City Council Budget Work Session Transcript 8/1/2012

>> Mayor Leffingwell: Good

morning, a quorum is present

so we'll bring this council

meeting to order wednesday,

august 1, 2012, the time is

9:13 a.m.

We're meeting in the board

commission room austin city

hall, austin, texas.

One item, the presentation of

the city's proposed budget for

fiscal year 2012-2013.

And to start off, I'll turn it

over to the city manager to

make a brief introduction.

>> Thank you, mayor.

Good morning, councilmembers.

I'm pleased to present to you

1 billion all funds

budget.

Structurally sound.

Values our employees for their

hard work and continues to

make prudent investments, and

best managed in our community.

The budget includes a proposed

18% increase in tax

including increases for our

increases.

These increases will cost a

typical citizen a possible $18

a month.

I don't take the increases

lightly, they are absolutely

necessary if they are to

continue to take the types of

investments in our community

to make austin the most

livable city in the nation.

As you know, the austin story

is very different from the

story of most other

municipalities.

Cities and counties across the

nation continue to struggle in

the wake of the great

recession.

Many have found it necessary

to slash their workforces and

critical services to keep the

strained budgets and ballots

with falling revenues.

For others, remaining fiscally

solvent has required more

drastic measures.

In just the past two weeks,

two california cities, san

bernardino and stockton, have

each filed for chapter 9

bankruptcy protection and

unfortunately, more are likely

to follow.

Austin, by way of comparison,

is flourishing.

During the past 12 months,

nearly 23,000 jobs have been

created in the region and our

local unemployment rate has

8%

while at the national level,

unemployment continues to

hover above 8%.

Other bright spots for the

city include one of the most

stable housing markets in the

nation and a revitalized

development sector.

You already are aware that two

new convention center hotels

are on the way to downtown

austin and I am likewise happy

to report that the number of

residential and commercial

building applications are up

16% and 36% respectively from

the previous year.

The success we are seeing

today is due in no small part

to the tough fiscal decisions

that were made by this council

during the past three budget

cycles.

Under your leadership, the

city has established a new

secondary low-cost pension

plan for new civilian hires,

renegotiated labor contracts

and more costs.

We postponed civilian studies

for two years.

We eliminated vacant positions

and repurposed other positions

to hire priority services.

5 billion from

nonpublic safety service areas

and improved tax fee increases

in order to protect or enhance

our most essential services.

As a result of the efforts,

the budget before you today is

balanced and -- balanced and

without any service

reductions, and also without a

single employee layoff,

despite continued cuts in

state and federal grant funds.

The budget includes funding

for a number of key

enhancements, most notably in

the areas of public safety,

park, recreation, planning and

development review, code

compliance, resource recovery,

and library services.

And for the third consecutive

year, we're recommending a tax

rate that is below the

state-defined rolled back

calculations.

One thing I want to make very

clear this morning is that we

must continue to place equally

high importance on value and

affordability for our

taxpayers as we do on

providing exemplary customer

service in meeting growing

service expectations in our

very diverse community.

When I came to austin, i

established as my goal having

austin known and recognized as

one of the best managed cities

in the country.

I also stated we would never

declare we have reached that

goal, but would rather let

others do that for us.

While nearly five years later,

people are starting to talk.

For two years running, the

business journal has rated

austin the number one place to

start a small business.

"Forbes" magazine has ranked

us as the number one city for

jobs.

Parenting magazine lists us as

the number two place to raise

a family.

And in our most recent

community survey, overall

satisfaction with city

services rated number one

among 13 comparable cities

with populations above 500,000

leading the survey team to

declare that, and I quote, the

city of austin is setting the

standard for performance among

large u.s. cities, end quote.

While these accolades are

certainly nice to receive, we

are not ultimately what best

managed is all about.

Best managed is not about the

number of top ten lists we are

on, or even being ranked

number one, the number one

municipal service provider in

a national survey.

Instead, it's about you, it's

about all of us.

It's about the 12,000 men and

women that comprise the city

of austin workforce doing all

we can, each and every day, to

make austin the most livable

city in the country.

As we move forward as an

organization, our greatest

challenge, one that is

incumbent upon all of us, i

think, will be to not rest on

our laurels of past success,

but, instead, to continually

raise the bar on what's

possible.

Mayor and council by way of

introduction for purposes of

balance, I want to take a

moment to acknowledge what i

can only describe as our

stellar financial services

team which, as you know, is

headed by our chief financial

officer, elaine hart.

Our deputy city manager, greg

cannaly who's somewhere here

in the room, insuspect.

And I'm pleased to note also

the recently promoted deputy

ceo.

We want to acknowledge them

for their stellar work as well

as the entire staff of the

financial services department.

Of course, their efforts are

supported by the rest of the

organization so I also want to

acknowledge my office, my

deputy city manager of the

ACMs, THE CHIEF OF STAFF, AND

All of the department heads

and their financial staff as

well.

All of those individuals come

together to produce one of the

most important projects that

we provide to the council and

the community on an annual

basis.

And that is this proposed plan

that is before you today.

So I simply want to start

today by offering my sincere

thanks to all of you for --

for your hard work, not just

for this budget, but for what

you do each and every day.

With that, mayor, with your

permission, I believe the

staff is prepared to present

the details of the budget.

>> Thank you, city manager.

And we'll go ahead.

First I want to also

acknowledge and congratulate

you.

I think the record of the city

of austin in the last few

years is one that's envied

over the entire country.

I think the record is a

stellar one.

Turn it over to you.

>> Thank you, city manager,

mayor.

Mayor, mayor pro tem, city

councilmembers, it's a

pleasure to present the

proposed budget for the fiscal

'13 year.

As the manager said is here

and is going to assist in the

presentation.

I also would like to make my

thanks to all of the folks

involved, citizens, stake

holders, all of the staff and

management, and city manager

in preparing the budget.

It's been a lengthy process

and this is the culmination of

all of that hard work.

I mentioned stake holders,

stake holder input is really a

chief role in our budget

decision-making process.

The past three years we've

really set the bar higher and

higher on that stake holder

input process.

And this year, again, we've

had an inclusive and

transparent process.

We had a council policy

retreat beginning in february.

We had in april we had in may

we had over 24 hours of

financial forecast work

sessions.

Following that, we had 15

public meetings at the board

and commission to gain citizen

input and board input on the

proposed budget.

We've also had other methods

for on-line input.

We started a new citizen

budget question and comment

section this year, much like

the council budget in question

process.

We continued our sneak up

budget forum.

We had a budget priority

survey.

And we've had extensive

documentation that's been

available on-line to all of

the folks in the community.

We've posed the results of our

citizen survey that was

released in november, our

horizon issues update was

released in march.

We've had an annual

performance report and city

dashboard on our performance

measures issued in the march

time frame as well.

We've published an unmet

service needs and demands

report prior to the completion

of the proposed budget so we

can gain input from the boards

and commissions and citizens,

and we've had a menu of

potential budget reductions

that are available for

discussion.

As the manager said, we are

proposing a budget for the

general fund that is

structurally balanced.

That being said, our

projective revenues are

sufficient to cover our

projected expenditures.

We did balance this budget

without service reductions or

staff layoffs.

And we did include funding for

some key service enhancements.

We were able to do this

primarily because of the

decisive actions that were

taken over the last three

budget years in response to

the downturn in the economy.

Over the last three years,

we've cut 178 vacant positions

citywide, repurposes other

positions to other priority

needs, renegotiated the labor

contracts which lowered our

staff costs, we eliminated

wage increases in 2010 and

deferred market studies for

two years, thus lowering our

overall costs and long-term

costs.

We balance the cuts with

various fee and ratings as

they were needed to avoid

layoff.

The general fund budget is

structurally balanced with a

2.2% increase in the tax rate.

That is below the rollback

calculation for the third

consecutive year.

3-cent increase

projected over our five-year

planning horizon and that will

maintain a balanced budget

over that five-year period.

67 month

increase for the median

homeowner.

This budget also values our

employees as the manager said,

we have over 12,000 employees.

This budget includes a

proposed 3% salary increase

for all employees.

It implements the full-year

costs of market studies that

were implemented in april of

2012 for civilian employees.

It increases our contributions

to our employee retirement

systems.

We have three retirement

systems.

1% Increase for sworn police.

A 1% increase for sworn fire

with an additional 1% plan for

september of 2013.

And finally a 2% increase for

civilian employees bringing

the total contribution of the

city to that system to 18%.

It's the final year of our

supplemental funding plan.

Originally we started out with

an 8% contribution level from

the city, 8% from the

employees.

Now we have a total of 26%

contribution level with 18%

funded by the city.

And I'm pleased to let you

know that for the first time

when we got the actuarial

evaluation from the employee

retirement system, first time

since 2001, the amitorization

period for the employee

retirement system is under 30

years which is very good.

We had an infinite funding

period previously.

So you can see these continued

investments have really paid

off for us.

This budget, again, has no

layoffs despite reductions in

our federal grants, 18

positions were transferred

from the grant funds to the

general fund.

And they'll be funded from

local sources.

How do we get to best managed?

We go down a path or a road.

It's a planned event.

Innovation is the way to get

there.

Some of the examples are here

on the slide recently got

awards from the finance

officers association for

transparency.

Excellence for transparency

for the austin finance on-line

website that was put in place

over a year ago.

We got awards from the state

comptroller's office for

eCHECKBOOK FOR IMPROVEMENT IN

Transparency.

Five years ago, this kind of

information was not available

to our citizens on-line.

We also implemented

innovations in our health care

plan to reduce our health care

increase projected for the

fiscal 13 budget to 3% well

below what it's been in the

past.

The accelerate austin

initiative allowed us to reach

our payment goal being in fair

to excellent condition five

years ahead of schedule.

It also created jobs locally

and enabled us to reach our

goal earlier.

As the manager d, the

results are in.

Our customer survey performed

by the etc institute report

was released in november of

2011.

We were, again, beating the

national average in 41 of 46

benchmark service areas in the

survey.

26 Were better than the

national average on our

customer satisfaction, and 13%

were better than the national

average for value, for the --

for the taxes and fees paid.

Again, as the manager

mentioned, our challenge is

continuing to raise that bar.

Statistically significant

improvements were made of 21

of 83 service measures and

they were reported in the

november customer satisfaction

survey.

Today's presentation will

cover these items, our all

funds summary, our general

fund revenue detail.

Then we'll move to budget

highlights for the general

fund, our expenditures and

departmental plans.

Then we'll cover internal

service funds, those funds

provide services to other city

departments.

Our enterprise funds, which

are our funds to charge fees

and our more fee-based.

And then we will conclude with

our cross jurisdictional rate

analysis and the next steps.

The city is a unique municipal

operation including many, many

businesses in addition to the

general funds.

To name a few, we include

austin energy, the electric

service department.

Austin water, the water

utility.

We run an airport and also a

convention center.

We set up a series of separate

funds that account for each of

these activities separately to

provide transparency to the

public.

The all funds summary and the

total budget for the city for

1

million.

It's depicted in this slide

here, in the pie chart.

Of that, this -- this gives

you a broad overview of what

is included in the budget, the

green area on the left is

austin energy, which

represents 37%, the turquoise

in the upper right is 14%.

The general fund, the navy in

the bottom section of the

slide, and it represents 21%.

Those are the three largest

pieces of our budget.

Beyond that, internal services

or departments who serve other

city markets are 7%.

This is a summary of our

personnel changes for the

year.

As I said, the term personnel

in the proposed budget is over

$12,000.

In this budget, we're

proposing 166.2 new positions.

Of that, 64 positions will be

in the general fund.

And that includes 22 new

police officers, four new

firefighters, and six new

paramedics.

Of the 22 for the austin

police department, 12 will be

911 call takers and

dispatchers that were

previously funded through

grants.

You see, we're eliminating

nine positions, those are

grant positions all vacant

that will be eliminated in

this budget.

The trafershows the shift of

the departments, there are

some grant funded positions

shifting to the police

department.

And the net change citywide is

157.2 positions.

I want to note that the austin

convention center for the

third year has asked for no

NEW FTEs AND AUSTIN ENERGY IS

IT ASKING FOR NO NEW FTEs FOR

The fourth consecutive year.

The additional staffing is

critical to our meeting our

service demands.

And programs.

This last slide is a summary

of our major rate and fee

increases across the city.

You will see the prior year,

the 12 or the current year

monthly rate in the left-hand

column to propose the

increases and rates.

In the middle column.

And the dollar change on a

monthly basis.

The total monthly cost is

08 for the typical rate

payer or taxpayer.

This includes the enterprise

funds and the property tax

bill.

For the property tax bill,

it's $1.67 of the.08.

The remaining of these fee

increases and rates are

proposed rates the council has

not approved yet.

These are for the typical rate

payer.

For that, I would like to turn

it over to ed who will go over

the general fund highlights.

>> Good morning, mayor, mayor

pro tem, members of the

council.

I'm the deputy cso for the

city.

It's been done by several

people, but I just can't not

do it myself which is to thank

a whole lot of people because

later today you'll receive a

1500 page two-volume budget

document.

You've seen with the slides

we're doing today -- I think

the slides that we're doing

today are going to take us

over 400 slides of power point

information.

Let's hope there's nothing

called death by powerpoint.

But the point is there's a

whole lot of work that goes

into this and there are a lot

of people to be thanked.

Probably 30 or 40 property

directors right now in the

bullpen or in the lobby ready

to run in if you have

questions of an operational

nature that are beyond our

ability to rep respond.

If you see bloodshot eyed

people walking around the

city, a good chance they're

financial people that work for

the city.

Thank all of them.

A number of departments have

started creating departmental

budget committees that meet on

a regular basis just to work

through a whole variety of

budget issues.

I want to thank all of those

folks.

The boards and commissions as

always, they've been very open

to making time on their busy

agendas to listen to the

budget staff come and talk to

us about budget matters and

take it seriously and a number

of them have provided input

back to council offices, i

know.

And last, but certainly not

least, I want to thank the

roughly two dozen folks I have

up on the third floor that

work very, very hard to make

all of this possible and they

just do an excellent job and i

could not be prouder to be

part of a group of people than

I am to be part of the budget

office and that group.

I mentioned a couple of things

later today, we're going to

deliver the budget.

Last year it was the cow

budget.

Then the guitar budget.

This will be the cow budget.

I hope you like the cover.

We're going to be releasing

later today a summary of our

unmet needs.

We produced a list, I think

back in april, we provided a

list to council of what our

departments are brought

forward with the undermet

6 million of needs

they identified so putting

together a summary report to

remind you what all of the

unmet needs were and which

we've been able to find a way

to fund in this budget and

which are the ones we are not

able to fund.

So that will be a way for you

to quickly and transparentally

see what we've added to this

budget and we'll provide you

with the summary of community

engagement efforts and we will

also be posting for the

community and for whoever

wants to look at it this

presentation, both the power

point slides as well as the

video of the presentation.

So that will all be getting

released later today.

Taking a look at our general

fund budget.

Our sources of funds.

5 million is

what we're projecting for

fiscal year 2013.

The bulk of that coming from

property taxes, roughly 42% of

it.

22% From sales taxes.

19% From our utility

transfers.

And a little aside from all

our other funding sources.

A pie chart that looked

different than it did in

fiscal 2008 prior to the

economic downturn.

If you turn the dial back five

years, you see property taxes

of 31% of our total general

fund pie sales taxes following

a number of years of really

good sales.

We're up to 28% of our budget.

The utility transfers are at

about 21%.

And all our other sources were

at 20%.

So the pie has changed as the

economy has turned down sales

tax revenue have lagged.

The utility transfers have

dropped as a result of the

budgets and the other sources

remain stagnant.

We continue that in to fiscal

year '13.

2 million

of additional revenue.

That's over and above where we

estimate to end the year in

fiscal year '12.

$34 Million of that from

5 million

increase in sales tax

projected.

5 Million increase in

utility transfer.

That's all coming from the

water utility.

The transfers are staying flat

in '13.

And increase in the other

revenue category with most of

that coming from a revitalized

sector and a lot of activity

that we're seeing through the

city.

So we're going to take

probably ten minutes and walk

you through some of the

details of each of the four

broad revenue categories.

First in regards to property

tax, our certified tax role

for fiscal year 2013 came in

4% higher than where it was

in 2012.

You can see the numbers up

6 billion tax base

9 billion of that

increase being new property

value.

At a proposed tax rate of

29 cents per $100 of

taxable value, that generates

the tax revenue that I showed

you on the previous slide.

18 penny

increase in the tax rate that

we have of 48.11.

We're taking a liberty and

rounding that to 2.2.

It's a lot easier to say than

2.18.

2

penny increase in the tax rate

that we currently have.

It comes out to be an impact

67 per month for the

owner of an immediatian value

home according to the travis

county appraisal district is

$178,000 in the current tax

role that was recently

certified.

You can see on the slide the

split between the proportion

of the tax rate that goes to

fund operations and

maintenance versus the portion

that goes to fund debt.

This gives you a little bit of

an historical context.

On our tax base in the city of

austin, this is about as good

a new story as you'll see.

I guarantee you you won't want

to see this slide for most

other cities across the

nation.

You can see pretty stable and

steady growth in the city's

tax base, pretty rapid growth

in the earlier part of the

decade.

A dip down in 2011, but then

we came right back.

It was a relatively minor dip.

We got most of the drop back

in 2012 and here in 2013, we

are now back above where our

tax base was at the peak of

2010.

So we've seen and been blessed

with a very stable property

tax base here in the city of

austin.

And just to give you some

context, if you look at the

next slide, it's -- it's truly

an amazing context when you

look at the change in average

home prices from what

typically is viewed as the

peak of the housing market in

2007 to the bottom of the

trough if you let me use that

word in 2011.

The city of austin is only one

of -- it's one of only two of

the largest municipalities

that saw an increase in

property values in that time.

And ours was the largest, a 5%

increase in average home

prices between 7 and 11 and

the drops we're seeing of

other municipalities are truly

staggering, in some cases,

40%, 50% in higher drops and

the average price of homes

which, of course, not only had

a huge impact on the

homeowners, but a huge impact

on the cities that rely on

that tax base in order to

provide services to their

communities.

Taking a look at sales tax, a

lot of arrows on this chart.

Show you the information in

two ways, 18 months of data

looking at the total sales tax

collection.

That's what you see on the top

line is our total monthly

change in sales tax

collection.

That includes a lot of white

noise, corrections, prior year

adjustments, auto year

adjustments always going on at

the state comptroller's

office.

The bottom slide tries to

clean out that noise and look

at what are the current sales

that occurred and how do those

occur from month-to-month.

So they both provide useful

information and tell a similar

story that retail sales are

strong in the city.

We've seen really good growth

in the last 18 months.

It's a volatile sales tax --

sales tax is a volatile source

of revenue.

I like to put this slide up

once or twice a year to remind

folks of that that over the

last decade we saw two

significant recessionary

periods and a six-month span

where our sales tax changes

went negative, significantly

negative.

We can see the recession we

just came out of with 18

months of negative sales tax

returns.

And, you know, we're well out

of that now.

And we're doing well.

But it's always good to

caution everybody against

getting too aggressive on your

sales tax progressions because

they're generally not

sustainable.

You know?

It's a bit of a roller coaster

ride.

So you have to be prepared for

those downturns in the

economy.

When you put it on an annual

basis and sales tax return,

that's what the bars are

telling you, the change in

annual sales tax.

You can see the downturns that

occurred in the early part of

the deck caped.

And just recently, we went

back and took an average of

the last ten years of actual

data.

So for 2001 and 2011 inclusive

of everything, what's been the

annual average increase in

sales tax revenue that came

out to be 2.3%.

So I drew a line on there of

3% so you can have a context

for how our current sales

taxes are doing and what our

projection for 2013 is

relative to that historical

context.

So we have been seeing retail

sales ahead of that historical

growth rate.

We are projecting in 2012 a 5%

increase and in 2013, we're

5%

increase which albeit higher

than what we saw for the

previous ten years, I earn --

certainly believe it's a

prudent sales ta budget for

us to build a budget on.

5% starts to get up

to 4%, 5%, or 6%, then you

have a concern with what's

going to happen in the next

downturn.

How are we going to sustain

the ongoing commitments to

expenses that we made if our

sales tax turned negative

again.

So those are our projections

for fiscal year '12 and '13.

I think we're certainly in

good shape to meet that fiscal

year '12 number of 5% year to

date.

Eight payments into the fiscal

year were up 8%.

So we're certainly in really

good position to meet the 5%

target for fiscal year '12 so

I feel confident we'll be able

to achieve 3.5% in 2013.

But, again, not to beat a dead

horse, but caution against

going much beyond that because

of the ongoing sustainability

of it.

>> Thanks, mayor.

>> Spelman: Real quick on the

last two points you made.

5% For 2012 wasn't our

projected sales tax growth

when you presented the budget

last year, right?

>> No.

>> Spelman: Next year you're

projecting at 3.5%?

>> Yes.

>> Spelman: This year we're

on page for 8%?

>> Through eight payments, the

year-to-date growth is 8%

above last year.

>> Spelman: Thanks.

>> Mm-hmm.

Next source of revenue is the

general fund transfer from the

two utilities.

Yellow bars show austin power

utility.

The blue are from the water

utility.

The steady and stable growth

historically.

You can see interestingly the

percent of total fund revenues

it's been dropping.

We're at 24% of total fund

revenues of this source back

in fiscal year '97 and '13,

it's down to just shy of 19%.

We expect that to continue to

decline over the next five

4%

by fiscal year 2017.

In regards to the revenue

source, the budget does

include the change to the

calculation for austin energy.

1% of gross

revenues.

We've changed that with

council of just over 12% of

nonfuel revenues and

established a floor of $109

million until the new

calculation method gets us

beyond.

So if we're going to switch

immediately to a pure

calculation using this new

approach, the transfer would

have dropped significantly in

fiscal year '13.

So council approved sending

$105 million and we'll stay

there until the 12% of nonfuel

revenue gets us above 105 and

we'll start floating it again.

We project $105 million for

the next two or three years.

Development revenue has

certainly rebounded.

We're projecting we're going

to end fiscal year '12 at

7 million and combined

result of the fee study that

council recently approved as

well as the approved

development activity.

We're continuing to see or

4

131

million in fiscal 2013.

You can see on the graphic

where that puts us relative to

the peak years of 2007 and

2008.

You can see where it puts us

relative to our historical

trends.

I would expect the future

trends to be a little higher

than the historical trends

given that council did just

approve a rate increase for

the fees to get the cost

recovery for the services

closer to the true cost of

service.

A lot of bullets on this

slide.

It's there for your context.

But largely what it shows you

is all the other types of

revenue sources are staying

stagnant.

Charges for services, which is

our emergency medical

services, parks and rec,

health and human services, are

some of the largest categories

there.

We're projecting those flat

from '12 to '13.

Franchise fees we're

projecting just a small

population growth-related

increase there from $33

million to $33.3 million.

Fees and penalties, largely

collected through our

municipal court for traffic

fines, parking violations,

court and arrest fees, we're

projecting those to remain

flat.

And in the interest earning

this is what we talked about a

lot in the past, it.

>>S a source of revenue that

used to bring in a little over

$8 million a year.

We're projecting that for

fiscal year '13 at $684,000

based upon an investment pool

yield of 0.41%.

Start on the expenditure side

of the budget.

The general fund budget as you

well know is predominantly

allocated to the safety fund

projects, police, fire,

emergency medical services

with 64% of the general fund

budget projected to go to the

areas in fiscal year 2013.

If you were to take a look

back and you provided the

slide for council in the past,

it's part of the financial

forecast.

If you go back and look the

last eight, nine, ten years,

it's been consistent with the

services comprising 2/3 of the

general fund budget and the

remaining 1/3 going to fund

the community service

department's planning and

development review, municipal

court, and then the transfers

and other requirements in

support of our support service

functions and community --

communications and technology

management services.

Now with the budget changing

from fiscal year '12 to '13,

where are the increases

occurring?

Police and fire are the two

largest departments by a long

shot.

So not surprising that the

largest dollar increases are

occurring in the large

departments with the largest

built-in cost drivers related

to employee wage increases,

health insurance, not a

surprise that the largest

dollar increase is occurring

there.

I think the more interesting

story on this slide really is

where the percentage increases

are occurring and you can see

8%,

increase occurring in health

7%

increase in planning and

development review, and an

4% in our library

department.

And I have a few slides

following this just to give

you a few tidbits, highlights

of what's driving those

changes and then later in

august, we have our general

fund departments and

enterprise departments will be

coming back to council and

give you a whole slew of more

details about the changes in

their budgets.

So some of those general fund

highlights are downtown austin

community court.

We're proposing to add two new

case managers that we think

will enhance services to

repeat offenders.

Both by serving offenders who

appear in court and outreach

and engagement activities to

help those offenders before

they're brought to court.

And our animal services

department for fiscal year

2013, we're establishing that

as a stand-alone office.

I need to correct myself.

It's not a department we're

going to be establishing this

as a stand-alone animal

services office.

We do have funding in the

budget for animal services for

the operation of tlac as an

overflow facility and

converting a halftime vet to

fulltime to help with the

increased animal population

they're serving at the new

facility.

And health and human services

earlier this year, the city

council approved continually

four-year animal funding for

[09:52:01]

the main interlocal agreement

that we have with atcic.

7 million in the

budget to provide annual

funding for that critical

service.

5

million of social service

programs, basic needs programs

that have previously been in

the sustainability.

What we're doing is we're

transferring some of those

programs back into the health

and human services

department's budget, which

into the general fund budget

which effectively shifts costs

that had previously been

funded by enterprise

departments because the

sustainability fund was funded

by transfers of the water

utility company and the

drainage utility.

We shift costs from the

enterprise operations to the

general fund and it's part of

our longer-termed strategy for

trying to better align the

services with the most

appropriate funding source

that we have in the city.

So that's a significant change

for proposing for fiscal year

2013.

>> Tovo: I want to better

understand that.

In effect the enterprise

services that have been doing

the funding, the programs that

do the sustainability fund are

no longer contributing to the

support of the programs.

Now they're going to be funded

entirely through the general

fund?

>> That's where we're heading.

But not getting through in

2013.

It's about $6 million that

flows into the sustainability

fund, the bulk of it comes

from the austin water utility,

resource recovery pitches in a

fair amount and the remainder

came from transfer from the

drainage utility and the

transportation fund.

And this year's budget, we

would be zeroing out,

eliminating the transfer from

the transportation fund and

the drainage fund and we're

reducing the transfer that

normally would come in from

the water utility.

But, again, we're not

affecting the program.

What we're proposing to do is

take some of the programs that

are truly social

service-related programs and

[09:54:00]

putting them to the health and

human services department

where we think they belong so

it provides an increasing cost

for the general fund.

A reduction in cost in the

enterprise operations.

And it also -- we get to it a

little bit, it frees us up a

lit built to allocate

additional sustainability

funds to the health department

which was in need because of

the loss of federal grant

funding.

>> Maybe I can submit some of

the questions in the q&a

process.

But is there a council

resolution or some policy

direction that I missed before

I got here that is guiding

these shifts?

>> No, no council policy.

The policy is set.

That's the longer term

strategy is to move away from

the sustainability as a source

of funding for the housing

programs, the social service

programs and to be shifting

those costs back to the

general fund.

>> I suppose the general

fund -- that's a strategy.

My concern is that while these

programs may not be impacted,

others might be because the

money has got to come from

somewhere.

What will the sustainability

fund primarily be supporting?

What kinds of -- I can make a

case that housing and other

needs are sustaining a healthy

community.

What's the primary focus will

this sustainability fund

become?

>> The primary focus of it has

been and continues to be in

the '13 budget funding.

Neighborhood housing programs,

it's a key source of local

funding for them.

It also funds a number of

social service contracts,

right now it's focused on the

basic needs contracts.

Not all of the funding to

[09:56:00]

basic needs.

Just an additional source of

funding.

That that is what we're going

to continue to use it for in

2013.

Staff agrees with the nature

of those programs.

Just trying to shift the

funding of those programs to

the general fund where we

think it's really a -- a

closer nexus between the

service and the mission of the

health department than there

is between those important

services and the mission of

some of our utility functions.

>> So over the long run, would

the end goal be that the

social -- the basic needs

social service programs all be

shifted out of the sustainable

sustainability fund and the

health and human services

budget and then the

sustainability fund would be

used primarily for

neighborhood housing?

>> I think even -- I think

that would be our transition

and then at some point I would

certainly even recommend that

the housing department to the

extent it needs local funds if

the local funds come from the

general fund as opposed to

enterprise operations and

enterprise operation dollars

be left for things that are of

more of a true enterprise

nature.

>> Thanks for that

explanation.

>> And -- and I would just

add, although -- while there's

not specifically policy

direction from the council

here, it's been a lot of

discussion about taking money

out of the utility silos and

funneling it to basically

unrelated purposes.

And that -- we had a lot of

discussion about the electric

utility doing that.

We also, I know I've raised

that question several times

with regard to the water

utility.

And I do think -- I don't want

to get into the discussion, i

want to let you finish your

presentation, but just

speaking for myself, I do

think that's the direction we

need to be going.

>> Morrison: One quick

follow-up.

I wonder if staff could help

us find some documentation

about when the sustainability

fund was first created and the

discussion around that or the

[09:58:00]

resolution.

That would be helpful to make

sure we understand the

context.

>> We can do that.

I think it was in the early

2000s, BUT WE'D BE GLAD TO GET

That information to you.

>> Morrison: Great, thank

you.

Wrapping up health and human

services, three positions

funded by grant funds, a

public health nurse,

toxicologistommunity

government health manager.

All are important positions

but in reduction in grant

funds we need to shift the

positions from the grant fund

to the general fund.

We're doing that in the fiscal

'13 budget.

Then the council policy

retreat, the council asked us

to look for ways to continue

funding the youth programs

that are currently funded out

of the hollywood neighborhood

program.

In 2012, some of the programs

refunded were youth leadership

development with the girl

scouts.

We gave money to put there.

Funds for an afterschool dance

program and also for after

school art programs.

These aren't ongoing

commitments, these aren't the

types of programs where every

year we give dollars to the

same agencies but they're the

same agencies we funded from

the good neighbor programs.

We looked through the last ten

years and the average amount

of programs that went to those

activities was $95,000.

We're recommending to include

$95,000 in the health and

human services budget to

continue to fund those types

of community events in the

wake of the holly good

neighborhood program ending.

WE WANT TO ADD TEN NEW FTs TO

The library system.

They've seen significant

reductions in staffing in the

last decade.

This restores some of those

positions and will help them

to meet the growing demand for

library services they're

experiencing.

Establishing a budget of

$150,000 for their temporary

staff.

They rely heavily on temporary

staff to keep the doors of the

libraries open.

They've never had a budget for

it.

They robbed peter to pay paul,

so to speak, to find funding

in other areas of their budget

to fund the temporary staff.

That would give them a

dedicated budget to hire temps

and keep the doors open and

provide services.

We're including an increase of

$138,000 to the materials in

cataloging budget and the

additional two custodial

positions to meet the growing

facility needs of our library.

In our parks department, we

have $652,000 that will be an

increase in preventive

maintenance contracts.

This will provide a whole

variety of facility

maintenance services including

inspections, fire devices,

fire protection systems and

boilers, roofing and floor

repairs as well as facility

entrances and sidewalk

improvements that will bring

those facilities into a.d.a.

Compliance.

So we have a lot of aging and

aged facilities in our parks

system and this increase will

allow us to improve the

preventive maintenance.

The budget includes $220,000

of additional funding for our

specialty programs such as the

creativity club that will

allow us to meet the continued

high demand for those

programs.

We have 9 1/2 positions in the

budget to staff a variety of

cultural centers, including

the planned grand opening of

the austin american cultural

center in april of 2013 and

THE FOUR FTEs FOR THE PARK

Maintenance activities.

>> Mayor Leffingwell: Asian

american.

>> Yep, asian american, I'm

sorry.

We're going to need one of

those next.

Okay, planning development

review department earlier this

year, the city council

approved a new fee study.

They approved the 11 positions

to improve the timeliness of

the development review

process.

We're proposing an additional

three positions in the fy-13

budget to implement the

conquer austin plan that was

approved earlier this year.

In the fire department, we

added three positions in the

same pdr amendment to help

with the review and processing

of our development plans.

We're proposing to increase

the overtime budget by

$522,000.

The department currently has

116 basic positions in the way

the fire department operates

is when the positions are

vacant, they back fill them on

overtime basis.

Significant overtime costs

associated with that.

We're proposing the increase

until such time we can get the

vacancies down.

THREE FTEs ARE BEING ADDED FOR

The personal protection

equipment maintenance program

and for the fire department.

The community coordinator and

specialist are needed and the

highlight of the fire

department really isn't even

in the budget yet, but it's

the recent award of the safer

1

million of funding that will

allow us to add 36

firefighters and we'll be able

to achieve four person

staffing in the remaining

three aerial trucks in

addition to the three rescue

units will be moved up to four

person staffing in 2013.

That's a good news story that

we heard we received that

grant.

In the police department, we

have 22 officers to maintain

the ratio of two officers per

thousand.

We're proposing a april start

date for those officers so the

costs of fiscal year '13 are a

little less than they

2

million.

And you can see the annual

9 million

that would begin in fiscal

year '14.

12 Positions using 911

dispatchers funded by the ar

grant.

That grant went away.

We're moving the positions

into the general fund in this

budget.

We're replacing grant funds

used for the austin regional

intelligence center with

general fund dollars and we're

proposing to upgrade ten

officer positions to detective

ranks again with the april 1

start day.

In our emergency medical

services department, I think

one of the real high lights is

not staffing related but more

so equipment related.

We're replacing 55 of our

cardiac monitors on to the

8 million which

will give them the latest and

most modern cardiac equipment

available.

We are also including the

full-year cost of the 12

paramedics that were added mid

year 2012 for operation of the

miller station and another six

paramedics we're proposing for

a new demand unit at the medic

five station for $582,000.

Moving on to the fund level.

These are things that kind of

happened outside of the

context of the department

budgets.

This is the transfers and

other requirements piece of

the general fund budget.

We have a $6 million increase

in the general fund transfer

to the communications and

technology management fund, a

large number, obviously.

So I want to talk a little bit

about it.

5 Million of that has to do

with the fact that the fund

has some ending balance in

2012 that it was able to

utilize the fund operations

that we didn't need for the

fund transfer.

That's for the general fund.

The transfer to support ctm is

lower than it otherwise would

have been because they were

drawing down the available

ending balance.

Can't draw down the balance

more than just one time.

So in fiscal year '13, we're

seeing an increase in the

transfer amounts because the

ending balance is not there to

do that again.

5 million

of that increase is related to

ongoing capital replacement

needs that had been funded in

previous years it last couple

of years, we funded them out

of the budget stabilization

reserves which is consistent

with the financial policies.

This is the replacement of

computer equipment, monitors,

printers, things of that

nature.

We had been funding those out

of our funding stabilization

reservings but not really a

sustainable way to continue to

fund the ongoing capital

replacements.

You can't fund them out of

reserves forever.

You can do it for a few years

when your economy is

struggling but you need to

start budgeting out of your

operating budget or you'll get

drained.

That's moving us from some of

the ongoing capital

replacements, moving way from

funding those out of the

stabilization reserves and

moving back to funding them as

ongoing operating costs.

The remaining $2 million is

related to a variety of cost

increases, a lot of the

standard things, wages,

insurance, retirement, and

some other costs that I'll

talk about when I get to the

ctm slide.

The story is very similar for

the increase in the transfer

to the support services fund.

That fund as well had some

ending balance of 2012 that

they're able to draw down to

help us keep the departmental

rates low in fiscal year 2012

and helped us balance the

budget that year.

But in the fiscal year '13

budget, we don't have the

benefit of that ending

balance.

3 million of the

increases is related to that.

There's another roughly $1

million of increase which is

related to our contract and

management -- contract

management department and our

office of real estate

services.

The two functions that had

previously been funded out of

our capital projects

management fund with some of

the reorganizations that the

city managers implemented had

been moving those two

functions out of the contract.

We're moving those to the

support services fund.

So there's no change in the

cost there.

It's a transfer from one fund

to the next.

But the general funds transfer

to the support services fund

as well as our enterprise

transfer is going up as a

result of the departments now

being part of that fund and

their new savings elsewhere

because of the capital project

management fund thereby lower.

6 million

increases in that fund related

to cost increases, wages,

insurance and a variety of

other things that I'll talk

about shortly.

I wanted to wrap up the

general fund discussion with

high lights from the capital

side of the budget with the

highlights being in the areas

of library parks and planning

and development review.

Fiscal year 2013 budget for

6

million appropriation to the

related new central library

project.

That project is on schedule on

budget.

The construction is set to

begin in september of 2013.

We're anticipating a grand

opening spring of 2016.

Moving on to parks and

recreation where the parks are

spending down their bond

funds.

That project a 2013 year

8 million,

with improvements to parks

including the conley garerro

senior activity center,

renovation at-bat ol knew

pool, and improvements and new

play escape at dove springs

park.

And including $2 million in

their budget so they can begin

work in the land development

code which is required

following the approval of the

5

million appropriation for our

great streets program.

All right, move on to talk a

little bit about our internal

service department and the

highlights from those

department ms.

-- Departments.

Cory: mr. mayor?

>> Mayor Leffingwell: Mayor

pro tem.

>> Cole: Before you go on.

I meant to ask you this

earlier.

You showed the chart on 13

with the basic breakdown of

o&m versus debt.

And because we're headed into

a bond session.

Election I don't know if we'll

go over it any further, I'd

like for you to spend a few

minutes on this chart

explaining how we calculate

the debt portion and go ahead,

explain that.

>> Well, the debt portion is

one of those things that i

mean the short story, it is

what it is.

That the voters have approved

a certain amount of debt for

the city to enter into.

The city also issues

certificate of obligation and

contractual obligations for

various things as it goes

through its business.

And there's a certain amount

of debt service which i

believe if memory serves is in

the neighborhood of $100

million of annual debt service

on our go debt programs, our

COs, AND OUR KOs.

And that service rate that's

needed to fund that for fiscal

year 2013 based upon property

tax base that has been

certified.

The rate that's needed to fund

08 cents

>> Cole: We're setting that

now when we passed the

september 2012-2013 budget?

Is that correct?

>> That's correct.

>> Cole: So we are confident

because of the way we fund our

debt, which is set first, that

we're going to be able to make

that obligation?

>> Yes, we'll be able to make

that obligation.

>> Cole: Thank you.

>> Mayor Leffingwell: It is

important to remember too that

the debt service portion of

the property tax does not

enter into the calculation of

the rollback.

If it did, the rollback rate

would be much higher than it

is.

>> Cole: I was not expecting

a tax increase in connection

with this bond initiative.

>> Mayor Leffingwell:

Correct.

>> Cole: Yet we were going to

fund it confidently.

>> Mayor Leffingwell: Right.

>> On to the internal service

departments.

The internal service fund is

the largest internal service

fund.

You can see all of the

departments there funded by

the services fund.

I wanted to go through a few

of the highlights.

I talked previously on the

previous slide about our

contract manager department

and services office

transferring from the

management fund into the

support services fund.

So the support services fund

is going up as a result of

that transfer, the property

taxes fund is going down.

It's just a shift.

2 million in the

budget for smbr department,

for a new disparity study,

which is legally mandated once

every five years to determine

whether disparity exists

between mbe and wbe groups

participation and certain

groups opportunities.

It's a requirement of

operating the smbr programs.

We have five positions we're

proposing to add to our

billing services departments.

That's two electricians and a

blumer to allow for preventive

maintenance at city

facilities.

They're also requesting a

research analyst to maintain

the asset management system

and a financial consultant to

assist with their increased

workload related to contracts

and budgets and financial

matters.

There's four positions in the

law department in their ethics

and compliance unit.

An additional four positions

in the human resources

department, one being a civil

service coordinator that would

help support the transition of

ems to civil service ranks.

One administrator to develop

and implement strategies for

the city's compensation baned

fits system.

They're also requesting a

programmer analyst to update

the city's personnel system

and increase the time and

attendance support and also

the hr manager position being

transferred to them from the

financial services department.

In the financial services

department, we're proposing

four new positions, two

accountants, a programmer

analyst, and a contract

administrator that helps with

the increasing workloads in

the department.

And then finally in our public

information office, we're

proposing a community

engagement consultant that

would specialize in minority

engagement that would have

foreign language skills.

Then the reclassification of

two positions is being

proposed in the offices of

city auditor in the amount of

$31,000.

Second large communication

fund is the city management.

Some of the highlights include

ongoing technology maintenance

and replacement of computer

and software line sensing, a

assessment and

strategic plan.

That was the number one reck

member -- recommendation of

the i.t. discovery committee.

It includes research policies

and practices with the goal of

producing an

organizational-wide plan that

would help guide and inform

the city's investments in

technology.

We have some significant

capital items for ctm,

including upgrades to the

greater austin travis county

radio system, gators, a $32

million project that will be

implemented over six years

with costs being shared with

the regional public safety

partners including the county

aisd and the university of

texas and the upgrade will

include replacing microwaves,

radio and dispatch console

equipment, and other items

that have reached the end of

useful life.

Another large captive project,

8 million for phase two of

the city of austin

telecommunications network.

This project will upgrade the

city's fiberoptic network to

accommodate the proliferation

of video web streaming,

training, video

teleconferencing, event

monitoring.

All of these things that have

surpassed the existing systems

transmission capabilities and

we anticipate this project is

going to roll out over a

four-year period.

7

million for replacements

including network of storage

needs, mobile data computers,

and voiceover internet

protocol.

And finally an upgrade to the

criminal justice information

system that's a requirement of

the federal system that's used

by law enforcement agencies

that they used to run

background checks, criminal

history, and licenses and to

obtain other information

related to cases.

>> Mayor?

>> I wanted to add one element

here, the citywide i.t.

Assessment, the city manager

and I had a long ongoing

discussion about that and we

did have a discussion about

this proposal at e.t.t.

And I think there's some

surprise that this was the

approach.

That it was going to cost that

much.

So I think we're going to have

continued conversations about

that and I'll look forward to

working more with etm and the

provision.

>> Mayor Leffingwell: That

was the upgrade you were

talking about, councilmember?

>> Morrison: I was talking

about the assessment and the

strategic plan, the $1 million

that's number two under the

operating highlight?

>> Mayor Leffingwell: Okay.

>> Morrison: So stay tuned.

I'll have more to say on that.

>> Mayor Leffingwell: Look

forward to it.

>> Okay, we're going to move

on to our interprize

departments and I would just

like to remind you here these

are intended to be a one-slide

high-level overview.

These departments will be

coming back to the city

council, not all of them.

But some of the biggest

enterprise operations will be

coming back to city council on

august 22 to provide you all

kinds of details about their

budgets, but we wanted to at

least leave you with some high

level -- high level

highlights.

First with the convention

center, the hotel occupancy

tax, collections continue in a

positive upswing in 2010.

7

million for projecting to end

2012 at $50 million and

5

million increase in 2013.

Cost containment remains a top

priority for the convention

center for the third

consecutive year.

They're proposing a budget

WITH NO NEW FTEs.

And they have some significant

work that we're going to be

doing on the cip side of their

budget.

$9 Million of new

appropriations and fiscal year

2013 as they're planning to

make a number of improvements

including rebuilding

escalators, parking garage

repairs, and upgrades to at

the electrical capacity out at

the convention center.

The austin energy I think you

all well know in 2007.

He improved the increase in

electric base rates in 2004,

and the result of the

increases is the impact to a

typical user, a 1,000 kilowatt

user of $6.63 a month.

The utility is actively

engaged in holding costs at

fiscal year 2012 levels.

Fourth consecutive year

they're proposing a budget

with no new positions and they

are also, deferring

noncritical maintenance and

some i.t. projects.

The total budget increase for

8

billion.

2 billion budget,

that turns out to be about

2% with a lot of those costs

being things that the utility

does not have control over,

things such as debt service

payments, increases in fuel

costs, increases in the

operating costs of the nuclear

and coal power plant, and the

transmission billout costs

that are set by ercott.

So a lot of the increases are

what we characterize as

noncontrollable.

side, there's

$228 million of planned

1 billion over

the five-year planning

horizon, $180 million related

to investments in power

production and alternative

energy projects and another

$20 million in fiscal year '13

will be for the fiscal control

center, $5 million for the

decommissioning of the plant

5 related to customer

billing and projects.

Going on austin resource

recovery.

They're proposing in this

budget a new rate structure

that is continuing their

design changes that are

intended to encourage

recycling by their customers.

Their base rate which should

have been on this chart but is

not, the base rate is proposed

to increase by 75 cents by

$8.75 to $9.50 a month.

So everybody will pay that

base rate.

Beyond that, you'll pay based

upon how much you throw away

on a per gallon basis with a

proposal of 16 cents per

gallon for the smaller carts,

the 24, 32, 64 gallon carts.

So it's a flat per gallon

amount.

If you have a larger gallon

cart, you'll be paying more.

There's a premium being placed

on the individuals that

continue to use the 96 gallon

cart charging 25 cents a

gallon for those users.

Aver overall impact is 2/3 of

their customers is a $1

increase per month.

Another source of funding for

the department is the clean

community fee formerly known

as the anti-litter fee.

Nick still known as the

anti-litter fee.

There's a resolution coming

forward to council to change

the name of that fee.

That fee funds litter

maintenance, tree cleaning,

hazardous waste disposal, code

compliance activity, and also

a $1 increase to customers in

50 a month

increase to the commercial

customers.

Some of the operating budget

HIGHLIGHTS, WE HAVE FOUR FTEs

That are being added to

implement the universal

recycling ordinance that

requires multifamily and

commercial properties to begin

offering recycling services.

TWO FTEs IN THE BUDGET TO

Improve customer service.

The department's goal is to

increase citizen satisfaction

with quality of curbside

collection from 85% to 90%

being highly satisfied.

They're adding two positions

to enhance the quality control

in customer service.

AND FOUR FTEs AND $2.4 MILLION

In the budget to enhance

marketing outreach and

education efforts on a whole

variety of zero waste

initiatives, things ranging

from mattress recycling, pilot

programs, to a new business

recycling assistance program.

Education on the single

plastic bag -- plastic bag use

ban.

A mailing campaign, a public

education so they have really

aggressive and innovative

activity in the planning to

fund in fiscal year 2013 as

part of the goal to get to

zero waste by 2020.

8 million

of planned spending for fiscal

4

million in new vehicle

purchases and $7 million

related to the harold court

facility environmental

remediation project.

Regards of the austin

transportation department,

this department is proposing

5 new positions in fiscal

year 2012, two of them related

to taking to the annual

program for austin energy.

1 1/2 To help administer the

vehicle for higher and valet

parking programs.

A business consultant that

will assist them for the long

range and strategic planning

effortings, and then the

public information office

specialist that will help

enhance community engagement

efforts.

On the capital side, they're

3 million in new

appropriations for the

downtown initiatives,

including urban rail planning

and way finding and another

$783,000 will be transferred

to the great streets program.

I do want to mention here that

the department anticipates

bringing back to council on

august 23 a proposed change to

the funding model for the

great streets program.

Currently it's 30% of parking

meter fees in the downtown

area.

Answer for the great streets

program.

The department is going to be

requesting that that program

continue but the hours that it

applies to be for the original

hours of operations, not the

extended hours.

And so that's something that

you'll be hearing more about

and we'll be coming back to

council in august.

I wanted to make you aware of

it in this presentation.

The department is funded

primarily through the

transportation user fee that

funds the public works

department.

We're proposing a 7% increase

in that fee which would cost

the typical house hold or

every house hold 51 cents per

month.

Going on to the austin water

utility.

You all know, we've seen a

presentation from mickie

fishback.

They went through a very, very

long working group.

Process with the joint sub

committee and austin water

utility, financial planning,

and the results of that were

and the recommendations of the

joint sub committee involves a

two-day rate change in fiscal

year '13.

Phase one in effect november 1

and have a systemwide increase

8%

on reclaimed wattever.

Phase two of the rate change

will then actually implement

the water rate recommendations

of the joint sub committee.

The proposed changes include

eliminating the current

revenue stability fee,

redesigning the fixed revenue

structure for all customer

classes, creating a new water

revenue stability reserve fund

to offset revenue shortfalls.

So there's a lot of changes.

It's a fairly complicated rate

structure that you've seen a

little bit already.

They were presented at the

council.

You'll hear more about it on

august 22.

The combined impact of those

77 per

month increase for the typical

water utility user.

The budget includes funding

FOR 26 NEW FTEs.

13 Of those are related to the

operation and maintenance of

water treatment plant four and

another five to enhance water

conservation and quality

programs.

Four, related to the needs of

just expanding growing utility

system.

And an additional four that

will assist them in enhancing

their planning and long-term

business practices.

I do want to mention that the

departments currently in the

process of developing a

long-term staffing plan.

If you go back and look all

the way back to 1996, they've

only added a net 13 positions

in all of those years.

And the utility has obviously

grown a lot since that time.

So pretty substantial staffing

needs in the department.

They are able to defer the

staffing increases for quite a

number of years, again,

proposing 26 staff in the '13

budget and anticipate coming

back to council and continue

to discuss about staffing

needs in the utility.

And a long-term staffing plan

for them.

As you all know, it's a very

cip-intensive operation.

Fiscal year '13 spending plan

6 million, a $1

billion of spending plan --

spending anticipated over the

five-year horizon.

$238 Million of that $1

billion being related to the

construction of water

treatment plant four.

And then other projects

include waste water facility

improvements, expansion of our

replanned water system, and

funding for new and replaced

vehicles.

Aviation, strong revenue

growth, it's projected to

continue.

They're projecting in fiscal

7% increase in the

landing fees.

5%

increase in nonairline

revenues.

One of the key metrics for the

airline industry is the cost

per passenger and they're

always working diligently to

keep the cost down.

Projecting a modest increase

in that metric for 2013.

Some of that is related to the

BUDGET TO FOUR NEW FTEs TO

Enhance management and

facility maintenance as well

as i.t. support.

8 millione essentially

what the airport does, they

transfer the excess revenues

to the capital fund to help

meet the needs of future

capital improvements,

8 million in

fiscal year '13.

5

million in new appropriations

in fiscal year 2013 with the

focus of their cip program

being on a variety of terminal

facility improvements.

Refurbishments, railway

safety, and great projects as

well as overfill parking, a

lot of improvements.

Co-compliance.

We're recommending some

significant staffing

enhancements there.

The department currently has

69 positions and proposing to

add an additional 19 positions

with six of those being field

positions and three more

administrating positions

related to the expansion of

the private waste hauler

monitoring and licensing

activities.

>> Designed to expedite the

resolution of compliance cases

by providing property owners the

potential to resolve them more

quickly and less expense through

mediation at the department

level as opposed to having it

blow up to a court of law type

case.

And I mentioned previously, that

of the code compliance

department as well as the

resource recovery received

funding from the clean community

fee.

And we're proposing a $1 per

month increase for residential

50 per month for

commercial customers.

Going on to public works, we're

PROPOSING 11 NEW FTEs FOR FOR

A tree maintenance and planning

crew, four to manage increasing

workloads and then I think we

have an innovative approach for

three positions for a career

progression initiative.

Designed for field employees in

the street and bridge division

seeking career advancement.

There's 165 non-supervisory

positions in this division and

the purpose of these three new

positions would be to assist

this group in developing the

skills they need to further

advance their career in the

public works department.

In regard to the public works

3 million is

being allocated to bike and

pedestrian improvements and

roughly $9 million for the

ladybird lake boardwalk that's

going to be getting under

construction and

.4 million for street

reconducts of third street and

as mentioned under the

transportation department

proposing a 7% increase in the

transportation user fee to fund

not only this department but the

transportation department.

Neighborhood housing and

community development, service

much of their funding from the

federal cdbg and home grants, a

$178 million reduction in those

grant funds as we mentioned back

in april.

8 million of

reductions that occurred in

fiscal year 2013 -- 2012,

they've been offset by a

one-time grant awards and to try

to mitigate service impacts

proposing to shift five

positions over to our housing

trust fund.

And then as I mentioned also

previously as part of the

changes making in the

sustainability fund and moving

those program costs into the

general fund, that freed up some

dollars that could be allocated

to the housing department.

To again, help with the drop in

grant funds, the additional half

million from the sustainability

fund to neighborhood housing and

community development.

In regard to the capital budget,

.5 million of the

$5 million that was approved as

part of the 2006 bond program

has been appropriated.

The last $175 million is

anticipated to come to council

this month and fully

appropriated and projecting a

4 million on

affordable housing programs in

fiscal year 2013.

So the short story here, they've

seen significant drop in grant

funds and we've been able to

kind of band-aid together an

approach to keep them whole for

fiscal year '13 but want to put

council on alert we expect

funding challenges in fiscal

year 2014 and beyond for this

department.

A lot the actions have been

taken to address shortfalls in

'13 and we're going to have to

undertake a comprehensive review

of the programs and identify

funding options that are going

to be for sustainability in the

future and tomorrow's council

meeting, you'll be seeing a

presentation from the housing

department on their action plan

that's required to receive those

federal grant funds.

I believe this is our last

enterprise department.

Watershed protection, funded

through a drainage utility fee.

7% increase which would have

a 60 cent per month increase per

equivalent residential unit.

The highlights are related to

the capital program and in

particular, to the continuation

of infrastructure and system

improvements outlined in their

master plan.

One of the highlights is they're

increasing their transfer to

their capital program.

Increasing from $19 million to

$21 million in fiscal year '13,

part of their long-term funding

strategy to implement the

drainage master plan over a

40-year period.

Capital budget, a number of

9 million planned

for fiscal year 13.

$23 Million related to the

waller creek tunnel project and

another $10 million for at

watershed protection master plan

5 million for

erosion and flood control and

7 for

water quality remediations.

So I think five of the seven of

you have seen these slides

before.

This is the work we've done with

the joint subcommittee of the

school district, the city and

county trying to take a cross

jurisdictionality look.

The tax rates projected and the

impact it has collectively on

the citizens of austin and i

wanted to share some of that

with you to close out the

presentation.

>> I wanted to share some of

that with you, the full council.

This slide shows the potential

timeline of tax elections, the

best information we have right

now.

We're heading toward a

november 2012 projected bond

election for the city of austin.

We're projecting it at

$385 million, though that's not

been decided yet.

It's just the number we're clue

including at this point in time.

The school district anticipates

$350 million to $500 million in

may.

Followed by november of 2013

with a likely tax rate election

of five cents.

And they've informed us they may

need to go beyond five cents.

The maximum would be nine cents.

The numbers we're putting

together, we're assuming it's

five cents and then the acc

projecting a bond election in

november of 2014 of

$600 million.

And the things below that dark

blue line are things we don't

have as much information on.

Urban rail has been discussed.

At one time it was discussed as

part of a november 2012 bond

election.

That's been delayed and at this

time, we're anticipating

somewhere between 2014 and 2017,

urban remain would make its way

back and see a bond election

related to that and there's

discussions from the central

healthcare district related to

the medicaid transformation

waiver and we've been able to

get very little information from

them.

A lot of things still up in the

air and we don't know at this

time, they've not informed us,

when that election might occur

or how large it might be.

So we go on to the next slides,

we show you a couple of

different scenarios and that

potential tax rate election from

central health is not in any of

them.

You look at the color schemes,

we tried to match them to the

next slide where you've got

things in red and things in

green.

You go to this next slide and

the blue line is the base

situation.

So essentially says if we don't

do any of the things on the

previous slide this is what we

project as the tax rates

collectively.

42 In fiscal year '13,

largely flat all the way through

the next five years.

To $2.40 in fiscal year '17.

The red line corresponds to the

items in red on the previous

slide.

If we were to go ahead and get

voter approval for all of those

things on the previous slide.

The tax rate projections would

be the red line and the green

dotted line, the additional

amount that rail could add in

regard to tax rates.

Trying to do the same for the

utility bills, we try to do for

all of the different entities

and define a typical user.

And so our typical user we're

using here is the city of

austin, owner of a median valued

home, $178,000, and then assume

that home grows at a rate of 3%

annually and assume in regard to

the utilities all of the

typical, 1,000-kilowatt per hour

and we

put of the numbers to it and

take a look at what is the

average tax bill from all of

these different jurisdictions

expected to look like for the

typical user over time?

And the number that I'll

highlight you on the one in the

far right column, the compounded

annual growth rate.

It gives an indication of what

the year over year growth we're

anticipating.

If all of these things were put

into effect and the bottom line,

6% in the tax and

utility bill of our residents

over the next five years if all

of the different bond rates and

tax elections highlighted on the

previous slide were to be

approved by voters.

Final slide, next steps in the

budget process, we'll be back

before council on august 15th

in the morning with budget

presentations from library,

health and human services, pdr

and planning and development

review and also, we need to --

pard and planning and

development.

And we need to start the process

of setting the tax rate and the

first step is to approve a

maximum tax rate.

Not approving it, just setting a

number that will be the maximum

tax rate you would consider as

part of the budget adoption.

We have typically recommend it

be set at the rollback

calculation and ask council to

set a maximum at the

august 15th meeting.

AUGUST 2nd, FULL DAY WORK

Session to hear from the --

AUGUST 22nd, TO HEAR FROM THE

General fund departments and

several of our enterprise.

Austin energy and austin water

and code compliance and

august 23 and 30, a whole array

of public hearings and

SEPTEMBER 10th, WE'LL BE BACK

To seek your approval for the

fiscal year '13 budget.

Happy to answer questions.

>> Mayor Leffingwell: Mayor pro

tem.

>> Cole: I wanted to look at the

timeline of the tax elections.

You presented it to audit and

finance and the general

subcommittee.

I want to make sure I understand

the tax rate forecasts between

'12 and '17.

The top green line, what does

that correspond to?

>> The -- let me explain the red

line, then it's easier to

explain the green.

>> Cole: Ok.

>> The red line corresponds to

everything on this slide I'm

about to switch to.

It corresponds to the tax rate

that would be needed to support

the projected city of austin

bond election, the school

district bond election, the

school district tax rate

election and austin community

colleges bond elections.

So everything on this slide in

red corresponds to that red line

there.

And then the green line is if we

were to do all of those things,

plus urban rail, that the tax

rate needed to support that

program.

>> Clerk: And so we don't have

any number or information --

specific information about the

medicaid '11-15 waiver from

central health?

>> I do not.

>> Cole: That's the only thing

not part of the potential

calculation.

>> That's right.

>> Cole: When we look at the

potential impact to the typical

homeowner without rail, this

really corresponds to the red

line, is that correct?

>> That's correct.

>> Cole: Ok.

And so when we look at it, over

a five-year period, is it

correct that you're calculating

a combined annual growth rate of

6 in total for all of those

jurisdictions?

>> Yes, that's all in,

everybody.

>> Cole: Ok.

And that's everybody, excluding

central health and excluding

rail?

>> That's right.

>> Cole: Ok.

So -- help me understand, there

was I think in the general

public and media, a premise that

our property taxes have went up

38% over the last 10 years.

I don't know if you saw the

article.

And so on the one hand, I think

the public gets confused, and

when we say -- even with all of

these jurisdictions, we're only

6%,

which I think is true, and then

we look at a calculation over a

10-year period that suggests

we're raising property taxes

38%.

>> Well, this number is an

annual number, so you know, let

me get a little loose with the

math, over 10 years, you'd

expect it to be 36% if we

continued with the annual

increases of 3.6%.

>> Cole: Ok.

So the calculation over a long

period of time that could get

you over 30%.

>> Yes, that's right.

>> Cole: Ok.

But still, our annual numbers

are on target?

>> Our annual numbers are at

3.6%, on target.

And you look at it relative

to -- you know, the typical wage

increase in the 3.5%.

And cost of living increase,

fuel gets more expensive.

I mean, just consumer price

index, inflationary forces will

be in the neighborhood of 3%.

So, you know, to me it's not a

big surprise, you see a

compounded annual growth rate of

about 3.6%.

That's what you would expect.

>> Cole: That's what we mean by

combined?

>> Yes.

>> Cole: So when we talk about

increases, I think you hit on it

when you talked about the cpi,

but I want to connect it to the

property tax assessed values

because a lot of times we're

seeing increases in assessed

value on top of our rates and we

can't control the increases in

the assessed values, is that

correct?

>> We certainly don't control or

have any say in the appraised

values that the different

appraisal jurisdictions come out

with.

There's the interplay between

the appraised values and the tax

rates and, you know, you can see

that when the appraiser says the

values are going up.

Our tax rates otherwise are --

generally come down and vice

versa.

If your appraised values are

coming down, the tax rates go up

to generate the same amount of

revenue.

>> Cole: So we're at the mercy

of our our prosperity?

I say that, because we see a

increase in our sales taxes and

we're happy when people are

earning more and then see the

property tax values go up and as

we said, our tax rate, we see an

increase in the revenue coming

in and that's good for the city

in terms of services, at the

same time, we have to be careful

of not overdoing that for the

consumers.

>> I think that's correct.

>> Cole: Ok.

You're taking care of that?

>> I certainly am.

[Laughter]

>> Cole: Thank you.

>> Mayor Leffingwell: I think it

would be useful, I'm not asking

for this, it would be useful to

see those relative to cpi or

some index.

Some appropriate index.

Which would -- looks like,

sounds like would probably show

a fairly flat trajectory.

>> I mentioned cpi.

I don't think that's the right

indicator, it's based upon a

basket of goods and quite

frankly, that doesn't look like

ours.

But I wouldn't rely too heavily

on cp being the correct gauge

what drives municipal cost

increase.

But I understand what you're

looking for.

>> Mayor Leffingwell: But would

provide a cost to the consumer

because the consumers --

consumer's basket is similar to

the cpi.

>> Sure.

>> Cole: I would like to follow

up with that request also.

We talked about it on a previous

slide, no other city would not

want the type of numbers that we

have in terms of our prosperity.

And it would be nice to see that

in the context of what we charge

for our tax rate and tax values.

Especially from our peer cities.

And I think you've done that

before.

>> We've done it for our tax --

>> Cole: Yeah, for our -- our --

>> Mayor Leffingwell: Briefly,

to accompany the follow-up

questions later on -- and

cookies.

But I wanted to clear a deck

on --

>> Spelman: Page 49.

We have property taxes, which is

the first five rows and we have

a total property tax value which

you show is increasing and the

compound annual growth rate of

2% over the next five

years.

And then we've got city of

austin utilities and fees which

cgr is going up and the total

6% on an

annual basis.

Is that about right?

>> That's right.

>> Spelman: Is there anything

else that the local government

is going to cost me that's not

on this graph?

>> Sales tax.

>> Spelman: Ok.

Development fees?

>> Uh-huh.

>> Yes, I mean, it depends upon

what you -- what you do, so if

you're doing a room addition or

bidding a new home, development

fireworks participating in rec

program, fees.

If you need to call ems, either

you or your insurance company

will pay fees.

So if you have a lot of parking

tickets you'll pay some fees.

[Laughter]

>> Spelman: Not lately.

Ok.

So city stuff.

Capital metro which takes sales

tax money and spend it's on the

bus system and maybe something

else some day.

Anything else besides that?

If I wanted a chart like this

that rolls up all of the costs

of local government.

Ok.

From the standpoint of the

average homeowner, most people

don't have a sense for where

their money goes, just knows

that the trash gets picked up,

the lights stay on, there's a

bus that comes by, somebody

handle that is and it costs them

something.

Can we roll all of those costs

up into one slide, like 49 or

one piece of paper, one table,

that includes the whole thing

and gets us to the bottom line,

here's our compound cost of

local government is going to do.

Including the city of austin.

A relatively small piece of that

whole puzzle.

Is that something that's doable?

>> I think -- it.

>> Mayor Leffingwell: I think

I've seen those numbers for a

total, like everything, federal,

state, local, around 40 plus

percent.

>> Spelman: I would exclude the

federal government as something

I have no control at all.

Lord knows, I have no control

over the state legislature

although I really wish I did.

But we have control what happens

locally, I was wondering if we

could get a local number.

This looks reliable.

What we need to add to it to be

all in.

>> I think this is reliable and

I think we could come up with

something to do for sales tax,

which is obviously a large

source of revenue.

Most goes to the state, doesn't

come to the city.

But I think we can do something

reasonable, on a typical payer

perspective.

At the typical income levels and

taxable income and figure that

out.

Beyond that, it strikes me as

being extremely messy to try and

determine in regards to

development fees.

>> Spelman: Ok.

>> What's the typical person --

you know, I don't know what it

would be and seems messy and i

don't know that it would be that

much relative to other dollar

amounts.

I think sales tax would be a

value-added improvement to our

analysis and I think we can come

up with something for that

reasonably well.

>> Spelman: Two observations.

One is that when do you that,

it's probably not going to have

a big effect on the compound

6%

is about twice the rate of

inflation.

If you use cpi or whatever,

whatever you use.

And an argument could be made

that local government has a --

as a whole should not be taking

more out of people's pockets,

meaning our increase on an

annual basis should be about the

rate of inflation, maybe a

little bit more or less.

But twice the inflation, means

we're taking on a percentage

basis out of -- more out of

people's incomes.

Is that -- if that question is

put to me, how would you respond

to it?

>> I think I would pick up some

of the themes I was going to

mention to the mayor, I don't

8% if you

peel of the onion, to get to the

8%, it doesn't look a whole

lot like our basket of goods

looks like.

That basket includes food

expenses.

We don't really buy food that

much.

A little bit but not much in the

way of food.

The basket of food goods for the

consumer doesn't include

personnel costs.

8% a

year.

>> Mayor Leffingwell: That's

almost always the case we

have --

>> we have cost rates that

exceed the inflation rate.

>> Spelman: That's what is going

on here.

What's different about ours

which drives the inflation rate?

>> One good example could be we

have some contractual

obligations with respect to

public safety.

You were alluding to the

inflation rate as being 1.8%.

We have wage obligations of 3%.

And I suspect there are other

examples that we could point to

where we -- we have little if

any prerogative but to fund

those things.

The context in which we talk

about the budget, part at least,

are uncontrollable cost drivers

that we have to -- simply have

to deal with and at the outset,

oftentimes, they exceed,

generally, exceed that rate.

>> Spelman: On a short-term

basis, two, three, four-year

period, something like our

contracts with the public safety

unions are not controllable.

On a long-term basis, of course,

they're completely controllable

because we can negotiate

whatever rate makes sense to the

citizens of austin.

>> In terms of the current

contract compared to the

previous one, we have brought

that cost down considerably, if

we were to compare the last two

contracts.

So d in regard to that issue, we

have focused on that.

>> One large difference between

the grocery basket, we have

several large very capital

intensive surprise funds, austin

energy and austin water and each

has over a million five-year

capital program and to fund

those programs and capital

improvements is in these rates

and the estimated bill for

those.

Sew that will drive some of this

number up as well.

>> Spelman: Why is it that we

are -- I think I know at least

part of the answer.

But I want to get a better

sense.

Why having a capital intensive

enterprise fund is going to

cause our costs to go up faster

than the rate of inflation?

Is it the nature of the capital

itself or the kinds of things we

have to buy with the capital.

The population growth inside of

the city?

>> Some is growth related.

Some is the timing of when you

have to build the capital.

Just as we finished a pretty

large program for clean water,

now we're building a treatment

plant.

So when you buy a power plant,

there will be a spike in capital

costs for a while.

But it's a long-term asset and

there's intergenerational cost

and you try to spread the cost

out over time by issuing the

debt on it.

But it will affect your rate to

extent and not necessarily tied

to a cpi index.

>> Spelman: Sure.

>> There are construction

indexes specifically for

electric utilities that are very

different than other

construction programs.

That's the nature of the

enterprise.

>> Spelman: So if we're heavily

capital intensive in

construction cpi goes up faster

than the rate of inflation, our

costs will go up faster than the

rate of inflation.

If we're dealing with a highly

labor intensive business, if

labor costs are going up faster

than capital costs and it could

be my cpi market basket is only

going up 178%, but the labor

portion of that is actually

going up faster than that, my

salary going up a little faster

than the rate, although not

bloody much, and I think it's

largely true for a lot of people

and there's knowing to be

that -- that component of the

cpi going up faster.

I'll probably have more to say

and ask about that but it's a

general observation if our costs

are going up faster than the

rate of inflation, it's true

we're taking a bigger percentage

out of people's paychecks and

people are entitled to know why

it is we're taking a higher

percentage and what they're

going to get in exchange.

And that's something we have

to -- I think work on a better

answer for that over the next

few weeks.

One other observation to make on

this page 49.

And that is that the top row for

the city of austin property

2%

'12 to '13 for the

typical homeowner by projecting

up by 5% in '14, 3% in '16 and

5% again in '17 and wondered why

is it going up a little now but

more in the future?

What's going to be driving those

increases over the next five

years?

And is it conceivable we ought

to be smoothing that increase

out?

>> You calculated those

percentages?

>> Spelman: Yeah, yeah.

>> Off the cuff, I could I would

anticipate it would have

to-to-do with the timing of the

debt service hitting on our bond

election.

You know, doesn't necessarily --

do the bond election in 13 and

by the time you issue the debt,

it's later and you don't pay the

debt service until after you

issue the debt.

So the bond election we're

proposing in 2012, the tax rate

impact, you would see later on,

you're not going to see them

immediately.

>> You'll have that in addition

to the completion of the 2006

and 2010 bond programs not fully

spent at this point.

>> Spelman: So what's driving

the changes in property taxes

are not anticipated changes in

operation and maintenance

expenses?

We don't know what those are

going to look like yet.

We haven't come up with a budget

yet for '14, '15 and '16.

>> We have the projections for

the other stuff as well.

All of that is built in.

Based on demographic projects,

two officers per thousand.

Dialing in additional officers

and anticipated increases in

wages and health insurance, 3%

and 10% is the assumptions for

the out-years.

We build those in and make

assumptions about the property

values and what happens with the

property values is going to

change how much revenue we've

collected any given tax rate.

It's all in there.

>> Spelman: Ok, would it be safe

to say that the first response

was that debt service is driving

this train.

Is it mostly debt service?

Small part, or mostly l and m?

Even steven?

>> In terms of the increases, we

could split it out for you, but

I would have to do digging to

see how it's split out.

Both of those.

>> Spelman: I wouldn't presume

you to come up with a number off

the top of your head, but I'll

be asking about it later on.

>> Mayor Leffingwell: To make

sure I have understand, we're --

we've got a flat trajectory at

least for the next few years on

the proportion of property tax

for debt service, remaining the

same.

I'm having a hard time seeing

how old debt authorization comes

back and change that is.

Or you don't understand how it

works.

>> The tax rate is not going to

change.

Our projection is we can have

$385 million with no change in

the tax rate.

That's not to say that the debt

service requirement doesn't

change.

>> Mayor Leffingwell: I thought

that's what this chart was

about.

The one bill was reference, the

entire -- the growth and entire

property tax in which the debt

service portion is remaining

fairly constant.

At least now, what the forecast

is.

>> The debt service rate is

remaining constant flute this

focus forecast, but the property

values are projected to grow.

>> Mayor Leffingwell: So unless

you're forecasting in these

out-years, an increase in the

debt service rate, that's not

the cause of these increases.

>> We're not projecting --

>> the short answer is yes to

that.

The --

>> Mayor Leffingwell: Yes I'm

right?

>> Yes, you're right.

>> Mayor Leffingwell: Council

member morrison.

>> Morrison: [Inaudible]

because the general fund --

sorry.

Thank you.

I wanted to ask how it ties to

slide three.

Our general fund budget is

structural balanced and then the

3% increase

projected over the five-year

planning horizon.

3 centss per year

included here in slide 49?

>> It is, and the increase is

not related to the debt side of

it.

>> Morrison: Right.

>> The debt -- and the

1 pennies over the

next four years for a total of

3.3.

That's what our current

projections indicate.

>> Morrison:2 this

year and then spread out over

the next four years?

Is 1.1?

>> That's right.

>> Morrison: And a lot of the

driver, slide 49, is the 3%

increase in property value

because presumably the person is

still in the same house.

>> That's right.

>> Morrison: Got it.

All right.

So that's a relatively speaking

1 cent spread out over four

years is very low.

>> Right.

>> Morrison: Ok.

>> Sure.

>> Morrison: Compared to what

we've been looking at.

2 centss, what percent

was that?

That was a number I wasn't sure

about.

Less than 8%.

>> Oh, the tax rate?

>> Morrison: Uh-huh, the tax

rate increase.

>> From 48.11 to 50.29.

So actually 2.18.

>> Morrison: And percent wise?

We're less than 8%, what percent

is that?

>> Yeah, it was -- the rollback

that maximum 8% rate was 50.5.

>> Morrison: Right, and what is

the 2.2 centss percentage wise?

-- Maybe you can give me that

later.

That's what I was interested in

asking.

I have a couple of comments i

wanted to make.

I understand there's a lost of

conversation after the central

health about possibly doing a

tax rate election this year and

I think we'll know soon.

So maybe when we get that

information it will be

interesting to get an update on

this chart.

Although it's important to note

their contribution to the

overall tax bill is pretty low.

It's $115.

So -- I think that will be

helpful information and for

clarification, the 1115 waiver,

that's not about taxes.

That's just something that they

think will play a major role in

their finances this year and

that's why they were holding off

to figure that out if that came

through.

Iuate to make one other -- i

want to make another comment.

On slide 42, we talked about

smart

came to our public health and

human services recently because

we've been following and having

conversations on the situation

with woodridge apartments and

what the significance of that is

and the told us about the plan

for a proactive multifamily

inspection program which I think

is great but part of the

conversation around that also is

that some of these older

multifamily properties are

critical to affordability in

town.

They're some of the most

affordable and we want to make

sure that we're going to be

helping incentivizing,

maintaining them, as opposed to

if one particular property is

sort of in bad shape, they may

be inclined to sell it off,

demolish it and build

higher-cost apartments.

So one of the things I think

important to do is really to

partner this program with making

sure that we can have some

opportunities to discuss with

these folks ways that they may

be able to get funding if they

need, and in terms of

low-interest rates.

If they maybe want to enter into

a long-term affordable housing

program with the city or

something like that, but I think

those two programs need to be

paired together so that we

really get the future that we're

I think looking for.

And I don't know if there's any

thought -- I assume if we get

more housing bonds approved, we

will be funding some more home

repair and maybe multifamily

repair and we could align those

two but that's a really great

opportunity to bring those two

kinds of ideas together.

>> Evaluate that with your

input.

Is at any time something that

we've had a whole lot of

conversation about at this point

in regard to the particular

complex that has had so much

notoriety lately.

That's a private enterprise and

so how we would ordinarily

respond to a set of

circumstances like that, in

addition to red cross, for

example, it was awkward and in

this -- in this particular case,

but your point is well taken in

terms of what we propose here

and seeing if we can develop

strategies that would help to

incent better behavior --

>> Morrison: I know the issue of

how we have respond properly

with a private enterprise in a

situation like that.

I'm not talking about that.

I'm talking about how do we make

sure we have a strong affordable

housing preservation program.

>> Did you have something else

to add.

>> Yes.

>> Assistant city manager.

Council member, actually that's

one of the strategies we're

looking forward to.

And we have talked to carl about

that, because there are

receivership -- possible

receivership programs.

As you mentioned, some

incentives to try to make sure

we have the affordability.

But that's one of our

preservation strategies moving

forward and that's something

that staff is already looking at

trying to incorporate into our

affordable housing discussion

and certainly the bonds will

hopefully get us there.

>> Morrison: I appreciate that,

and goes beyond any multifamily

properties that might be

identified.

If we know properties are about

40 years old, they can go one

way or the other.

Be rehabbed or demolished and

build likely much more expensive

housing.

Thanks.

>> Mayor Leffingwell: Other

questions?

Council member martinez.

>> Martinez: Council member

morrison is right.

We talked about this in the

health and human services

subcommittee meeting.

One of things that we discussed

that I'm not sure that betsy has

on hand in terms of information.

Before we go and ask the

citizens for potentially

$70 million more for affordable

housing, that we establish a

baseline and know where we are

today and ensure that we're not

going in reverse.

In terms of spending more money

on affordable housing yet losing

existing stock.

That's really the crux of it.

I think the community is going

to be supportive of spending

millions more on affordable

moving forward.

Affordability moving forward.

What I would like to see is a

baseline that lets us know we're

making progress toward achieving

the goals of affordabilities

that needed for citizens, as

opposed to spending millions but

on the back end, losing the

complexes at at faster rate than

we're affording affordability.

Does that make sense?

>> Absolutely.

Thank you.

>> Martinez: Thank you.

>> Mayor Leffingwell: Council

member tovo.

>> Tovo: I know we'll get the

budget detail this afternoon and

some of my questions will

probably be answered in that.

But in instances where there's

ADDITIONAL FTEs PROPOSED.

Say, the transportation

department, the -- sorry, maybe

that's not a great example.

5 for the vehicles, rather

THAN TALK ABOUT FTEs, I'M

Going to talk about this.

Oh, it is a fte.

175 For the vehicles hiring a

valet parking project.

Does the budget detail we'll

receive calculate out what the

cost recovery is for those

FTEs IN TERMS OF THE FEES THAT

Will be assessed through those

programs?

Or is that something that

will -- we'll need to follow up

with a budget question.

Basically when bringing on new

staff, and maybe code inspection

for the multifamily program is

one of them, will we receive in

our documents today an analysis

of how the fees and potentially

any new or increased fees might

support those positions?

>> I think in some cases you may

see language that would talk

about that.

Maybe for the planning and

development review, adding 11

positions and the cost is fully

recovered through the fees being

charged.

In that one you mentioned, i

think in those, probably request

for additional information.

>> Tovo: Great, I know we had

that discussion with regard to

planning and development revenue

and this is something that --

development review.

I guess my other more general

question, when you have

something like the austin

transportation department, one

of the departments with a

proposed increase in fees and i

think it was -- I've forgotten

what the amount was -- does the

budget detail that we'll receive

this afternoon talk about how

these individual new positions

factor into those fees?

Or is that a budget q & a?

For example, how much of the --

I think maybe a 50 cent fee or

something like that, increase,

proposed for the austin

transportation department, how

much of that -- how much of that

is attributable to for example,

the new public information

specialist or the new business

process consultant.

>> It doesn't break it out

position by position or line

item by line item in that way,

it's just going to say these are

the cost increase, whether they

be built if for wages and

insurance or new positions to

fund new or enhanced services.

It's a total cost and in order

to fund that total cost, here's

the rate that's required.

So it's done at a global level

and if you're interested in the

details we can get those for

you.

>> Tovo: Great.

I think that's it for now.

Thanks.

>> Mayor Leffingwell: Ok.

That's it?

And next session is when?

>> AUGUST 15th.

9:00 A.m.

>> Mayor Leffingwell: Look

forward to that.

We start on the, I believe with

the police, fire, ems.

>> It's actually our community

services department and planning

and d. review.

>> Mayor Leffingwell: Council

member martinez.

>> Martinez: I'm reminded of

last year's schedule that looked

eerily similar, we're going to

try and do a budget presentation

on seven departments, in one

day?

And if I recall, last year, we

never even got through the first

three or four, much less all

seven in that one day, had to

schedule an extra meeting and

postpone some items.

ON AUGUST 27th, AND WITH SEVEN

Departments, it's going to be a

long, long day, if we get

through all seven.

>> Mayor Leffingwell: That's a

good point.

We'll take a look and see if

there's some adjustment can be

made.

Without objection, we stand

adjourned at 11:20.