- Coming up on "Austin InSight," "City Desk: Austin."

The mayor and city council have approved a $6.3 billion budget.

What you need to know about a proposed tax increase.

Our reporters roundtable discussion starts now.

- [Announcer] Support for "Austin InSight" comes from Sally and James Gavin, and also from Suerte, Este, and Bar Toti restaurants, bringing Austin together around culinary excellence to celebrate creativity, conservation, and culture in central Texas.

(bright calm music) - Hello, and thanks for joining us, I'm Laura Laughead.

Homelessness, police, and fire departments, parks, streets, water, and electricity, support for families and children, and for music and culture.

Austin's $6.3 billion budget pays for all of that and more, but with less money coming into the city, property taxes will be going up, but by how much?

That will be up to voters in November.

By a 10-to-one vote last week, the city council approved a tax increase of 5 cents per $100 of taxable property value.

That's about $300 per year for property owners.

We have a quick summary of how the city's budget is divvied up.

A large portion of the $6.3 billion goes towards utilities like electricity and water services.

$1.5 billion goes to the General Fund, which is allocated like this.

36.7%, the biggest chunk, goes to the police department.

About 18% goes to the fire department.

10% then goes to Emergency Medical Services, and 9% goes to Parks and Recreation.

5.4% is for the library system.

Social Services gets 5%.

Public Health gets 4.4%, and other smaller departments include Homeless Strategy, Housing, Animal Services, along with the Arts, Music and Culture.

Many hours of public comment shaped the debate over the new budget, and especially the tax increase.

- Increasing taxes has already made Austin ridiculously unaffordable.

Increasing them again, like you're considering today, just puts a mountain of salt on the wounds.

A tax increase right now isn't necessary, and very likely won't pass.

- There is no reason why you can't listen to the people of this city, not just the advocates of the homeless, but actually the homeowners in this city that are gonna be run out of this city because of your tax increases.

- A modest property tax adjustment isn't about politics.

It's about preserving the things that make our city strong and reliable.

- I thought that I, as a progressive, was supposed to be the one demanding that I get everything for free.

Yet here I am at City Hall, advocating for the city to raise what I pay in property tax, because I understand that if I sincerely want to take care of my neighbor, I need to pay for it.

- Joining us now to help break this down, we have Luz Moreno-Lozano, city hall reporter at KUT, Austin Sanders from "The Austin American-Statesman," and Lina Fisher from "The Austin Monitor."

Thank you all for being with us.

- Thank you for having us.

- So let's start with the budget.

Following lots of debate, the council approved the property tax increase subject to voter approval.

How did they arrive at that number?

Let's start with Luz.

- Well, it's important to remember that the city council had the power to go up to 8 cents.

So we saw several different proposals over the week of what that could look like, ranging from 3.5 cents all the way up to 6.75 cents, but we heard from the mayor that he would not vote for anything over 5 cents.

And so the city council was almost inclined to figure out what they could fund within the 5-cent package.

- Hmm, Austin, Lina, anything to add to that?

- Yeah, I was just gonna add that, you know, there was a lot of wrangling and negotiating behind the scenes over getting to that 5-cent figure, but as Luz just kind of mentioned, the mayor's support was, I think, integral.

He'll have a lot of influence as we go to November and seek voter approval for this budget.

So the first time in the city's history that this has happened for city services, so there's a lot of unknowns here, and I think most of the council members that I spoke to recognized how crucial the mayor's support would be here.

- Indeed, and let's back it up, and explain what even is a tax rate election?

So you know, Lina, can you help us understand why a vote is required to raise taxes?

- Sure, so prior to 2019, the city could raise property taxes every year up to 8 cents, or sorry, by 8%, and then in 2019, the state legislature passed a law that capped that at 3.5%.

So actually, they wanted to go down to 2.5%, and during the special session right now, they're trying to do just that, but that's basically the maximum rate they can raise it per year without going to the voters.

- And the city budget is complex, lots of spreadsheets and data tables, and always more requests than funds allow, of course, but a budget statement, it's also, like, rather a statement about priorities.

What's the overall message here, would you say?

Let's start with Austin.

- Yeah, well, you know, I think back to an interview I did with Council Member Ryan Alter as they were kind of negotiating and kind of wrangling over the budget proposals, talking specifically about these contracts with social service providers.

They provide meal assistance, or vaccine clinics, and things of this nature.

There have been some in the community that view those as non-essential services, that those are not things the city should be paying for, but Council Member Alter, you know, in his words, were "Someone's non-essential service is a lifeline for someone else," right?

So and then as they passed the budget, he sort of came back to that, and framed the budget as putting people first as an investment in the people of Austin.

And so I think that is kind of how this council is viewing this budget while acknowledging that will come with a cost, higher tax bills for all of Austinites, but that is kind of the trade off that they are wanting to make, and feel they need to make as elected officials.

- Yeah, and I would just add to that, that given the national context of this administration, there was a lot of talk on the dais about are we going to follow in the footsteps of the federal government and the state government that are, you know, adopting this sort of constriction austerity stance toward people?

Or are we going to view this as a moment where we need to invest in people, especially disenfranchised Austinites more than ever?

And they seem to fall down on the ladder.

- And Luz, anything to add to that?

- I would just say, I've heard a lot about core services being a really huge part of what they're trying to fund, things from homelessness to public safety stuff around parks, and these kinds of essential things that I think the city council was trying to send a message about, is if we want these things, someone has to pay for it, and yeah, kind of striking that balance between putting affordability at the forefront of what they're trying to do, and trying to provide the services that the people of Austin deserve.

- And you guys brought up some specific services, let's go down even further.

What specifically stands out as areas of focus?

You guys mentioned the homelessness strategy, other social services infrastructure.

Are there winners and losers here, Lina and Luz?

- I mean, I think the Homeless Strategy Office's comprehensive plan for about 101 million was a main focal point.

It was the mayor's top priority, he said, all of council agreed, there was a lot of public testimony during budget hearings that was, you know, indicating unanimous support for this plan.

And it's important to note that the city's not gonna pay for all of it.

There's also a bucket of that that is, you know, provided by private contracts for service providers in the community.

What's important to note about that is that the way that we got into the situation of having to pony up a lot of city dollars for that is because, again, federal funding cuts.

So this one isn't as much related to the current administration, the American Rescue Plan Act funding from the pandemic, that relief funding has now run out, so a lot of the one-time investments into homelessness services have run out, and the city needs to sort of make them ongoing on its own.

Luz, do you wanna say more about that?

- You know, in addition to the homelessness, we also saw this push for firefighter staffing, and as part of the CRE package, it sounds like they'll be able to maintain at least, at minimum, four people on each truck.

And that was another big part of, like, how they built this into, like, not only are we addressing homelessness, but we're addressing public safety, and making sure that firefighters have the resources and the staffing they need to respond to people when they call for help.

We saw some cuts and restructuring to the Austin Police Department to help cut on overtime.

So we started to kind of see this shift in some of these social contracts that would normally have ongoing funding, but had received one-time funding for now, and it's something the city council can revisit.

- I wanna get your overall thoughts on the election.

Are Austin voters likely to approve this increase?

Austin, let's start with you.

- Well, you know, as I mentioned earlier, this is kind of an unprecedented election in Austin's history.

In 2020, Austin voters approved a similar tax rate increase, but that was to fund Project Connect, this kind of generational investment in transit, in a light rail system, but this is the first time Austin voters will be asked to approve higher tax rate to fund city services, city programs.

Given it's unprecedented, it's kind of hard to say.

Historically, Austin voters have been very favorable toward bond packages, which kind of help put up buildings, you know, maintain older buildings around the city, especially in recent history, but there's been a real cost of living squeeze in Austin, not just from the City of Austin.

Last year, the Austin School District raised taxes, sought approval from voters, which they won.

Travis County is raising their taxes this year.

Central Health, the local healthcare district, raised their taxes.

So voters are gonna have to contend with all of these other governmental entities raising their taxes at the same time the city is asking to raise taxes even more, so it'll be a difficult problem for elected officials to address.

- Would any of you guys like to add anything to that?

- Yeah, just quickly, I think also the numbers are a confusing aspect of this.

Even council members on the dais were kind of, you know, constantly mixing up cent and percent increase, and I think it's really important to, you know, make sure people know this is not a 5% increase on your annual property taxes, it's 5 cents per $100 of the value.

So it's just a much, much lower percentage of that annual bill, but again, even that might be too much for people that are struggling with affordability.

But that confusion is actually grounds for a lawsuit that was filed yesterday that Luz reported on, if you wanted to.

- Yeah, so there was a lawsuit that was filed over the weekend that challenges the ballot language of this, so it won't stop the election, but there was a lot of concern about what this additional money would pay for, and concern about there not being dedicated funding to each category, each project, that you might see in a bond package, for example.

So that is before the courts, and we'll see how that plays out.

- Another layer, I'm glad you brought that up, 'cause we were gonna address that as well, but another layer to make this unprecedented, to use your word.

And so now, let's switch gears and talk about public safety, reducing over time and reorganizing team structures in both the police as well as the fire departments.

Those were discussed as areas of budget savings, but these changes, they're not welcome by all.

So Austin, and then everyone, from your reporting, why do you think that is?

- Well, I think where we have to start is the simple fact that public safety, that's police, fire, and EMS, these services consume almost 60, 67% of the city's tax revenue, nearly all of the property and sales tax revenue, so this is a huge part of the city's budget.

So when the city is looking for ways to save money, that's one of the places that, you know, the city's budget staff and policymakers have to look, because there is so much money going to these services, but of course, public safety is kind of what most people view as kind of a core government service, as Luz said earlier.

And when someone calls 911 for a fire or an emergency, they want someone to show up, and there's concern that reducing that spending may affect 911 response times, but I think it's important to note here that the reductions in fire and police budgets are around overtime spending.

Both departments spend a great deal of money on overtime due to, you know, the department leaders will say, "inadequate staffing."

- You know, the several weeks ago, we saw the city manager propose cuts to fire staffing, and they were looking at some engines would go from four to three.

Now, they were saying that overall on scene, they would be above what the national standard requires, and so there would be plenty of staff to, like, respond, but firefighters came back and said having that four-person staffing is almost important to not only respond to the emergency efficiently, but how they work together.

And it also helped how they, yeah, you don't want one firefighter overloaded, and someone's in, and someone's out, and there's, you know, there's rules and staffing structures that help them respond to an emergency, but as part of that 5% package or 5-cent TRE package, we will, yeah, see that fire staffing is maintained.

I think council members, several council members, have been very vocal about that.

We saw them support the fire union several weeks ago when they came out against the cuts.

- And I would also just add that importantly, the police department overtime is actually a much larger chunk than the one that fire uses of the city's overtime budget, and they actually, as part of the restructuring, which is separate from the city budget, have cut 9 million.

So we're still gonna get see some cuts there from the public safety portion.

- That's important to note.

And do you have any thoughts on the impact of police salaries overall?

There were concerns that the police contract deal struck just before the 2024 election would lead to tax increases.

Let's start with you, Luz.

- You know, Austin has done some really great coverage about this, but yes, I think, you know, as the police department has come out with the contract similar to the ones that the firefighters and EMS are also trying to negotiate, is these salary increases over the next several years, especially as they're trying to recruit, you know?

They're talking about staffing shortages, and one of the ways to recruit people here is to have a decent pay package, but I'll let Austin talk about that.

- Yeah.

I think the main problem is the police union won a contract that will raise the base wage for police officers by 28% over a five-year period.

And you know, the police union leaders, when I talk to them, say that's because it's a fraught job.

It's dangerous, and they deserve that pay.

But the fact is that creates a real constraint on the city budget, because basically, officers are getting raises well above the rate at which the city can generate revenue.

So if you think about running a business, anytime you're paying your largest employee group more than you can bring in an income in revenue, you're gonna have a budget problem, right?

And so going into this budget, the city faced a $33 million deficit, which policymakers were working to close.

In addition to, you know, the federal spending cuts, the state law that we mentioned, that constrains a city's ability to generate revenue.

The police contract was a big factor in that deficit as well, because it costs a lot of money, and it's difficult for the city to generate that revenue to pay for it.

- And meanwhile, the city's homeless strategy is getting praise from leading nonprofits, and there were concerns about possibly, though, losing momentum due to those budget cuts.

Anyone who wants to take this question, how did funding for the homeless programs turn out?

- Well, I mean, it was fully funded contingent upon the TRE passing.

So this was, as I said, like a unanimous priority across the board for most of council, the mayor and people who spoke in those meetings.

It's been in the works for about a year, I wanna say, and essentially, you know, it's got these three buckets of funding.

We've got the partnerships with the service providers in the community that are already working, we've got, you know, sort of replacing federal funding for ongoing things such as, or for what used to be one-time things, such as the Marshalling Yard, which is the 300-bed capacity shelter.

Also, rapid rehousing programs, the Heal Initiative, which is, I think Austin knows more about this, but it's essentially taking people from encampments and giving them from temporary apartments, so just a really comprehensive approach, and it seems like, you know, people are really excited about it.

Do you want to build upon that?

- Yeah, so I think earlier this year, we heard from the Homeless Strategy Office that to effectively and efficiently address the issue that they would need something like $101 million, and only a portion of that would come from partners.

The rest would be put on the city.

Some of that was federal funding that they lost, and so the city was gonna have to dedicate something like 67 million or something, something around there.

And so as part of this, as we kind of talked about earlier, the mayor, that was his top priority.

He wanted to fund homelessness.

He said if we want to add adequately build permanent supportive housing, have rapid rehousing funds, you know, be able to fund things like the Marshalling Yard and the A Street Shelter, where we're kind of creating and funding this cohesive system that not only provides housing and services, but provides a temporary reprieve for those who need it, this 5% increase was gonna be part of that.

And so from what we are looking at as part of this package is that this plan that the Homeless Strategy Office has proposed will be fully funded.

- Austin, would you like to add anything to that?

- Yeah, I guess just that, you know, as we've talked about, this is a clear priority for council members, and I think that's for a couple of reasons.

One, you know, since 2019, homelessness has been, you know, a growing problem in Austin, both for people who are forced to live on the street or in encampments in wooded areas, and people who are, you know, encountering people who are struggling, perhaps sometimes with mental illness or other issues that need supports that they're not necessarily getting on the street.

And I think this budget is a recognition that the way to help people living on the street is to get them into housing, whether that's temporary or long term, and provide them services.

- This, as the city combined its programs supporting music, arts, and culture into one department.

What's been the reaction from stakeholders in our arts and music scene, Lina?

- Yeah, so I think the intent behind this was to streamline, as you said, the grant-funding process, sort of provide more clarity around eligibility, and also make sure that everyone from smaller artists to more established, you know, nonprofits that have been operating for decades in the community get funded.

I think there's still a lot of, you know, kinks to be worked out, and then I heard from the Arts Commission a couple months ago that they are worried that this, you know, still kind of reinforces institutional barriers for smaller indie artists that may provide a lot of artistic merit and community value, and be known in that way, but maybe don't have sort of, like, the organizational skills or marketing skills that a more established artist might have.

I think also there's just a general conversation with the way that South by has changed, about, you know, what Austin's art scene even is anymore, and how we are going to keep it alive, especially facing this new period of sort of budget constraints.

- Yeah, that's definitely been a big conversation emanating out of this year's South by, and then of course, with the reduced dates next year, how that will play a role.

And reduced sales tax and hotel tax collection, speaking of, like, festivals and big draws to Austin, those could be seen as a warning that Austin's legendary boomtown days may be ending.

As you talk with city leaders and others in your reporting work, what concerns are you hearing about the future of growth in Austin?

And let's start with Austin.

(reporters chuckling) - Yeah, as you said, you know, Austin has been a boomtown for decades now, and the sales tax, the declines in sales tax revenues, that's kind of a trend nationally.

Cities, you know, across the country are feeling that.

What was particularly alarming for Austin officials in this budget is the revenue the city generated from property taxes decreased by about 10%, which is the first time that's happened in a while, according to the city budget staff.

And that just means property value is dropping in Austin, which will be a shock to anyone who was trying to buy a house in 2021, '22, or renting even as, you know, rents were soaring.

And that is was kind of a canary in the coal mine for budget staff and policymakers, that we're approaching a deficit, and things may not get better.

We may not have this explosive sales tax, property growth to kind of help close a deficit, right?

Which is why policymakers have explored this tax rate election option, because that kind of boomtown economy may not be here, is not here, and it may be kind of lessening in the future.

- Lina and Luz, anything to add to that?

- I think what I've seen, too, as the city council has tried to kind of deal with this shift in sales tax revenue and property values is how they're addressing affordability, and how they're making it easier to build, and where to build.

And so what we've seen the city council look at land development code, and how they can maybe change that, that'll help put up more apartments, it'll put up more homes, and it'll make it so that, yes, the city council, you know, has this message of affordability, and people can afford to buy a house.

Maybe it's a starter home, maybe it's a townhome or a condo, and have those kinds of opportunities available that not only help people in Austin thrive, but help contribute to this need for property values and sales tax.

And maybe they can be walkable in these areas near Congress, and East Austin, and those kinds of things.

- There's certainly so much ground to cover in what's going on in Austin.

I know nationally, Texas has been making quite the name for itself in the political landscape, but important nonetheless to know what's going on in our very own backyard.

Well, thank you so much, Luz, Austin, Lina, for sharing your reporting insights with us.

I'm sure we'll have you back on in the future to see how all this plays out.

- Great.

- Thank you.

- Thank you.

(bright music) - Before we go, a brief update on a news story from last week.

Austin Police have now identified the suspect in last Wednesday's break in at the Austin Pets Alive!

Town Lake Center.

(dogs barking) (door creaking) The suspect shown here in security camera video released many dogs and damaged the entry gate lock.

Austin Pets Alive!

quickly located all of the missing animals, (dogs barking) and repaired the damaged entry keypad, but several dogs (dogs barking) had to be treated for injuries, and one dog even died in the incident.

Of course, Austin Pets Alive!

can always use your financial support, or help volunteering, or fostering pets.

And lastly, with our focus on City Hall, we wanted to share with you a unique feature of city government here in Austin.

As The Live Music Capital of the World, almost all of Austin City Council meetings include, of course, live music.

We'll leave you with a performance from a local band called Mariachi Rock Revolution, rocking the house at Austin City Hall.

Thanks so much for watching.

(upbeat music) (singer singing in Spanish) (singers singing in Spanish) - [Announcer] Support for "Austin InSight" comes from Sally and James Gavin, and also from Suerte, Este, and Bar Toti restaurants, bringing Austin together around culinary excellence to celebrate creativity, conservation, and culture in Central Texas.

(bright flute music)