City Manager Spencer Cronk laid out a proposed $5 billion budget for Austin's fiscal year 2022-23 on July 15, supported by a decreased property tax rate alongside increased fees for some city services.

The approximately $5 billion total is a jump up from last year's unanimously approved $4.5 billion budget. Residents may see a more than 16% property tax rate decrease while other city fees increase.

City Council will consider the financial outline over a series of meetings in July and August, and final votes on the budget and tax rate are set for the week of Aug. 15. The 971-page budget proposal may be viewed here, and a shorter overview of the draft may be viewed here.

The draft spending plan's release comes as the city is grappling with a staffing shortage across most departments and as the cost of living continues to rise. During his announcement of the budget, Cronk said he hoped to correct the trend of Austin heading "in the direction of a crisis" related to its workforce.

"The simple truth of the matter is that we do not currently have the staff that we need to deliver the services that we must," Cronk said. "For that reason, and others, the core feature of our FY23 budget proposal is a renewed emphasis on ensuring that, as we move into the future, we are in a position to recruit and retain the people we need to do the job that our community expects of us."

In line with that goal, Cronk proposed a 4% cost-of-living wage increase for nonsworn employees as well as a 20% increase for the city's living wage. That pay rate has remained at $15 per hour for years and would jump to $18 under the FY 2022-23 plan.

A more significant living wage hike to $22 per hour has been pushed this year by city employees, a range of community members and City Council. Officials in June called on Cronk to budget for that pay rate—or to increase the living wage "by the most significant amount possible" this year. After his July budget presentation, Cronk said further analysis of that request pointed to his proposed $18 rate.

“We worked extensively with our human resources department, did market studies in terms of looking at what other communities were at. We are very committed to ensuring that, position by position, we are competitive," Cronk said. "When you look at specific job classifications, we want to make sure that we are able to recruit and maintain the right people. But across the board, we knew that that’s a significant increase if we go too high too fast. And so based on the feedback that we got from our budget staff and from HR, we landed on the $18 [rate].”

In addition to those wage adjustments, Cronk's plan also includes a one-time stipend of $1,500 for employees with at least one year of service with the city. That figure would be prorated for employees working less than 40 hours weekly.

Ratepayer effects

City taxpayers would be in line for some relief on their property tax bills based on the proposed budget. Austin's tax rate would dip from the current $0.541 per $100 of property valuation to $0.4519 per $100, a more than 16% drop.

However, the city said the property tax decrease combined with projected increases in other city fees and services—headlined by Austin Energy's proposed rate hike—would result in an overall 2.7% increase in annual city payments for the "typical" ratepayer. That assessment is based on a resident living in a single-family home worth the city median of $448,000, with certain assumptions for their power, water and trash service.

Cronk said the typical resident can expect to pay around $10 more per month under the proposed tax and fee structure, and that the increases are mainly aimed at covering cost increases related to city employees and services.

"We are always mindful of our impact on the pocketbook of Austinites. At the same time, we firmly believe that effective city government is critical to the success, financially and otherwise, of our whole community—and we will endeavor to continue to strike the right balance," Cronk said.

Public safety

The spending plan would include a nearly $1.3 billion general fund, the portion of the budget covering the "meat and potatoes" of city government, Cronk said, the majority of which is dedicated to public safety.

The Austin Police Department would receive a 0.22% budget boost to a record $444.03 billion, a less than $1 million jump from the $443.07 set in the current year's amended budget. While that increase includes three more sworn officer positions, APD maintains dozens of vacancies and has not been fully staffed for years, a trend Cronk said will continue to be addressed.

“I have committed to the chief and to the community and to our departments that we are going to do everything we can to fill those vacancies as soon as possible," Cronk said. "As we fill those vacancies, I have put in the forecast additional resources for particularly our police department. So as we have the opportunity to fill them, we will have the resources that are needed."

APD's budget is rising despite the removal of the city forensics office from its operations. The separation of the forensics lab took place in 2020 during a budget process marked by City Council's push to "reimagine" public safety, including reallocating millions away from APD.

Austin was forced to add the forensics office and other funding back to APD last year to comply with a state law passed to punish any cities that "defund" their police departments. Despite that reversal, city staff said earlier this year that they were working to once again remove the lab from APD, a plan Cronk is moving along with his proposal.

While APD's funding is at its highest ever, Gov. Greg Abbott said this week that his office will "look into" the department's funding and Austin's compliance with the law.

The Austin Fire Department is in line for a nearly $10 million funding increase and 18 additional civilian and sworn positions, while emergency medical services would receive nearly $6 million more with nine additional civilian staff positions. Those totals are roughly in line with projections made this spring, although they do not cover all additional staffing and operational requests made by the public safety departments.

City services

Aside from the general fund, which makes up around one-quarter of the overall $5 billion proposed budget, Austin Energy's $1.59 billion allocation and Austin Water's $683.75 million are the other largest pieces of the draft FY 2022-23 plan. Austin Energy's budget would be 5.04% higher than this year, while Austin Water's would be 4.21% more.

Cronk's presentation also included a focus on resiliency and addressing climate change. Some highlights include more than $120 million dedicated to expanding the city's network of urban trails, $35 million for Austin Resource Recovery's waste-diversion services, $2.2 million for eight new disaster preparedness staff and $630,000 dedicated to staff for regional resiliency hub efforts, among others.

"Clearly, one area of broad concern is the impact that our changing climate can have on Austin, and the increased potential for weather-related emergencies, especially when it comes to protecting our most at-risk residents. That’s why this proposed budget dedicates funds for disaster infrastructure, such as cold and hot weather centers and neighborhood resiliency hubs; and to ensuring that the community is informed about those resources and understands how to utilize them if needed," Cronk said.

Future outlook

A chief consideration for many cities across Texas in recent years has been the state-imposed cap on revenue collections established by lawmakers in 2019. Following that move, cities are not allowed to collect more than 3.5% additional revenue from property taxes year over year without asking voters for approval.

Cronk said that limit has forced Austin to make some operational adjustments, but that the city remains on solid financial footing.

"Especially for a city whose population, and resulting demand for services, has grown as fast as Austin’s, what that 3.5% cap has meant is that we’ve been obligated to make some fundamental changes in the way we do business," he said. "While I can happily report that we have succeeded as an organization in making many of those changes over the past few years, it’s also clear that there is more to do—and that the state revenue cap will continue to present significant challenges for us moving forward."

A five-year financial forecast released this spring also painted a better-than-expected outlook for Austin's budgeting. Despite those projections, however, Cronk said there is a chance the city may need to call an election for further revenue as time goes on.

“That will be an ongoing discussion with our community and with our council, but certainly it’s always a possibility if we do need to go above the 3.5% mark," he said. "At this point we’re not anticipating that. But again, as we see increased needs for additional fire stations or additional substations for our police department, we may need to go to the voters for an additional tax increase.”