Budget: Cut Chpt. 380 corporate subsidies by 50% FY15-16

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Don Zimmerman
Posts: 168
Joined: Fri Jan 09, 2015 11:05 am

Budget: Cut Chpt. 380 corporate subsidies by 50% FY15-16

Post by Don Zimmerman »

Dear Fellow Council Members,

Please see the below draft resolution. I am planning on making a budget amendment during our budget process to reduce the amount of corporate subsidies via the Chapter 380 (Texas Local Government Code) agreements. As we are all aware, our residents are asking us make the city more affordable. By reducing the Chapter 380 agreements by 50%, we would reduce the tax burden by over $6.8M without cutting city services. This would just be for FY 2015-16 and would not impact future years. However, I would be open to reducing the Chapter 380 agreements by 100% and make that change the policy moving forward.

Please review the following draft resolution and post feedback to the Council Message Board. I look forward to offering a budget amendment at the appropriate time.


RESOLUTION NO._________________ (DRAFT)

WHEREAS, according to the University of Toronto’s Martin Prosperity Institute report released in early 2015, the Austin-Round Rock, TX Metropolitan Statistical Area (MSA) was the most economically segregated metropolitan area in the United States; and

WHEREAS, according to the “Proposed Budget Overview FY 2015-16” that the City Manager presented to the Austin City Council on July 30, 2015, the City Manager proposed an increase in property tax rates in order to help cover all of the items in the budget; and

WHEREAS, the City Council has expressed repeated concerned about the affordability of living in the City of Austin; and

WHEREAS, past City Councils have entered into Chapter 380 (Texas Local Government Code) agreements to provide subsidizes to corporations; and

WHEREAS, for Fiscal Year 2014-15, the active Chapter 380 payments are anticipated to be $12,937,992 and for Fiscal Year 2015-16, they are anticipated to be $13,691,361
(REF: http://www.ci.austin.tx.us/budget/cbq/index.cfm -- budget question #90); and

WHEREAS, most, if not all, of the Chapter 380 agreements contain language similar to:
• “This Agreement shall not be construed as a commitment, issue or obligation of any specific taxes or tax revenues for payment”;
• “All payments or expenditures made by the City, including Austin Energy, under this Agreement are subject to the City’s appropriation of funds for such payments or expenditures to be paid in the budget year for which they are made”;
• “The payments to be made, or other expenditures under the Agreement, if paid, shall be made solely from annual appropriations from the general funds of the City or from such other funds of the City as may be legally set aside for the implementation of Article III, Section 52a of the Texas Constitution or Chapter 380 of the Local Government Code or any other economic development or financing program authorized by statue or home rule powers of the City under applicable Texas law, subject to any applicable limitations or procedural requirements”; and
• “In the event the City does not appropriate funds in any fiscal year for payments due or expenditures under this Agreement, the City shall not be liable for such payments or expenditures, and the company, in its sole discretion, shall have the right but not the obligation to rescind this Economic Development Agreement”;

REF: https://data.austintexas.gov/dataset/Ec ... /pxe3-na7s



The City Council desires that the City Manager present, as part of the Fiscal Year 2015-16 proposed budget ordinance, a reduction of incentives for Fiscal Year 2015-16 in each of the active Chapter 380 agreements by 50%, including, but not limited to, Chapter 380 Payments, Fee Waivers, and Rebates.
Don Zimmerman
Council Member District 6 (northwest Austin)