Next year’s budget will bring bigger bills for Austin residents.
The Austin City Council got its first look Wednesday at the city staff’s proposed 2016-17 budget, which includes $56 million in increased general fund spending, 435 new employees citywide and a tax and fee structure that will add $150 to the average homeowner’s annual expenses.
Deputy Chief Financial Officer Ed Van Eenoo described the budget as “scrambling to try to keep pace” with a city population that is expected to hit 937,065 in 2017, up from 842,743 three years ago.
Though the city’s tax rate is projected to be lower than last year, rising property values mean the bill for property owners will be higher, even with an increased homestead exemption approved last month. The proposed tax rate of 44 cents per $100 of property value is as high as the city can make it without possibly triggering an election.
City Manager Marc Ott told the council that an abundance of spending and committed funds had made this budget tighter than others in recent years.
“We’re feeling the full impact of that in this budget,” he said. “I cannot overstate the importance, in my view, of moving back to a more conservative posture.”
Mayor Steve Adler, who didn’t attend Wednesday’s budget workshop but spoke to reporters via phone from the Democratic convention in Philadelphia, called it a “good initial place to start,” but he emphasized that the council would certainly make changes.
“The council in any year needs to be conservative and prudent in spending taxpayer dollars,” he said. “We had a balanced budget last year, and we’ll have a balanced budget this year. I think what the city manager was saying is we can’t go outside of that.”
More fees & new costs
The proposed budget includes increases to all city fees, utility charges and property tax bills. The owner of a home with a taxable value of $278,741 (the average in the city) would pay $44 more in property taxes.
Monthly water and garbage rates, utility fees and drainage fees would also go up. The city’s staff estimated the total increase in taxes and fees for an average Austinite would be $150, a 4 percent increase.
Homeowners could have faced an even larger property tax bill if the council hadn’t voted last month to increase the homestead exemption to knock 8 percent off the value of a home for tax purposes, up from 6 percent this year. That change is expected to shave $23 off the typical homeowner’s tax bill.
Public safety, which makes up nearly three-quarters of the general fund, would increase $31 million under the staff’s proposal. Development services would get an additional $5.5 million, a 17 percent increase, while libraries would get an additional $6.1 million, a 15 percent hike.
Most of those increases are associated with raises for employees — 2 percent for police and firefighters as mandated in their contracts and 2 percent merit increases for other city workers — and paying for new employees.
City Council priorities — including a living wage increase and increases to health and housing programs — also contribute to the larger budget.
Departments were able to shave $3 million in nonpersonnel costs to cover some of the council-requested increases, Van Eenoo said.
The proposed budget is by no means final. Council members have four workshops during August to argue for and against department-specific expenditures. The final budget will be approved in mid-September and will go into effect Oct. 1.
Council Member Delia Garza kicked off a political push immediately by holding a news conference Wednesday afternoon with supporters demanding more funding for health and human services programs. Those expenditures need to increase by $8.3 million to stay on par with city goals, but are projected to increase by only $4.3 million, Garza said.
She doesn’t know yet what to adjust for that, but she and others at the news conference said they would find room.
“We do not want to hear that the budget is tight — if it’s so tight, you should not have given a tax break to the few,” said Tom Mendez of Austin Interfaith, referring to the increased tax exemption for homeowners.
But others said rising taxes were too much of a squeeze already, and the exemption was a little relief.
“Do (they) have any idea what the appraisal value for normal people is?” said Mary Ingle, president of the Austin Neighborhoods Council. “The homestead exemption is a necessary thing right now if you have examined a normal person’s tax bill.”
Ingle added that a proposed $720 million transportation bond could further add to homeowners’ bills. If voters approve the bond in November, it would incrementally add 2 cents to the property tax rate starting in 2018. Early estimates put the cost at nearly $60 a year for the typical homeowner.
Adler, for one, would like to see more funding in 2017 for quality of life expenditures, such as after-school programs and efforts to help Austin’s music scene. The mayor doesn’t expect the total budget to increase, he said, but he doesn’t know yet what he would tweak or reduce to make room.
“We all just got this, so it’s going to take some time to look at that,” he said.