Tag Archives: Austin City Manager

Special Event Fee Waivers – Other Texas Cities Prefer Hotel Occupancy Tax

By Bill Oakey – June 4, 2015

The quest to eliminate taxpayer-subsidized special event fee waivers may get a boost, thanks to the discovery of a little-publicized City Manager’s Power Point presentation from mid-2014. This presentation followed the May 1st passage of City Council Resolution # 20140501-036, sponsored by Kathie Tovo, directing the City Manager to review alternative funding sources for special event fee waivers. One specified option was to consider using the Hotel Occupancy Tax. A subsequent information request from then Mayor Pro-Tem Sheryl Cole revealed that Austin’s Hotel Occupancy Tax revenues have galloped from $51 million in 2012 to an estimated $70+ million in 2014.

The newly discovered Power Point presentation should put to rest any fleeting suggestion that Austin cannot or should not use Hotel Occupancy Tax funds to replace millions of dollars in fee waivers. This statement appears on Slide # 17: “To date we have researched and found 30 cities in Texas that currently utilize other funding sources for special events that qualify; most utilizing a percentage of HOT Funds administered by the Convention & Visitors Bureau (CVB).” Cities cited in the presentation include Cedar Park, Dallas, Georgetown, Giddings, Fredericksburg and Round Rock. You can download the Power Point presentation here.

From an affordability standpoint, here’s a revelation that should catch everyone’s attention. On Slide # 8, charts show that in 2013 the City granted $1,146,127 in fee waivers. But somehow they wound up with a funding gap of $3,110,104 that year. The event costs for all City departments added up to $6,703,457, while fees collected only came to $3,593,353. (The City Transportation Dept. reported the 2013 funding gap to be $4,256,000, with the total five-year deficit from 2009-2013 coming to $10,694,000).

At the City Manager’s Power Point session, Slide # 2 states that an alternate funding proposal for special events was due to his office on July 24th, and to the City Council on August 7th (the date specified in the Council resolution). We now know that something transpired at City Hall between May and November of 2014. Marc Ott’s November 7th memo signaled a new direction for responding to the issue, as well as a new one-year-later deadline. They are now pursuing a plan for multi-year agreements with special event organizers. These carry the potential for locking in the taxpayers to continuous fee waiver subsidies. The whole notion of considering the Hotel Occupancy Tax as an alternate funding source disappeared down the rabbit hole.

But now it is on its way back out…Stay tuned!

Rabbit Hole

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Another Huge City Management Failure – The 911 Call Center Fiasco

By Bill Oakey – May 29, 2014

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

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

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

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

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

Update: City Staff Unmet Service Demand Dated May 20th

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

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

By Bill Oakey – May 13, 2014

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

Vacant Positions

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

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

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

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

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

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

“Yes.”

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

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

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

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

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

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

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

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

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

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

By Bill Oakey – May 11, 2014

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

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

The City Manager Does Not “Get” Affordability

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

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

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

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

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

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

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

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

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

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

How Can the City Council Double Down on Affordability?

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

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

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

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

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

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

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

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