As the election nears on Prop A — a petition driven measure on the November 2 ballot which would require Austin to have 2.0 police officers per 1,000 people — the Prop A campaign is reassuring citizens that their measure would only raise the City budget by a tiny 1.2%. That is accurate to a point. They derive that number, however, from the entire City budget and ignore that the Austin Police Department (APD) is funded by the much smaller General Fund. That is much more than a bureaucratic distinction. 

The General Fund this year totals around $1.2 billion. That’s barely a fourth of the $4.5 billion number the pro-Prop A website uses to claim a 1.2% budget impact. So Prop A proponents are vastly understating the budgetary impact of their proposal.

In addition to APD, the General Fund finances the Austin Fire Department, EMS, the Parks and Recreation Department, Libraries, Austin Public Health and more.

The larger overall City budget cited by Prop A backers includes Austin Energy, Austin Water, Austin Bergstrom International Airport, the Resource Recovery Department, Public Works and the Convention Center.

Under a section titled “Cost,” the website tells voters, “Every City Deserves Safe Streets, Safe Parks, & Safe Neighborhoods. The choice to fund adequate public safety, at 1.2% of the total city budget, is not a trade-off. It’s what we were doing just 2 years ago before the cuts.” 

Screen shot from Pro Prop A website claiming that Prop A’s budget impact will be only 1.2% of the total City budget; ignoring, or not realizing, that police funding comes from the smaller General Fund.

The About section of that website lists the same board as Save Austin Now, the group that led the petition drive to get Prop A on the ballot. The site also provides links to the Save Austin Now website.

Further down on their website the pro Prop A group repeats, “Cost of Prop A: 1.2% of $4.5b City Budget.” The Prop A campaign bases its calculation on the “Low Scenario” laid out by the City’s Chief Financial Officer Ed Van Eenoo in an August 10 “Fiscal Analysis” of Prop A. Van Eenoo wrote that the lowest figure in the range of what Prop A would cost is $54.3 million per year for five years. The “estimated 5-year cumulative cost for the Low Scenario is $271.5 million.”

So the Prop A backers are consistent with City projections in the cost they are using, although they are using the low end of the City estimate. They are also correct that the overall City budget is $4.5 billion, and that the first year City estimate is 1.2% of that. They conspicuously fail to mention, however, that APD is funded from the much smaller General Fund; which as noted above is around $1.2 billion. 

This graphic from the City Manager’s Proposed Budget illustrates that the General Fund, which funds APD, is only 24% of the size of the overall City budget. The Prop A campaign is basing its 1.2% cost claim on the entire City budget. From City Manager’s Proposed Budget.

Adding $54.3 million instead to the General Fund would be a 4.5% increase in cost just to fund the requirements of Prop A for the first year. And, that’s on the low end.

Chief Financial Officer Van Eenoo also gave a “High Scenario” of $119.8 million for the first year and $598.8 million over five years. That would be a 9.9% increase in cost to the General Fund in the first year alone — again, just to fund the requirements of Prop A.

The pro Prop A website helpfully provides a link to their “source” which is a City slide presentation on which the top bullet indeed reads, “This year’s $4.5-billion proposed budget maintains high-quality services, while investing in critical infrastructure and programs that foster resiliency.”   The same slide, however, only two bullets down, also states, “The FY 2021-22 General Fund proposed budget is $1.2 billion, balanced with a 3.5% tax increase, and achieves the City Council’s reserve policy of 14 percent.” Since this was one of their sources, the Prop A campaign either ignored the adjacent bullet about the General Fund or did not understand its significance.

Slide from a City of Austin budget presentation which the Prop A campaign cited as a source for their 1.2% budget impact claim. Two lines below that is a bullet stating the size of the General Fund, from which the APD budget is actually drawn.

After laying out the 1.2% claim on their website, the Prop A backers go on the offensive with a section that reads, “The “No On Prop A” group is just flat-out lying about the cost of Prop A. . . and they’re doing so intentionally.” On the finances, however, it is the Prop A campaign that is distorting the numbers, at least in this claim. They also fail to mention that the primary source of funding to implement their initiative would almost certainly be property taxes. Let’s take a closer look.

The Sources of Austin’s General Fund

The four major sources of revenue for the General Fund are property taxes, sales taxes, general fund transfers from Austin Energy and Austin Water, and fines and fees. Sales taxes are regulated by state law and Austin has long charged the maximum percentage permitted under state law. According to the City’s Manager’s Proposed budget sales taxes make up 23.7% of the General Fund. The overall haul from sales taxes can increase from year to year, but the City could not raise the rate to help fund a costly program like Prop A. 

Sources of Funds for the City of Austin General Fund. From City Manager’s Proposed Budget.

The general fund transfers from the water and electric utilities are a very appropriate and important part of a City owning its own utilities. The level of transfers, however, is governed both by state law as well as by sound practices of operating a utility. The transfers make up 13.9% of the General Fund.

Then there are fees and fines, which are listed under “Other,” which constitutes 11.8% in the Manager’s budget. In APD’s case fines, of course, come from tickets. So few Austinites are going to support APD officers being instructed to write more tickets to fund having more cops. 

That leaves property taxes, which constitute 50.6% of the General Fund. Property taxes also bring state law into the equation, along with some other important numbers. A state law passed in 2019 limits cities to annual increases in property tax revenue of 3.5%. To go higher than that requires an election. Based on figures in the City Manager’s budget, a 3.5% increase from this year’s property tax yield would total $20.4 million.  

As noted at the beginning the projected “Low Scenario” to fund Prop A is $54.3 million per year for five years. (Save Austin Now apparently accepts that number because they use it to devise their 1.2% increase claim.) 

The state law does exempt property tax revenue generated by new construction from the 3.5% cap. This year the City of Austin garnered $21,368,668 in property tax revenue from new construction. Assuming that the City pulls in the same amount from new construction next year, we can add that to the $21 million that would come from a 3.5% property tax increase. That totals $41.7 million that property taxes could be increased, without an election. That is still almost $13 million short of the “Low Scenario” first year estimate and $78 million short of the High “Scenario.” And, that’s just for the first year.

The most likely approach to deal with such a budgetary shortfall is cuts to other General Fund Departments. That helps explain why the Austin Firefighters Association — the Austin firefighters union — and the AFSCME (American Federation State County Municipal Employees local 1624) local that represents City employees oppose Prop A. Firefighters, however, would probably be the last to get cut. Parks and Libraries would likely go on the block first, but there might not be enough to cut there. 

The financial aspect of Prop A is crucial, but is only one part of a sprawling, messy debate. The Independent will provide several more installments before the election and will examine the claims and rhetoric of both sides. Stay tuned.

((City officials were unable to respond to questions before press time, but we will include further information from them in future postings. The budget numbers in this article come from the City Manager’s Proposed Budget and city press releases. The City Finance Office says the final numbers are not available yet. There will only be minor differences from the numbers cited herein.

The Independent also contacted Matt Mackowiak of Save Austin Now, but did not hear back by press time. If we hear from him we will include comments from him in future installments.)  


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