Travis County Commissioners Court
February 16, 2010,
Item 4
4 is to consider and take appropriate action on issues related to the proposed fiscal 2011 budget guidelines.
>> good morning, judge, Commissioners.
wish I could come to you with better news.
as expected, when we were talking about the fiscal year 2010 budget, we had made comments that we did not anticipate 2011 to be any better if not more challenging.
that is in fact the indications that we get going into the budget season for 2011.
i'll just give you a couple of indicators that we are seeing out there and then I'll let leroy talk about some specifics regarding the meeting we had Friday with our other public sector organizations, the city of Austin, isd, and the appraisal district.
just to give a little bit of idea of the indications that we're seeing right now as relates to 2011 outlook, in fy 2009 we had $3.9 billion in new construction certified.
in 2010, that went down to $2.9 billion.
and we are expecting in 2011 in --new construction to drop to 1.2 billion.
what that means for Travis County, that mens a decrease of as much as $7 plus million in new ongoing revenue coming into the county.
we see other indicators continuing as we go forward with the current economic conditions, that being interest e we're --earnings we're anticipating to drop.
compared to 2010 we anticipate that drop to be as much as 2.5 million.
we're projecting other revenue to be flat at this time for planning purposes.
we are continuing to work with the auditor's office on a regular basis.
we will continue the practice we had going through the current fiscal year's budget last summer of meeting regularly with the auditor's office and working with them on the revenue side.
so it's not a pretty picture.
we are once again going to be looking at, asking departments to submit some budget reductions which we'll talk about more specifically.
really asking the departments once again to tow the line, work with us through one more year, and let's try to weather this storm.
with that I'll turn et over the leroy and let him talk about some spes fix and jessica will talk about the highlights of the guidelines.
>> I think we shared individually when we met with you some of the more specifics.
i know the Austin business journal on Friday released a report that said they anticipate that construction starts during 2010 will be up 30 percent and that Austin will essentially lead the nation in the recovery.
i would just remind you that from the point that you get a development and a plan approved, which is what they are starting the development process, it's about three years before you actually realize the new construction.
so we are looking, according to our chief appraiser patrick brown, about two more years of decreases in new construction with two years of recover.
the last two recessions took eight years, the latter part of the '80s, to get back to the new construction number.
and the 2002 bust took about seven years to get back.
we have a little bit of work to do between now and then.
hopefully some of our other revenues we're working with the departments and we think that they will recover a little bit faster.
the major difference in the guidelines, and I'll turn it over to jessica, has to do with our recommendation of bringing the preliminary budget in within three percent.
and that is either below the effective mno plus debt or above the effective mno plus debt.
the significance of the effective mno and then adding the debt takes into account the major proposed purchase that y'all are working on in downtown Austin.
so with kind of that overview I'll turn it over to jessica and let her talk about some of the specifics.
>> good morning.
>> good morning.
>> the guidelines for fy 11 are substantially similar to fy 10.
think what departments would be most interested to note as far as the difference is that since departments have submitted five percent reduction proposals during fy 10 and some of those were accepted by pbo and approved by the court, pbo is going to take that into consideration for fy 11.
so I think departments will add least be happy to hear those cuts will already be taken into consideration for fy 11.
having said that we are expecting departments to submit five percent reduction proposals that can be implementd on an ongoing basis.
just to highlight, budget submissions are due April 26.
i'll be had a ep --happy to answer any requests.
everything else is pretty much the same as fy 10.
>> April 26 is the deadline.
>> that.
>> okay, great.
>> we did meet with all of the departments, get our budget manual out, based upon our approval of the guidelines in I think it's March, the latter part of March.
two different meetings where we answered any of the questions the departments have.
>> we have not shared these guidelines with, these draft guidelines with the department heads.
>> we have.
they did go out last week when we submitted them for backup.
we did share them with all appointed and elected officials.
>> what day was that?
>> Thursday.
i believe it was Thursday.
>> I'll need another week.
>> okay.
>> okay.
>> to be clear, we're asking for the five percent reduction again.
if we took all or part of the five percent offered up during this budget process, the departments, those departments will be credited.
so we're not asking them for ten percent.
>> correct.
>> correct.
>> okay.
i think we ought to give department heads and officials an opportunity to provide feedback before we take action.
if they want to.
in view of the fact that yesterday was a holiday.
this will be a short week.
seems to me that month great injury will be done if we delay action one week.
right?
>> no.
>> ms.
flemming, she is already stimulated by the news that these guidelines may be acted o.
>> let me get that clear.
if we delay, I don't have an objection to delaying a week on any action.
but how will that affect any of the response time that the departments are going to need to really review this and look at it very thoroughly and then still come back with substantial input from them where by the court at that time can make a decision on where we are and what we are doing with all that included.
i want to be sure we don't miss the opportunity of the flavor of of having significant input from the departments.
that is what I'm trying to put my arm around.
>> I don't think by delaying one week for action by the court it will have any impact on our calendar we have with the departments.
so I don't see a problem.
>> okay.
>> ms.
flemming.
>> yes, sir, thank you, judge.
i just wanted to distinguish between the dates that we discussed earlier and the date we just previously study because it may be confusing.
i think we know but folks listening may not.
earlier we study that the end of March would be the date that any requests that would be coming in through a county department would be due.
the April 26 date is when departments would be making their budget submissions to the planning and budget office.
so I thought that was critical to distinguish because departments will need an opportunity to review and respond to any requests that come in.
speaking for my department particularly and social services we with like to have that time to review any proposals that may come in.
so just wanted to distinguish--
>> that date is March 26.
pretty easy to remember.
one month exactly prior to the department submissions to the pbo that those outside agencies have.
>> which a very short window.
thank you for making that distinction.
a very short window between outside proposals going to departments and departments making their final requests to pbo.
>> and social services analysis particularly who may be listening should feel free to contact us immediately if they anticipate making a request.
we'd like to know.
>> thanks for making that distinction.
>> good point.
>> just another point.
the date that sherry referenced is correct, March 26, but also the, as relates to last year's budget guidelines, they are the exact same in terms of the timing for the outside agencies.
we're trying to be consistent as best we can.
>> we adopted a moratorium against contributions to capital projects last year.
what was the end date of that moratorium?
or was there one?
>> yobble --i don't believe there was one.
the board of directors of the county corp rages has declared a moratorium on funding.
>> capital projects.
>> right, noncounty capital requests, yes, sir.
>> so unless we lift, that is still in place.
>> yes, sir.
>> health and human services typically receives several.
i guess we have had several requests outstanding for a couple years.
those will be left on the table but not acted on unless we lift the moratorium.
>> correct.
>> that is correct.
>> okay.
judge, to clarify once again for the departments as we go forward you know, our goal, as it was for 2010, is to ensure that we try to minimize the service level impact for the current programs that we're funding, and obviously, avoid layoffs at all cost.
and those are really the two primary goals that we have going into 2011.
i will tell you, as it stands today based on these preliminary numbers that we're looking at, and they are very preliminary at this point, we have about a $8 million gap to close.
and so we will be working diligently to close that gap and to try to protect existing programs and avoid layoff as best we can.
that is kind of the picture that we are looking at at this point.
we have got a lot of unknowns out there, obviously, right now.
these are, for planning purposes these are the guidelines that we feel are the most prudent going into 2011 and will carry us through this down turn.
>> that drop, you know, is significant.
that is not chump change.
you know.
that is a really stick number that we have to work with.
since we don't dough deficit spending here.
those are significant numbers .
we take them seriously.
>> yes.
>> what was the shortfall last year?
just remind me.
as far as last year.
compare it to this year.
basically dealing with new construction and stuff like that.
>> going into the preliminary budget?
>> yes.
>> I believe it was somewhere, Commissioner, I don't have the exact number.
>> I can't recall.
>> I think it was somewhere in the $3 million range that we were looking at going into preliminary.
and we ended up closing that gap as well, I believe.
>> yeah.
>> describe exactly what that means, what the $8 million gap means.
>> the gap that we are currently facing is $8 million between both ongoing and one-time revenue.
and ongoing and one-time expenditures.
it's a combination of the two.
it's not a, in ongoing dollars, not in one-time dollars.
it's a combination of the two.
but it is a combined total right now of $8 million that we anticipate based on planning purposes, we anticipate that we are short between revenues and expenditures.
>> but we always have quite a bit of one-time revenue surface during the budget process.
at least we have during the last 20 years.
>> uh-huh.
>> for those listen, it's not like we are sitting here looking at a deficit of $8 million.
it's that if you want ongoing money to cover a hundred percent of your expenses, then we would fall some short at this time.
and during the budget process, what we do is identify revenue and we try to on ongoing projects, we try to use ongoing money.
>> that is correct.
>> when we run out of ongoing money and there is one-time money there, we have shown the flexibility to use it.
>> right.
>> the problem with that is that you are facing the same situation next budget cycle.
>> that is right.
just as frame of reference, we have been carrying over $2 million in one-time money every year for ongoing expenses.
and so, yes, we have been able to utilize one-time money as a source to continue ongoing services and have done that.
but we are trying to reduce that number as best we can with ongoing dollars.
going forward.
>> yeah.
and if you use ongoing money then, the next time the current budget, we call steady state, would include all of the ongoing expenditures.
right?
>> that is correct.
>> and ongoing revenue.
>> that is correct.
>> but on the one-time stuff, steady state would not cover that so we would have to figure out a way to create efly cover it.
>> correct, yes.
>> you notice all across Texas jurisdictions are having similar maybe more severe struggle than we have here at Travis County.
i feel confident we're going do what we need to do to bring things to even keel.
i heard somewhere the state is even looking for five percent cutbacks throughout all its agencies.
that is something they are struggling with.
i'm quite sure everyone else is again struggling with similar type probable situations as far as the budget process is concerned.
it's not going to be easy.
>> no.
>> but I think we can do it.
we have done it in the past and come up with a good budget.
>> departments last year, as you know, were very cooperative and worked well with us.
really assisted us in holding a steady state budget and just continuing on.
and so, we anticipate that that is going to be needed again in 2011.
we hope the departments will respond accordingly than we can continue to move forward and get past this.
as leroy said, the recovery period based on the last two recessions that we have been in, have taken anywhere from 3-7 years to go through the recovery period.
as we said, as we worked on the 2010 budget, 2011 is going to be tough, probably more than 2012, excuse me, 2010.
and that is bearing out for us.
it's going to be a challenge.
but I think--
>> it really is.
>> exister.
>> is it.
>> .
>> Commissioner.
>> is it safe to says, I'm going to throw out a generalization, is it safe to say that the decline in governmental revenues lag the decline in revenues in the market generally.
>> that is correct.
our revenue essentially is, you know, 80 percent generated from property tax.
and the construction, you continue to get new construction after the new permits start dying.
now, also the recovery kind of lags the other.
>> that was my next and more salient point.
thank you, leroy.
go for it.
>> yeah.
essentially the state and the cities have been, you know, hurt quicker than we have.
but they will recovery faster than we will because once you take the construction cranes down, it takes a while for the commercial construction to get back up to the same level.
>> I think that that is a point bearing reputation because I think it's very hopeful out there right now, which is a great thing.
i feel like we have, we are on the upswing in the market generally.
but I want to manage expectations in the public.
it's actually a wonderful that I that government revenue, downfall in government revenue lags because we are able to pump prime the economy.
it's also probably a good thing that we lag in revenues coming back up because that way the market itself can pump prime the economy.
i did want to manage expectations.
we do have some serious job losses and social need out there which we need the prioritize.
can y'all give us a flavor of some of the unknowns that are not reflected?
the, that are not reflected in the concrete way in our preliminary budget?
>> we still have, they have actually done some analysis on the health insurance expenditures for the first three months of fy 10.
and it looks like those expenditures are running about 25 percent above the same period last year.
obviously, there's any number of things.
but obviously, h 1 n 1 had a lot more office visits and various other things at hr and pbo working on.
so the health insurance is a question that we'll be working with the health insurance committee to take a look the a the costs drivers.
the other thing has to do with retirement.
you know, we took about a $1.5 million hit on retirement contributions last year.
the market did recover, but that was an amortization and they anticipate we will have to do that over a 15-year time frame.
so those are two of the things that they are driving, obviously.
we worked very hard to see if in fact we can get some compensation in .
at this point we're still working on closing the gap.
>> a couple of other areas, Commissioners, are the unknowns that we continue to look at.
obviously, the jail population as it fluctuates up and down.
right new it's been holding pretty steady.
but that is always an known that we have to consider indigent defense expenses are out there for us.
we are monitoring those regularly.
contract increases, just a norm annual escalator built into our contracts that we have to deal with.
those are some of the unknowns that we look at in addition to the things that leroy had mentioned.
>> thanks.
>> ms.
flemming.
>> I want to add that we are continuing to project a deficit in emergency assess tance programs.
now, each we'll that we continue to serve resident, we recalculate that number.
we continue to be hopeful that some of the stimulus related monies that have come to other entities, such as the city of Austin, might help us to get in the black toward the end of the budget year.
it's important to note that in programs like emergency assistance and our mental health programs particularly, as people continue to experience reductions in hours, in job loss that also impacts their ability to maintain their health insurance.
in some cases where people have lost their jobs, they have lost their health insurance.
so for our residents who have children with serious mental health needs, for example, those will be direct, will have direct impact to our mental health programs.
so it's important for us to note that as we move forward through the budget process.
>> mr.
preist.
>> yes, judge, existers, morris priest.
i was going to ask staff, it wasn't that long ago, since 80 percent of our funds come from property taxes, it wasn't that long ago that our property taxes of our residents and commercial were almost 50-50.
but with brian rogers, when he brought out the numbers in the tax ael dids --appraisal district, he showed there's been a ten percent shift like the residents of the county are paying like 62 percent of the burden while commercial is paying about 32 percent of the taxes.
i was wondering if there's been any progress, or when can we anticipate or if there be any change in how our county tax appraiser will appropriately appraise commercial properties and make up the, somewhere where we are going to be able to make up that difference.
there's some astrow nomically different money paid on property that is just way under taxes.
>> we met Friday with patrick brown of the appraisal district, as I mentioned, and the other public entities.
patrick's numbers right now going through all of this, everything appears to be down including commercial, residential appears to be down as well.
so we know permits are continuing to drop off.
to answer your question, we can't address when that change will take place.
that is an appraisal district process.
and they are the ones that handle that.
we just simply handle all the certified numbers as they come in.
it's very difficult to say.
>> I think patrick did say that he had recently hired additional appraisers for his staff.
and that he is looking at the commercial valuation.
one of the problems, as you know on commercial, a lot of those properties are valued on a net income approach.
and we do have an increasing vacancy rates on some of the commercial properties.
i think what you are referring to is when brian rogers did the analysis, and I was out at tk when he did the presentation.
he was pulling up specific sales data in which I think patrick has indicated that he is putting additional staff on, hopefully to get a closer valuation on those commercial properties.
unfortunately, at this time the commercial values are falling, which will, you know, maybe widen the gap.
but he is, he does have additional staff.
and he does intend to address the issues that brian brought u.
>> yeah.
if you get time to catch up before the drop in commercial, I think the commercial is facing about a 25 percent drop.
>> yeah.
15 percent is what--
>> by the next seekel.
>> new construction we are look to go continue to fall off.
overall right now as frame of reference, we're looking at overall decline in the tax base about seven and a half percent going forward in the existing tax base.
so that is a combination of all the categoer.
>> okay.
>> may i?
>> yes.
>> again, this is another distinction moment.
sounds like insider baseball.
morris priest is an extremely knowledgeable resident on this issue.
so often our governmental structure is fractured for reasons that are poor policy.
but in this respect, tcad, the Travis County central appraisal district is accept pratt from Travis County governance or city of Austin or aisd or mashel falls for a real good reason.
an its a wonderful, good policy reason that Travis County central appraisal district is completely separate from us.
and there cannot be any political or even policy pressure brought to bear by us on tca d.
it's strictly an appraisal office.
i'm very appreciatetive of that distinction made by the Texas legislature.
yes, I am praising the legislature for having made that separation for us.
>> anything else today?
>> knows.
>> judge, do we need to accept the report?
>> no, we have it back on next week.
>> thank you.
>> good distinction.
>> yes, understandable.
>> yeah.
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Last Modified:
Tuesday, February 16, 2010 2:15 PM
