Austin City Council finds $15 million to lighten pandemic pain on music venues, child care, legacy businesses

Pictured here is a concert at the Mohawk on Red River Street. (Christopher Neely/Community Impact Newspaper)
Pictured here is a concert at the Mohawk on Red River Street. (Christopher Neely/Community Impact Newspaper)

Pictured here is a concert at the Mohawk on Red River Street. (Christopher Neely/Community Impact Newspaper)

Almost seven months into the pandemic, local businesses who have held on in the child care, live music and service industries could receive some financial aid from the city; however, many industry members have said that the $15 million in aid from the city represents a pittance as compared to what is needed to save the local industries.

Austin’s mayor, City Council members, bureaucrats, small business owners and workers acknowledged as much ahead of the unanimous vote to pool together the money from corners of the city budget.

Austin Mayor Steve Adler said the scale of the “enormous” challenge would require state and federal assistance.

The city has not seen much funding from Washington since receiving the CARES Act money in the spring. With that money already spent, scant progress from U.S. Congress and no indication of additional assistance from the state, two weeks ago, City Council told City Manager Spencer Cronk to leave no stone unturned in a scramble to find aid dollars for some of the local industries on the brink of collapse.

In the “Live Music Capital of the World,” music venues and child care facilities as requiring the most targeted assistance—two types of businesses that, if lost, would be difficult to replace, officials said.

After a week-and-a-half dive into the budget’s couch cushions, the city manager's staff came back with $15 million. The city will likely divide the $15 million into three funds with $5 million each: a music venue preservation fund; a child care provider relief grant; and a legacy business relief grant, which will be available to a range of businesses determined to meet the standard of being a “legacy” business.

City Council spent the morning listening to service industry workers and business owners, music industry artists and employees, and child care facility managers describe their dire situations nearly seven months into the pandemic’s economic devastation. Some aggressively urged City Council to “do [their] jobs and get us the money we need,” while others said the money was needed, but was not nearly enough. Some criticized the federal government’s lack of assistance for what they said was “giving us an eight-week solution for an eight-month problem.”

A common refrain over the last two weeks was the city’s economic development department’s choice of the Better Business Bureau to administer CARES Act funding to local businesses in need. Many complained that the city needed to choose an administrator with local roots that understood local nuance. However, city staff maintained that the BBB was the right choice at the time. The city has not determined the mechanism for choosing recipient businesses and distributing City Council’s $15 million stimulus.

To amass $15 million, City Council unanimously approved pulling $6 million initially budgeted for the city’s human capital management system and $500,000 from “less critical” maintenance projects. City Council said it would pull another $8.5 million in sales tax revenue with a vote in two weeks, which was initially proposed to come from a program to house the homeless and an increase to the city’s transportation user fee. However, City Council decided funding it through sales tax revenue, which, so far, is $12 million ahead of early pandemic projects, would make more sense.

Deputy Budget Officer Ed Van Eenoo said his office was still examining other funding sources. The $15 million presented to City Council represented what staff could pull together within council’s two-week deadline.

At one point, Council Members Leslie Pool and Kathie Tovo floated proposals to look into the city’s existing corporate tax incentive agreements. Van Eenoo said the city is set to pay $10.2 million to corporations, such as Apple, Samsung and Visa, for meeting agreed-upon performance metrics in 2019.

Pool and Tovo tried to gain support from City Council to look into these agreements and see whether it would be possible to delay the millions in payments for next year in order to fund aid for local businesses; however, a majority of City Council members, led by Adler, disagreed with touching the corporate tax incentive deals. Adler further said that doing so would send a bad message.

Adler said he was encouraged by some of the progress made in recent days by the federal government. Carried by a Democratic majority, the U.S. House passed a $2.2 trillion stimulus package bill Oct. 1, according to reports. That bill was opposed by House Republicans; a successful stimulus package will require approval from the Republican-led U.S. Senate. According to reports, U.S. Treasury Secretary Steve Mnuchin has said the $2.2 trillion package is too high and countered Oct. 1 with a $1.6 trillion package.