could do an annual review and issue payments to well-managed utilities, based on a certain set of criteria.

Perhaps there is some provision buried deep within the  troves of ERCOT and PUC regulations that we just don’t know about. If not, let’s hear it for a new bill at the State Capitol to give utilities like Austin Energy and their ratepayers proper compensation-for now, and into the future.

The Great Texas Power Swindle – State Refuses to Correct $16 Billion ERCOT Billing Error

By Bill Oakey – March 8, 2021

While you and your neighbors were freezing in the dark for several days in February, you probably wondered if you could trust the “powers that be” to straighten out the big, ugly mess. Fast forward to Friday March 5. We learned that ERCOT, the team that manages the Texas power grid, kept the maximum price allowable for electricity for 32 hours past the end of the storm. So, for a day and a half, Texas electric utilities were overcharged to the tune of $16 billion. During the full period of the maximum pricing, including the overcharge period, utilities were charged $9.00 per kilowatt hour. That is 75 times the normal winter rate, according to NPR News.

How much do Texas ratepayers stand to lose in this shameful debacle?

Here’s the simple math. This is based on very rough averages, but it will give you the basic perspective:

  1. $16 billion billing error divided by 29 million residents of Texas = $552.00 for every man, woman and child in the state.
  2. $552.00 times 1 million Austin residents = $552 million lost to Austin ratepayers
  3. $552.00 times 2 million Austin metro residents = $1.1 billion lost to the Austin Metro

Surely, the Texas Public Utility Commission would order those overcharges to be paid back. Right?

WRONG!

Like Trying To Unscramble An Egg?

On Friday March 5, Mr. Arthur D’Andrea, the new PUC Chair, who just replaced the ousted former Chair, tried to explain their decision NOT to correct the overcharges. “It’s just nearly impossible to unscramble this sort of egg,” he proclaimed. Then he did an artful Texas two-step to dance around the issue. In doing so, he left a big boatload of unanswered questions:

  1. Are there procedures in place to guard against keeping prices high beyond the conclusion of a power emergency?
  2. Is there a written policy regarding if, when and how the related overcharges should be corrected? If not, why not, and will such a policy be forthcoming?
  3. Who all is responsible for monitoring the fluctuating electricity prices?
  4. What specifically were the various breakdowns in procedures that led to the February overcharges?
  5. Are there any penalties placed upon employees for actions or inactions that can lead to these types of overcharges? If not, will there be some in the future?
  6. What is the historical record of previous overcharges similar to these?
  7. What specific steps can be taken to prevent these overcharges from happening again?
  8. Do any State laws or regulations need to be revised or new ones written to authorize and mandate that these type overcharges be corrected?
  9. Does the Governor have emergency authority or any other powers to make this happen? If not, can political pressure be applied?
  10. How long has it been since ERCOT and the PUC have been audited by the State Auditor?
  11. Are there any reports showing whether or to what extent these agencies have followed previous audit recommendations?
  12. Who will be the first State leader to demand that the overcharges be paid back, ask for revised procedures for both agencies, and request new State audits.
  13. Have you ever heard of any business or agency, public or private, that has ever even suggested not correcting a $12 BILLION billing error??!!

The biggest question – Why do we have such a screwball system? A convenience store owner could face civil penalties up to $10,000 per violation for price gouging. And yet the electric power suppliers get away with it. A bunch of fat cats are now laughing all the way to the bank! For the wonks among you, here’s the scoop on how ERCOT works. This article is from April, 2019. The warning signs were flashing, as they have been for a very long time.

Humpty Dumpty – Texas Style

By Bil Oakey

Humpty Dumpty fell from a tower
That ERCOT assigned to bring us all power
None of the bureaucrats and none of their friends
Could put Humpty back together again

So they gathered his innards and tossed ’em in a bowl

And scrambled him up, unaware of the toll

Try as they may, and try as they might

Those buffoons just couldn’t get anything right

 

They overcharged Texans by $16 billion

How’s that for relief from the freeze and the chillin’?

You can’t unscramble this sort of egg

Said the PUC Chairman – was he pulling our leg?

 

The Texans I know are smart and tough

We won’t put up with that kind of guff

Charging 75 times the normal rate

Is no way to run the Lone Star State!

 

Humpty Dumpty will not be forgotten

By now the poor fellow is probably rotten

It’s time for our leaders to stand up and be counted

There’s a big hill to climb, but it must be surmounted


Anyone who reads this should contact their State Representative’s office and their State Senator to ask for an end to the insanity surrounding our electric power grid and the lack of common-sense regulations.

Check out this amazing, but unverified YouTube video on how to  unscramble an egg.

A Blast From My Past

My days of consumer activism began in the 1980’s. As a member of Austin’s Electric Utility Commission, I fought many electric rate battles. Here is one of my letters to the editor in the Austin American-Statesman. The last line became my slogan:

Isn’t it interesting how many words in the English language have more than one meaning? Take, for example the, word “bill.”  Birds have bills. The Legislature passes bills. Entertainers are listed on bills. But the worst kind of bill is the kind you have to pay, like an Austin electric bill. Well, I have a very simple message. My name is Bill, and I would like to lower yours.

Musical accompaniment for this blog piece:

1.Humpty Dumpty Heart – Hank Thompson (original 1947 version)
2. Dirty Old Egg-Sucking Dog – Johnny Cash (live from Folsom Prison)
3. Four Strong Winds – Bobby Bare
4. The Blizzard – Jim Reeves
5. Storms Never Last – Dottsy
6. I Am The Walrus – The Beatles
7. Texas Two-Step – Vance Lane
8. Take The Money and Run – Steve Miller Band

23% City Tax Increase Baked In Before November Election!

By Bill Oakey – August 18, 2020

As the pandemic drags on and threatens to be compounded by the winter flu season, Austin taxpayers face another daunting challenge. Last week the City Council adopted their new budget that includes a 23% property tax increase. This increase is for Project Connect’s “initial investment” of $7.1 billion for a horribly flawed mass transit plan. Voters will decide whether to approve the tax increase in the November 3rd election.

But by the time the election gets underway, the Travis County Tax Office may have already processed our new property tax bills with the City’s 23% increase baked in. This link shows that last year, the Travis County Tax Office submitted electronic bills to taxpayers on November 1st. It remains to be seen whether it is possible or feasible for the County to wait until after the election to prepare this year’s tax bills.

What Happens If Tax Bills Get Processed Before The Election, And Voters Reject The Unconscionable Tax Increase?

The Texas Municipal League has published a helpful guide to implementing Senate Bill 2, which contains the State legislation related to this topic. At the bottom of Page 9, it states:

”If property owners pay their taxes using the originally adopted tax rate and the voters ultimately reject that rate at an election in November, the city must refund the difference between the amount of taxes paid and the amount of taxes due under the voter-approval tax rate.”

As you can easily imagine, we could be headed for a confusing and chaotic whale of a mess! Long before the November election, scores of businesses, landlords and homeowners struggling with mortgage payments during the pandemic will confront a harsh reality. They may be delinquent or completely unable to pay their property tax bills. On top of that, the City of Austin may have to calculate and process tax refunds for a few hundred thousand taxpayers.

And If That Isn’t Enough, Another City Tax Increase Is Looming!

In their infinite wisdom, the City Council chose this unfortunate time to put a whopping $460 million bond issue on the November ballot. Proposition B is a grab bag of projects including bike lanes, urban trails and transportation improvements. Some of these are well thought out and necessary. But voters should reject it this year, because it is loaded down with far too many expensive goodies that we can’t afford during a hundred year health crisis and recession. (For crying out loud)!

The absurd Project Connect item is Prop A on the November ballot. The nearly half-billion dollar goody bag is Prop B. So, here is a slogan that we can share with friends all the way to the November election:

Vote Nay On Prop A, and No Sirree On Prop B!

The Ugly Truth About The Project Connect Ballot Proposition To Raise Property Taxes 23%

By Bill Oakey – August 13, 2020

Does Austin need some kind of improved mass transit system? Absolutely. Do we need a good plan to relieve traffic congestion? Absolutely. So, does the City Council’s November ballot initiative to raise your property taxes by 23% address those needs and solve the traffic problems?

Absolutely not! And there are plenty of reasons why.

Are You Ready for Just One Car Lane In Each Direction On Major Sections of Guadalupe, North  Lamar and South Congress?

if you go to the Project Connect website, you will see a fairyland artist’s rendering of a beautifully landscaped, massively wide boulevard. There are two lanes in the center for the rail line. Then there are two car lanes on each side of the rail line, with drivers cruising along blissfully. But this little slice of paradise is about as real as the yellow brick road that leads to Emerald City in the Land of Oz.

All you have to do is take a little trip from North Austin along North Lamar and Guadalupe through U.T. and then across the river and down South Congress. Look out the window and count the number of car lanes. Unless you see six wide lanes all along the route, you will be witnessing a big heap of trouble for the Project Connect Pie-In-The-Sky transit plan. Just do a Google search for “Project Connect” “car lanes,” with the quotes exactly as shown. You will find plenty of community concerns about this critical issue. What is Capital Metro’s response? Oh, well, we could always dig some more tunnels or do some elevated sections. Bottom line – There is no firm plan to address the problem. It’s all couched in several layers of ambiguous speculation. A “yes” vote in November will guarantee clogged turn lanes and exponentially worse traffic congestion.

But Isn’t It About Time We Got People Out of Their Cars?

If you dare to raise serious questions about the murky state of this transit plan, you will hear that familiar refrain. Well, of course in an ideal world, most people would abandon their cars and step into a sleek rail car that will whisk them away to their destination  There are cities like Portland and Vancouver that have excellent transit systems. But most of the good ones were started at least 30 years ago, when the costs were much cheaper. In today’s Austin, we have a large suburban population that uses the roads. There won’t be a rail line to serve most of them for decades. But they still need to come into the City and use the roads every day when they go to work. Project Connect’s grand plan is simply a companion piece to the high density land development scheme that threatens to disrupt and displace existing residents of Central Austin neighborhoods. It is designed to carry young hipsters back and forth to the bars and festivals, and of course to their high tech jobs.

The Ugly Truth About the Real Cost of a Citywide Transit System

You don’t have to look far into the Project Connect webpages to come across a key phrase that no one should overlook – “Initial Investment.” Yes, the glossy pages and slick ads will try to convince you that we can have a huge north-south Orange Line, a Blue Line all the way to the airport, a series of downtown tunnels, and a slew of new rapid and regular bus routes – all for the $7.1 billion from raising your property taxes and imagined Federal support. But remember that the November vote is only the “initial investment.”

The Real Cost Is at Least 8 Times Higher than $7.1 Billion!

All you have to do is look at the rail initiative approved by Seattle voters in 2016. It calls for a $54 billion expansion of their rail system. You read that right – $54 billion! And not for the entire citywide system, but just for an expansion of their existing system. This is why Project Connect refers to the November vote to raise your property taxes as an “initial investment.”

But hold on, it gets worse. In case you were wondering whether there would be cost overruns in Project Connect’s cost estimates,, take a look at this article that hit our fellow taxpayers in Seattle: “Seattle Light Rail, Transportation Plan Busting $54 Billion Budget.” They are barely getting started and the costs are already spiraling upwards. Project Connect’s plan calls for Austin’s entire downtown section to be built in underground tunnels. Just close your eyes and try to imagine the staggering, ever-escalating costs piling up over time to accomplish that.

Hey Wait! Aren’t We In the Middle of a Pandemic??

The first question anyone should have asked with regard to Project Connect is whether this year is the right time to ask voters to raise their property taxes. We have no firm estimates on how many businesses will fail completely between now and the end of the year. Even the ones that survive the downturn will be strapped for cash. How in the world will they be able to pay their property taxes in full and on time in January. Is anyone at the City or Travis County even looking into this question? Have they surveyed the many types of struggling businesses to gauge the situation? Have they calculated the potential loss of sales tax revenue combined with a steep loss of property tax revenue? What about all the unemployed workers? And the hundreds, if not thousands of landlords who haven’t been able to collect their rent payments?

Update: 6:00 PM, August 13

Today the City Council made it official. They voted unanimously to put the Project Connect measure on the November 3rd ballot. The referendum calls for an 8.75 cent hike per $100 home valuation. This would mean a property tax increase of 23%!! It would cost the owner of a median-valued home of $326,368 an additional $332 per year. The ill-conceived timing and the exorbitant cost makes this the most foolhardy and irresponsible action of any City Council in our lifetime!

Please send an email link to this page to all of your contacts, and share it widely on social media.

Let’s Bring AISD Into the CodeNext Process – To Avoid An “Affordability Perfect Storm”

By Bill Oakey, January 22, 2018

The following is an email that I sent this morning to Mayor Pro Tem Kathie Tovo and City Council Member Alison Alter:

Hello Mayor Pro Tem Tovo & CM Alter:

At a meeting about affordability issues at AISD last week, I offered to try to help bring AISD and City officials closer together on CodeNext. So, let me introduce all of you in this email to Beth Wilson, AISD’s Director of Planning Services. I am also sending this email to Nicole Conley Johnson, Chief Financial Officer for AISD and her Executive Assistant, Amanda Ortiz.

It is my understanding that AISD would like to have much greater access to the CodeNext revision process, and to have their concerns addressed fully before the final draft is completed.

As an affordability and taxpayer advocate, I believe that CodeNext should be structured in a way that would allow families with children to remain in their homes. And new development in many existing neighborhoods should be affordable for families with children. In recent years, too many families have been forced to leave AISD because of high property taxes and gentrification.

We can see the devastating results reflected in AISD’s annual student enrollment drops. To add insult to injury, AISD is projected to send $2.6 billion in local tax revenue back to the State over the next five years, under the “Robin Hood” school finance system. This toxic combination of factors could result in an “affordability perfect storm” for AISD and Central Texas taxpayers.

Therefore, I strongly recommend that the City work closely with AISD to ensure that the CodeNext process not only includes full participation by AISD, but also implements code policies that reflect their concerns.

Thank you for any help you can provide to facilitate the engagement between the City and AISD. Below is an American-Statesman editorial that focuses on the importance of this collaboration:
Viewpoints: City should not overlook Austin ISD in CodeNext talks
 
By Editorial Board
Posted: 10:07 a.m. Friday, November 24, 2017
 

“We need a seat at the table.”

That is the message the Austin Independent School District is sending to the city of Austin with a proposed resolution regarding CodeNext that trustees are expected to approve Monday.

A firm statement outlining the district’s position on CodeNext is needed because city officials thus far have overlooked – if not ignored — Austin ISD’s input and concerns, though the district has a huge stake in the rewrite of city zoning and land-use rules, said Kendall Pace, president of the school board.

Consider that Austin ISD is one of the city’s largest property owners with 145 facilities. Its boundaries encompass 230 square miles, said chief financial officer Nicole Conley Johnson. That’s about three-fourths the size of New York City, about 305 square miles. With 11,500 employees, the district also is one of the region’s largest employers.

Austin ISD’s interests, however, go beyond property and employment issues. They include families. At this point, the district is losing families and students because of massive redevelopment in core neighborhoods — mostly in East Austin — that is displacing lower-income families with kids to make way for higher-income families with fewer or no children.

Even as Austin’s population is growing, the district’s enrollment, now at 82,000, is declining. Austin ISD administrators and trustees worry that without key changes to CodeNext, those trends will accelerate.

“Displacement of families living in those core Austin neighborhoods – and not competition from charter or private schools – is the primary driver for our enrollment declines,” Conley Johnson said.

Pace, Conley and others said they’ve tried to get a coordinated planning effort going with the city, but have been ping-ponged around different offices without progress.

That back-and-forth bureaucracy prompted Austin ISD officials to take a more public, forceful approach with something in writing they aim to back with a vote in hopes of grabbing the city’s attention: a resolution that mostly is centered around stabilizing enrollment declines by holding on to and creating more affordable housing.

Specifically, the resolution emphasizes the need for CodeNext to create more duplexes, townhomes, apartments and additional dwelling units that are affordable for families earning 60 percent or less of Austin’s median family income and housing for teachers and staff.

It also calls for limits on up-zoning that doesn’t help lower-income families, especially in areas affected by gentrification, such as East Austin.

Another request encourages the preservation of older-market, affordable, single-family detached homes, duplexes and multi-unit apartments by not increasing entitlements on existing properties without a clear affordability requirement.

The resolution calls for an expansion of incentives, such as density bonuses that permit developers to build taller or with greater density in exchange for benefits, such as affordable housing. But they should be combined with other incentives or funding to create permanently affordable housing instead of studio or one-bedroom apartments.

It’s worth noting that more than half Austin ISD students are economically disadvantaged. Their families depend on “deeply affordable” or subsidized housing. The resolution points out that most new housing units that are being built are small, expensive apartments and condos that aren’t family friendly. It notes that just 46 children were enrolled in Austin ISD in 6,895 new units that were sampled.

The district’s resolution also objects to CodeNext’s reductions for onsite parking in residential and commercial areas near schools, which they say could create safety problems for students and hinder access to school grounds.

In our view, those are legitimate concerns that should be addressed by the city sooner rather than later. The city’s lack of response so far only gives credence to critics who complain that the CodeNext rewrite is too heavily dominated by a narrow group of city staffers and paid consultants.

With so many unanswered questions regarding CodeNext, which would determine the city’s physical and economic makeup for decades to come, we recently called for a pause so the city could answer residents’ concerns. Following that, the city announced it would slow down the release of a third draft of CodeNext and perhaps push back its April deadline for approval.

That is progress. But the city must do more in ensuring that Austin residents understand how CodeNext – contained in more than 1,300 pages — would impact their communities, then seek their input on revising proposals that don’t address Austin’s affordability crisis, economic segregation and the displacement of families leaving Austin ISD because they no longer can afford the rent, mortgage or property taxes.

They should answer concerns of others, who point out that Austin needs more so-called missing-middle housing for the thousands of people flocking to Austin each year. Questions linger about how CodeNext would address Austin’s growing traffic congestion. Over the next decade, the city will need about 130,000 homes to fill Austin’s housing needs, city officials have said.

We understand that density, which allows more to be built on less land, is a way to address such challenges. But up-zoning for the sake of generating more housing — without an eye on whether that would worsen the housing crisis for working and low-income families, further segregate the city, or accelerate enrollment declines in public schools — could prove disastrous.

“We need a seat at the table,” Pace told us in explaining the need for the resolution. “We want input.”

The city should waste no time in making room for Austin ISD at the CodeNext discussion.

New Blog Launches To Help Support Austin’s Music Industry

By Bill Oakey – January 18, 2018

Anyone who has lived in Austin for a while knows that we are very proud of our nationally recognized creative industries. This includes music and all of the arts. But affordability issues have cut deeply into the well-being of many musicians, artists and venue owners. High rents caused by high property taxes and gentrification are the main sources of this problem.

So, today I am launching a new blog called, KeepAustinMusicAlive.com. This blog will feature occasional updates on efforts by local music and arts advocates to find solutions to some of the affordability issues. You will also find some entertaining surprises on the blog, beginning today. So, go ahead and click on it now and consider following KeepAustinMusicAlive.com.

The Scary Future For America’s Middle Class

The following commentary was published in The Conversation. Steven Pressman is a professor of economics at Colorado State University.

GOP tax plan doubles down on policies that are crushing the middle class

By Steven Pressman, December 20, 2017

The U.S. middle class has always had a special mystique.

It is the heart of the American dream. A decent income and home, doing better than one’s parents, and retiring in comfort are all hallmarks of a middle-class lifestyle.

Contrary to what some may think, however, the U.S. has not always had a large middle class. Only after World War II was being middle class the national norm. Then, starting in the 1980s, it began to decline.

President Donald Trump has portrayed the tax plan Congress is wrapping up as a boon for the middle class. The sad reality, however, is that it is more likely to be its final death knell.

To understand why, you need look no further than the history of the rise and decline of the American middle class, a group that I’ve been studying through the lens of inequality for decades.

The middle class rises

The middle class, which Pew defines as two-thirds to two times the national median income for a given household size, began to grow after World War II due to a surge in economic growth and because President Franklin Delano Roosevelt’s New Deal gave workers more power. Before that, most Americans were poor or nearly so.

For example, legislation such as the Wagner Act established rights for workers, most critically for collective bargaining. The government also began new programs, such as Social Security and unemployment insurance, that helped older Americans avoid dying in poverty and supported families with children through tough times. The Home Owners’ Loan Corporation, set up in 1933, helped middle-class homeowners pay their mortgages and remain in their homes.

Together, these new policies helped fuel a strong postwar economic boom and ensured the gains were shared by a broad cross-section of society. This greatly expanded the U.S. middle class, which reached a peak of nearly 60 percent of the population in the late ‘70s. Americans’ increased optimism about their economic future prompted businesses to invest more, creating a virtuous cycle of growth.

Government spending programs were paid for largely with individual income tax rates of 70 percent (and more) on wealthy individuals and high taxes on corporate profits. Companies paid more than one-quarter of all federal government tax revenues in the 1950s (when the top corporate tax was 52 percent). Today they contribute just 5 percent of government tax revenues.

Despite high taxes on the rich and on corporations, median family income (after accounting for inflation) more than doubled in the three decades after World War II, rising from $27,255 in 1945 to nearly $60,000 in the late 1970s.

The fall begins

That’s when things started to change.

Rather than supporting workers – and balancing the interests of large corporations and the interests of average Americans – the federal government began taking the side of business over workers by lowering taxes on corporations and the rich, reducing regulations and allowing firms to grow through mergers and acquisitions.

Since the late 1980s, median household incomes (different from family incomes because members of a household live together but do not need to be related to each other) have increased very little – from $54,000 to $59,039 in 2016 – while inequality has risen sharply. As a result, the size of the middle class has shrunk significantly to 50 percent from nearly 60 percent.

One important reason for this is that starting in the 1980s the role of government changed. A key event in this process was when President Ronald Reagan fired striking air-traffic control workers. It marked the beginning of a war against unions.

The share of the labor force that is organized has fallen from 35 percent in the mid-1950s to 10.7 percent today, with the largest drop taking place in the 1980s. It is not a coincidence that the share of income going to earners in the middle fell at the same time.

In addition, Reagan cut taxes multiple times during his time in office, which led to less spending to support and sustain the poor and middle class, while deregulation allowed businesses to cut their wage costs at the expense of workers. This change is one reason workers have received only a small fraction of their greater productivity in the form of higher wages since the 1980s.

Meanwhile, the real buying power of the minimum wage has been allowed to erode since the 1980s due to inflation.

While the middle class got squeezed, the very rich have done very well. They have received nearly all income gains since the 1980s.

In contrast, household median income in 2016 was only slightly above its level just before the Great Repression began in 2008. But according to new unpublished research I conducted with Monmouth University economist Robert Scott, the actual living standard for the median household fell as much as 7 percent due to greater interest payments on past debt and the fact that households are larger, so the same income does not go as far.

As a result, the middle class is actually closer to 45 percent of U.S. households. This is in stark contrast to other developed countries such as France and Norway, where the middle class approaches nearly 70 percent of households and has held steady over several decades.

The Republican tax plan

So how will the tax plan change the picture?

France, Norway and other European countries have maintained policies, such as progressive taxes and generous government spending programs, that help the middle class. The Republican tax package doubles down on the policies that have caused its decline in the U.S.

Specifically, the plan will significantly reduce taxes on the wealthy and large companies, which will have to be paid for with large spending cuts in everything from children’s health and education to unemployment insurance and Social Security. Tax cuts will require the government to borrow more money, which will push up interest rates and require middle-income households to pay more in interest on their credit cards or to buy a car or home.

The benefits of the Republican tax bill go primarily to the very wealthy, who will get 83 percent of the gains by 2027, according to the Tax Policy Center, a nonpartisan think tank.

Meanwhile, more than half of poor and middle-income households will see their taxes rise over the next 10 years; the rest will receive only a small fraction of the total tax benefits.

From virtuous to vicious

While Republicans justify their tax plan by claiming corporations will invest more and hire more workers, thereby raising wages, companies have already indicated that they will mainly use their savings to buy back stock and pay more dividends, benefiting the wealthy owners of corporate stock.

So with most of the gains of the $1.5 trillion in net tax cuts going to the rich, the end result, in my view, is that most Americans will face falling living standards as government spending goes down, borrowing costs go up, and their tax bill rises.

This will lead to less economic growth and a declining middle class. And unlike the virtuous circle the U.S. experienced in the ‘50s and ’60s, Americans can expect a vicious cycle of decline instead.