City Council, complete with a new mayor and six new Council members, set its budget priorities for San Antonio's 2018 fiscal year budget on Wednesday.
It's a routine process, but new this year is an "equity lens" that will be applied to funding top priorities that emerged during the more than six-hour budget policy goal-setting session: public safety, mass transit, streets and sidewalks, and general neighborhood improvement – in that order. The City anticipates it will have about $12.4 million in its more than $1.4 billion General Fund next year to allocate to funding new policy goals. The total proposals from police and fire departments and street maintenance exceed that by almost $2.5 million.
"What does 'equity lens' mean?" Councilman William "Cruz" Shaw (D2) asked the meeting facilitator and his Council colleagues in a conference room at the Henry B. Gonzalez Convention Center.
Basically, instead of trying to ensure each geographic area gets its close-to equal share, the more than $2.5 billion FY 2018 budget should emphasize need-based funding, Mayor Ron Nirenberg said. "Eventually we should be matching needs to resources."
It's no secret that some districts have received more public and private investment than others. The concept of rough proportionality that has been applied to municipal bond programs and previous budgets approaches equity, but "let's get a little rougher and let's actually do it," Nirenberg said.
For instance, more than 10% of streets in districts 1, 2, 3, 5, and 9 received poor or failing pavement grades, according to Transportation and Capital Improvements Director Mike Frisbee. A rough proportionality funding method would allocate between $5.7 million and $8.8 million for each district based on need and how much that district received for streets in the 2017 bond. A needs-based method would allocate significantly more to districts with more than their fair share of need: District 2 would receive the most at $11.5 million and District 9 would receive the least at $2.4 million.
The equity concept received general consensus on Wednesday, but it will need to make it all the way to Sept. 14 when the Council is set to approve the FY 2018 budget that goes into effect on Oct. 1. Over the next six weeks, City staff will be working overtime to craft a budget proposal that includes several different allocation options for Council to consider.
But Councilman Clayton Perry (D10) took issue with how the graph above displayed the 2017 bond allocations for streets. Not included in that image are the projects that were designated as having a "citywide" impact, such as the $43 million Broadway Street renovation in District 1 and the $7.5 million from the streets bond for the Hardberger Park land bridge in District 8.
While they do have a citywide impact, those projects should be included in the chart, Perry said, to "show more clearly where our money is going to."
'... How Do We Pay For This Stuff?'
As usual, there was a lot more talk about what Council would like to fund than how it would fund it, noted meeting facilitator Francisco A. Gónima. "So how do we pay for this stuff?"
Revenue streams are hard to come by without asking residents for higher taxes or additional fees – an unpopular political move. City staff introduced two possible funding mechanisms on Wednesday: increasing the City property tax rate by 1 cent and a "transportation user fee" similar to Austin's. Neither received much enthusiasm from the Council, but Nirenberg and others said the transportation user fee was worth looking into.
The fee would be applied to monthly utility bills of residents and commercial users and be based on "traffic levels generated by each dwelling unit or business," according to the City of Austin's policy page. "City of Austin residents pay the mandatory fee to help prolong the life of city infrastructure and assets. By managing and maintaining public right of way infrastructure, the City of Austin is able to save taxpayer money by intervening before full reconstruction is needed. Full street reconstruction can be costly and time-consuming, therefore preventative maintenance provided by the fee helps reduce these costs."
Austin's fee could generate $70 million this year.
There would be some exemptions to the fees and an appeal process if the fee did not reflect actual motor vehicle use, Frisbee said.
"That is a jarring concept," Nirenberg said. "But for the record ... no one is suggesting we should do this unless we have a thorough discussion about it."
"Jarring" is the perfect word to use, Councilman Greg Brockhouse (D6) said. Today was the first time most Council members had heard discussion of such a fee, he noted, adding that it "sets a bad tone" for the discussion.
"I'm going to be a 'no way' on that one," Brockhouse said of the proposed fee.
Councilman John Courage (D9) suggested that the City look into how it could generate more revenue from San Antonio Water System, indicating that the City-owned utility would have to ask residents to pay higher rates – which is not popular with ratepayers. He also suggested making sure that reserve funds are not overflowing. The City maintains a 15% reserve each year as back up and as part of maintaining its AAA bond rating. If the reserve grows beyond 15%, Courage said that money could go toward other priorities or projects.
Councilman Manny Pelaez (D8) suggested the City review its municipal court system to see if there are opportunities for the court to become self-sustaining. It does not currently collect enough through tickets and fines to do so.
Public Safety is Still Top Priority Amid Fire Union Lawsuit
Most Council members expressed support for funding the San Antonio Police Department's request for 25 additional uniformed positions in FY 2018, a total of 125 uniformed positions by FY 2022, and increases to communications/dispatch staff. The San Antonio Fire Department's needs were also well received, which included another medic unit to serve the growing Medical Center, more ladder companies, and two new division chiefs.
But before Council members began discussing their district's budget priorities, they were asked if they should continue to operate under the same framework that previous Councils and City staff have upheld since 2014. These financial policies have allowed the City to maintain a balanced budget, as required by law, and helped keep its AAA bond rating, according to Assistant City Manager Maria Villagómez.
Brockhouse questions these policies.
"I have a problem with the lack of debate ... 60% of us are new," said Brockhouse, a political consultant who worked for the police union during its contentious contract negotiations with the City. "I believe if we're going to build the city we deserve, Mayor [Nirenberg], we don't continue doing a lot of the same things we've always done. We have to challenge who we are and what we can be."
"The City you Deserve" was a tagline of Nirenberg's successful campaign.
Brockhouse's main concern was the 66% line in the sand drawn by City Council in 2014 after a task force of experts examined the ballooning costs of public safety. It found health care to be the main cause and recommended that the City disallow public safety spending – generally police and fire departments – to exceed 66% of the general fund.
Brockhouse called 66% an "arbitrary number, we created it through the task force."
But it's not uniformed positions or fire trucks that will likely push public safety spending beyond that 66% threshold. It's the police and fire union collective bargaining agreements and associated health care costs.
After years of wage increase and term negotiations, the police union and City settled on a five-year contract that includes a healthcare package option that would have some officer dependents pay premiums for the first time. The deal, if the same provisions are contained in the firefighters union contract, would likely increase public safety spending beyond 66% in its fourth year.
That means the deal, if any, worked out with the San Antonio Professional Firefighters Association could be less sweet for firefighters than for police officers. But the fire union has yet to begin contract negotiations with the City. A continuing lawsuit brought on by the City challenging the current 10-year evergreen clause, which allows most of the current contract’s terms to stay in place for 10 years without a new pact, also stands in the way of a deal. The City dropped its lawsuit against the police union when it agreed to an eight-year evergreen clause.
"Everyone wants to move past that. We all want a deal. We all should be talking – there shouldn't be a lawsuit," Brockhouse said.
He has maintained that his previous close relationship with the unions has no bearing on his decisions on Council.
Councilwoman Shirley Gonzales (D5) countered Brockhouse's insinuation that the Council has become complacent in its budget structure discussion.
"Why you haven't heard a lot of feedback [from senior Council members] is because we have already heard why this is important," Gonzales said. "I'm comfortable with the adopted financial policies ... I don't always agree with everything in front of us ... but we're making decisions on behalf of the entire city."
Brockhouse told the Rivard Report after the meeting on Wednesday that he will continue to push for increasing the public safety budget beyond 66%.
It's Transit, Not Transportation
A clear distinction made this year for transit, pointed out by Gonzales, was that one of the top priorities – No. 2 behind public safety – was mass transit – decidedly not transportation.
Facilitator Gónima erased the word "transportation" on the priority list written out on a large white board and replaced it with "transit."
Last year there was more talk about transportation – building lanes and capacity – but mass transit is an entirely different beast.
Most Council members support giving more funding to VIA Metropolitan Transit to reduce wait times and trip duration.
Gonzales, for one, was "happy" to see the transportation user fee up for discussion.
"A massive public transit system will require a tax increase," she said.
Short of that, Council will likely revisit a proposal by Councilman Rey Saldaña (D4) to give VIA a funding boost of up to $10 million annually. That proposal was shot down by the previous Council.
The City's budget office must also keep a close eye on the federal and state funding policies.
President Donald Trump’s blueprint would cut about $18 million in grants that fund a wide range of services for vulnerable populations in San Antonio, including infrastructure projects, code enforcement enhancement, emergency family assistance, after school programs, utility assistance for low-income households, support services for seniors, and more.
It would also require the City to pay an outstanding $36.2 million Housing and Urban Development loan with $4.5 million payments each year through 2026.
On top of that, the State Legislature's consideration of the "bathroom bill" and the pending "sanctuary cities" laws are both hurting the visitors and convention industries. California has also banned state-funded travel to Texas because of a new Texas law that allows organizations to deny adoption based on "sincerely held religious beliefs." This law makes it legal to deny an adoption to a same-sex couple.
Another critical discussion that the Legislature will have this year surrounds revenue caps, which would basically limit the amount of taxes the City could collect and affect the level of services it could provide.
“This is easy. Next year is going to be really tough,” Nirenberg said of the looming federal budget cuts.
Five years out, the City anticipates a drop in funds available for policy issues as it starts to implement SA Tomorrow initiatives and 2017 bond projects, Villagómez said. There are also built-in wage increases for uniformed police officers as per the union contract.
In 2019, the City expects the growth of property tax revenue to slow, based on information from the Bexar County Appraisal District. This growth rate is estimated to decrease from 6.4% in 2018 to 4% in 2019 and 3% in 2020-2022.
"As we get closer next year, it could change – could be less, could be more," she said. "The further out we go, we're trying to be more moderately conservative so we're not overestimating our budget."