Travis County Commissioners Court
February 26, 2008
Item 7
7. Consider and take appropriate action on issues related to the fy '09 budget, including: a, . Fy '09 budget parameters; and b, proposed fy 09 budget guidelines. A and b.
>> this is something we do typically around this time of year. Where we share with you what we know about the upcoming economic circumstances that the county will be facing for the fy '09 budget as well as asking you to adopt and approve what one of my colleagues called the rules of engagement and we call flaming the fy '09 budget process. You should have the document framing the '09 budget process in both legislative as well as non-legislative style format. Some of you like one, some of you line the other. You should have a four page spread sheet which we have reviewed with you individually. And I -- I am either happy to go through that in detail here or just pick up the -- the very brief highlights. And that's -- that's really a briefing document. What we start with, though, is -- is information from the appraisal district, they have shared with us that -- that they predict property values will go from -- from 84.9 billion to 91.7 billion. That includes $6.2 billion of new construction, that's the greatest amount of new construction that we have seen I think in the history of Travis County. That includes $2.2 billion from samsung, and as you know, the Commissioners court has an agreement with samsung where 80% of the incremental tax revenue will go back to samsung and that the county will retain 20% of that. The information that we have provided in that spread sheet excludes the samsung revenue and expense because it's in essence a revenue in and expense out. We didn't want to show any -- any significant dislocation in terms of the relationships to prior years. T cad indicates that they predict homestead values will be from 243,800 to 251,521. A 3.2% increase. Suggest budget guidelines are suggested that we return to the court's prior practice of setting the preliminary budget at or near the effective tax rate. Rather than establishing a cap on growth. We establish a cap on tax rate. Guidelines suggest that the definition of near the effective tax rate is within three to four percent, what we have done is -- is tested to whether we can have a balanced budget at no more than 2.5% above the effective tax rate. You will see in the budget parameters, the legal sized sheet, we have provided high and low amounts. High and low on revenue, high and low on -- on expense, these are the major building blocks of the budget and we -- we have shown a low tax rate of the effective tax rate, high of 2 and a half percent above the effective tax rate is 41.60. The current tax rate is 4216. If we are accurate, which it's still a little early to know where the beginning fund balance will land and as we get closer the auditor's office goes through a sophisticated process of being able to identify where that beginning fund balance will be and as we go through the spring and summer, that number gets more and more accurate. But we are showing, suggesting that we would probably not see any growth. We indeed may see a decrease in the beginning fund balance. Other revenue is another one of those -- those areas where the auditor's office does a very detailed analysis and as we get closer to preliminary budget we will have a much better feel for those numbers. But bottom line is that if these assumptions are correct, at the low amount, we would have a 1.6% growth in the total revenue compared to '08 and at the high amount 5.3% growth above the -- the total revenue for the year before. And if in that -- that excludes the samsung increases. We are -- we looked at the average homestead and said well -- well are we within tolerable limits for a tax impact on your average homestead owner. And we -- at -- if the numbers were provided by t cad and this effective tax rate, we would be able to see a 15 to $36 per year increase on -- on the average homestead at either the effective rate or 2.5% above it. The -- the -- we are -- I -- I’m happy to go through that spread sheet, but in essence the largest assumed increases are for compensation increases and new county court at law. We are also recommending a reserve for economic downturn. Where we would see -- make a one-time cessation of a transfer to the health fund and create a -- create a then additional resources in the general fund, because as you know resources that go into the employee health fund, it's one way, once in, they stay in. The reserve is -- higher than we all have said is appropriate and the way then to -- to deal with that situation is to not necessarily transfer from the general fund into the health fund and we are suggesting that that reserve for economic downturn be used in -- for fy 10. I was cleaning out my files the other day and I noticed a letter that went to the Commissioners court in June of '05 from me and it was regarding bubbles. And it enclosed a couple of articles about a housing bubble and it says in essence it's coming. We need to prepare. It may come in a year, may come two, maybe even longer. What that means and we know we are going to be hitting a downturn. We just don't know how bad it will be. So that economic downturn reserve then would be one of the major issues and naturally compensation will be a part of the dialogue that -- that exists as -- as part of the normal budget process. A reasonable conclusion that one can form from all of these materials is that we should be able to balance the budget and meet all of our many service obligations within the available resources without major dislocations for county programs or services. Like any budget process, there will be much greater demand for increases than resources that are available and that's part of the process we all have grown to know and love. You then have these budget guidelines that -- that -- that in prior years we have sometimes gone through some considerable change, but in discussions with you, as well as ourselves, it appears that if you are relatively satisfied with the -- with the basic process that was followed, the way in which the budget was developed, the protocols, so we are not proposing any substantive policy changes in direction. We are changing -- proposing changes to reflect contemporary circumstances rather than substantial policy modifications. The one area that is substantial is the -- going at or near the effective tax rate rather than a cap on total budget growth. We are suggesting that elected officials' salary committee be dealt with every two years rather than every year so that then -- then elected officials salaries would be reviewed in depth by a citizens committee every two years with the off year then attempting to match to the best agree you can to -- degree you can to rank and file. We are suggesting that the security recommendations be handled in executive session in June so you deal with the security issues early. And we have those budget parameters for you, hopefully you find them acceptable and will adopt them.
>> questions or comments? I have two. One is did the chief appraiser hint as to expected values in 2010?
>> yes he did. Rather than $6.2 billion, you should go with -- assume for more than 1 to $1.5 billion of new value. What we have seen now in '09 is the value that is on the ground and he expects to certify at the level we're talking. We are facing one to one and a half billion dollars is still a lot of value, it's not just extraordinary value. Returns us to prior years when we've had one, two, and then in recent years as much as three. We have not ever seen six, but one to one and a half is the answer.
>> six is a fairly conservative estimate for '09.
>> he believes it's fairly accurate.
>> accurate. Okay.
>> we received a request that I think committed to make the financial incentives that we provide to different companies part of the budget process. So your intention is to do that.
>> yes.
>> all outstanding agreements.
>> yes.
>> which would pick up the domain and samsung 1 as well as samsung 2. Samsung 1 and 2 and we would do an estimate of cost benefit. Some of the cost and benefit is highly quantifiable and some of it is more artistic, but still there. And will be described for all to see, and for all to comment upon.
>> okay.
>> ms. Reed and her colleagues will be watching us.
>> judge?
>> yes, sir.
>> christian, last year we did have
>> [indiscernible] general fund growth. I think the first sentence that you had under e was fairly appropriate. The general fund has been growing at a rate that is much greater than the growth and population and inflation. Do you think that that same sentence could be used in -- in this budget cycle?
>> I think that -- that in '08, the -- the growth in the total general fund was greater than a simple calculation of growth in population and inflation. The question, though, of -- of '09, I do believe that you have the capacity to keep total growth within population and inflation because of the new value there. You may choose not to. You may choose because of dislocations in the community, because of community needs to go beyond population and inflation. And that's -- that's why you sit on the dais.
>> but is that a good standard?
>> I -- I don't --
>> if I were in your shoes I wouldn't establish that as a standard, I would establish that as a parameter that I measure against but not limit myself to. It's an interesting thing to know about.
>> I think we always looked at that but I don't know that we thought that was a benchmark.
>>
>> [inaudible - no mic]
>> services that we render are -- are in proportion to that. In other words,.
>> population.
>> I will take one off the top of my head. Indigent defense that's something that we have a lot of pressure for. Then the question is is that related directly to population plus inflation and I think that what you would find is that it is not. So, you know, you've got --
>> I don't know about that, but every time the legislature comes to town, when they leave we have picked up additional financial obligations whether we like it or not. Tyc this last time, Texas youth commission, few years back indigent attorneys fees, we thought we were sitting in a good place, spending millions of dollars more probably appropriately so but at the same time the facts are that we spent a whole lot more money on things that we previously funded every time the legislature leaves town because of mandates that they dropped. Dropped on us, let's say.
>> you are right, judge. The other thing is that the nature of the services that the county mandated to provide the demand for those services really go up in a downturn. We see more people in the court system, and all of the costs that go with that and the jail and so -- you know, if you are a private business, you have really control in some regards of how to -- to contract or expand your product line. We really don't have that here. And so -- so as we are looking to adopt it, I think christian is exactly right, you know, a setting -- setting some money aside to say what is this going to mean for us. But I think underlying assumption which is what the legislature has -- some members of the legislature have encouraged, you know, since I testified on that, I think the facts here are that the kind of services that we provide are not in line with that formula. And that's the flaw in the formula. I think you can say that if your population grows you could assume more services are needed. But also that in and of itself is not just a -- just a static number because if your growth in population is more people who need the kind of services that we have to give as opposed to people that don't, even those population numbers, you know, are not the same. I mean it takes some analysis to look at that. I think your.is --
>> I’m not saying we ought to disregard them. I do think we ought to try to be smart and lean, but there are other factors that you have to look to. The other thing that we did was we kind of beefed up the reserve funds because when we made the decision we needed to do so. Now we may have overfunded some of them. But they have result understand good credit for us, in the long term saved us more money with the lower interest rate so we now kind of back off of them, when we made that decision it was just like spending money, it was just putting the money in reserve. But I think that we were unanimous in that that was the thing to do at that point. Now, though, the thing to do I think is to back off some. But my only point is that there's population growth, inflation, other factors in the end, though, there's no way for us to get around on some of the basic programs not budgeting the amount of money necessary, but still we probably could cut some programs that aren't working, redirect some of the funding from programs that are not working as well as they should into programs that we want to give a chance to work, i.e. Pilot programs, other things. I see the budget process as our opportunity to do that. We probably ought to be a bit more vigorous and aggressive about it than we have been historically. It -- you know, it's easy to commit to -- to a little bit more difficult to implement, though.
>> judge.
>> then I’ll be quiet.
>> yes, sir.
>> I don't think people in this community question whether there is a continued -- longer line of needs year after year after year. We are fooling ourselves if we think that the needs line is shortening because it's not. But people are not accepting -- it's not like we have a lot of people coming down here screaming, I will say that. But we grew our general fund last year by 9%. Now, I don't know why people don't come down here ranting and raving about 9% when you go from $400 million, to $436 million worth of spending. I guess that's because either people --
>> where you spend it matters. The people that heard the number asked me, where did the money go, for about two or three months I had a little short list of expenses, here's where the money went right here, this is why these made sense, we put a whole lot of money in the workforce.
>> judge, here's what I’m saying. Approximate we know that the needs are greater, we as government have got to be better at process improvement and we are not very good at process improvement. I mean, we cannot just because we are government that we just grow. Because I agree with you. We probably could justify every dollar that we spent out because they were asked for, they were things where there were great needs. But -- but the average everyday person wants to know why can't you run government and not have to grow it at 9%. 9% is not an acceptable growth by government. I mean I don't -- I doubt that there were any households that grew by 9 -- their personal incomes, by 9% last year. Maybe some did, if you got some big bonuses, but we have got to find a way if we are going to spend dollars on I think the key is, what are the -- what are the things that you know that you are getting bang for the buck for. But we can't put our heads in the sand just go you know what, there is a growth factor every year and you just live with it. I don't think that that's the way to do it. Unfortunately I think that if you -- if you don't put some sort of -- of blocks up there, I mean,, you know, not that 4% was a block because we want by 4% so fast that it made our heads spin. But it's not acceptable. And it is -- it is the responsibility of elected officials and government to say okay, if the needs are going to grow and we have mandatory things that we have got to do, what are the things that we are not going to do in order to take care of the needs that we are not willing to say no to. And I know because all of us that -- there are five votes up here. Just about everything that we vote on, you know, is pretty gut wrenching. You want to look at employees and go get over it. You want to look at social services say I’m sorry that you got issues. You want to tell, you know, departments that, you know, we want more out of you, but we're not going to give you the tools that you need. No. You don't -- you don't have those things.
>> [one moment please for change in captioners] of being asked.
>> the answer to that, or the answer should be it's not out of our control. It should be something that we ought to find a way.
>> right.
>> you just can't --
>> I agree. Last year we had can I voiceded votes on the issue am for every person that complained about the growing of the county budget, 100 asked about their individual tax bill. If you are the average home horn your bill went up $13. That was not nine or ten percent because the average, that was probably, what percent would that have been? One or two basically. Now --not that I’m bragging but in the scheme of things it's a small amount. When people ask about the $13, they wanted to know how the money was spent. We should be able to explain that. I’m not bragging about total growth. It does seem that we ought to try to keep that as low as possible at the same time my platform was I would meet needs as efficiently as possible, try to run an effective government. To the extent that we can process, reengineer and end up with a better result, I’m all for it. Going through that exercise does not mean you will land on a tight of budget. Seems to me you have to do work in addition to that. But I’m game.
>> judge, I think all of us had our opinion. Of course we didn't have an unanimous vote on everything during the budget process. But that's fine. That's the way it is. But I didn't vote for everything on the budget. Those things that I thought the need and what I was hearing people ask for in the community and things like that I tried to support as much as possible. They did not mind whatever increase because, Commissioner, we need to have this, we want this, blah blah blah, down the line. I supported those things.
>> we're going to get an opportunity to vote--
>> we're going to do the same thing this year.
>> that the exactly, I mean, as long as we are not willing to sit down and put some sort of restraint on this budget, and I would gladly make four percent motion again, but I know it doesn't have a chance of getting passed.
>> we kind of learned or lesson.
>> it didn't even get put in the budget guidelines. I don't think this community deserves a nine percent growth in general fund budget. I don't think that in any year probably, occasionally, you're going to find that you have got a need that you just absolutely can motor get around. I would venture to say that, I’ll be interested in to see-- our challenge is motor to look --not to look at total . It's to take on individual things when spec proposals come before us. When the budget is being put together, it's not the total amount we need to change, I think. We build our way up to it and look at each and every item, maybe to the a fault. And I don't know, maybe one year we ought to say we are not increasing the budget any so what do we do we have to reduce some of the items that we fund.
>> or better.
>> we say that every year and we plan to but we don't.
>> I think it's time for us to make a commitment that we're going to look at finding way to do process improvement within county government. And that's the only way we're going to get there. You're right, it's too easy to say we can't get there and we just kind of move on.
>> I agree with you, Commissionerer, with regards to process improvement absolutely. I think we need a higher legal of commitment to perform measures within the budget is process. I disagree that we have no tools in place. I think the document before us today have a number of tools regarding market salary surveys, regardinging full time employee requests, space requests, regarding performance measures embedded in the budget requests overall, that they also all come through planning and budget office prior to coming to us for our deliberations. We haven't been 100 percent on those parameters. I think we could be and it would improve our budgeting process. I do agree with you that we do have to have a higher level of commitment to process improvement. I disagree that we've had no process improvement. I have seen some real movement in a number of areas. We've seen, for instance, in family violence the change in the way a family violence case is filed, which has greatly increased the efficiencies in that division. We see it in several areas in the county. Can we do better? We certainly can. Doing better may cost us less, but in some instances doing better may cost us more. That the --that is not a bad thing particularly in light of a possible down turn where unlike a household a government's mandate usually increases.
>> christian , as far as the effective tax rate is concerned, and we start there. I guess folks need to understand that we look at the effective tax rate and go from there. During this the process there are opportunities to remain at that or go above the effective tax rate as far as funding a lot of things that we have fund the in the past and things we are looking to fund in the future. But there are some challenges, I think, that we need to hold on as much as possible and we really have not unveiled all the challenges. I think Commissioner eckhardt just mentioned one as far as down turn. There are some things that we can't kind of put our hands on stuff but there are possibilities of down turn. How do you safeguard? You do things to safeguard and make cushions, I think, maybe available to do just that i. In my opinion that is a process and part of what we end up doing here. But there are other challenges with retirees and as persons in the county get in a position where they are ready to retire, then we got to look at the health benefits for retirees or look at ongoing type situations or one had ever --one-time type situations. These are challenging situations. We have set aside in this budget money to address just that concern. But this court will have to make a decision one time versus ongoingment we have done this in the past.. I do not see any, I guess variance as far as what we have done in the past and doing now. Except the fact that the growth in the general fund is not as significant as it was last year, which is a good thingment we took care of a lot of things last year that I think were pressuring us to deal with just that of the now this year we are looking at a different situation as far as growth in the general fund. Starting from scratch, effective tax rate, looking at the challenges that we must deal with, the process has begun. Of course we are going to have different varied opinions on ongoing versus one-time, reserve set aside to take care of this, down turn in the economy type situations. These are realistic type situations that we got to deal with, and we as a Commissioners court are going to have to the deal with these situations. So there is a process. And I think that process has improved. An example, let me give you another example of the improvement of this process where by in past years we looked at our guidelines and rules and stuff like that, guidelines where we had folks coming in at any time, noncounty requests on the general fund. Those particular persons coming in at the last minute. Of course, the department had to deal with those. We had to deal with them. Now if the process works thoroughly and accurately, the persons that, the entitis that are non-Travis County related have to submit to the department. There is a process. We are going to perfectionment there are a lot of loose ends and thank goodness we are better than we were five years ago. It's a moving target. Hopefully we can hit the bull's eye every time we can going threw the budget process. I think the parameters and guidelines and all these other kinds of things, ongoing versus one time, all the had things we have to look at and examine, I think it is a process that we can embrace and move forward with and I’m ready to move on with it.
>> one thing since we are talking rules of engagementment, judge, in the budget process when departments are asking for things, they have to run those requests past facilities, i.t. And records manage with the an understanding that there might be an indirect cost involved in that program. The purchasing office and auditors office has never been part of that I want to say that I am at a point where I am very concerned about the ability of my office to meet the statutory responsibility with regard to these programs. There is no sense for us, for instance, accepting grant, just using an example, going out important them if in fact we do not have the infrastructure in the county to monitor those grant the way the law requires. I’m getting very concerned about that. We have really done a lot of process improvement, Commissioner Daugherty. I’m speaking for the purchasing office as well.
>> and the financial.
>> they are in the same position. At some point, there just isn't enough. I mow in payroll, for instance, with the growth we have had here I don't think we have added anyone in payroll for well over a decade. How have we handled that? It's been through process improvement and technology improvants. At--improvements. I’m concerned about that, at some point you can't go beyond. I know these really aren't policy oriented but they are an underpinning of what we immediate to do to procure, what we need to do to handle revenue going in and out, grant and all of the things. So I guess as a start, I would like us to be added to that list where we get a feeling for what the new budget is going to look like because we prepare our budget like everyone else but really don't know the workload until you adopt a budget. If in fact we are not able to handle that workload well, there's mog to be done. I don't know exactly how to do it other than perhaps to add us on the same list as i.t. I’m assuming david has the same issue.
>> did you make a list of the grants that you are talking about? Obviously there are the grants where you say, quite frankly, this is not something that we think that we can do under the circumstances that we have right now. Is that something that you can quantitatively make a list of?
>> what I don't want to do is decide programmatically what you think is important. You ought to do that. I don't want to say in the list of grants, that the it, we can't handle anymore because it may be that the grants that y'all find are most important are further down on that list. But I think when you are looking at grants, for instance, and I have prepared a paper that I’m going to send your offices to be free to look at. I think in looking at those we need to be looking at workload and then you need to decide, do you want to or do we have the ability to support the infrastructure for that grant. Then you programmatically need to make a decision which ones you want to do and which ones you don't. It's unrealistic for departments to continue to grow out and accept grants. I know why they do because, well they see it as free money but they are committed to the programs that the grants are funding. I understand that. But having said that, we.
>> there's an end.
>> there's another part of that. It's not exciting but it's required by law.
>> you have to say that you need the tools to do those things.
>> yeah.
>> first thing we have to have then is a list, here are the wunds that we are challenged with with, complying, and you all need to take a look. You're right there probably will be some of those, we need to find a way on get that one done, susansure.
>> sure.
>> that's important.
>> unless we see the listthat.
>> that sounds more like a need to revisit the granting process, the grant summary sheet, the grant proposals to the Commissioners court. I too have noticed a need for additional information to truly understand how the goal of the grant fits into the goal of the county as well as how the administration of the grant will affect the cause of the county. I don't know if that's really the conversation we should be having now.
>> I think susan just mentioned grant as one example. What really she is talking about is as the budget requests go through the process, they are there is that are poe cud on and how it affects that department. She is saying there are other indirect costs. I think she is asking fob included in formal process. I’m in the here for that because I think y'all are involved in those matters than the legal services would be but I think we have a great relationship with budget. I think we have trained them to see those type of things and ask us what would the impact be if we added the new program, the legal needs for that. I think that already existed for my part. But I can see from the accounting standpoint. The only reason I sat down is to address the previous question. I think to echo what the Commissioners have said, I think there have been improvements. From my personal standpoint of being here way so long, and watching the budget process mature, there is, the court has been I think very firm in laying out those priorities for budget. I’ve had to learn to live with them. I remember I would come to you many times, times when the priorities were whatever you are asking for needs to have a net gain, needs to make money we are going to, it's really going to make the preliminary budget am I would come here, we accepted that, that favored civil more than criminal. I would come and say criminal isn't a profit center. I hate to say never butia think of an example where I could come to you where criminal would be something would I ask important, victim witness counselors or whatever, had a would make money. But we went many years without that and I saw a deterioration of the infrastructure in criminal . I would warn you about that every year. I’m thankful in the past few years the Commissioners court has moved over and set some priorities on criminal. I think two years all we were able to get a number of prosecutors. We're still working with that support staff and we'll be coming with that. I guess I’m telling you I hing it's improving. I think there are process changing. I worry that we have implemented a lot of those, like Commissioner eckhardt has mentioned, we have done that to keep up but the benefit of those changes is quickly outlived and now where do we turn to. I think we've got very talented people in the county that are constantly looking for ways to perform better and provide a better product. But there will be times k Commissioner, when this county with the growth that we've got, we will have to, and we expand. That's the way it is.
>> growth is not a question, david. The amount of growth is what is in question. Four percent growth is something that all us can go out and sell with population and with cti.
>> in the end you have to balance all of these needs. I think you were talking about social service and criminal. That's y'all's decision to make in the end. I ask when you put together the process rules that they not be so rigid that it really denies something that is coming out of a different end, a priority that you haven't recognized yet, and gives me a chance to come and lay that out. In the past that chance has come not at the preliminary phase but the very end, last minute, here is a problem. Just be mindful is all I ask of that, that the old days of it's got the make a profit, I understand the financial needs you have, but what it did, it just quieted down certain problems that just sat there and fes terred for a long while until we saw an opening to bring that of the there's an impact. When you come up with the rules please provide some kind of flexibility for budget to address the other things that are popping up.
>> move approval of the bunk parameters --budget guidelines.
>> second.
>> move approval of the, withdrawal that and move approval of the parameters.
>> second.
>> first part divided. Discussion? All in favor. That passes by unanimous vote. Move approval of the budget guidelines in 7 b.
>> second.
>> discussion. All in favor. Show Commissioners Gomez, Davis, yours truly environment--voting in favor. Against Commissioner Daugherty.
>> thank you.
>> thank you this is going to be a very challenging year. I’m looking forward for the challenge. Thank you for laying it outjudg.
>> judge, we are adding 50 tor and purchasing to the list of people that would look.
>> I think we need to have a work session or discussion of grants so we can know exactly how we.
>> see where they fit in.
>> outside the budget process. So we can figure out exactly what modifications we need to make, if any.
>> sure.
>> I do agree the more of the grants you get, the more work you impose on yourself. Some of them provide a substantial amount of additional money for programs consistent with programs already in house. In my view the question is how do we figure out way to do them. You're talking about addinging personnel and growing our budget Commissioner Daugherty. A little bit, not a whole lot. Just a little bit.
>> yeah.
>> I look forward to that discussion.
>> the other things about those grants, when you only look at them incrementally and you're a service department, you say came I can do that. But when you look at the totality and holistically, one more is just too much. I think we need to look at that.
>> some of these we do annually kind of like the weatherization and federal energy money, we do that every year.
>> some of them are simple and some you're getting $200,000 of grant money and spending $150,000 to manage it. That's where bang for buck perhaps--
>> exactly.
>> the grant don't allow a certain percentage for administrative.
>> typically we could not hire a grant accountant to handle a grant. We have a group of accountant who can only handle so much workload. That discussion would be very useful to have.
>> I think we ought to have that so we can understand. We know there are a whole lot of grants in different areas, some headed by elected officials and some by pointed. But they are required work.
>> this Commissioners court has merf turned down a grant in my knowledge.
>> that's a good move.
>> that's right.
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Last Modified:
Wednesday, February 27, 2008 8:09 PM