Travis County staff estimate its general fund resources for fiscal year 2020 will be $861.9 million, up nearly 8% from $798.2 million in fiscal year 2019, according to a June 18 memo to members of the Commissioners Court. The general fund estimate is comprised of a beginning balance of $162.9 million, property tax revenue of $604.5 million and other revenue totaling $94.5 million. County commissioners are scheduled to adopt the FY 2020 budget Sept. 24.

Planning ahead

Since last year’s budget approval process, two major changes have occurred. In May, the county submitted an application for a state grant that would cover half of the startup costs over four years for a new public defender’s office, which provides representation to residents who cannot afford to hire a private attorney. If the county is awarded the grant, it will be required to contribute $4.1 million in FY 2020 to help get the office established. When the grant runs out, the county will be responsible for funding the office in full; by fiscal year 2024, the annual cost is expected to be $16 million. More recently, Texas Gov. Greg Abbott on June 12 signed into law a bill reforming the state’s property tax system. Senate Bill 2 caps how much cities and counties can increase their revenue from property taxes over the previous year. It will affect the budget process for fiscal year 2021. To accommodate these changes, county staff have adapted their approach, recommending limited budget hearings, as in years past, that are driven by the Commissioners Court rather than individual county departments. “Given SB 2 and the discussions we’ll be having for the FY 2021 budget process and beyond as well as the prioritization of indigent defense, we believe that it would be a wiser use of our time this year to have limited budget hearings again,” County Executive Jessica Rio told commissioners at a June 18 meeting. In a memo about this recommendation, Rio and Budget Director Travis Gatlin suggested any issues to be discussed during a budget hearing require sponsorship by at least two commissioners.

Financial forecast

Over the last decade, the county’s base budget has grown at a rate of approximately 5.15% annually, according to the memo. To accommodate the new 3.5% property tax revenue cap, it will need to reduce its base budget growth rate to 4.1%. This reduced growth rate is higher than the 3.5% cap because the cap does not apply to property tax revenue earned from new construction. “[This] does mean some hard decisions [will have to be made] in the upcoming budget cycles,” Rio said. County staff estimated that even with new construction the county will lose $30 million “in annual ongoing revenue and budget flexibility” by FY 2024 as a result of the cap. To account for this shortfall, Gatlin said commissioners will need to explore other revenue streams other than property taxes and make data-driven decisions when it comes to services the county is mandated by the state to provide. “There’s only so much effective, efficient and equitable government that we can provide within that shrinking envelope [the state provides us],” County Judge Sarah Eckhardt said.

Next steps

Typically, the Travis Central Appraisal District provides a certified tax roll by a July 25 deadline, which helps the county and other area taxing entities determine their tax rates. However, TCAD Chief Appraiser Marya Crigler told commissioners in April the district is unlikely to meet this deadline due to an increasing number of property appraisal protests. As a result, when the county publishes its FY 2020 preliminary budget July 22, it will not include the certified tax roll. “This year we will not have that luxury,” Rio said. Once the preliminary budget is published, the Commissioners Court will sponsor two budget hearings Aug. 22 and Aug. 23 followed by public hearings on the tax rate Sept. 17, Sept. 20 and Sept. 24. As scheduled, commissioners will approve the budget and tax rate for FY 2020 on Sept. 24.