Austin leaders are weighing a $5.91 billion budget for the upcoming fiscal year 2024-25, a spending plan supported by a more than 5% increase in residents' property taxes, utility charges and other fees.
The FY 2024-25 budget is not yet finalized. City leaders will spend the coming weeks reviewing the plan and proposing changes, with input from Austinites at several public meetings.
In a nutshell
City Manager T.C. Broadnax's proposed FY 2024-25 budget would be about 5% larger than this year's.
Broadnax said the plan addresses Austin's critical needs, such as city services, with investments reflecting community goals to make the city more livable, affordable, equitable, sustainable and resilient. He also said it prepares for "financial uncertainty" and multiple major infrastructure projects now in development.
The plan will likely end up costing Austinites more over the coming year through property taxes, city utility fees and service charges.
Broadnax proposed a tax rate of $0.4493 per $100 valuation. While that represents a less than 1% increase over the FY 2023-24 rate of $0.4458, it'd translate to about a $100 higher tax bill—nearly 6%—for the owner of a median-valued home given rising appraisals.The city's general fund, covering most of the public-facing departments supported by tax revenue, would grow more than 4% for the upcoming fiscal year to about $1.41 billion.
Services ranging from emergency response to parks, libraries and animal services are all in line for increases, largely driven by personnel costs. Some new spending would be supported as well, like an additional $3.6 million for rental assistance, and $2.6 million to staff a new West Austin EMS and fire station.
Some extra money could be available if city officials pull some money from the budget's proposed reserves, a strategy that could yield more than $4 million.Austin's employees are also in line for more pay and additional benefits, building on an approach to boost city compensation and improve recruitment and retention.
Civilian city staff can expect a 4% raise this year followed by an additional 3% next year, when Austin is expected to reach a targeted wage floor of $22 per hour. Sworn public safety staff are also in line for higher wages or one-time payments.
The new budget document also covers two full years: the FY 2024-25 proposal plus plans for FY 2025-26. Broadnax initially committed to shifting Austin to a two-year balanced budgeting schedule after his hire earlier this year, and said the strategy—being used for the first time in city history—will better prepare officials for future spending and possible deficits ahead.
The full proposed budget is available here.
Diving in deeper
Broadnax and city financial staff said the budget came together at a tough time for financial planning across Texas. A significant amount of one-time federal dollars are drying up, and cities are limited in their ability to increase their tax revenues under new rules imposed by the state in 2019.
Texas cities' property tax collections can't increase by more than 3.5% year over year unless an election is called to secure voter approval for a higher tax rate.
"If you look at other Texas cities, you’re looking at budget deficits everywhere you look: Dallas, Houston, Corpus Christi, Fort Worth, San Antonio—they’re all struggling with budget deficits of various magnitude and looking to, ‘What are we going to have to cut in order to balance our budget?’" Chief Financial Officer Ed Van Eenoo said. "They’re all struggling with the 3.5% revenue cap ... that is going to continue to impact us into the future.”
“We’re in a new time; we’re in a new world with those restrictions. But there are ways to do more, and how do we consider that to be financially sound and make sure we’re protecting our long-term financial structure?" Mayor Kirk Watson said.
Van Eenoo estimated Austin could have had about $165 million more in its general fund budget if tax revenue increases hadn't been capped over the past few years.
“We can’t lose sight of the fact that we are now operating under a new tax regime that has substantially lowered the amount of revenue available to balance your base budget, let alone fund new priorities," he said.
What's next
City Council members will begin budget approval on Aug. 14. More information on the timeline for additional budget discussions and public hearings is available here.
