Tag Archives: Austin City Budget

City’s Numbers On Homeless Costs Don’t Add Up

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By Bill Oakey, June 29, 2022

I took a big gulp when I read the American-Statesman article about the “funding shortfall” of $93 million for housing the homeless. The article says the City has established a mind-bogging $515 million price tag for housing Austin’s homeless over three years. There is a big push to find corporate donors to cough up the $93 million. But, as you will see, their numbers don’t add up.

For starters, you can’t take all of the homeless people off the streets and put them into a home! Too many of them have serious substance abuse and mental health issues. Experience has shown that many (but not all) of these impaired individuals cannot maintain a home properly. Some will even refuse to be placed in a home.

I mention this, not for any lack of compassion, but for the sake of practical reality. The situation simply is what it is. What the City should be doing is raising large sums of money for mental health services and substance abuse rehabilitation. That should be a major component of the homeless solution plans.

Let’s Take a Look at the Math

Regardless of the merits of any of this, the City’s numbers do not add up. The City wants to build 1,300 housing units. The Statesman article suggests that with recent construction cost increases, a typical apartment unit would cost $275,000. So, let’s put a little cushion on that, and bump it to an even $300,000. Here’s how the math comes out:

$515,000,000 Total fundraising goal
    -93,000000 Alleged shortfall
$422,000,000 Available to spend

$300,000,000 Cost per housing unit
           X 1,300 Housing units needed
$390,000,000 Actual amount needed

$422,000,000 Available to spend
 -390,000,000 Actual amount needed
  $32,000,000 Left over, WITHOUT including the $93 million “shortfall”

Now, let’s look at it another way. Suppose they did raise the additional $93 million. Here’s what would happen:

$515,000,000 Available to spend
            / 1,300 Housing units needed
$396,153,846 Cost per unit

The City’s fundraising goal would provide roughly $400,000 per newly built housing unit for the homeless. That is a whopping sum of money for a very risky proposition. It assumes that all 1,300 of these folks could, or would, actually live sustainably in their own homes.

I would expect City officials and homeless advocates to do an artful dance around these numbers. They will probably mention administrative costs. Well, I can’t imagine those adding up to the $32 million left over without the shortfall, or the full $125 million, if you tack on the $93 million.

Perhaps they are allowing for other homeless services besides housing. If that’s the case, then it brings up a huge problem with the City’s lack of transparency to the public. Where in the &@#!!_&$#! are these giant mountains of taxpayer money and private donations for the homeless actually going?? What are the metrics? 

At the very least, we deserve to see answers to these basic questions:

1. How many homeless folks have been settled into housing in the last five years?

2. What is the annual budget for cleaning up homeless camps? Is there an upcoming  budget plan for providing sufficient staff to keep these camps clean and sanitary?

3. What is the annual budget for providing substance abuse rehab and mental health services for the homeless? What are the recent annual metrics for the numbers of people successfully treated with these services?

4. Does the City have a specific policy and the necessary staff to ensure that local businesses and homeowners are sufficiently protected from homeless crime?

5. What are the metrics for resolving issues of homeless crime? How many people have been arrested per recent year? What are the City’s policies for making arrests for homeless crimes? What are the specific metrics for prosecutions, prison time served, probation granted, release without prosecution, etc.? Is there sufficient accountability imposed on homeless folks who commit crimes to discourage these offenders from doing it again?

When all of these questions are satisfactorily answered, I sincerely believe that the public and potential corporate donors will show their compassion, and be much more willing to get on board with an aggressive plan to deal with our homeless dilemma.

What Are the Requirements to Get a Free Home?

This question is not intended to reflect badly on the unfortunate folks who lose their jobs, while facing devastating medical issues they can’t afford, and find themselves out on the street. Certainly, these folks need public services. But a program that offers free homes, valued at hundreds of thousands of dollars could become very tempting. What would prevent a fraudster from storing their belongings with a friend, and pitching a tent to become “homeless?” Or, what if a group of folks facing 30% or 40% rent increases, decided to stay in Austin and try to qualify for free homes? How will the City determine who is legitimately entitled to this grand prize of a benefit?

At first glance, this question might seem preposterous to longtime homeless advocates. If so, that just proves my point about the need for transparency. Will some of the newly constructed homes be intended only for transitional housing? Can we assume that the folks have to either buy the home, rent it or move out, if they get a job and become self-sufficient? Or, are they allowed to keep the free homes for life? Will these free homes come with a Federal tax liability, like the cars that were once given to Oprah Winfrey’s audience? The public needs to know, and we haven’t been told.

There Is a Big Shortfall, But It’s Not Financial

The City’s thinking falls far short of where It ought to be. Austin has a broad range of critical needs. In all of our history, major endeavors costing hundreds of millions of dollars have been debated, discussed and decided with significant public input. Major  projects have often required months, if not years of community involvement before we came together to approve them. On the homeless issue, our City leaders have made huge financial commitments, without large-scale community input. Discussions were held, of course, but not to the extent that we know many details about how the money is being spent. Or whether the public is comfortable with the vast amounts being spent. We haven’t seen any metrics on the progress made to house the homeless, or address the mental health, sanitation and public safety components of the issue.

Austin has a major affordability problem that impacts every neighborhood. We have a lopsided, tech-based economy that has created an income inequality crisis. It threatens our diversity, and is probably not economically sustainable. The Project Connect transit plan is spiraling out of control, with ballooning cost projections. Its odds of actually being completed, with miles of tunnels and a split-level underground fantasy land are slim to none. And we face a climate change challenge that threatens our quality of life, including severe wildfire dangers.

Bottom line – $515 million is a staggering sum to put into a single basket among all of our critical needs. Especially, without transparency and community consensus.

A Parting Thought

If and when the City finally decides to provide some transparency, I would urge them to reinforce their assumptions about the viability of their homeless initiatives. Please show us some examples of other cities that have a prove record of success, using the approaches that our taxpayer dollars will be funding. Let’s hope that the outcome looks better than what we see in San Francisco and L.A.

Musical Accompaniment for This Blog Piece:

  1. “Someone’s Child” – Matthews, Wright & King
  2. “Ain’t Got No Home” – Clarence “Frogman” Henry
  3. “Green Green Grass of Home” – Tom Jones
  4. “Sloop John B” – The Beach Boys
  5. “Detroit City” – Bobby Bare
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Ellen Troxclair Is First To Stand Up For Affordability

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By Bill Oakey – August 21, 2016

With Austinites reeling from another year of double-digit tax appraisal increases and neighborhoods across the city losing longterm residents because of high taxes, this blog has called for City Council action on affordability. In Saturday’s Austin American-Statesman, Council Member Ellen Troxclair became the first to speak up, with an op-ed calling for an official “Year of Affordability.” (This recommendation is Item # 8 on the Affordability Petition to the City Council, posted here on August 11th).

Council Member Troxclair’s willingness to stand up for the taxpayers should be embraced immediately by the rest of the City Council. Although the technically non-partisan Council often splits along obvious party lines, affordability is such a critical issue that it demands attention from all quarters. Kudos to Troxclair for pointing out that the City Budget is growing much faster than our population, and that they have $40 million in new revenue to spend without any tax increase at all. And yet the proposed budget raises them to the legal maximum of 8%.

Remember This – If The City Keeps Raising Taxes 8% Every Year, Your Taxes Will Double In 9 Years!

One of the reasons that the budget is so high is that it includes funding for a wide variety of City plans. As this blog has pointed out several times, there is no coordination or systematic approach to the City’s overall planning process. There are so many plans on the books that no one on the City Staff or the Council would even know where to begin if they were asked to list them all or determine what their total cost might be. And yet, more and more new plans pop up every year, costing millions of dollars to develop and publish. Just close your eyes and try to imagine any private company stumbling blindly into the future without any earthy idea how many plans they have or how much they might cost. The City just plugs the numbers into the budget each year, and crosses their fingers that the taxpayers won’t mind. (See Item # 7 on the Affordability Petition).

Let’s Ask the Entire City Council to Reduce the Budget, Lower the Utility Fees and Live Within Their Means – Just Like You and Your Families Have to Do!

Here is the single-click link to email the entire City Council. Feel free to submit the link to the Affordability Petition from this blog.

Here is Council Member Ellen Troxclair’s Editorial. Let’s hope she can find co-sponsors to make the budget more affordable.

Troxclair: Make this the year of affordability

By Ellen Troxclair – Special to the American-Statesman, August 20, 2016

When voters sent the new 10-1 council to City Hall, they did so with a clear mandate to address the rapidly rising cost of living in Austin in order to slow gentrification, address economic segregation, keep long time Austinites in their homes, and protect seniors — and the rest of us, too — from losing their quality of life. Yet, as we enter our second budget cycle, “affordability” seems to be slipping further and further away.

In these next few weeks leading up to budget adoption, critical decisions about property taxes, utility bills and city programs will be made. This is when the difficult choices are supposed to happen. But the proposed budget takes the easy road at every turn.

It includes an increase to all utility bills and every major fee in the city, and it proposes adopting the maximum tax rate allowable under state law. General Fund spending is increasing a whopping $58 million, and an additional 437 new city employees are being added to the payroll.

To put this in perspective, since 2010, the increase in the adopted tax rate, when compared to the effective tax rate, never rose above 4.4 percent. Last year, that increase was 6.85 percent. This year, we are faced with an 8 percent increase. This occurs despite the fact that Austin already has a higher cumulative property tax bill than all the major cities in Texas when calculated as a percentage of income.

While the individual financial impact will vary, if you live in the median-valued home — which is $278,741 — with the 8 percent homestead exemption, your property taxes, utility bills, and fees will increase an estimated $150 a year. This, of course, does not include the impact from the other taxing entities like Travis County, Austin ISD, Central Health or Austin Community College. If you own a business, or have an older home that is not considered energy efficient, you will likely be faced with an even greater increase.

Some argue that we’re a growing city and we have to keep up. While this may be true, our spending is greatly outpacing our increase in population. The city’s population grew 2.5 percent in 2015, but our spending is increasing a massive 6.7 percent.

The growth is certainly already contributing the city’s coffers. Property tax revenue from new construction is expected to increase by $10.2 million. Sales tax for the city is expected to increase by $8.5 million. Hotel occupancy taxes could rise by $11.2 million. Licensing, permitting, and inspection revenues could increase by $9.1 million. Charges for services other than utilities could increase by $2.4 million. Parking revenue could go up by $900,000. Other taxes, which includes alcohol tax is expected at $1.7 million.

This means that the city is already bringing in well over $40 million in additional revenue this year, and is still going to turn to you for more money.

The city must learn to live within reasonable means, set goals that have measurable outcomes, and scrutinize every program in order to become relentlessly efficient with taxpayer dollars.

In this year alone, I have voted against hundreds of millions in spending, from high priced consultants to vehicle purchases to cost overruns. I did not vote this way because replacing vehicles every three years or hiring consultants aren’t nice things to do. It is because each vote and each purchase ultimately impacts affordability. We must ask ourselves: Is this item a higher priority than financial relief for Austinites?

Beyond that, the city could choose not to add any new positions until the over 1,000 existing vacant — but fully funded — positions are filled. Save the money allocated to these vacant positions as a credit to the next year’s budget. The city could limit the surprisingly large marketing budgets and significant transfers to other departments from Austin Energy, Austin Water, and Austin Resource Recovery.

None of these choices would result in laying off employees or cutting critical services, which is so often the false narrative when confronted with the idea of slowing spending.

Austin residents need a break — and this is the time to take their pleas to heart. We have to end the pattern of consistently increasing spending that has become a crisis for our city. It’s time for action, and it’s time for this budget year to be the Year of Affordability.

Troxclair is a member of the Austin City Council, representing District 8.

Affordability Petition To The City Council – Let’s All Join In!

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By Bill Oakey – August 11, 2016

Unless Austinites come together quickly and petition the City Council, the new budget will hit us with the biggest round of property tax, utility and monthly fee increases in several years. The entire concept of affordability has been tossed to the wind by a City Manager and staff that appear to be isolated from the realities facing us. The lofty language in the budget crows about a booming local economy. But it doesn’t mention what’s happening to you and your neighbors – being taxed out of your homes, runaway rent increases, and stagnant wages.

This Petition Needs To Move Quickly. You Can Print It and Distribute It To Your Friends. Or Just Share This Blog Link By Email And Social Media

Affordability Petition to the Austin City Council – August 2016

We call upon the Austin City Council to reject the City Manager’s FIscal Year 2017 Budget recommendation. We respectfully ask you to recognize that affordability is the number one civic issue, and to protect the interests of taxpayers by taking the following actions:

1. Make responsible adjustments to the Budget to reduce the effective tax rate increase from 8% to 4% or less, in line with most City Budgets adopted since 2011. Delay or phase in new programs. purchases and staff positions, rather than sacrificing critical community needs. (Annual increases of 8% would cause property taxes to double in 9 years – even sooner if tax appraisals go up).

2. Place all utility charge and utility bill add-on fee increases on hold. Ask the City Manager to report back to the City Council with a much more affordable fee schedule. (The dollar impact of the utility and fee increases is 2.4 times higher than the property tax increase for a typical resident).

3. Provide senior citizen discounts for all utility bill add-on fees. This is necessary since these fees are growing faster than property taxes.

4. Establish a sliding scale for City employee pay raises. Consider a flat dollar amount or a percentage with a dollar cap. Provide living wages for low-income workers. (2.5% raises over 10 years would increase a $150,000 salary by $37,329. But a $30,000 salary would only increase by $7,466. This would promote economic segregation).

5. Allocate equal City resources to retaining existing Austin residents as for recruiting new businesses. Please consider the AustinAffordability.com ”Homeowner Retention Initiative” as a starting point, along with policies and practices to help renters.

6. Establish a formal timeline to rapidly implement the Mayor’s “Music & Creative Ecosystem Stabilization Recommendations.” We need to protect Austin’s creative Industries and our quality of life.

7. Compile a comprehensive list of all City plans, determine estimated costs for each plan, along with a grand total cost for all of the plans. Publish the list on the City’s website. Seek public input to prioritize the plans and develop an affordable timeline for implementing them.

8. Make an official declaration of 2017 as “The Year of Affordability,” and pursue it as vigorously as you did the 2016 declaration for “The Year of Mobility.”

For more details on how the FY 2017 Budget shuns affordability, read this posting.

How to Get the Petition to the City Council

The fastest way is to use this single-click link to email all of them at once. Just tell them you support the AustinAffordability.com Affordability Petition. Or copy and paste it into your email. If you want to distribute printed copies, those can be mailed to: Austin City Council, P.O Box 1088, Austin, Texas 78767.

Come to the Public Hearings Next Thursday, the 18th

Please invite your friends and come to speak at the City Budget and Tax Rate public hearings. These will be held at 4:00 on Thursday August 18 at City Hall, 301 W. 2nd Street. You can sign up to speak on Item # 82 and Item # 84 at the kiosks in the City Hall lobby beginning next Monday, August 15th.

ALERT – City Budget Shuns Affordability With Record Tax, Utility And Fee Increases

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By Bill Oakey – August 4, 2016

Before you even start reading this, get ready to think about what you can do to help. The proposed City Budget is moving like a freight train through City Hall. We don’t have much time to slow it down. What we face is a taxpayer, utility ratepayer and fee payer disaster on two major levels:

1. The budget raises property taxes by 8% above the effective rate, which is the highest allowed under Texas law, without triggering a rollback election.

2. Every utility charge and utility add-on fee is slated for increases – so high that the total dollar impact on the “typical” resident is 2.4 times higher than the record tax increase!

Hang Onto Your Hats for This One Folks – If They Raise Property Taxes 8% Every Year Going Forward, Your Taxes Will Double In 9 Years!

And if your tax appraisals keep going up, they will double a lot sooner. Now let’s take a look at what I found after reviewing the City Budgets adopted since Fiscal Year 2011. In most of those years, the effective property tax rate only increased by about half of the legal maximum of 8%:

Fiscal Year Effective Tax Rate Increase
2011 2.9%
2012 4.2%
2013 4.1%
2014 3.9%
2015 4.4%
2016 6.8%
2017 8.0% (Proposed)

You can review several years of the Austin City Budget here.

How Does the City Staff Rationalize These High Proposed Increases?

In Volume 1, Page 29 of the budget, you will find a cheerful note declaring that a “typical family” would only pay $324 per month for City taxes and fees. They state that this is only 4.8% of the median family income for our region. Well, just look at your utility bills and your property tax bills. Then, sit down with your neighbors and take a look at theirs. Ask each other how many of you would consider yourself “typical,” based on this chart in the Budget. If you live in anything larger than a small condo, your utility bills, fees and taxes are probably much higher.

But here’s the biggest flaw in the argument about City taxes and fees being “only a tiny portion” of your annual income. That doesn’t account for the long parade of other taxes from AISD, Travis County, Central Health and ACC. Of course you could isolate just one taxing entity on your total bill and claim that it isn’t really all that bad. But hey, we have to pay the entire bill! And it’s absurd to suggest that a “typical” family currently pays only $221 per month on their utility bills. The mere suggestion put forth in the City Manager’s proposed Budget that we the citizens don’t have a problem with these costs is outrageous, preposterous and insulting to our collective intelligence!

Please Share This Blog Piece With Your Neighbors, Friends and Co-Workers

Ask them to use this single-click link to email the Mayor and every City Council member. If the City Manager and his staff can’t find a way to make the City departments run more efficiently and more affordably, then it is simply time for them to hit the road!

How Could the City Council Easily Trim the Budget?

Last year I fought hard to convince them to apply cost of living pay increases on a sliding scale. The wealthy managers and executives at the top do not need the same percentage increase as the lowest paid grunt workers. Several City Council members spoke favorably of the idea and even floated various scenarios to make it happen. I pointed out that many times during my 35 year career as a State employee, the Legislature gave us flat dollar amounts as pay raises. This helped the lowest paid workers and held down the skewed impact of percentage increases.  But last year, the City Manager sent a screaming and crying letter to the City Council, complaining that the entire staff had been humiliated by the suggestion of more equitable pay increases. This caused the City Council to fold their tents and abandon the idea immediately.

But Here’s the Crazy Irony In the Situation

Year after year, City officials complain that the State will not allow a flat dollar amount to be used for the City homestead exemption on our property taxes. Every City Council for as long as I can remember has wanted the Legislature to change the law. They have argued correctly that a percentage increase in the homestead exemption favors wealthy homeowners. A 20% exemption on a $1 million home is $200,000. But for a $150,000 home, it is only $30,000.

Well, here’s my question. Why not apply that same logic to across the board pay raises for City Employees? The chart below shows what happens to lower end and higher end employees if they all get a 2.5% pay increase every year for 10 years. Ask yourself if a flat dollar amount would be more equitable. Or at least a sliding scale of some sort on the percentage amount.

City Employee Pay Raises at 2.5% Per Year
Year Low End Salary High End Salary
1 $30,000 $150,000
2 $30,750 $153,750
3 $31,519 $157,594
4 $32,307 $161,534
5 $33,114 $165,572
6 $33,942 $169,711
7 $34,791 $173,954
8 $35,661 $178,303
9 $36,552 $182,760
10 $37,466 $187,329
     
Total Increase $7,466 $37,329

You can see how the rich get richer. For the record, Politifact Texas reported that as of Sept. 1, 2014, 879 City workers earned between $100,089 and $304,657.

Let’s Put a Human Face On Austin Affordability

My friend, Todd Jones, sent me the following email and granted permission for it to be published. I can’t think of anything to add to his comments. Except that I would like for each City Council member to print it and leave it by their bedside between now and the end of the budget cycle.

Bill,

I am over 65 and my property taxes are still around $10k this year even though my AISD portion was frozen when I came ‘of age.’
My home is paid for but my taxes are far more than what I paid each year when I had a mortgage.  I am retired and my pension and social security check did not go up this year.
I just received a utility bill for over $500. for July.  This is the highest bill I have ever received during any summer month since I moved back to Austin from San Antonio in 1983.  We are not lavish when it comes to running our air conditioning.  In fact, we recently bought an expensive high SEER central air conditioner in effort to save money on our electric bill.  Apparently that was for naught given the city’s ridiculous tier system for measuring water and electricity.  We water twice a week to keep our yard from becoming a desert.

We are a man and a wife, both retired finding living in Austin un-affordable.  I suppose we receive some benefit from our taxes we pay but it’s hard to rationalize the amount we pay -vs- the benefits received.  We hope to continue living in Austin because we have a son and a grandson who live here.  However we feel like we have no representation when it comes to affordability.

While we could make a lot of money by selling our home and moving to almost anywhere else…we really would hate to pack up and leave in disgust.

(Feel free to use this letter or a portion as one example of disillusionment with living in a city and county on spending sprees that do not take in to account individuals on a fixed income or people who do not make a lot of money).

Todd

Musical dedication to the City Manager and any other staff members who do not understand affordability and who refuse to accept the notion of pay equity for City employees:

“Hit the Road Jack” – Ray Charles, 1961

It’s Time For Taxpayers To Contact The City Council – Watch Out For The Budget!

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By Bill Oakey – August 20, 2015

Many thanks to Council Aide, Michael Searle in Council Member Ellen Troxclair’s office. He provided me with a document that shows the current status of proposed cuts and additions to City Manager’s proposed City Budget. Today it is available online. You can read the details by clicking the link below:

City Budget Concept Menu Aug 20

There Is Good News and Bad News

One piece of good news not noted in the chart is that, according to an information request from  Council Member Troxclair, there are no funds budgeted for special event fee waivers. If this position holds, it will be a major victory. It is long past time for the City to pay for special event services from sources other than local taxpayers.

The bad news is the bottom line. This current “budget concept menu” calls for $30.7 million in increases to the General Fund budget, with only $13.4 million in spending reductions. It should be noted, however, that several of the budget change suggestions from Council members have not been quantified yet by City staff. Those items are labeled, “TBD” – To Be Determined. So, in all fairness, the jury is still out on whether this current menu would offer pain relief to taxpayers or serious indigestion.

A Closer Look At Some Of the Highlights

  1. Item 2.13 – Council Member Troxclair recommends freeing up $9.7 million in Budget Stabilization Reserve funds. This would lead to taxpayer savings.
  2. Item 2.14 – Huge Kudos for Troxclair! This item would end three layers of utility subsidies for “economic development” (giveaways for corporate recruitment) to the tune of $11 million. This would lower our utility bills.
  3. Item 2.4 – Thanks to  Mayor Steve Adler. Debt financing of select capital expenses would free up $12.9 million in reserve funds that could lead to tax savings.
  4. Item 2.3 – Thanks to Council Member Don Zimmerman. Implement a sliding scale for City employee pay raises. This would save a total of $7 million. Why should the fat-cats at the top of the scale get continuous big raises every year, while tens of thousands of Austinites struggle with stagnant wages?
  5. Item 2.2 – Thanks to Mayor Steve Adler. He offers an alternative plan for the tiered pay increases that would save $4.7 million.
  6. Item 2.23 – More thanks to Ellen Troxclair. This item calls for a staff pay increase structure that would save $6 million. We need to press the City Council to adopt either the Adler, Zimmerman or Troxclair plan!
  7. Item 3.3 – Thank you, Mayor Pro-Tem Kathie Tovo. Increase Development Services fee to 100% of cost of service. This would save us $1.4 million.
  8. Item 3.6 – Huge thanks to Council Member Sheri Gallo!. Increase Senior Homestead Flat Exemption to levels comparable to 2005 property valuations.
  9. Item 3.13 – Troxclair again! Freeze utility rates and fees to this year’s levels.
  10. Item 2.18 – Still more kudos to Troxclair. Limit additional police positions to 53. The staff’s ambitious increase in police is too much for one big jump in this year’s budget.

Here Is What You Can Do to Help!

This is our big chance to really make a difference in affordability. We need to let every City Council member know that we want meaningful reductions to the budget without being totally swallowed up by budget increases. In other words, tangible relief in taxes, utility rates and fees.

So, please take the time to email the Mayor and all Council members, using this one-click email link. Then, please send emails, texts, Facebook and Twitter postings to as many neighbors and friends as you have on your lists. If we all join together, we can score a nice victory in the new budget. Time is very short, so let’s get the action started now!

A Challenge To The News Media: Monitor The City Council For Budget Affordability

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By Bill Oakey – August 13, 2015

The City Council is now knee-deep into their budget deliberations. All of you reading this are wondering about the answers to some critical questions. These are questions that the news media should be asking the Council members, to find out how seriously affordability is being taken into consideration so far:

  1. How many cost-saving proposals have each of the Council members brought up so far in the  Budget Work Sessions?
  2. Which cost-saving proposals have they recommended so far?
  3. How much money has each Council member asked to be cut from the City Manager’s proposed budget?
  4. Has anyone on the City Council suggested an affordability goal for reducing the budget?
  5. Has anyone on the Council suggested a target for reducing taxes or fees in the budget?
  6. Has anyone on the Council suggested reducing the huge increase in staff in the City Manager’s proposed budget?
  7. Has the Council agreed to use a sliding scale for City Staff pay raises, after City employees received two separate raises this year? Or, do they plan to capitulate and offer all employees 3% raises, including executives with lofty salaries at the top?
  8. Have any of the Council members’ proposals for new spending have been offset with corresponding cuts, to ensure a zero impact on each new funding request?
  9. Affordability was often listed as the biggest issue in last year’s City Council campaigns. Has the importance of affordability been front and center so far in the budget deliberations?
  10. Which Council Members appear to be taking the lead on affordability throughout the budget deliberations?

A Few Bad Signs To Be Concerned About

  1. According to a recent article in the Austin Monitor, the City Manager’s budget proposal would RAISE TAXES ALMOST TO THE LEGAL MAXIMUM! That is called the “rollback rate,” which is an 8% increase over the current zero “effective rate.” Specifically, Marc Ott’s proposal would raise the tax rate to 48.14 cents. The legal maximum rollback rate is 48.26 cents.
  2. We would see some relief from the new 6% general homestead exemption. But the bad news is that the proposed budget does not include any specific spending cuts to offset the revenue gap from the homestead exemption. In other words, taxes would need to raised to make up that difference!
  3. Andra Lim with the Austin American-Statesman wrote a City Hall Blog piece entitled, “5 Things We Learned As Austin Officials Started Hammering Out the Budget.” Unfortunately, three of those five items relate to NEW SPENDING that Council members would like to ADD TO THE BUDGET.  While these programs may be worthwhile, and some appear to be, where are the cuts needed to offset these changes?
  4. Earlier this week, I was at City Hall for a meeting with a City Council aide. While walking down the hall, I encountered another aide who delivered some disturbing news. He told me about a trend that has emerged during the budget talks. Every time someone brings up a plan to cut some part of the budget, another Council member has a pet project ready to absorb that new-found money.

There is a simple three-word message that needs to be conveyed to the City Council:

Remember the Taxpayers!

Remember affordability! Remember the map of the City almost totally blanketed with double-digit tax appraisal increases for this year. Most homeowners will face the 10% appraisal cap, and any difference left over above the cap will be pushed into next year. Probably causing yet another back-to-back 10% increase in taxable value.

The Biggest Obstacle That Taxpayers Face is Business As Usual

It doesn’t take long for new City Officials to become absorbed into the status quo. A good word for that is “INERTIA.” Here is Merriam-Webster’s official definition of “inertia”:

: lack of movement or activity especially when movement or activity is wanted or needed

: a feeling of not having the energy or desire that is needed to move, change, etc.

“Business As Usual” was an appropriate title for the groundbreaking album by the Australian rock group, Men at Work, released in 1981. It stayed at number one on the Billboard music chart for 15  weeks and sold 15 million copies worldwide.

But here in Austin in 2015, we can no longer afford Business As Usual at City Hall!

business-as-usual-4f745d7d29bf1

City Council Approves Taxpayer Impact Statement

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By Bill Oakey – August 6, 2015

On Thursday the Austin City Council voted unanimously to approve a proposal by this blog to produce a Taxpayer Impact Statement as part of the upcoming City Budget. This marks a major step forward for truth in taxation. When the final budget is adopted, taxpayers will be able to determine the actual dollar amount of any tax increase for a range of home values at various levels of appraised value increases. The Taxpayer Impact Statement, which will be included in the budget document and published online, will also include the estimated dollar increases City in utilities and fees. An amendment to the resolution calls for a set of “budget highlights” to be listed on the statement.

Many thanks go out to Council Member Elken Troxclair, who sponsored this item as a resolution, and to the co-sponsors, Mayor Steve Adler and Council Members Ann Kitchen and Sheri Gallo. And of course we are extremely grateful to the entire Council for their unanimous approval!

The Next Step Is To Ask Travis County to Follow the Example

On Thursday morning I contacted all five of the Travis County Commissioners and asked if they would consider supporting a similar Taxpayer Impact Statement for their upcoming budget. Commissioner Margaret Gomez was the first to respond, and she has gladly agreed to help. The best-case scenario would be universal adoption by all of our local taxing entities. Once all of their budgets are finalized, we should ask for a combined statement of the impact on taxpayers. I believe that good transparency will lead to a better appreciation of our affordability challenges, and hopefully, an eye toward more prudent budgeting.

American-Statesman Editorial Board Endorses This Reform

Here is an excerpt from their editorial:

WE SAY: AUSTIN CITY BUDGET
Tax deliberations need transparency, sensitivity for homeowners
Posted: 12:00 p.m. Thursday, Aug. 6, 2015

By Editorial Board

“City watchdog Bill Oakey, who writes the “Austin Affordability.com” blog, has put together what he calls a ‘Taxpayer Impact Statement’ that spells out much of that data for city taxpayers. That is a good starting point.”

“And, if all five taxing jurisdictions put together such impact statements that also detail the total taxes and fees taxpayers are shelling out annually to those entities, it might generate the kind of sensitivity — and sensibility — needed in budget and tax deliberations. At the very least, such transparency would illuminate how spending decisions by elected and appointed officials affect taxpayers’ wallets from one year to the next. And that would enable voters to hold their elected officials more accountable”

 

Budget Op-Ed In The Austin American-Statesman

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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.

 

The Whole Truth About The City Manager’s Proposed Budget

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By Bill Oakey – July 30, 2015

On Thursday morning the new City Council members were treated to something they have been  eagerly awaiting all summer long – the proposed FY 2016 City Budget. If you would like to get an overview, you can see Volume One right here from the City’s website.

We have all known since the spring that property tax appraisals shot through the roof for most Austin homeowners, to the tune of mid to high double digits in many local zip codes. So, my approach to analyzing the taxpayer impact of the new budget will be different from the spin that appears in the budget’s executive summary. The word “affordability” appears a total of 8 times in Volume One, while the word “tax” appears 290 times, and “fees” appears 134 times. Here is the opening statement on the first page:

“This budget will raise more total property taxes than last year’s budget by $36,413,252 or 7.7%, and of that amount $13,926,299 is tax revenue to be raised from new property added to the tax roll this year.”

It is easy to see from those figures alone that the City intends to spend more money much faster than the growth in new population. Imagine what would happen to the tax impact on long-term residents if that trend continued for the next 10 years. Another disturbing tidbit is that the City Manager proposes adding 347.4 new staff positions, which is more than double the number of 151.25 positions that were added last year. Also, utility and fee increases averaging $7.98 per month are included in the budget.

So, What’s the Bottom Line On This Year’s Proposed Tax Increase?

The fairest and most truthful way to answer that question is to look first at the tax appraisal map from TCAD that was published in the spring when the new appraisals went out. Click to enlarge the map.

Notice this statement that appears next to the map, “The average market value for houses with a homestead exemption in Travis County went up 11% on average to $355,312.” Because the map includes several areas that are outside the City of Austin, it is hard to tell exactly how much the average appraisal increase is for Austin residents. But we can see that almost every Austin section on the map will, on average, hit the 10% tax appraisal cap.

However, the City told the Austin American-Statesman that “The owner of the median-valued homestead worth $232,272 would pay $1,051.08 in city taxes, up from $1,011.24 this past year.” That works out to a very modest-appearing tax increase of only $40. This includes the new 6% homestead exemption approved by the City Council.

What’s Wrong With This Picture?

Here is a comparison between the data in the current FY 2015 Budget (Vol. 1, Page A-16) and the proposed FY 2016 Budget (Vol. 1, Page A-13). But this comparison is not accurate, as you will soon see.

FY 2015 FY 2016 $ Difference % Difference
Median Home Value $202,254 $232,272 $30,018 14.8%
Property Tax $973 $1,051 $78 8.00%

It turns out that the data presented in each of these budgets only allows an “apples to oranges” comparison of the numbers. After conferring with the reporter of Thursday’s article in the American-Statesman, I obtained the missing number needed to derive the $40 tax increase for the “median value” homeowner. The “median value” of $232,272 for a home in the FY 2016 budget is actually the “median homestead value.” They used that value because the City has adopted a 6% homestead exemption. So, in order to calculate the tax increase, we need to know the “median homestead value” for FY 2015. That number, which does not appear in either of the budgets, happens to be $210,279. Thanks to Andra Lim with the Statesman for tracking it down from the City.

With all of the required figures in hand, here is how to calculate the estimated tax increase:

  FY 2015 FY 2016 $ Difference % Difference
Median Homestead Value $210,279 $232,272 $21,993 10.5%
Less 6% Exemption $0 $13,936    
Taxable Value $210,279 $218,336    3.8%
Tax Rate Per $100 0.4809 0.4814    
Property Tax $1,011 $1,051 $40 3.9%

The median homestead value only includes owner-occupied homes, and not the ones being rented. So, there is a vast difference in the variety of residential properties on the tax rolls. A $40 annual tax increase looks small, but the median value numbers above include small units in multi-family properties such as condos. The biggest tax burden is borne by single-family homeowners, who make up a large percentage of Austin’s long-term residents.

We have been told that the City Manager’s budget proposal calls for a tax rate increase from 48.09 cents to 48.14 cents per $100 valuation. But that doesn’t tell us the percentage increase above the “effective rate,” which would take the appraisal increases into consideration.

A Taxpayer Impact Statement Would Be a Good Tool for Truth In Taxation

My “Truth In Taxation” proposal calls for the City to produce a Taxpayer Impact Statement that includes a chart of home appraisal values in $50,000 increments. The chart should include the following information:

1. A column showing last year’s taxable values, with no homestead exemption, plus columns showing the standard homestead exemption and the over-65 and disabled homestead exemption.

2. Additional columns showing this year’s taxable values at various appraisal levels, up to the 10% cap. And the dollar amount of taxes due at each appraisal level.

3. Columns showing the average amounts of utility and fee increases.

4. A final column showing the estimated grand total of tax, utility and fee increases.

It is time for the City to finally bring the full, complete and truthful impact of the budget out of the shadows and into the open!

Page A-11 of the budget spells out the frustrations of the people in the results of a citizen satisfaction survey. Here is just one example:

  • When asked to rate “Overall value for city tax dollars and fees,” 40% of citizens responded that they were satisfied or very satisfied, four percentage points better than the national average. However, 30% of respondents expressed dissatisfaction. Satisfaction is down nine percentage points from previous years, indicating that residents and business owners may increasingly be feeling the pinch of higher tax and utility bills.

Austin And Travis County Should Announce Joint Affordability Initiative

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By Bill Oakey – July 15, 2015

In about 7 weeks the City of Austin and Travis County will each have to finalize their Fiscal Year 2016 budgets that will take effect on October 1st. For the past several years, citizens throughout the area have been clamoring for major steps toward affordability. Today I am calling upon City and County officials to make some decisions on what affordability measures and proposals they will include in their new budgets, and to make a public announcement telling the citizens what their affordability plans are. As I have said many times in public presentations – the time for talking about affordability is behind us. The time for action is now.

The Austin American-Statesman has repeatedly editorialized on the need to slow down the growth of the City Budget in particular. Austin’s downtown has added countless high rise buildings that should be adding to the tax base and making it easier to pay for expanding City Services. The same is true for neighborhoods all over town that have seen gigantic new resort-style apartment structures that take up a full block. Traditional neighborhoods in all parts of Austin have seen older homes scraped off and replaced with expensive luxury housing.

So that leaves us with a fundamental question. Where is all the increased tax revenue from all of those high-priced new buildings going? Why are our property taxes continuing to rise so rapidly that people are being priced out of their homes?

What Is the Bottom Line On the Growth of the City and County Budgets?

What you are about to see is not a pretty picture. Notice the rapid increases in the general fund in both of these budgets. That is the fund that is paid for with property taxes, sales taxes and some of the fees

City of Austin
  2010 2015 % Increase
General Fund $614,915,000 $854,040,000 38.9%
Total Budget $2,747,105,000 $3,493,973,000 27.2%

Travis County
  2010 2015 % Increase
General Fund $455,661,280 $650,897,476 42.8%
Total Budget $655,140,525 $910,988,941 39.1%

Has Affordability Been Addressed In These Past Budgets?

You will find that word sprinkled quite liberally throughout the current FY 2015 City Budget. In fact, in Volume 1, it graces the pages no less than 29 times. On Page A-8 within City Manager Marc Ott’s cover letter, he issues the following pronouncement with italics included:

“Carefully balances the service demands of a growing community with ongoing concerns over affordability by proposing a full penny decrease in the tax rate.”

That statement contrasts with the opening sentence on the very first page of the Budget:

“This budget will raise more revenue from property taxes than last year’s budget by an amount of $29,970,162, which is a 6.7 percent increase from last year’s budget. The property tax revenue to be raised from new property added to the tax roll this year is $8,375,296.”

What that means is that existing property owners paid the overwhelming bulk of the tax increase, to the tune of $21,594,866. The word “tax” appears 298 times in the first volume of the three-volume document. The word “fee” shows up 277 times. But, alas, on Page A-15 “affordability” gets its own section heading, with the title “Maintaining Affordability.” Most of the initiatives listed pertain to subsidies and assistance to low-income and senior residents. These are, of course, very worthy programs. But the bottom line for the average homeowner is that total property taxes for all of the taxing entities in Central Texas increased 6.1%, as shown on Page A-16. And that does not include the relentless forward march of the various “add-on fees” that appear on our utility bills.

What Can the Taxpayers Expect Over the Next Five Years?

You would probably be less frightened by spending a weekend alone in a haunted castle during a thunderstorm, while reading a Stephen King novel. But if you care to take a look, here is a glimpse of Page 60 in the City’s current Five Year Financial Forecast:

City of Austin Property Tax Assumptions

Fiscal Year Projected Assessed Valuation Growth Projected Total Tax Rate Projected Operations & Maintenance Revenue
FY 2016 9.0% (actual amount is 11%) 0.4782 $385,500,000
FY 2017 7.0% 0.4850 $420,900,000
FY 2018 7.0% 0.4860 $452,500,000
FY 2019 5.0% 0.5008 $492,700,000
FY 2020 5.0% 0.5192 $540,100,000

This chart assumes that property values and tax rates would both increase at the same time. If that were to happen, it would be in stark contrast from current policy, which has been to reduce the tax rate somewhat, to offset the increase in property assessments. In any case, the City’s O&M revenues are projected to increase 40.1% over the five years. When you look at percentage increases, keep one important factor in mind. As the base dollar amount continues to increase, the percentage applied to that base derives a progressively increasing amount. The same is true of your home valuation and your tax increases. The taxable amount of your home value is capped by law at 10% per year. So, if your home started out a few years ago being valued at $200,000, the 10% cap meant that you could only be taxed at $220,000. That’s a $20,000 increase. But once the value of that same home has doubled to $400,000, then the 10% cap yields a taxable value that is $40,000 higher. This year, as the TCAD map shows, Austin has many zip codes with home appraisal increases into the double digits. Click or tap the image to enlarge it.

That’s all the more reason why our City and County officials need to come together and decide on an affordability agenda to be incorporated into their upcoming budgets. A failure to adopt meaningful near-term and long-term reforms would only intensify our already critical economic divide.

Should We Vote to Approve Bonds for a New County Courthouse?

There is no question that Travis County needs a new Civil and Family Courthouse. It is my understanding that no other area taxing entity will place any additional bonds on the November ballot. The current price tag is pegged at $291 million. But Travis County officials are working feverishly to come up with strategies to offset the cost. Discussions have included using fees from after hours parking at the courthouse, certain rental receipts from other County properties, and the sale of other County owned land. Between now and the November election, we will know more about the total amount of those offsets. In addition, the firm that is awarded the contract to build the courthouse could potentially make some design changes that would make the project more efficient.

No decision has yet been made as to whether this blog will endorse the courthouse bonds. But I am hopeful that both the City and the County will join together and demonstrate to the community a serious commitment to affordability. The Travis County Commissioners that I have met with have laid out some innovative ideas for cost-savings, through County-specific initiatives as well as cooperative strategies with the City. Both bodies have appointed representatives to the Regional Affordability Committee. At my suggestion, that committee has embarked on the development of an Affordability Strategic Plan. If the local voters are shown that affordability efforts will finally bear fruit with tangible results, then they are much more likely to stand behind the County Commissioners’ recommendation and vote to approve the courthouse bonds.