Ed Van Eenoo, the city’s deputy budget officer, prepped City Council members with the forecast as the city’s policymakers prepare to begin budget talks for fiscal year 2018-19.
Here are five takeaways from Wednesday’s discussion.
1. Sales tax revenue growth has been trending downward since 2012.
In FY 2016-17, Austin’s sales tax collection fell $750,000 short of projection—city staff said such projections are always very conservative—and an $800,000 shortfall is predicted for the current fiscal year.
According to numbers presented by Van Eenoo, Austin’s sales tax revenue growth has been trending downward since 2012.
2. Property tax and sales tax revenue combined do not cover the cost of city’s public safety budget.
The city spends 67 percent of its general fund budget on public safety. Although Van Eenoo said that number has dropped in recent years, Mayor Pro Tem Kathie Tovo pointed out the city’s property tax and sales tax revenue only accounts for 66 percent of the general fund. She said the numbers show the tough budget constraints Austin finds itself in.
3. The city expects to save $4.4 million from not having labor contracts with the Austin Police Department and Austin-Travis County Emergency Medical Services.
The city has so far failed to renegotiate labor contracts with the police and emergency medical service, or EMS, unions. Instead of operating under a personalized and independent labor agreement, both departments are operating under state law requirements, which has had effects on hiring, pay structure, promotions and retirement.
Although the city is continuing its negotiation work, Van Eenoo said he expects the city to save $4.4 million by operating without a contract.
4. Austin will need to completely rework its cost structure in the event of a tighter, state-mandated property tax collection cap.
Texas state law mandates that governments can only increase property tax revenue by 8 percent each year. Last legislative session, state lawmakers proposed 4 percent and 6 percent caps, but both measures failed. Earlier this year, Gov. Greg Abbott floated the idea of a 2.5 percent cap.
For the last few years, Austin has been increasing taxes close to the 8 percent limit. Van Eenoo told council members Wednesday that he expects the cap to get tighter in coming years, and when it does, he said Austin will have to restructure its current cost strategy, and likely consider employee, pay and program cuts.
5. Austin's new paid sick leave policy estimated to cost the city $480,000
After passing an ordinance in February mandating all private employers to provide paid sick leave to employees, the City Council expanded the policy to include the city of Austin. On Wednesday, Van Eenoo estimated the rule's cost to the city at $480,000—a number he said could change depending on how many employees call in sick through the rest of the year.
Van Eenoo said the effect of the policy differs between departments and positions. Some departments can work around a temporary vacancy, but others—such as the parks and recreation department with swimming pool lifeguards—will need to pay the sick employee and their replacement, Van Eenoo said.
