Tag Archives: Austin

Could Austin Be Headed For Another Budget Surplus?

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By Bill Oakey – May 14, 2014

Just two months ago, Austin taxpayers narrowly escaped a stance by some City Council members to dip into a $14.2 million budget surplus.  Thanks in part to the efforts of readers of this blog, citizens spoke out and the money did not get spent.

Now it appears possible that we could see an additional budget surplus, just in time for the annual budget discussions that will commence early next month.  The new surplus could arise from stepped up efforts to reduce the high number of staff vacancies still remaining in the current fiscal year’s budget.

In my message to the City Council on Monday, I urged them to cut back and regulate the number of unfilled positions.  Since then, even more information has come into focus on that issue.  The City Manager and his top budget staff have been very inconsistent in their handling of vacancies, and in their response to Council Members’ attempts to cut taxes by reducing them.

Last Summer’s Battle of the Bulge In the Budget

A great boxing match took place late last summer, when Council Member Mike Martinez took center stage on the issue.  See the Austin Chronicle article, “City Budget: Open Season On Vacancies,” from last August 23rd.  Martinez stepped into the ring, gunning for victory in one of the final rounds in the annual face-off with the staff.   But it may not have been an even fight.  Martinez was outnumbered and out-maneuvered, or so it seemed.  One by one, budget staff came out swinging, and they parsed the 930 citywide vacancies into categories.  Blow after blow was struck at the heart of any attempt to reduce the cost of the unfilled jobs.

The math that was used in that hot summer standoff conflicts with a new spin on essentially the same set of numbers, just five months later.  The official line from last August was that the City’s overall average vacancy rate was 5% to 8%.  On January 10th of this year, the same City Manager (Marc Ott) cited a vacancy level of 900 positions and labeled that number “quite frankly, far too high.”  This time a new kind of math pegged the vacancy level at 9.7%.  (A relevant paragraph from the City Manager’s January memo will be attached to the end of this posting).

But here’s what’s interesting.  When you peel back the surface coating of the numbers and look a little deeper, suddenly you see a whole new picture.  Between October 1st when the new budget took effect and January 10th, the needle had barely moved on the total number of vacancies.  So, at that point, a little over 25% of the fiscal year had passed without any of those staff funds needing to be spent.   Even if all of the vacancies were filled by February 1st, only two-thirds of the fiscal year would be left by then.  So, what happens to the leftover budgeted funds?

A hint can be found in the January City Manager’s memo…

“Long-term vacancies not approved to be filled will be eliminated or repurposed in the upcoming budget process to meet other priorities.”

We can only wonder how much money is actually left over and “repurposed” each year.  Other cities have established reasonable levels of staff vacancies.  Portland’s is about 5%, according to this article in the Portland Oregonian.

What Will It Take to Finally Fix the Problem?

What will it take for all of this money that is being juggled around to be accounted for in a more transparent manner?  The answer can be summed up in one simple statement:

The City Council must exercise its authority over the budgeting process, and not concede another inch on a prudent set of fiscal directives to the City Manager.

Here are a few friendly suggestions on how they might go about doing that:

1. Ask for a full accounting of all unspent funds from vacant positions from all City Departments.  Consider asking for regular updates on a quarterly basis.

2. Label those funds and post them to the City’s website on a chart that the citizens can see.

3. Include in the same chart a listing of surplus funds from the previous budget from increased sales taxes and user fees.

4. Establish a clear policy on how leftover funds from vacant positions can be allocated.  The Council may decide that some departments have backlogs and should receive additional funding.  Or that some funds should be transferred to one of the utilities to hold down a rate increase.  Or set aside to reduce taxes in the next budget.  But, however the process is set, it should be much less fuzzy and squiggly than the system we have today.

The bottom line now is that we should be in line for a budget surplus in excess of the $14.2 million that was announced in March.  Hopefully, we will be allowed to see exactly how much it is and where it ends up.

The City Manager’s January Budget Memo

Below is the key paragraph on staff vacancies from City Manager, Marc Ott’s January 10th memo to Department Directors.  The subject of the memo was “FY 2015 Budget Planning.”

“Another area that we must closely examine in the months ahead is how we manage and budget for our vacant positions. As of the end of December, there were more than 900 vacant non-uniformed positions across City departments. This represents a City-wide civilian vacancy rate of 9.7%, which, quite frankly, is far too high. Nearly 400 new positions were approved by Council back in September with the adoption of the fiscal year 2014 Budget. It is imperative that these new positions be filled as soon as qualified candidates can be identified so that we can fulfill the many new initiatives and service enhancements to which we have committed. With respect to longer term vacancies, effective immediately, all positions vacant more than 180 days will be frozen and will require both ACM and City Manager approval to fill. This review process will remain in place at least through the end of June, when it will be reevaluated. Long-term vacancies not approved to be filled will be eliminated or repurposed in the upcoming budget process to meet other priorities. Moreover, I have directed budget staff to reassess how we budget for vacancies with an eye towards better aligning budgeted vacancy savings with actual long-term trends.”

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

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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

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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.

New Survey Says It All – Austin Is Headed For Very Serious Trouble

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By Bill Oakey – May 9, 2014

Yesterday veteran Austin pollster, Peter Zandan, released the results of a survey called “The Zandan Poll: Voices of the Austin Community.” These words rose from the page upon my first glance at the report:

65% of Austinites are dissatisfied with the cost of housing

59% of them are dissatisfied with the cost of living

You can read a summary of the survey here.  And see the full report here.

Not surprisingly, the typical media response to the survey incorporated lots of spin.  That was easy to do because there were plenty of “feel good” responses about Austin as a city.  KUT’s website trumpets the poll with the cheery headline, “Austinites Optimistic About City’s Future.”   Two important words were left out of that statement.  A more accurate telling would read “Very Young Austinites Optimistic About City’s Future.”

Even the numbers for the respondents aged 18-35 are far from universally rosy.  67% of them say that Austin is headed in the right direction.  But 19%, almost one in five, say that the City is headed down the wrong track.  Among the 35+ age group, the numbers are most disturbing.  Only 46% say that we are headed in the right direction, while a whopping 37% say that we are moving down the wrong track.

Mr. Zandan should be commended for producing this survey at his own expense.  His goal was to start a conversation about where Austin is headed and the challenges that the community faces.  No amount of media spin can wipe away the underlying concerns about affordability.  Traffic and water are highlighted as well.  The most positive results from the poll indicate that people love Austin and would like to remain living here.  They would recommend our city to their friends as a fun place to live.  And, yes, Austin’s “weirdness” also fared well in the survey.

It is unthinkable to me that anyone with the power of the pen would not publicize all of the concerns expressed in such an important report.  The trend lines for Austin’s future do not look very encouraging.  If 59% of Austinities are not happy with the cost of living today, how in the heck are they going to deal with it five years from now?  We have two basic choices.  We can either pretend that Austin is one big party town, go out and enjoy the drunken binge of full throttle growth and festival fun, and not worry about the huge hangover that looms over it all.  Or, we can step out of denial and admit that bold, innovative, and decisive action is our only hope to avoid some sort of highly volatile boom and bust cycle.

As I have stated before to our elected officials and those seeking to replace them – your most ominous opponent is the quiet inertia of business as usual.  The path that we are on now is literally unsustainable on many levels.

The young hipsters of today’s Austin will be looking for houses to raise their own families in a few short years.  They will step across the line of that survey into the 35+ age column.  What fate will await them at that point?  Perhaps our status quo growth model will try to push them out and replace them with a fresh batch of new young hipsters.  But by that time, the prospective newbies may have already seen the handwriting on their virtual reality screens.   Those may show scenes of a few white-gloved ladies on Congress Avenue, escorted by guys who just stepped out of their lamborghinis.  But the screens may also show an eerie calm on the street.  Where did the rest of the people go?  And who put those boards on all the store windows?

Does Anybody Know a Rocket Scientist? We May Need Their Help

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By Bill Oakey – May 7, 2014

Nobody ever said that fighting City Hall was easy.  I just happen to be bold and / or crazy enough to try.  The victories are few, but very sweet.

This time I’m asking for a little help – from a rocket scientist.

Here’s the deal.  One of my proposed reforms has languished for nearly 30 years.  Everybody should get one proud notch on his belt in a lifetime.  So, here’s how I’d like to earn mine.

Win a reform of the City Council agenda process, so that citizens don’t have to wait six hours to speak at public hearings.

I lost that battle in 1987.  But I stood my ground and fought valiantly, sitting in the Council chambers waiting hours for my turn to speak on the proposal.  The Metro section headline in the next morning’s paper read, “Agenda Reform Proponent Kept Waiting.”

And I’m still waiting, nearly 30 years later.

So, I’m ready to call in a rocket scientist for help.  Perhaps she could measure the trajectory of each weary citizen as they navigate the voyage to and from the City Hall restrooms.  Or, she could track the velocity of the motorized wheelchairs that disabled citizens move about during their extended stays into the wee morning hours.

Maybe she could even stand beside me and help propel me to my proudest City Hall victory of a lifetime.  It would indeed be a sweet victory.  Not really for me, but for the next generation of City Hall visitors who want to participate in making Austin the best place to live.

You Have Been Summoned By the Austin Bulldog

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By Bill Oakey – May 4, 2014

If you are reading this blog, the chances are pretty good that you would be interested in an online publication that thrives on investigative reporting about public officials.  It’s called the Austin Bulldog, and you really need to check it out.  In addition to detailed profiles of current local officeholders, you will also find hidden truths and occasional skeletons pulled out of the closets of candidates who are seeking those offices.  The good news about these candidates is up front as well, based on extensive research and interviews with associates who are intimately familiar with their backgrounds.

The mad dog behind this publication is Ken Martin, who originally started In-Fact Daily as a weekly.  In-Fact is a subscription based newsletter that delivers detailed coverage of the hottest agenda topics at Austin City Hall and Travis County.  The publication is now edited by Jo Clifton, and has recently been renamed the Austin Monitor.

But you can read the Austin Bulldog for free.  They are currently examining many of the candidates running for the ten new district-based City Council seats.  And of course, you’ll find coverage of the mayor’s race.  Ken Martin has just published Part Two of his in-depth analysis of mayoral hopeful, Steve Adler.   I encourage everyone to follow this series on Mr. Adler.  Steve is much better known for his work at the Texas Legislature and for educational nonprofits than he is for direct involvement with City of Austin political issues.  The latest Bulldog piece quotes numerous sources as having high praise for Adler.

At this early point in the mayor’s race, all of the candidates deserve our attention.  But the buzz on the street among progressives is that business as usual at City Hall is not working out very well these days.  Unless one of the experienced, currently serving candidates comes up with some form of bold action to counter their previous voting records, we may be looking for new leadership.

One place to look for clues about the backgrounds of both the current and aspiring new officeholders is the Austin Bulldog.  And if you like what you read, you might consider making a voluntary donation.  Then hold onto your seats for a wild and crazy ride, from now all the way to November.  As many in our community have stated, Austin is at a crossroads.  We’re at that proverbial tipping point, where renters, homeowners, medium-skilled job seekers, and longtime Austinites are collectively shaking their heads.  Affordability is a major issue.  This upcoming election may well be the most important one we have faced in several decades.

We Need One More Vote From The Austin City Council

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By Bill Oakey – April 27, 2014

My longtime friend, Shudde Fath, who has served on the City’s Electric Utility Commission since 1977 and is approaching her centennial birthday needs our help.  A victory on this issue may take a group effort.  But she deserves all the credit in the world for discovering the problem.

In a nutshell, Shudde did some research last year and discovered that Austin Energy no longer charges the full amount that it costs to hook up a new home or business to the electric system.  What that means is that the rest of the ratepayers, people like you and me, are having to subsidize the new hookups that come on line.  Until Shudde made the discovery, there was no hookup fee at all, and there hadn’t been since sometime back in the late 1980’s.  As of today, a very small fee has been added for the new hookups, but it is not nearly enough to recover the total cost.

On this Thursday’s City Council agenda (May 1st), Item 41 is a resolution directing City staff to implement full cost recovery of the new hookups, as part of the Fiscal Year 2015 City Budget that takes effect this coming October 1st.   Here is a link to the resolution for Item 41.

The City Council member that we have to thank for this item is Kathie Tovo, who received the AustinAffordability.com Above And Beyond Award last week.  Her co-sponsors are Laura Morrison and Mike Martinez.  So, we just need one more vote.  You can send an email to Mayor Lee Leffingwell, Mayor Pro Tem Sheryl Cole, and Council Members Chris Riley and Bill Spelman by clicking this single link.  Then Tweet and Facebook this blog posting to your friends.

If you are an Austin American-Statesman subscriber, you can read an endearing article about Shudde Fath, entitled “97-Year-Old Woman Still Monitoring Austin’s Electric Rates.”

And The Winner Is…Kathie Tovo

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By Bill Oakey – April 24, 2014

Last night during an affordability presentation to the Austin Neighborhoods Council, I had the privilege of recognizing someone with a well deserved award.  Kathie Tovo and her Policy Aide, Shannon Halley, have been more responsive and attentive to the details of affordability issues than anyone else on the Austin City Council.  Not only that, Kathie’s actions have spoken louder than words.  She worked with City Staff to find an alternative to spending the budget surplus for funding a worthy project for a senior citizen recreation center.  And her office stayed in touch throughout the week that increasing the Over-65 and Disabled Homestead exemption came up for a vote.  She steered it past an uncertain fate, all the way to a welcome victory.

Giving an award is one of the fun parts of an otherwise treacherous process.  Along with it comes the AustinAffordability.com endorsement for Kathie for District 9 in the upcoming City Council election.  You can see the award below.  Click to enlarge it.

Tovo Award

 

Goodnight…And Pleasant Dreams, Plus Other Updates

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By Bill Oakey – April 21, 2014

Last Friday night I spent a cool and very pleasant evening at the Lenoir Wine Garden on South First Street.  It was an Authors Party, sponsored by the Austin Public Library Friends Foundation.  In addition to the opportunity to mingle with literary standouts such as Elizabeth McCracken,  I happened upon a chance meeting with noted psychologist and Austin resident, Dr. Gemma Marangoni Ainslie.  Little did I know at the time that my curiosity would lead to…

Goodnight…And Pleasant Dreams!

A Google search for a few of the intriguing folks on hand for the party turned up a disturbing New York Times article.  You might be better off reading this in the morning, rather than right before bed.

Entitled, “The House of Your Dreams,” the article was published in 2009 during the height of the real estate bust and economic collapse.  “Foreclosure, eviction and an uncertain real estate market are providing material for disturbing dreams and nightmares about home, which has an especially powerful place in the psyche,” the story begins.

As I continued reading, I began to discover an eerie parallel between the housing collapse of the Great Recession and the feelings of hopelessness felt by many Austinites as they struggle to hold onto their homes today.  Just yesterday, a realtor in my neighborhood told me that quite a few of her clients are sellers who can no longer afford to live here.

Back to the article, here is another interesting quote.  “At a time of collective angst and fear of economic insecurity, psychologists say more patients are recounting stressful dreams that revolve around the theme of home.”

Some psychological studies suggest that people’s dreams reflect actual real life situations that they can act upon as a result of what they learn from their dreams.  Austin’s own Dr. Gemma Marangoni Ainslie, whom I met at Friday’s party, cautions against taking dreams too literally.  “Things are not necessarily what they seem to be,” she stated in the NY Times article.  In her view, dreams are simply “clues about personal struggles and ongoing conflicts.”

As you turn down the sheets tonight, try not to think about Austin affordability.  Goodnight…and pleasant dreams.

Presentation to the Austin Neighborhoods Council on Wednesday

On Wednesday April 23rd, I will give a presentation at the Austin Neighborhoods Council meeting at approximately 7:53 PM at the Austin Energy Building, 721 Barton Springs Road.  The title is “Affordability –  Goals And Reforms to Maintain Austin’s Economic Diversity.”

“Above and Beyond” – The First Award From This Blog

Stay tuned for an upcoming announcement.  The first ever AustinAffordability.com award will be presented to a public official who has demonstrated outstanding leadership in the face of the inertia of Business As Usual.  She has definitely gone above and beyond her peers.  It will be a happy occasion, but the time and place have yet to be determined.  (As you probably already guessed, the tittle for this award was inspired by the classic Harlan Howard song, first reaching number three by Buck Owens in 1960, and then number one by Rodney Crowell in 1989).

Paul Robbins – Measures Needed To Control Austin Water Rates

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Austin’s critical water situation is an important element of affordability.  Veteran energy and water activist and author of the Austin Environmental Directory, Paul Robbins, weighed in recently with this guest editorial in the Austin American-Statesman:

Robbins: Austin needs to take measures to control water rates

Posted: 12:00 a.m. Saturday, April 12, 2014

BY PAUL ROBBINS – SPECIAL TO THE AMERICAN-STATESMAN

Austin’s cost of living is soaring, and one reason is its water costs. Water rates are falling into a dangerous pattern. It’s called a “death spiral.” Costs go up, inducing market pressure to drive consumption down, eliminating revenue needed to pay fixed costs. So rates go up again, causing consumers to cut back further, and the spiral gets steeper.

At the same time, the Central Texas region is afflicted with record drought, so consumption is heavily discouraged. Water rates will go higher to make up for even more lost revenue.

Austin’s water utility boasts that its conservation efforts have lowered consumption 17 percent per person between 2006 and 2013. This seems impressive until you consider water rates went up 70 percent in the same time period. In fact, between 2000 and 2014, water rates went up 123 percent and wastewater rates went up 130 percent. Inflation only rose 36 percent.

And brace yourselves. It has been announced that by 2019, water rates will need to be increased another 31 percent and wastewater rates another 15 percent. This is despite cutbacks planned for next year’s budget and recent hook-up fee increases for new buildings of almost 200 percent.

The planned increases may not stop here. Due to the drought, the utility is shopping for new water supplies. To give you an idea of the relative cost, groundwater sold by one potential supplier to an Austin suburb is 30 times the price Austinites pay for Colorado River water.

Why are costs so high?

  • The biggest reason is capital investment and debt, much of it coming from growth. About 52 percent of your water/wastewater bill is related to capital improvements. An example of this is the half-billion-dollar Water Treatment Plant No. 4, which began construction in 2010. Judging from the utility’s recent forecast, Austin will not need its capacity for 17 years. Because it is a wasted asset, it will literally cost more to turn on the plant than to leave off.
  • There were poor decisions regarding asset management. The “profit” from the land sale of the former Green Water Treatment Plant site was put back into enhancements for the site’s redevelopment instead of lowering water costs. Other property, such as the retired Govalle plant on Lady Bird Lake, sits almost unused.
  • The water utility is one of the largest energy users in Austin, consuming enough electricity to power 17,000 homes. Yet it has no energy conservation plan and is buying wind power at 39 percent more than it cost the electric utility to purchase.
  • The utility’s profit, the transfer to the General Fund, has more than doubled since 2000, while water consumption is roughly the same.

Until the debt works its way out of water rates over time, Austin may not be able to do much to lower them. But through fiscal discipline and real conservation efforts, it can mitigate future increases.

There are a host of small cost-saving measures that can add up. These include: reducing General Fund transfers; postponing the operation of the new treatment plant until it is needed; buying and conserving electricity at an affordable cost; selling unneeded assets and using the profits to buy down debt; using leak-resistant polyethylene pipe; using “smart” utility meters to reduce labor costs and water loss.

There are several strategies that need to be implemented instead of purchasing new supplies. One of the most basic is to fully implement the water conservation plan approved by the City Council in 2007. This would be greatly enhanced if the conservation program was moved out of the debt-strapped utility, which has a conflict of interest saving water.

In addition, Austin has a reclaimed water system that is barely used, as well as access to Barton Springs flows into the Colorado River that might be routed to a treatment plant.

Austin would be foolish to ignore the affordability of its water any longer. Wall Street has a word for cities that have reached the height of fiscal hubris: Detroit.

Robbins is an environmental activist, consumer advocate, and author of “Hard to Swallow,” a report on Austin’s high water costs.