'Fiscal discipline': City of Austin's financial forecast points to tighter budget process

AUSTIN (KXAN) -- Austin City Council members were briefed on the city's financial forecast Tuesday. It points to the need for a more conservative budget over the next few years, city staff said.

"It's a very different forecast from what we had last year," Interim City Manager Jesús Garza said at the beginning of the presentation. "This change in the fiscal environment requires us to have fiscal discipline so that we can maintain solid finances in this organization."

Of the overall challenges cities face nationwide, staff pointed to inflation, sales tax revenues, supply chain issues and challenges finding adequate workers.

FY 2024 budget deficit

Financial staff started by reviewing the Fiscal Year 2024 budget. We're in the middle of it -- it wraps up at the end of September.

City staff said it will likely see a budget deficit in its general fund of roughly $3.8 million this fiscal year. Overall, the general fund is expected to pull in $1.4 billion, staff also reported. The general fund pays for things like police, fire and parks.

"We're showing a bit of a shortfall this fiscal year, we'll have conversations with departments on how we can address that," said Kerri Lang, budget officer with the Financial Services Department for the City of Austin. She did not elaborate on which department(s) would be responsible for the cuts required to meet the gap.

One of the major reasons for the shortfall, city staff said, is how much money they received in sales tax revenue. What the city expected to receive in revenue from those taxes, hasn't met expectations. We've covered that previously.

Future budget talks could be tight

City staff say it's not just the current budget that could feel a pinch. As the city looks at the Fiscal Year 2025 budget starting this summer, conversations could include what needs to be cut or altered to make a balanced budget.

City staff said they're already projecting a deficit next fiscal year of more than $13 million. They'll bring some suggestions to council as the city manager's proposed budget is released in mid-July.

City staff suggested combing through departments' budgets to look for savings, analyzing fees that could be raised to meet some of the demand, looking at "bend[ing] the City's cost curve" and even tax rate elections.

"I think there's also going to be an ongoing or a longer-term conversation that we have to have with you all [city council] on whether or not we need to consider periodic tax rate elections to offset the rising costs we're seeing as a city," Land said.

The Fiscal Year 2025 proposed budget is expected to be released mid-July. That budget will go into effect October 1st, 2024.