City leaders have detailed how more than $5 million of Austin's social service contract funding will be reallocated to support the city's fiscal year 2025-26 budget, following the failure of Proposition Q's tax hike and passage of a trimmed spending plan this fall.

What's happening

City Council passed an expanded budget this summer to fund tens of millions of dollars in public services and programs, based on a larger tax increase that was subject to voter approval. Much of that roughly $100 million in added revenue would've supported homelessness and public health initiatives, as well as other city functions like public safety operations and parks upkeep.

After the proposition's failure, council had to revise the FY 2025-26 budget without that extra revenue. Finance staff said during the process that many city social service initiatives would face reductions to help balance the budget and fully fund other aspects of homelessness response. Nearly a month later, those changes were detailed in a memo from City Manager T.C. Broadnax shared with council members Dec. 17.

Zooming in

During budget review, city staff relayed that social service funding for public health, economic development and court services would fall 10%, while contracts under Austin Homeless Strategy and Operations could be reduced or shifted by 4%. They also projected that balancing next year's budget would likely require further cuts.

This year's impacts have now been detailed, with $5.28 million of Austin's more than $74 million allocation for social services to be reduced or reallocated, including:

• $2.74 million from Austin Public Health
• $1.46 million from the homeless strategy office
• About $630,000 from the city's municipal and community courts
• Almost $452,000 from Austin Economic Development

"As part of this adjustment, limited resources will be aligned with Homeless Strategies and Operations to address immediate operational requirements, while maintaining a balanced and coordinated approach across the full continuum of social service investments," he wrote.

Program-by-program adjustments can be viewed in Broadnax's memo. He also reported that next year's social service funding cuts will be more significant, totaling nearly $17 million.

What's next

In passing the current FY 2025-26 budget, council members called for several financial planning changes including new cost-savings reviews and a new process for procuring and monitoring social service contracts.

Some of that work will be moving ahead through an inventory of every city department's grants and contracts that provide social or community services. That process will result in a new "centralized record" of that funding with a renewed look at contract performance, consideration of any duplicated or similar programs that could be merged, and targeting programs that could be moved out of Austin's budget to other area organizations or governments.

A wider citywide efficiency and optimization initiative launched this fall includes the "social service contracting transformation." Broadnax said Austin's current contracting system resulted in inefficiencies, reduced transparency and led to limited performance evaluations. Before the revised budget's approval in November, he also highlighted a need to refine city spending.

"We’ve just got to be more responsible overall and level-setting with people about what we are not going to be able to do and whose shoes we’re not going to be able to step into. Because we just can’t afford it because it’s not sustainable," he said Nov. 19.