In July, the Austin City Council began its annual budgeting process.
Austin’s new City Manager, T.C. Broadnax, proposed a $5.9 billion budget for fiscal year 2025, up from $5.4 billion last year.
The budget is funded primarily by residents through property and sales taxes, utility bills, fees charged by the city, and a variety of other taxes and charges for services.
The largest expenses for the city are Austin Energy, Austin Water, Austin Police Department, Austin Fire Department, and convention center.
With a maximum increase to property taxes, utility bills going up, the budget is projected to cost the “typical” Austin resident more than $5,000.
City financial staff and Mayor Kirk Watson have expressed trepidation about the budget this year, in particular the city’s General Fund, citing loss of federal funds, smaller increases in sales tax, and property tax increase limits set by the state government.
In the budget document itself it says, “as federal funds provided through the American Rescue Plan Act (ARPA) expire and growth in sales tax collections slows, municipalities across the state are finally experiencing the harsh consequences of the property tax cap established by the Texas Legislature. Austin is no exception.”
Yet, the Mayor and Council Members will be submitting all their funding requests for projects or unmet needs next week, according to Mayor Watson’s budget schedule.
Since the manager proposed a budget with a maximum property tax increase under state law, Council Members will have to find revenue increases or spending cuts elsewhere if they want to add new expenditures to the budget.
According to the budget, one source of funding that is not maxed out is voter-approved bonds.
The city has more than $1 billion in unexpended bond dollars that have been accrued since 2016. The budget does not say how much funding is left over from previous bonds.
The available funding includes almost $750 million unexpended funds for transportation projects, $365 million for affordable housing, $95 million for libraries, $83 million for flood mitigation, $62 million for parks, $14 million for public safety, and $5 million for health and human services.
Use of voter-approved bonds is regulated by state law which says they “may only be expended for the purpose for which they are approved.” However, according to the Texas Bond Review, bond dollars can be more flexible and used for operating costs “in the case of short-term borrowing to meet cash flow needs.”
With housing and services for homelessness being the city's largest recipient of ARPA funds, the bond dollars could be considered to help fill holes in funding left by the expiration of ARPA funding. Previous affordable housing bonds have been used for a variety of housing purposes, including land acquisition, housing for the homeless, rental assistance, home repairs, and other affordable housing programs.
Further, the General Fund summary on page 457 of the proposed budget shows that the City Manager proposes transferring more than $21.7 million in general revenues, rather than using bond dollars, to various capital projects and funds.