Travis County considers how to recoup revenue

As the deadline for Travis County’s Fiscal Year 2020 budget draws near, the Commissioners Court is grappling with how to appropriately price county fees and services in anticipation of the 3.5 percent property tax increase cap that will go into effect for FY 2021 due to a bill passed in May by the Texas Legislature. The FY 2020 budget is the last county budget that will be passed under the current property tax cap of 8 percent, which means that the county can raise the property tax rate up to 8 percent above the previous year’s rate before voter approval is required.

The Commissioners Court has been considering different ways to compensate for the upcoming change, which will sharply curtail the amount of revenue the court can receive from property taxes. Property taxes constitute over 85 percent of the county’s General Fund revenue, which is used to pay for all county services including judicial system services, health and social services, law enforcement and corrections, and maintenance of county roads.

At Tuesday’s meeting, Assistant Budget Director Alan Miller presented a proposed FY 2020 budget rule stating that any organization (municipalities, school districts, nonprofits, private entities, etc.) considering contracting a service from Travis County must provide a “full cost recovery” option by coordinating with the Planning and Budget Office, among others, to estimate the entire cost to the county of providing this service.

For instance, Public Information Officer Hector Nieto said, Travis County contracts with some small municipalities and school districts within the county to provide law enforcement services if those entities don’t have police departments of their own. Nieto said that, in many cases, the county’s costs for providing services were assessed some time ago, so the full cost recovery option makes sure that the county’s current costs are calculated, ensuring that the county isn’t undercharging organizations for county services.

“This is a change in how we operate,” said County Judge Sarah Eckhardt, referring to the court’s move toward full cost recovery. “And whenever we are embarking on any change institutionally, we need to be open to possible unintended consequences, and areas where we need to be vigilant of where there would be appropriate exceptions. But we will only know what those appropriate exceptions are by going ahead and moving forward with this budget rule and then seeing what comes from it.”

Commissioner Gerald Daugherty reviewed some of the challenges the court has experienced as it works to bring prices for services in line with the cost of providing those services. He referenced the court’s Aug. 13 decision to raise the price of bulk water services from $0.25 per 100 gallons to $12.28 per 100 gallons to reflect the cost of providing the service. Two weeks later, upset residents complained about significant economic hardship due to the cost increase.

“It’s good to try to get full cost recovery, but I know there are times when we’re going to get pushed really, really hard on (why) we can’t do that,” Daugherty said.

In testimony to the court, senior analyst Alex Braden said that the Planning and Budget Office intends to come up with a policy to provide guidance and consistency on when the county should ask for full cost recovery on service agreements, and when exceptions should be made. Braden said that the county is considering whether it makes sense to offer exceptions to full cost recovery for nonprofits, for emergency situations on a short-term basis, and for services that have value to the community at large. “This is going to be a little bit messy as we work through it,” Braden said.

Another suggested addition to the budget rules would mandate a quarterly review by the court of any positions that have been vacant for more than a year. This would enable the court to review any issues with filling the vacancy as well as discuss whether the vacant position is still necessary.

Budget rules 8, 9 and 24 were proposed for deletion due to having fulfilled their purpose or no longer being relevant. The court took no action today on the proposed additions or deletions to the FY 2020 budget rules, but have scheduled a vote on them for next week’s meeting.

The Commissioners Court will hold public hearings on the proposed property tax rate for FY 2020 on Sept. 17 and 20, and will hold a public hearing on the proposed budget on Sept. 24. The court is scheduled to vote on both the tax rate and the budget on Sept. 24.

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