Blogger Bill Oakey of AustinAffordability.com appears to have caused somewhat of a stir at City Hall last week.
Oakey wrote last Thursday that he was breaking his first-ever news story: “The City of Austin Financial Services Dept. is projecting a budget surplus for this year of $26.9 million!” That surplus, Oakey pointed out, tops the $14 million surpluses the city’s seen in recent years. Oakey’s take has been that surpluses should be spent on taxpayer relief.
Bill Oakey testifies before the Austin City Council in 2014.
Oakey penned an email Friday with the subject “Critical Questions on the $26.9 Million Budget Surplus,” which Council Member Leslie Pool then asked the city’s financial staff to address. Also on Friday, Council Member Ellen Troxclairasked financial staff to provide information on the city’s so-called “budget stabilization reserve fund,” which contains surplus money.
And the Love North Austin blog sent out an email Friday linking the $26.9 million surplus to what it called City Manager Marc Ott’s “proposed budget cuts” to public safety (we cleared up what those “proposed budget cuts” are all about in a story). That prompted Ott to respond, also on Friday, with an email that said the blog’s sources were “intentionally obscuring financial facts.”
So, what’s going on?
The city of Austin actually had a surplus of $12.3 million from its 2013-14 budget year. That surplus came from the city netting about $6.7 million more in revenue than budgeted, spending $3.6 million less than budgeted and a “year-end accounting adjustment” of $2 million, the city said in response to a written list of questions we submitted.
All $12.3 million went into the city’s “budget stabilization reserve,” as all end-of-budget-year surpluses do. That reserve is entirely comprised of surplus city money and used for one-time expenditures. The city isn’t supposed to spend more than one-third of the reserve in any given year – and also strives to make sure the city’s saving enough money so that all reserves are 12 percent of the budget.
In past years, the City Council was known to consider spending surplus money in the reserve mid-year. For instance, in the 2013-14 budget year, the council was told there was a $14.2 million surplus from the prior budget year – but could only spend about $9 million, or the city’s reserves would dip below 12 percent of the budget. The council in March 2014 ultimately decided not to spend the money and later passed a new policy limiting such mid-year spending.
For the 2015-16 budget year, the city’s financial staff has projected a budget stabilization reserve of $86.7 million. Meeting the 12 percent goal would give the city an estimated $26.9 million to spend out of that reserve in the 2015-16 budget year. The city manager’s proposed budget, which will be released at the end of July, will contain recommendations for using the reserve to fund items like vehicles and information technology projects, the city said.
A finer detail: Money is not spent directly from the budget stabilization reserve. The money is first transferred to another fund – it’s the sole source of revenue for the city’s so-called “critical one-time fund” and has also flowed into the general fund – and then it’s spent. In the past five years, the city’s typically kept its spending from the critical one-time fund to below $15 million but estimates spending will be $32.3 million this budget year.
Responding to Oakey’s work, the city’s financial staff said the $26.9 million is not a surplus but an estimate of how much the city could spend from one of its reserves. To another Oakey question – Did the city manager look at this surplus when considering how the city could pay for a homestead exemption? – financial staff said reserves are for one-time, “non-recurring” expenditures.
Oakey has since acknowledged surplus money couldn’t pay for a homestead exemption and that not all of the $26.9 million is a “new budget surplus.” But, he said, the bottom line is that the city’s got a sizable pot of money to spend in its next budget.
Meanwhile, over at the Chronicle, Mike King defended Marc Ott. "After a couple of tax-obsessed bloggers first implied that city budget policies are deceptive, then one directly denounced Ott as a “liar” – he had enough."
We have already rocked the boat once this week, so we will leave it up to our readers.
Should Marc Ott and City staff disclose any budget surpluses when talking about potential budget cuts?
Or is Mike King and the Chronicle correct, and Marc Ott has no obligation to make this information available when having these discussions?