Austin City Council members could be looking at a $3 million budget shortfall for the fiscal year 2014 budget after they heard reports April 18 from staff and local economist Jon Hockenyos with Texas Perspectives about the city and region's financial state. The April 18 work session started the city's budget development process.
Ed van Eenoo, deputy chief financial officer with the City of Austin, said even though Hockenyos' presentation showed Austin doing well when compared with other regions in Texas and across the nation, the city still has some struggles to contend with.
"Jon talked about Austin being one of the brightest economic stars in the country, and while that may well be true, I'm going to do everything I can to bring us down to earth here a little bit," said van Eenoo.
According to a presentation given by van Eenoo, the city is projecting a revenue for fiscal year 2014 of about $781 million at the current tax rate. Expenditures for fiscal year 2014 are expected to be at least $784 million. Elaine Hart, chief financial officer with the city, said five-year projections of the city's revenue and expenditures show that deficit dwindling away.
"We do have a balanced forecast, as I mentioned," Hart said. "It's balanced over the five years and it is structurally strong [and] financially sound."
According to staff numbers, expenditures would equal revenues by fiscal year 2015 at about $811 million dollars.
One point of contention at the meeting was a potential 3 percent wage increase for all city employees. The wage increase would push projected expenditures to about $798 million for fiscal year 2014 and to $970 million by fiscal year 2018.
Councilman Mike Martinez pointed out to council that even with a rollback election on the tax rate, bringing it up to 51.57 cents per $100 in property valuation, the city still could not afford the wage increase.
"That was, to me, eye opening," Martinez said. "How could we possibly even put something up there like that [when], at rollback rate, we won't even meet those cost projections?"
The rollback tax rate would generate about $11 million additional dollars, putting projected revenue for fiscal year 2014 at $792 million.
Hockenyos' presentation took a look at how Austin is doing economically when compared to other cities in Texas and around the nation.
"Austin, I think is doing extremely well," Hockenyos said.
Hockenyos said that if he had to choose one single measure of a region's prosperity, he would choose per capita personal income. According to his information, from 2007 to 2011, per capita personal income in the Austin Metropolitan Statistical area increased by 6.5 percent. Houston's per capita personal income increased by 6.1 percent and Dallas-Ft. Worth's per capita personal income increased by 3.2 percent over the same time period.
Hockenyos' forecast for the Austin-area economy is the creation of about 24,700 new jobs in 2014, and personal income is expected to continue to expand by around 6 percent.
"We are the bright star," Hockenyos said. "I don't see too much change for 2014."
City Council is scheduled to have another presentation April 25 covering the finances of particular departments as well as an unmet service demands report. The budget and tax rate is expected to be adopted in September.