Category Archives: News & Editorials

Budget Op-Ed In The Austin American-Statesman

Austin City Budget Needs Affordability Makeover

Wednesday August 5, 2015

By Bill Oakey – Special to the American-Statesman

Every year at this time, Austin homeowners grit their teeth and wonder whether the City Council will remember their skyrocketing tax appraisals as they deliberate on the budget.

This year the tax appraisals were stunning, with double-digit increases as high as 27 percent in some areas. When the newly formed single-member-district City Council asked the city manager to submit a lean budget with responsible cuts, his response was pitifully weak and it suggested closing a fire station. What part of affordability does he not understand?

At the end of July, the city manager issued his official budget recommendation. In Volume One, the word “affordability” appears eight times. But the word “tax” appears 290 times and “fees” 134 times.

Property taxes would go up $40 annually for a “typical” median homestead, with the new 6 percent homestead exemption included. But that “typical” homestead is only valued at $232,272. Many longtime residents in single-family homes haven’t seen tax appraisals that low in about 15 years. Even more disturbing is the onslaught of utility increases and “add-on” fee increases averaging $7.98 per month. For most of the past 40 years, these “add-on” fees were included in our property taxes.

Here are several ideas for cost savings. Each year with our growing economy, we tend to have budget surpluses. The old city council spent nearly all of those in between budget cycles, with little or no public input. A budget is a budget, and any surplus should be used to reduce taxes, unless there is a public safety emergency.

It is long past time for city taxpayers to stop subsidizing for-profit public event companies, like South By Southwest. We could save $4 million every year in the budget with a compromise proposal. City services could be paid from three sources: funds from the Hotel Occupancy Tax, surcharges on ticket sales, and making the event promoters pay some of their own fees.

The council should consider awarding staff pay raises on a sliding scale. The city’s recent across-the-board raises, combined with bonuses and other perks, well exceed the stagnant wages of tens of thousands of other Austinites. Another opportunity for substantial cost savings involves the annual transfer of funds from the Budget Stabilization Reserves. Instead of spending more than $20 million on “wish list” items as the previous council did, the new council should time the purchases of new capital items over several years. Some of the surplus could be used to offset the cost of recent flood-related repairs, thereby cutting the budget and saving money for the taxpayers.

For better transparency, I have proposed a truth-in-taxation plan that includes a “Taxpayer Impact Statement.” This would be a chart that shows tax appraisal values from $100,000 to $1 million, in $50,000 increments. Categories should include the general and over-65 homestead exemptions. There should be columns showing the dollar amount of taxes due and the increase above last year’s amount. Taxpayers should be able to look across the chart and estimate their tax increase, based on various levels of appraisal increases up to the 10 percent appraisal cap. In my discussions of this proposal with both Austin and Travis County officials, some have suggested that the County Tax Office could help by creating a standard format for all taxing jurisdictions.

The city has a flawed policy of cramming the budget process into a few short weeks after the city manager’s recommendation. Travis County begins their budget process in February. The council should consider adopting an earlier schedule for next year. In light of the current tight deadline, they should not accept the city staff’s request to add 347 new positions, compared to only 151 that were added last year. Such a big change should require much more discussion and community input.

The tax-supported general fund has grown 38.9 percent in the last five years. Keeping the budget lean will be necessary if the new City Council wishes to achieve their goal of implementing a full 20 percent homestead exemption over the next few years. This first budget is their opportunity to prove that they are ready to quit talking about affordability and show us some real action.

Oakey is a retired accountant and writes at AustinAffordability.com.

 

Guest Editorial On MoPac “Improvements”

Oakey: MoPac project will hurt affordability and worsen congestion

Posted: 6:00 p.m. Sunday, April 19, 2015

By Bill Oakey – Special to the American-Statesman

Last summer I blogged about my concerns about building so-called express lanes on the northern portion of MoPac (Loop 1). Now we are confronted with a new plan for more toll lanes on the southern part of MoPac. The new section will include an upper deck and flyovers that will dump thousands of cars onto Cesar Chavez Street next to Austin High School. Instead of improving traffic, this will cause much worse congestion.

No one doubts that MoPac needs improvements. But when you look at the big picture, the current plan is problematic on several levels. The expansion of Texas 45 will ultimately create a link between Interstate 35 and MoPac. It will saddle MoPac with untold numbers of cars from new developments being built over the Edwards Aquifer. Imagine the bottlenecks from all those cars when they exit MoPac. Central city roads have capacity limits, and when you exceed those limits you risk serious traffic gridlock. Adding lanes to MoPac is a welcome idea, but the design should take local neighborhoods into consideration.

On the affordability front, I still can’t swallow the notion that MoPac can never be improved without toll lanes. Why can’t state dollars be used for the sections of MoPac that run through the main part of Austin? I haven’t heard anyone in the Legislature make that suggestion, even though more funding for highways seems to be in the works.

Somebody should step in and nix the cornball scheme for “Lexus Lanes” on North MoPac. The luxury housing binge in the urban core has priced many of the once-considered middle class people out into the less expensive suburbs. Even without tolls, the commuting costs for these residents is high. So adding express lanes for the privileged will not help them at all.

These pay-if-you-can toll lanes will feature a variable pricing structure that actually drives down the number of people who can afford the tolls. During the morning and afternoon rush periods, the toll meter will jump as more cars enter the lanes. The gimmick here is to keep the traffic flowing faster, with fewer drivers willing to pay. But this could easily backfire if too many frustrated drivers clog the toll lanes. These drivers could find themselves paying a lot of extra money, while not moving any faster than the folks in the free lanes. That will push them back onto the free lanes, only to create intolerable congestion on those.

My final concern is the one factor that makes our express lane project unique. Ours is the only one among those listed on CTRMA’s website that does not offer free access to car poolers. That flies in the face of Austin’s traditional approach toward air quality and traffic mitigation.

I shudder to think how much it will cost to build and maintain the complex electronic apparatus to constantly assess and juggle the variable toll rates.

Our local officials should have fought much harder to keep MoPac free. Maybe they will reconsider if the “Lexus Lane” concept receives a lukewarm reception.

Oakey is the author of the blog AustinAffordability.com.

Guest Editorial – City Budget Slaps Taxpayers; Reforms Needed

Oakey: New council needs to look at budgeting overhaul

Posted: 6:00 p.m. Wednesday, Sept. 10, 2014

By Bill Oakey – Special to the American-Statesman

It’s as if somehow the City Council never got the message, even though the message has been echoed loud and clear across the city. The taxpayers need relief. Austin has an affordability problem.

The budget that the City Council adopted has landed with a thud. Taxes are going up again. Oh, they heard the message from the taxpayers all right. But the sad fact is that they just don’t care. This City Council simply never met a spending opportunity that it didn’t like. If 50 people split up and walked into each of their offices tomorrow with 50 new spending proposals, council members would put all of them on the next agenda and then add a few more of their own. Affordability is apparently just a word to them, something to repeat when they are out in the community but to completely ignore while they are on the dais.

I have had the opportunity to meet with many of the candidates running in the 10 new council districts, as well as for mayor. I have recommended some crucial financial accountability and transparency reforms. To start with, the city should stop playing games with budget surpluses and inflated departmental budgets padded with unfilled staff vacancies. We need quarterly reports with budgeted versus actual revenues and expenditures posted to the city’s website. And we need to limit unfilled vacancies to no more than 5 percent of the workforce as Portland, Ore., does, instead of the 9.7 percent that is currently allowed in Austin.

The existing policy on budget surpluses is to wait until February to announce the amount of any budget surplus from the previous fiscal year that ended Sept. 30. For two years in a row, we have had surpluses of $14 million. In 2013 the council blew through that amount in a few minutes with no public input or anything else resembling normal budget scrutiny. Council members were about to do the same thing this year when outraged citizens, including myself, bombarded them with emails begging them not to spend the surplus. This time they held off on spending the $14.2 million, but only temporarily.

That surplus was quietly tucked away, and the council never mentioned it again. When I contacted them and asked about it last week, I was told that all but a few million of it “was absorbed into the new budget.” My specific suggestion during the spring to transfer the money to hold down the water rate increase was ignored. The loud chorus of citizen appeals to use the surplus for tax relief was also ignored. When I asked council members to revise the written policy on spending budget surpluses to include taxpayer relief as a specific option, the request was denied.

Throughout the year the potential exists for the city to run up a budget surplus. Current rules allow departments to spend money from staff vacancies on other projects. We definitely need serious reforms, such as the Honolulu policy that places funds for unfilled vacancies under the control of a central office, to be disbursed only as needed.

We need a new City Council that listens to the people and takes affordability seriously. There is more to serving in that job than generating costly new plans for every spending opportunity under the sun. If you went online and downloaded all the corridor gentrification plans, forestry and trail plans, etc., you would get dizzy trying to add up all the costs. If city leaders don’t find some way out of business as usual, the people who live here and our local economy will suffer. Let’s hope that the new council not only hears the affordability message but acts on it as well.

Oakey is a retired accountant and writer of the blog AustinAffordability.com

American-Statesman Editorial: Austin Affordability Issue Needs An Action Plan

BY BILL OAKEY – SPECIAL TO THE AMERICAN-STATESMAN

Oakey is a retired accountant and writer of the blog AustinAffordability.com.

“Affordability” has become a popular catchphrase for several years now. We hear it often in local political campaigns and public gatherings. Now it is the time for an aggressive, proactive approach to addressing the problem and finding solutions. My suggestion is to establish a group of public officials and citizens with topical expertise to work together in a formal problem-solving effort. It’s time for some folks to roll up their sleeves and make real progress.

The issues are complex and daunting, but one thing is clear. We simply cannot afford business as usual at City Hall or the other local governmental entities. Here are just a few examples of fiscal discipline and accountability gone awry:

• Since February, the Austin City Council has given away millions of dollars in fee waivers, including $756,000 to South by Southwest and $6 million to the University of Texas for road realignment near the new medical school.

• Last year the city spent a $14 million budget surplus with no formal citizen review.

• The city routinely raises property taxes close to the 8 percent legal maximum every year. But they obscure the truth by hiding behind the tax rate. Rising property values provide an easy cover for tax increases.

• Citizens wishing to speak at 4:00 p.m. city budget hearings are often kept waiting for up to six hours. A reform for that madness is 30 years overdue.

• Twice in the past year, Travis County commissioners have sidestepped voter approval for controversial road projects.

As noted in a recent American-Statesman editorial, the owner of a $185,133 Austin home faces an estimated increase in taxes and fees from $6,981 to $8,327 by 2019. That is the combined impact from the city of Austin, Travis County, the Austin school district, Austin Community College, and Central Health. People living in neighborhoods with significantly higher home values will be hit much harder.

Better coordination among local jurisdictions would be a helpful step to lessen the taxpayer impact of large-scale capital projects. Priorities should be set, and perhaps bond issues could be scheduled less frequently. Everyone in public office needs to take a “big picture” approach to all spending, and not assume that every wish list item is a must-have. Not when too many citizens face budget cuts of their own and the possibility of having to sell their homes and leave Austin.

The affordability problem extends well beyond taxes and fiscal prudence. Some owners of our treasured local businesses have complained loudly about onerous and expensive permits for remodeling and expansion. Why couldn’t some of the regulations that don’t involve critical public safety or environmental concerns be reduced or eliminated? I long for the good old days when letters sent from City Hall bore the slogan, “Austin, The Friendly City.” How about bringing that back, for existing residents and not just the tourists?

A recent Leadership Austin breakfast discussion on affordability touched on a housing problem that begs for a solution. Why is there hardly any multi-family housing being built for moderate-income people? The vast majority of it is large-scale and luxury priced. City planners and policymakers need to identify and fix whatever disincentives exist for building smaller projects with affordable units. At the same time, we should not demolish every remaining apartment complex for low- and middle-income renters. We risk losing our population diversity.

Failure at the local level to address affordability concerns could trigger an ominous overreaction from the Texas Legislature. The anti-government fervor from some state officials could lead to strict controls on cities and counties, forcing cuts to badly needed services. Where we do need help from the Legislature is in closing the giant loophole that allows commercial property owners to get tax appraisals at below market value.

Affordability encompasses taxes, housing, transportation and other important areas. Our best hope for finding solutions and making progress towards implementing them is to bring some people to the table and get to work.

Helping Travis County Reduce the Cost of the New Courthouse

STATESMAN IN-DEPTH: TRAVIS COUNTY COURTHOUSE

As Travis County works toward courthouse price, Florida project may be a guide

Posted: 12:00 a.m. Sunday, Sept. 1, 2013
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BY FARZAD MASHHOOD – AMERICAN-STATESMAN STAFF

As Travis County commissioners embark on plans for a $340 million civil courthouse — hoping to avoid the embarrassing cost overruns, delays and lawsuits that plagued their last major downtown construction project — officials are looking toward the beaches of Florida for guidance.

Two miles from the Atlantic Ocean, officials in Broward County, Fla. are working on a new courthouse, too. The south Florida courthouse will be five stories taller and contain twice as many courtrooms as Travis County officials plan to build, but at a cost of $298 per square foot — half the price Travis County officials project.

Consumer advocate Bill Oakey has told Travis commissioners all about the Broward County courthouse, which is under construction and slated to open in the summer of 2015. Now, Travis County leaders are looking into the Florida project, and may survey other recently built courthouses around the country for cost-cutting ideas.

“I think, shame on us if we can’t find a way to build this thing the most most-effective way possible and give the judges what they feel they need,” said Commissioner Gerald Daugherty. He met with Oakey and is having an aide research the Broward project’s particulars to see how comparable Travis County’s project is and what can be scaled back here.

County Judge Sam Biscoe, chairman of the commissioners, said he will have a discussion during an upcoming meeting and will ask his colleagues to vote on whether to ask staffers to survey similar projects, including the Harris County courthouse that opened in 2005.

The county’s anxieties about cost overruns are real: The Criminal Justice Center opened in 2000, three years later than planned and at a cost of $45 million, about twice what was originally budgeted. The county sued the contractor overseeing the project, accusing it of design problems and delays, but the company said it did everything the county asked of it. Others had said the county rushed the project and demanded too many design changes.

As with that complex, commissioners plan to fund the civil courthouse through voter-approved bonds, perhaps on the November 2014 ballot. But approval is not going to be a slam dunk. Last year, Austin voters narrowly nixed $78.3 million in bonds for affordable housing; in May, two of the Austin school district’s bond packages, worth a combined $403 million, also failed.

If Travis County seeks $340 million in bonds for the civil courthouse, the cost to taxpayers would be about $61 to $69 a year. Commissioners have said shrinking the project’s tab could improve its chances for approval.

Back in Broward County, voters balked at the request for $450 million in bonds to finance most of the courthouse project, which would have cost the average landowner about $33 a year. About 61 percent of the voters rejected those bonds in 2006. That forced community leaders — lawyers, judges, mayors and commissioners — to regroup and reshape the courthouse plan into something they could afford with other pots of money.

“The type of building we had originally contemplated was not possible,” said Alphonso Jefferson, assistant to the Broward County administrator. “The task force looked at what the basic components of a new courthouse are … and that’s what you’re seeing coming out of the ground today.”

The new courthouse will have some room for expansion, but is built for Broward County’s court needs of today, Jefferson said. Originally planned as a 893,000-square-feet complex costing $510 million, the courthouse was pared down to a 714,000-square-foot tower costing $213 million. Broward officials are using cash, federal stimulus money and tax revenue to pay for it.

Shrinking the project helped, but Broward also found more affordable ways to build and finance it. How? That’s what Travis County officials hope to learn by scrutinizing the project.

Biscoe said his request for staffers to study other projects is “more than two hours of work. It’s a major investment of time.”

He also cautioned that Travis County’s $340 million estimate, originating from a consultant’s report in 2012, is likely an unreliably high figure. He said county staffers haven’t vetted the assumptions behind the estimate. The building hasn’t even been designed yet, which is when more accurate costs emerge. The actual cost, he said, will “be based on a whole lot of facts we don’t have today.”

Travis County officials plan to build a civil courthouse sized to meet its needs 2035 and last for at least 50 years. The existing Heman Sweatt Travis County Courthouse opened in 1931 and has had two major expansions, yet, the building has about half as much space as the county says it needs.

The new courthouse estimates are made on various assumptions by the consultants, such as building a “world-class building of significance/a grand public building,” according to an Ernst and Young report.

“That’s exactly what we can’t afford,” said Oakey, a retired accountant. “We definitely need a new courthouse. … But I quite frankly don’t think that if they put it on the ballot at somewhere between $300 million and $350 million, it will pass.”

The county is negotiating a contract with consultant URS Corp. to continue managing the remainder of the project, including public outreach ahead of a bond election and help with preliminary designs of the building. The firm would also help find a separate contractor to handle the final design and construction of the courthouse and help oversee the work at the downtown site, on the block south of Republic Square Park.

“The place we need to get fairly quickly is asking, ‘What are we talking about building? How big? What are the features that the judges say they need?’” Daugherty said.

The ultimate design of the building, and in turn its cost, will be determined by commissioners, working with URS.


Two courthouses

Travis County (projections)

$340 million

15 stories

510,000 square feet

500-car underground parking garage

31 courtrooms

Broward County (under construction)

$213 million

20 stories

714,000 square feet

500-car above-ground parking garage

77 courtrooms

Austin American-Statesman Affordability Editorials

Austin American-Statesman

City, County Must Stop Its Binge On Tax Hikes

Posted: 2:40 p.m. Friday, Aug. 16, 2013

BY EDITORIAL BOARD

The Austin City Council is either unable or unwilling to stop itself from raising taxes to near or at maximum legal levels — despite larger revenues, windfalls, and growing tax bases. In doing so, city officials have shown themselves to be drunk on tax hikes, and it’s time to implement a 12-step program.

How else can their actions be explained? Year after year, without much — if any — consideration for the public’s ability to pay through-the-roof tax bills from the city, county, school districts, hospital district and Austin Community College, elected officials have continued to impose steep tax hikes. Other cities, such as Round Rock and Cedar Park, have held the line on taxes, even while giving employees a pay raise and expanding city services.

Certainly, well-financed local governments provide services to residents and take care of parks, libraries, schools, roads and people in need. But there are limits – points at which more harm is being done than good when taxes are raised beyond certain levels. As local contributor Bill Oakey notes in his commentary below, the current system is not sustainable for most city residents whose wages have not kept pace with ballooning housing costs, electric rates and tax bills. It’s disheartening that the public’s ability to pay has been an afterthought in budget decisions.

That concern continues to be trumped by other priorities, such as providing substantial yearly pay raises and benefits for city and county employees and, in some cases, pay raises elected officials have awarded themselves; tax rebates for private companies that relocate to Austin or Travis County; and tax breaks for homeowners of historical homes in upscale neighborhoods. The steep and continued increase of tax bills is curious given all the additional money generated by new construction and businesses, a rebounding economy and larger revenue from higher property values. Elected officials tout growth as a counterbalance against such steep tax increases. Yet that benefit is not showing up in our tax bills.

That situation caused Austin City Council Member Laura Morrison to pose this question, “What do we have systemically in our business model that, even with growth, we can’t keep up with expenses … and (because of higher rates) are taking more and more of a bite out of people’s incomes?”

That question deserves an immediate answer. And neither the council nor the commissioners court should approve budgets until that question is answered and budgets are adjusted to reflect the financial realities of people who are paying the bills. Taxpayers should be getting a break, given all the extra money the city and county are taking in.

But the binge continues.

American-Statesman writer Sarah Coppola reported in recent editions that Austin’s property tax rate would increase from 50.29 cents per $100 of property value to 51.14 cents. That rate is just below the highest rate the city could choose under state law — 51.34 cents — without triggering a possible election to limit the increase.

Under the proposal, the typical Austin household would pay $173 more in property taxes, utility bills and other fees next year if the budget is approved in September. Austin would add 365 jobs to its nearly 12,400-person payroll, including 23 jobs in the planning department to review, inspect and permit new construction. Local attorney Bill Aleshire has a good recommendation to address planning department expenditures, including new jobs: Make the department a self-supporting enterprise from user fees. Council Member Mike Martinez, citing 900 positions in the city that are vacant, doesn’t see the need to add hundreds more. We agree. Council Member Bill Spelman is challenging the idea that Austin needs an additional 47 police officers in jobs that can be filled by non-civil service employees, who earn considerably less than police officers.

To give taxpayers a break, the council should take the long overdue step of granting home owners tax relief through a homestead exemption, as the county already offers.

For its part, the county also is on a bender regarding its expenditures. Earlier this month, two county commissioners, Margaret Gomez and Ron Davis, voted themselves and about 40 other elected officials a 3 percent pay raise. They were joined in that arrogance by retiring County Judge Sam Biscoe. The proposed budget for the next fiscal year also includes 3 percent across the board pay raises for all employees, though employees received hefty pay raises this year and the year before.

Though county tax bills will rise nearly 3 percent for the average homeowner, the tax rate will decline by a wee bit, about 1.1 percent. Taxpayers could and should get a bigger break, given the windfall to the county budget from rising property values. Officials seem unaware that most residents don’t share their affluence or ability to pay ever-increasing tax bills.

We’re not advocating that the city, county and other taxing entities practice strict austerity. Perhaps smaller tax increases are warranted in some cases, but they should be justified. We are arguing for tax sobriety.

OTHERS SAY: AUSTIN AFFORDABILITY

Oakey: Dollar signs can be danger signs

Posted: 12:00 a.m. Friday, Aug. 16, 2013

BY BILL OAKEY – LOCAL CONTRIBUTOR

Let’s get straight to the bottom line. The Austin city budget has increased a whopping 73.7 percent in the past 10 years, from $1.9 billion to $3.3 billion. Travis County’s budget increased 93.6 percent between 2003 and 2013, which means that it nearly doubled. Right now, the Austin area is experiencing one of the biggest economic booms that the entire country has ever seen. The glow looks great in the national spotlight. But look out for the danger signs.

We surged from becoming America’s 17th largest city in 2000 to 11th place this year. But not without a hefty price. The layer upon layer of related cost increases and future spending proposals can be summed up with one word — unsustainable.

Local property taxes have increased 38 percent in the past decade, and rents have skyrocketed 49 percent. And yet, the median income in Austin, adjusted for inflation, has stayed virtually flat since 2000. The tax rates for the city and county alone have gone up 25 percent in just four years. Homeowners whose tax appraisals have increased during that period have seen even higher increases. And that does not include Austin Community College, Central Health, area schools, and water and electric rate increases.

When many people think of 21st-century Austin, they envision young high-tech whiz kids and innovative entrepreneurs who bring new companies with good-paying jobs to town. We hear about Formula One and the X Games, and an impressive schedule of music and cultural festivals that attract more tourists every year. But beneath the veil of prosperity lies an inescapable fact. The Austin population is a diverse demographic mix.

According to U.S. Census figures, one in five Austinites lives in poverty. Interestingly, poverty has spread to our suburbs at a growth rate that ranks number two nationwide. The Brookings Institution released a report that shows we have the nation’s fastest-growing population of “pre-seniors,” ages 55 to 64, and the second-fastest-growing senior population. And yet, our city and county older-than-65 homestead exemptions have never been indexed for inflation or rising home values, and are woefully inadequate.

Estimates of the number of people moving here range from 100 to 158 per day. Those who landed a good job or who sold their home in a West Coast market can live quite comfortably in Austin. But their arrival in older neighborhoods has driven up property values and priced a lot of longtime Austinites out of their homes. Many of the tens of thousands of residents who were already here before the boom started now face economic uncertainty.

Some of these problems are not unique to Austin. San Francisco, Portland, Ore., and other cities have gone through similar growing pains. But the accelerated pace of the Austin transition gives reason for local government officials to wake up to the harsh realities of affordability. If anyone thinks the past 10 years of tax increases and high housing costs were hard to swallow, just ask yourself this. How long could you sustain the same pace, if not even higher costs going forward?

Over the next 15 months, voters will need to decide on some very expensive bond propositions. ACC is considering a half-billion dollar bond election for building renovation and expansion. Next year, we may see a $275 million election for the first phase of the urban rail project. Add to that a proposed new Travis County Civil Courthouse for $300 million to $345 million. More water and electric rate increases are forecast. Worst of all, the Austin City Council continues to raise property taxes to the legal maximum year after year.

So, what can be done to bring the area’s perceived needs and the cost to fund them in line with the public’s ability to pay? I have read dozens of consultant reports and internal planning documents. But nowhere have I ever encountered the phrase “the public’s ability to pay.” Policymakers should heed the warning signals. For many Austinites, there are only two options: cut the family budget, or load up the car and watch Austin fade away in the rear view mirror.

If local officials really want to tackle this problem, they must first recognize how serious it is. Then they need to schedule some joint planning sessions and get down to the business of doing whatever it takes to make Austin more affordable.

Oakey is a retired accountant and a consumer advocate