Travis County Commissioners Court
Tuesday, June 7, 2011 (Agenda)
Item 13
Item number 13, to receive update on planning and budget office on fiscal year 2012 budget process.
>> judge and Commissioners, you had received my memo dated may 31 updating you on the fy 12 budget process.
we have received the first revenue estimate.
and we have shown you a summary in that backup of the difference between your fy 11 adopted budget and the fy 12 first revenue estimate.
as you can see on that, the total adopted fy 1 general fund budget was $494,361,768.
at the three percent above the effective tax rate, which is the ceiling by which the court had approved in our fy 12 budget guidelines, that represented $518,290,955, or an additional $23,929,187.
now, there are a couple of things about that number that I'd like to comment on before we go into the number request against it.
essentially, any of the new revenue that you receive, there's a requirement of 11 percent unallocated reserve.
that takes up about $2.6 million.
we have been notified by tcdrs that the retirement rate for all employees will go up, and that is about 1.3 million.
we do have the projected cost of the health insurance on retirees that is about 777,000.
we are using as a planning number on the bcp transfer from the general fund as 670,000, which is essentially what the fy 11 transfer is.
we would assume it would be that number, programs a little larger.
the total of those are about 5.3 million.
so those kind of come off of the top immediately in our planning for the fy 12 preliminary budget.
we have not in our preliminary plans reduced any of our reserve level.
and the reason is there's kind of a mixed projection at the federal level as to what could possibly happen in 12 and 13.
you might have seen that the equity market has substantially reduced, as a matter of fact, they have had reductions in the last six weeks and we currently sitting at one of the lower levels since '08.
it is not certain that fy 12 with the ending of the stimulus funds, that it would be wise to substantially reduce your reserve levels.
you will have an opportunity once planning and budget office files a preliminary budget and mark-up and the court will have the opportunity to modify that recommended budget.
at this point we're attempting to hold those reserve levels the same for fy 12.
so that is kind of in the context of this discussion.
>> leroy, with that, I didn't mean to interrupt, but with that I hope this message that you bring before us today per vades through the different departments of how really tough the times are.
even with that you still are some requests coming in from all the departments as far as things that will affect the general fund.
as far as paying for those things.
my concern is that knowing what we really, haven't finalized as far as coming from the state, it's going to be some tough times.
I just hope that this is conveyed very very thoroughly to the departments that we are in tough times.
salary increases and all these other kind of things.
I want to make sure that happens.
so what are we doing to, even though you are reporting to the court today, but what are we also doing from the pbo perspective to let the folks know what the situation really is?
you know, we go from there.
how to deal with it.
>> the procedure that we have is the planning and budget office makes a comment, a recommendation on each of the requests that come in from each single department.
those total for the generally fund about $48.6 million for the total request.
pbo staff, myself, jessica and the analysts and rodney, we sit down with each individual department, an and we discuss our recommendations of each one of their requests.
it is a draft recommendation.
sometimes we get it wrong.
sometimes there's some wording.
but on the top of each one of those packages that go out to the departments one week before we have a meeting with that department head and their staff, there is an explanation of the financial environment that we are making these recommendations in.
and rodney and I have both signed that letter.
each analyst sends those draft recommendations out with that explanation.
so I don't think that there's any question about the need to be conservative going into the preliminary budget.
because of the size of the state cuts.
and katie has the detail.
but as she has reported to the court previously, there was about $6 million identified in state cuts, and we have about 5 million of budget requests to fund those 6 million.
our anticipation on those state cuts, in addition to that, there's a 7 million request.
you add the 5 and 7, you have about 12 million.
>> mhmr is now looking at a million and a half based on what mr. Evansance told me two or three days ago.
>> okay.
>> the legislature may change that but so far.
>> it's the million and a half.
>> thank you, judge.
>> essentially what we would propose is, due to the fact of the size of the cuts, whatever we go into preliminary budget, we have a reserve set up for the court to address those areas that have been significantly hit by the cuts.
it very well may be advantageous in year for the court to actually hear some budget hearings from those departments that have been significantly hit by the state cuts, ie, the adult probation cscd were hit very hard.
mhmr, various other departments that have been hit by the state cuts.
so that is something that we have pointed out in our memo to you, that you may very well want to reserve those budget hearing dates, or at least some of those dates from August 10 to August 19, where we had previously held steps ef budget hearings, you--extensive budget hearings but at least on those departments that have significant state cuts to hear what she e --what they have done about the cuts and kind of what their needs are so that you could take action during mark-u.
>> I would also like to add, Commissioner Davis, when we were doing the budget kick-off meetings we stressed over and over again the situation we were dealing with in terms of the economy, state cuts, et cetera.
we really made an effort to try to get the word out to those departments to let them know just how dire things were in terms of our financial position or the condition in terms of the economy.
we worked real hard to get the word out to folks.
>> we listened very closely to members of the court when we presented our guidelines.
the concern, the direction given of avoiding, attempting to avoid layoffs.
and we're very sensitive to that and are attempting to meet that directive.
I know that adult probation started freezing positions some time ago, maybe a year ago.
I think that dr. Nagee had told rodney and us that they had maybe 50 fte's frozen currently in an attempt to help offset the anticipated state cuts.
I think the departments are very aware of the environment that we are in with the state.
>> leroy, have we done any analysis over the last several years with regard to the state and local revenues as percentage of per capita perge income?
what I'm looking at, I have several different sources here, the Texas fact book put out by the lbb, the tax foundation, a federal nonprofit, and then also the real estate council of Austin's annual missive on combined cost of local government.
so what I'm seeing is at least based on taking the 40,000 feet and coming down, it looks like at least based on the tax foundation's work in 2008, the state of Texas ranked 4 3rd in terms of state and local impact, with under ten percent of average taxable income being the tax burden of that is from 2008.
lbb's statistics are from around the same time period, even in the most recent 2010 fact book, putting us at 4 3rd statewide.
if I compare that against the rica stats, which I'm not sure what their source, but they seem to be fairly reliable and consistent, looks like of the combined tax burden, at least traditionally, looks, extrapolating, like the state has borne about six percent of the overall, generates about six percent of the overall combined tax burden and the local governmental entities have generated about four percent.
of that four percent, we're less than 15 percent of that four percent.
what I'm driving at is considering what is happening with the state budget, I imagine that six to four is going to flip and will we'll become the state--we'll become the six when the state is the four.
I wonder if we have the capacity to do that analysis or identify the most credible sources to extrapolate from.
>> we have not performed that analysis.
I would assume that the public policy group, and we do have members of that group on our local tax equity committee.
and we'll be glad to see what type of research they did because they have a staff that has been doing that type of research for years.
>> I think it would be helpful to tell the story to our constituency as we're contemplating three percent above effective tax rate, that the reason why we must contemplate this is not because they are overall going to be paying more taxes, it is that we will be collecting the taxes rather than the state because we're providing services rather than the state the overall burden is not changing.
the responsibility of collecting those taxes is shifting.
I think that is a story earth would of telling in numbers and charts.
>> okay.
we will contact public policy group and see if we can coordinate with them.
>> because we will catch the flack.
because it will be us raising taxes because the legislature is refusing to identify revenue sources to do what they have traditionally done.
>> okay.
>> I have laid out in the memo essentially the tax effect on the average homestead.
these numbers do change weekly.
on the average homestead as they go into the appeal process at t cad, but our best estimate currently is the proposed tax rate would be $33.95 increase on an appraised average homestead of $266,000 any questions that you have about kind of, we do anticipate receiving the second revenue estimate which will have not only the general fund but it will have all the special revenue funds.
we do have some concern about what will come in.
and the auditor's office has been good enough to give us some drafts on the road and bridge fund.
but it does show that the road and bridge fund will be decreasing for fy 12.
we had anticipated some increase but not to the extent that what we are seeing in an official rough draft of that estimate.
but on June 20 we will receive all of the special revenue funds in addition to the general fund.
and that is when we really good age good snapshot of kind of where we see the preliminary budget coming in.
Commissioner.
>> but as far as the t cad involvement, I guess we really won't know exactly where we are going to land.
especially if we are k looing --looking at the tax rate.
until we get everything from t cad from the certified tax roll.
and that will be in July?
>> latter part of July.
we file, normally the third revenue estimate is based on t cad certified tax values, and it is that tax certification that the tax office runs the effecttive tax rate and proposed tax rate.
in answer to your question, there are some, t cad is dealing with name of issues currently, and they could affect the numbers that we are presenting today.
>> right, that is why I pose the question about the July date.
>> right.
>> because there are pending issues that we probably need the look at.
>> uh-huh.
>> at any rate, okay, thank you leroy.
>> how much did we transfer from the general fund to the, I guess tnr, to cover what historically the road and bridge fund has covered?
>> actually it's based on a formula dates back to the late '90ss when there was a one penny increase.
now that there are some fines going into the road and bridge fund, there's calculation that takes those things into consideration to get the net transfer.
so the necessary --net effect for being a 3.47 benefit to the road and bridge fund, if that answers your question.
>> no amount above that was transferred from the general fund.
>> if there was an amount above that, it only has do with how the calculation is done with the fines received into the road and bridge fund.
the benefit is forced to be a $3.7 million benefit.
>> okay.
we recently received a notice of an increase in our, I guess, allocation to cover expenses of the central appraising district.
just under $100,000, right?
I think it was about 86, 87,000.
>> I don't recall the exact amount, but I do know they were sending in an increased assessment.
they have been attempting to address the issue.
I think you recall when patrick brown was here, the chief appraiser, answering questions not only from Commissioners court but from the entire community about the equity of the appraisal system.
and he mentioned in that presentation that he needed additional staff to increase the accuracy.
I think that is what the additional assessment is an attempt to address the raised with his organization.
>> that is what I was about to ask.
I thought they indicated the need to hire additional staff.
>> right.
>> if that was the reason, I understand.
the next update is the first Tuesday after June 20?
>> the county auditor will be, I'm sure, making a presentation on the second revenue estimate to the court and the first revenue estimate with the second revenue estimate, as she does.
>> 28th of June.
>> I'm pretty sure that is it judge.
>> okay.
>> anything else regarding the 2012 budget?
>> challenging.
>> thank you very much.
>> thank you all.
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