Council fails to adopt budget on first day of reading

For the first time in memory, the Austin City Council on Monday failed to pass an annual budget on first reading. Instead, after nearly five hours of discussion, debate and amendment recommendations to the proposed FY2013 budget, Council voted unanimously to recess and meet again this morning.

Staffers’ amendments to the budget were lengthy, the result of numerous long debates over the past several weeks about budgetary priorities. If approved by Council this week, the $3 billion budget will add three new full-time equivalent positions (FTEs) to the Austin Fire Department payroll to create a Wildfire Mitigation Division, along with $87,000 for the purchase of equipment for that division. AFD had requested a new fire station in northwest Austin to fight wildfire but lost that battle earlier.

Another significant amendment was the addition of three FTEs to staff the city’s recently approved short-term rental program, at a cost of approximately $352,000. That cost would be at least partially offset by the implementation of a new fee for all homeowners wishing to rent out their houses as short-term rentals. Staff has proposed an annual fee of $235 plus a fee to notify neighbors.

Council Member Bill Spelman made the recommendation that staff and Council consider lowering the fees in the hopes of encouraging more people to register, which would, in turn, result in more Hotel Occupancy Taxes for the city. Those taxes would be worth far more to the city than the fee, Spelman said.

“Establishing a low fee and perhaps eating some of the cost of our inspections through the Clean Community Fund, that might end up being a way as an entire city we’re better off,” Spelman said.

But Council Member Kathie Tovo insisted that the fees cover the cost of running the short-term rental program. “I don’t think we should be in the practice of subsidizing through taxpayer dollars people’s private enterprise,” she said.

Today, Council members are expected to vote on the amendments they proposed to staff’s budget during Monday’s discussion. The city’s Budget Office said these changes would be expense- and revenue-neutral. If approved, the changes would essentially amount to about $450,000 in money shifting.

The changes include increased revenue from adjustment to the fees at Plaza Saltillo, increased transfers from the Sustainability Fund for the Parks and Recreation Department’s Roving Leader Program and increased transfers from the Budget Stabilization Reserve Fund for one FTE for the Police Human Trafficking Program.

On the expenditure side, Mayor Pro Tem Sheryl Cole recommended adding three FTEs to the Parks Department budget, two for urban forestry and one landscape architect. Council Member Mike Martinez recommended funding four FTEs for the Fire Department, one more than staff’s recommendation, and upping by $200,000 funding for the Council for At-Risk Youth.

Though Council never got around to considering the budget on first reading, they managed one vote, striking down by a count of 6-1 Mayor Lee Leffingwell’s proposal to reduce the budget by $4.5 million. To do that, Leffingwell suggested a flat 2 percent cut to every department (to be divvied up at their own discretion), except for the city’s public safety departments – police, fire, EMS. Those, he said, would see no reduction.

The mayor said he was making the across-the-board-cut recommendation to minimize the proposed 2.2-cent increase in property taxes. His plan would have reduced the proposed property taxes by .57 cents per $100 of valuation, down to 49.7 cents. The staff-proposed increase – which would come to about $1.67 a month for an owner of a median-value home in the city – is too large a burden to ask Austin homeowners to bear, Leffingwell said.

“We’re in the process of recovery … it’s a fragile recovery, and I don’t think it’s the time for a huge tax increase,” Leffingwell said. “What we have before us is a significant tax increase.”

When Spelman asked him why public safety was being spared the knife, Leffingwell said, “I guess the short answer is it’s public safety. And that’s our paramount duty as a city to maintain public safety.”

The mayor’s colleagues on the dais weren’t having it, though. Even Leffingwell’s closest ally, Martinez, seemed taken aback. He said, “I’m all for cutting the budget and making tough decisions. But an across-the-board cut is not based in policy and could even be irresponsible because we don’t know the impact.”

They rejected the mayor’s proposal, opening the door for the lengthy discussion that will, for the first time in a long time, extend to day two and possibly longer.