With one week left before Austin City Council members are set to finalize the city's fiscal year 2021-22 budget, officials on Aug. 5 worked through several of their priorities and spending plan details.

With input from a range of city staff, council members dug into issues including resident displacement, homelessness, the city tax rate, and the police budget and outside influences on its scope. Following an Aug. 3 work session focusing on budget items such as public safety and mental health diversion, council now has around one week to continue poring through the more than 900-page proposal and submit further inquiries and amendments to the document. The budget, tax rate and other city fees are set to be adopted Aug. 11 and Aug. 13.

Taxes and revenues

Council's Aug. 5 session led off with an overview of the city's finances through FY 2021-22 and beyond.

As noted by City Manager Spencer Cronk in his July 9 unveiling of his budget plan, Austin is emerging from FY 2020-21 in a better-than-expected position, but could be looking at years of projected annual budget deficits if current spending practices continue. That outlook is informed in part by a state limit on the annual increase in property tax revenue cities can see without setting a tax rate election, and under the mandated 3.5% revenue increase cap Austin is unlikely to reach a balanced budget at least through the mid-2020s.

Interim Deputy Budget Officer Erik Nelson also said, due to the city's total taxable property valuation being certified at around $1.4 billion more than initial staff projections, the typical city homeowner could see more than $33 in tax bill savings next year—up from an estimated $9.

Council members went on to discuss the possibility of raising the city tax rate beyond the 3.5% limit, a move allowed this year under ongoing state disaster rules. Such a change would not require voter approval and could net the city more than $14 million in one-time funds with a 6% tax hike—at no tax bill increase for the typical Austin homeowner—or more than $25 million at the maximum 8%, which could cost homeowners more than $25 next year.

District 4 Council Member Greg Casar also ran through a list of wide-ranging council priorities that could be supported with newly-identified one-time funds over the coming fiscal year he said could be accomplished without raising property taxes. The list of items such as parks maintenance, EMS and antidisplacement funding, city staff stipends, and music venue support totaled around $20 million, per Casar.

Officials are also looking to ensure city employees receive a 2% raise this year, in addition to stipends of between $500 and $1,000 depending on council's final decisions. Mayor Steve Adler also floated the concept of setting aside some money for COVID-19 vaccination incentives for staff.

Austin police and House Bill 1900

The Austin Police Department's record $442.81 million proposed budget has been the subject of most public comment throughout this year's budget planning, and its scope was again in focus Aug. 5. Growing more than $130 million from last year's $309.71 million amended budget, the FY 2021-22 spending outline for APD once again includes several components that were previously cut, reduced or removed by council in order to comply with House Bill 1900.

Targeting large cities that "defunded" their police departments, the new law's listed penalties led Cronk to craft a police budget in line with fiscal year 2019-20 levels to avoid conflict with the state. Officials still pushed to explore options for once again shifting some pieces of APD's budget over the coming week while including the approximately $12 million forensics lab that moved away from APD's purview for the 2020-21 period.

District 5 Council Member Ann Kitchen also voiced concern that, regardless of council's decision on the lab item specifically, full compliance with HB 1900 this year could set a high funding baseline that would need to be matched or upped in future budget cycles.

“My point in mentioning the fact that we’re creating our floor is, I think we’re also tying the hands of future councils in terms of what the APD budget needs to look like," Kitchen said. “What House Bill 1900 does is, it sets the budget for us and reduces some of our flexibility in terms of how we might choose to spend those dollars."

Council members and staff also spent time going over the projected effects of Save Austin Now's ballot proposition, another external influence on future public safety budgeting. Austin CFO Ed Van Eenoo said the political action committee's proposal, recently confirmed as a valid addition to the city's November election ballot, would require several "extremely significant" budget changes including a jump in APD staffing if approved by voters.

Van Eenoo said city staff are still working to calculate the total possible cost of the measure, if it passes, and noted the largest component would be its requirement that APD is staffed at a ratio of two officers per 1,000 city residents. In response to questioning from District 6 Council Member Mackenzie Kelly, Van Eenoo said that and other pieces of the proposition would "very likely" require Austin to hold a tax rate election in fiscal year 2022-23 to accommodate a large increase in required funding. In the meantime, he said the immediate effects of the proposal could result in "very deep cuts" to many other city departments' general fund allocations in order to fund the potentially voter-mandated officer surge through the coming fiscal year.

Van Eenoo said he expects a report from staff on the projected costs of the policing ballot measure will be completed within two weeks.