Hotel taxes don’t belong to hotels

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City Council ultimately voted 10-0-1 yesterday, with only CM Leslie Pool abstaining, to kick off the process of acquiring land for the new Convention Center. 

As I discussed yesterday, my doubts about the long-term viability of the convention industry have only grown as a result of the pandemic. In a brief phone convo with the mayor, however, he said he doesn’t view the expansion as a major “risk” because the city is not on the hook. It is not the city that is issuing bonds to finance the Convention Center expansion, but a separate entity that is funded entirely by hotel occupancy taxes. If the Convention Center goes bankrupt, said the mayor, city taxpayers will not be forced to bail it out. 

I appreciate that. If City Council were actually putting the city’s general fund at risk, that would be an even bigger problem and I imagine the project would encounter much greater opposition. 

Still a major lost opportunity
The problem is that this project shuts the door on the possibility of reforming the deeply unjust way that we use tourism taxes. And yes, that’s what the tax levied on hotel guests is: a tourism tax. It is a tax on tourists, not hotels. They don’t pay a damn thing. It’s their guests who pay.  

The failure of policymakers to understand this distinction has hamstrung the debate. The hotel industry has brilliantly framed the taxes that hotels collect from guests as belonging to them. They frame their support of room taxes as an act of benevolence and it’s only right that the city return the favor by dedicating the great majority of that money to generating more demand for hotel business via a Convention Center. 

But the fact is that it’s not the hotels who generated that tax revenue. It’s generated by tourists and other visitors who are coming to the city to do other things. They’re not coming to Austin for the privilege of staying in the Hilton. The hotel is just one of many local businesses that is providing them a service while they’re in town to visit friends, attend a music festival etc. The hotels are just the most logical place to collect taxes on tourists. For hotels to argue it’s “their” money is ludicrous. Another way to tax tourists is to put a tax on rental vehicles –– should the government spend that money in a way that specifically benefits the car rental industry? Of course not. 

There is a major opportunity to rethink the hotel occupancy tax paradigm that we’ve operated under for decades but nobody in city leadership is interested in that. They’ve resigned themselves to playing by the rules set by the hotel industry and negotiating for crumbs, rather than just taking the whole pie. 

Local leaders in recent years have dismissed calls to reallocate money from the Convention Center by pointing to state law. It’s true that the state law on hotel taxes was written by hotel lobbyists and is geared towards helping the hotel and convention business specifically. However, past attorneys general have opined that cities have broad discretion in their interpretation of the law. More importantly, laws can be changed and in this case, it should be changed. Activists and local leaders in Austin should be leading the charge, along with allies in other cities. 

I really do think there is an opportunity for local and state elected officials to rethink the use of hotel occupancy taxes. There are certainly members of both parties who aren’t happy with the current system. The right-wing Texas Public Policy Foundation, for instance, the influential Koch-aligned “think tank” and lobbying group, is not a fan. And I’m sure that there are many elected officials in urban areas who are desperate for new revenue sources to make up for the Covid-induced plunge in sales tax revenue. If not now, perhaps three or four or five years from now, when Texas may very likely be a blue state. 

But the problem is, building a new Convention Center will shut down the opportunity for Austin to rethink how it spends tourist taxes. Building a new Center ties up our tourist taxes for another 30 years. 

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Covid schmovid. City Council wants a new Convention Center.

City Council is poised to take an important step toward building a new Convention Center. Today it is considering a resolution that would authorize city staff to enter negotiations with the owners of two properties that the city is eyeing for the future CC. The resolution authorized staff to provide up to $6.3 million in “earnest money,” which suggests they are envisioning paying as much as $600 million just to acquire the land for an expansion. 

This move comes after a meeting on Tuesday in which HVS Convention, Sports & Entertainment, the nation’s leading Convention Center consulting group, presented an economic analysis touting the benefits of a bigger Convention Center. The report argues that Covid-19 is a temporary setback for trade shows, conventions and meetings, but the industry will eventually claw its way out of the abyss and Austin will need to have a bigger Convention Center if it hopes to compete with peer cities. 

If there has ever been an instance in which HVS recommended that a city not expand its Convention Center, I’d like to see it. I have a strong suspicion that that’s a recommendation they’ve never made. Yesterday emailed Thomas Hazinski, who heads the firm’s consulting practice, to ask whether they have ever advised a city not to expand. I haven’t gotten a response yet. 

Now, technically HVS wasn’t hired to tell the city whether to expand the Convention Center or not. Council already had a report by a group of folks at UT that it used to justify the expansion last year. That report actually focused more on potential designs for a new CC, but it offered some pro forma economic analysis as well. 

You may have to zoom in to see the figures below, but at the bottom you’ll see that the UT study presents three scenarios for the number of jobs that a larger CC will create. In the “base case,” which essentially is what the report considers a middling outcome, the new CC will add 355 jobs to the local economy. In the “upside case,” they project it will add 954 jobs.

The HVS analysis was far more optimistic. Even though it projected an increased attendance of only 350,000 per year, it projected that the expansion will add 1,772 jobs to the local economy. That’s nearly twice the number of jobs that the UT study projected in its “upside” scenario where CC attendance increases by 500,000.

What explains the huge discrepancy in these projections? Hard to say. Both studies say they relied on same IMPLAN input-output software to estimate the economic and employment impact of CC expansion. 

Things were likely bad even before Covid
Considering how much taxpayers pour into Convention Centers, there’s surprisingly little analysis of their economic impact. Heywood Sanders, a professor of public administration at UT-San Antonio, seems to be the only scholar who has paid much attention to the issue over the past 20 years.

In a report that he just prepared, Sanders says that Convention Center attendance at the nation’s four largest facilities (Chicago, Las Vegas, Orlando, Atlanta) has still not returned to the levels experienced before the 2008 financial crash.

At the very least I would like to see HVS and other Convention Center proponents address these facts. The prospect of an enormous investment in an industry that was not even keeping pace with population growth before the pandemic is troubling. 

Here’s what has happened in Las Vegas since the major expansion in the early years of the century. It appears that the expansion prompted an immediate spike in attendance but that quickly evaporated in the Great Recession and has never recovered.

Sanders highlights a few major national conventions that have seen their attendance dip. For instance:

If he’s cherry-picking, I’d like to be presented with some examples that prove it. 

Even the figures provided by industry cheerleaders aren’t very encouraging. According to the Center for Exhibition Industry Research, the industry has underperformed the overall economy more often that it has overperformed it. But the convention industry suffers far greater than the overall economy during downturns. 

See below how the industry compared to GDP over the past decade. It got absolutely crushed in the years following the 2008 crash and in recent years it has generally grown at a rate slower than overall GDP. This is despite a steady stream of investment by cities to expand Convention Center space. 

So, about COVID…
The short-term impact of COVID on tourism in general and conventions in particular makes the 2008 recession look like a picnic. Hotel tax revenue, which is what is needed to fund the new CC, has plummeted. For what it’s worth, in a July assessment of the city-owned Hilton Hotel, Standard & Poors projected that revenue per room will not return to 2019 levels until 2024. 

The intense decline in the short-term is worrisome enough, but what about the long-term impact of the fundamental shift in work behavior prompted by the pandemic?

The past six months have certainly highlighted the limits of Zoom meetings. But they’ve also highlighted the opportunities. People are eager to talk with their colleagues face-to-face again, but it would be foolish to assume that everything is going to return to the way it was before. Because frankly, it shouldn’t. Being in the same room with clients and colleagues is beneficial, but it’s not always necessary. My guess is that, assuming that this pandemic is eventually resolved, more employers are going to tolerate more remote work, more flexible schedules and they’ll likely spend less on conventions.  

Here’s some more background I’ve written on the Convention Center and why local leaders insist we have no choice but to continue supporting it. 

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How the status quo bias warps our politics

How much should the city of Austin be spending on policing, based on its size and crime rate? How many police officers should it employ? How many patrol officers should be out at any given time?

If you stopped 100 people on the street and asked them those questions without providing any further context, would any of them feel any degree of confidence providing an answer? 

Consider some other public policy questions: 

  • What should be the starting salary of an Austin public school teacher? 
  • What is the appropriate sentence for someone convicted of armed robbery? 
  • How many swimming pools per capita should the city of Austin have? 
  • How much should the city spend per year to maintain its parks?
  • What’s the minimum level of math knowledge that a high school graduate should have?  
  • What percentage of city land should be zoned for single-family homes? 
  • How much should the owner of a $400,000 home expect to pay a year in property taxes?

In almost every case, few people will have strong answers to these questions if they’re presented in the abstract. Many will, however, have strong opinions in response to the following:

  • Austin City Council has slashed its police budget by $20 million. 
  • The school district board has proposed cutting teacher salaries by 10%. 
  • The state has proposed reducing sentences for those convicted of violent crimes, such as armed robbery. 
  • The city is shutting down a quarter of its pools, including your neighborhood pool
  •  The city is rezoning single-family properties on the edge of your neighborhood to allow as many as eight units per lot
  • AISD will no longer require students to take trigonometry to graduate 
  • Your taxes are going up by $700 this year 

(TO BE CLEAR: Except for the police budget issue, all of the above are imaginary scenarios. I have no idea what the AISD math requirements are, for instance)

In public policy debates, there’s always a bias for the status quo. There’s always an assumption that things are the way they are for a reason.

If a property has been zoned single-family for 40 years, then many elected officials in Austin believe that it should not be rezoned unless the developer requesting the change offers a basket of “community benefits” in return. It rarely occurs to anyone that there was never any good reason for the property to be zoned single-family to begin with. Austin is less densely populated than Dallas, Houston and San Antonio and yet efforts to modestly densify the city are portrayed as an attempt to turn Austin into New York –– or Calcutta

If the city of Austin spends more per capita on police than every other major Texas city and has a far lower crime rate, cutting the police budget still prompts outrage. Those driving the outrage –– notably Greg Abbott –– don’t have any ideas about how much Austin should spend on policing. They just know that the city is cutting, and that’s bad. They’re proposing to punish the city for cutting, but they’re not proposing to punish Houston, Dallas and San Antonio for spending less than Austin has for all of these years. 

My favorite example of the status quo bias is in transportation policy. For instance, autonomous cars are probably already safer than driver-operated cars but they will undoubtedly have to be much, much, much safer before society will fully embrace them. The tens of thousands who die each year in driver-operated cars are taken for granted. Any casualty attributed to driverless cars, however, will likely prompt widespread panic about their safety.  

Similarly, those who oppose major investments in alternatives to cars will invariably point to the fact that the great majority of Austinites rely on cars. Of course, they do so simply because that’s the only decent option we’ve provided them. Thus, an $8 billion expansion of I-35 is viewed as logical and an $8 billion investment in public transit is viewed as radical.

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No, City Council isn’t cutting $150M from the police

As Council approaches budget deliberations, there appears to be consensus on the dais in favor of a package of cuts and reallocations of APD funding put forward by Greg Casar. It includes $149M in current APD funds that could be taken away from the department in one way or another. 

But that figure is not nearly as big of a deal as you may think.

Only $23.3M of the total are immediate cuts. Nearly half of the total ($10.7M) comes from cancelling the three police academy classes in FY 2021. Then there’s $2.5M from contractuals and commodities, $2.8M in reduced overtime, $2.8M from records management and an assortment of smaller items. 

Then there’s the $79M of programs that are being “decoupled” from APD. These are programs that will continue to exist but that Council wants to exist separately from the police department. That includes Victims Services, the 911 Center, Forensics, Internal Affairs. There are arguments for and against movign these entities, but it would certainly not be fair to characterize them as cuts. 

Finally, there’s the $47M “Reimagine Safety Fund.” These are programs that have essentially been flagged for review, with the hope that they can either be reduced or eliminated in the near future. That includes $18M for traffic enforcement, another $3M for overtime, $2.2M for mounted patrol, $10.8M for training, $5.9M for park police, $1.4M for lake patrol and $3.5M for recruiting. 

How much of the “reimagine fund” will ultimately be reimagined? Hard to say. There’s a good chance that six months from now city staff will return to Council and recommend keeping those budget line items almost exactly the same. 

As I explained the other day, a good guess would be that the cuts envisioned by Council will likely result in 200 fewer cops by the end of next year. Or 1,593 cops instead of 1,793. If you’re worried about fewer cops on the street, those are the numbers you should be focused on. 

What’s going to be strange is that both sides of the debate will disingenuously argue that Council has cut 1/3 of police funding. Some will celebrate it as a radical reform while others will decry it as a dangerous step towards anarchy. In reality, the average Austinite won’t be able to tell the difference between a 1,600 officer force and a 1,800 officer force. If there are consequences, positive or negative, they likely won’t be apparent, at least not immediately. It’s no different, really, then the debate over class sizes. In that case, however, it’s liberals and teachers who are saying that our children’s futures will be destroyed if the average class size marginally increases. In this case it’s conservatives warning of chaos if we marginally reduce the size of the police force. 

In fact, the crime rate might go up (during a recession, it’s a good bet), but it also might go down. The marginal reduction in the size of the police force is not going to dramatically reshape the calculus for would-be offenders. 

Proposed bond proposal severely neglects bike infrastructure

Two weeks ago City Council, after being lobbied intensely by active transportation activists, asked city staff to come up with a bond to fund pedestrian and bike infrastructure. The advocates had asked for $750 million, but everyone assumed that city staff and Council would settle for a smaller package. 

The $250 million presented on Thursday by Gina Fiandaca, the assistant city manager who oversees mobility, is a major disappointment. I’m less concerned about the total figure than I am about the woeful neglect of bike infrastructure, the investment with the greatest potential to produce mode shift.

As you can see above, there’s only $18M for “bikeways.” The $23M for urban trails certainly counts as bike infrastructure, but even if we consider this $41M for bike infrastructure, it’s still not nearly enough to create the “All Ages & Abilities Bike Network” that was envisioned in the 2014 Bicycle Master Plan. (The idea of the AAA system is creating enough protected bike lanes and urban trails that people of any age and skill level would feel comfortable biking around town)  

In her memo, Fiandaca says the proposed bike investment will get the city to 62% buildout of the AAA network by 2025. Boo! The 2014 plan called for 80% buildout by 2025. 

The city should at the very least be meeting the modest goals that were set during a much more conservative era of city politics. The Bicycle Master Plan was adopted during the last year of the at-large City Council, whose members were elected in very low turnout May elections dominated by older voters.

The moral imperative
City Council is making the right bet on Project Connect, recognizing that 2020 likely offers the best opportunity to get a generational investment in public transit approved due to the anticipated high turnout from liberal voters seeking to oust Trump. This is despite the fact that many voters will likely be wary of approving a tax increase during a recession. 

But it will take years before Project Connect bears fruit. It will be at least eight years before we get the light rail and likely several years before we get some of the smaller improvements, such as new MetroRapid bus lines. 

In the meantime, we can still make big progress on offering people affordable, safe transportation. The way to do that is through bike infrastructure! It’s extraordinarily cheap and can be done extremely fast. The cost of building a world-class bike network in Austin would barely register on the average homeowner’s tax bill.

There’s simply no excuse for a “progressive” city to not make space on its major roads for bikers. In fact, there’s no excuse for any city, regardless of its politics, to forgo such a practical investment.

For the millionth time, this is not about supporting the lycra-clad cycling hobbyists who own $10,000 bikes. This is about opening up our infrastructure to those who can’t or don’t want to spend thousands of dollars a year on a car. According to AAA, the average true cost of a new car is nearly $9,300 a year. According to Edmund’s, even a six-year-old Carolla will cost you $5,000 a year. In contrast, you can get a bike for practically free. Indeed, bikes are a common sight at homeless encampments.

The pandemic, which has forced people to spend more time outside, is a great opportunity to accelerate bike infrastructure. We’re also in the midst of a major economic downturn, during which a modest investment that will provide a tremendous good to those with the least should be a no-brainer. The construction projects, which can kick off immediately, will also create jobs. 

The activists who pushed for the $750M bond requested $47 million for on-street bike facilities and $123 million for urban trails. Together, these funds should be enough to realize the AAA bike network.  

What about capacity? 
Fiandaca is clearly not super-stoked about a big active transportation bond and is trying to keep it as small as possible. There are a couple potential reasons.

First, Fiandaca has noted that the city has a stated financial policy not to seek approval for new bonds while there is still a certain amount of funding from past funds that is unspent. Indeed, virtually none of the transportation bond funding that was approved in 2018 has yet been spent. This is linked to a lack of necessary staff as well as a tight market for contractors. Projects are struggling to attract bids. 

This is not an insurmountable challenge. First, the labor market over the past two years has likely been tighter than it will be in the next couple years. Second, Council can help out by adding some transportation staff. Indeed, boosting transportation staff to help oversee the deployment of infrastructure, much of which is aimed at reducing roadway fatalities, is a legit way to use “public safety” funds freed up by APD cuts.

Staff used this “capacity” argument in 2016 as well. Council responded by telling them to add staff as necessary. This cannot be an ongoing excuse. We’re a major city trying to build basic infrastructure –– we need to do what it takes. 

You can’t wait till 2022 
2020 is the best opportunity for a game-changing investment in ALL alternatives to cars. Simply put, whether or not Trump goes down nationally, we can count on a huge liberal-leaning turnout in Travis County this November.

It’s much harder to predict what the electorate will look like in 2022 or 2024. If Trump pulls off another miracle victory then perhaps 2022 will be another Democratic wave election, like 2018. Likewise, if Biden wins, then 2022 may be GOP-friendly, since midterms tend to favor the party out of power and Dems will be asleep at the wheel again. 

This is the best shot. Council should approve at least another $100 million for bike infrastructure, focusing on bikeways and urban trails.

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A look at potential APD cuts

Council members have been floating APD budget cuts. In some cases, it’s hard to know what the actual savings will be from a specific cut. But here’s what city budget staff said yesterday in a meeting with the Council Public Safety Committee. 

  • Cancelling all three FY21 police academy classes: $5.1 million in one-time savings    

(Each class produces an average of 65 new officers and costs about $2.3 million, mostly to pay the officers-in-training. Some of the savings would come in FY22, however, since the class is 7 months long) 

  • Eliminating 80 vacant positions: $10 million in permanent savings

The city manager’s proposed budget would eliminate about 80 positions, but if these are the savings we’d get if we eliminate the rest of them. 

  • Overtime budget: $12.9 million

This is the total amount budgeted for FY21. About half, $6.3 million, is for patrol officers. Some of that is for cops who are dealing with a call that goes past the end of their shift or are called to testify in court. It’s hard to eliminate that, explained Chief Financial Officer Ed Van Eenoo. But most of it ($5.1 million on avg) is for “patrol backfill,” in which officers are working extra shifts due to department vacancies. 

Wait, so APD is relying on overtime because it doesn’t have enough cops? That’s certainly what the department would say. And they would point to the staffing plans endorsed by past Councils, based on at least two different consultant reports, as evidence that they don’t have enough cops. Activists, and at least some Council members, are challenging those assumptions and arguing that we simply don’t need as many cops per shift. Hence, we don’t need to fill the vacancies or spend so much on overtime.    

Another $2.6 million is reimbursed overtime when outside contractors or agencies will pay APD to provide security. The city does not save any $ by eliminating this. Then there’s $2 million of overtime for special events, $1.5 million of which is for SXSW. And there’s $1.3 million for civilian employees dealing with forensics or emergency communications. 

This graphic, put together by Van Eenoo, shows the number of projected department vacancies over the next year in the city manager’s budget (blue) compared to the number if Council eliminates all current vacancies and all three cadet classes. You can see that under Cronk’s plan, the number would drop in May, when the November cadet class would graduate.

But focusing on vacancies can be misleading. What really matters is the overall number of cops. This graphic shows the difference between the two scenarios.

Pretty straightforward. By September of next year we’ll have 70 fewer cops. What this graphic doesn’t show, however, is the difference between the two scenarios a few months later, when the planned March and June 2021 classes would be expected to graduate. If the city cancels those two, the police force would likely include 200 fewer cops than under the city manager’s proposal.    

APD functions that could potentially move to other departments in medium-term: $68.7 million
After highlighting a number of relatively small APD duties that could be eliminated relatively quickly, Van Eenoo focused on some bigger functions that some have argued should be moved out of APD. 

Strategic Support: $18.4 million
Communications: $17.7 million
Support Services: $14.1 million
Forensics: $12.8 million
Victim Services: $3.2 million
Community Partnerships: $2.5 million

He noted, however, that it’s not clear where this stuff should go. Should it be part of a new standalone department? Or should some of them be moved into existing departments? At the very least, he hinted, it’s not something that could be done in the next few months. 

Even longer-term transitions out of APD: $51.7 million
Unlike many of the medium-term changes listed above, many of these functions are currently performed by police officers. Figuring out who will do traffic enforcement seems like a much heavier lift than, say, transferring a counselor who works with sex crimes victims out of APD and into a new department. 

Traffic Enforcement $17.8 million
APD Training $10.7 million
Parks Police $5.9 million
Internal Affairs $4.5 million
Special Events $4.5 million
Recruiting $3.6 million

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The NIMBY-in-Chief

It’s been surreal to see single-family zoning become one of the president’s favorite subjects. It still ranks well below FAKE NEWS, confederate monuments and mail-in voting on his Twitter feed, but he’s given it a fair bit of attention in recent weeks. The WaPo reports: 

The next night, in a “tele-town hall” aimed at Wisconsin voters, Trump went further, saying that Democrats could “eliminate single-family zoning, bringing who knowsinto your suburbs, so your communities will be unsafe and your housing values will go down.”

Then there was this:

And this:

Trump’s histrionics have been warmly embraced by other conservatives at Breitbart, the National Review, the New York Post and Fox News. And no, the fact that self-proclaimed champions of the free market would support severely restricting property rights is not the least bit surprising; the principal political debate in this country has rarely been about whether you’re for or against big government, but rather which constituencies you want big government to serve. Many people, consciously or not, believe that keeping undesirables out of your neighborhood, whether that’s minorities, the poor, college students, or children, is a proper preoccupation of government. 

Not all of those people are conservatives, of course. In Austin and many other big cities, most of them identify as progressives. It’s not unusual to see a home with two yard signs standing side-by-side: one proclaiming that Black Lives Matter and another imploring city government to prevent the construction of housing that people of lesser means depend on. 

In 2015 the Obama administration implemented a new rule to the Fair Housing Act that required local governments that receive HUD funding to document and report on any barriers to housing that may exist in the community (i.e. zoning). The administration also published a “housing toolkit” for local governments. It stressed the importance of eliminating or reducing zoning regulations that discourage more affordable forms of housing. It specifically called out minimum lot regulations, a sacred cow in Austin. 

A number of times I asked liberal neighborhood association leaders, Planning Commission members and City Council members how they squared their support for the zoning restrictions that their beloved president said was a segregationist scourge. I think it was relatively easy for them to bat the question away. After all, just because they supported Obama doesn’t mean they have to agree with him on everything. Plus, if you are someone who believed that Obama got rolled by big banks and other industry interests, it wouldn’t be that hard to believe that his housing policy had been similarly poisoned by real estate developers. Above all else, it wasn’t something that Obama talked about that much. 

In the years since, however, housing policy, which has long been largely absent from national political discourse, has started to get more attention. Bernie Sanders and Elizabeth Warren, hardly anyone’s idea of industry stooges, unveiled housing platforms that identified exclusionary zoning as an enemy of equality. Here’s what Joe Biden’s platform says: 

Exclusionary zoning has for decades been strategically used to keep people of color and low-income families out of certain communities. As President, Biden will enact legislation requiring any state receiving federal dollars through the Community Development Block Grants or Surface Transportation Block Grants to develop a strategy for inclusionary zoning, as proposed in the HOME Act of 2019 by Majority Whip Clyburn and Senator Cory Booker. Biden will also invest $300 million in Local Housing Policy Grants to give states and localities the technical assistance and planning support they need to eliminate exclusionary zoning policies and other local regulations that contribute to sprawl. 

Of course, none of this puts nearly as much of a spotlight on the issue as Trump. There’s nothing worse than sharing a position with Trump, particularly when he’s characterized the position in nakedly racist terms. 

This could be a major opportunity for pro-housing activists and politicians. For years they have struggled to convince people that the seemingly populist fight against “developers” is in many instances actually elitist and regressive. Now, however, the evil developer in the White House is the one supporting single-family zoning while national progressive icons like Warren and Sanders oppose it. And then there’s the largest protest movement in U.S. history focused on racial inequality. 

So far, however, I’m not seeing much evidence that local pols are seizing the opportunity. In their defense, they’ve got a lot on their plate: the city budget, potential plans to reimagine public safety and Project Connect. But land use intersects with all of those things. Restrictive zoning creates the sprawl that has undermined public transit and furthers the economic/racial segregation that produces inequality and crime. If not now, when?

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Spencer Cronk did not cut $11 million from APD

When City Manager Spencer Cronk unveiled his budget last week, he touted an $11.3 million cut to the police department, which he framed as a response to the demands from activists and City Council to “reinvent” public safety.

Media outlets, including yours truly, noted that that cut far short of the $100 million cut demanded by some, but didn’t think to question whether the $11.3 million figure was accurate. Why would it be? A source suggested I actually look at the budget. 

If you look at the lower right corner, you’ll see the difference between the budget approved last year and this year’s proposed budget. The difference is a whopping $154k. Less than the cost of two officers.

What gives? Here’s the explanation provided by a city spokesman: 

The base budget for each department is forecast each Spring. For APD it included cost drivers such as the 2% wage increase and the 30 officers called for in the 5 year Police staffing plan. The $11.3 million cut was from the FY21 base budget that existed prior to Council passing the two resolutions.

So $11 million wasn’t cut from the police budget. Rather, Cronk has proposed a police budget that is $11 million smaller than what he planned on proposing a few months ago.

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A baffling COVID claim by Austin’s top doc

Yesterday multiple media outlets reported on a claim made by Dr. Mark Escott, the interim director of Austin Public Health, in a presentation to the Travis County Commissioners Court. Escott, discussing the risk of re-opening schools, said that we should assume that 70% of the students would become infected and that that could lead to between 40 and 1,300 student deaths. 

Time out. Let’s consider some statistics. Here is the age distribution of COVID-19 deaths from the CDC about a month ago, when the U.S. had already hit over 100,000 deaths. 
That shows 24 deaths for those under age 15 nationwide. And yet we’re supposed to believe that just in the Austin school district we could have scores or hundreds or thousands of youth deaths? 

You know all of those idiots who say that the coronavirus is no worse than the flu? Well, if we were just talking about kids, they’d be right. In fact, the flu appears to present a much greater risk to minors than COVID-19. 

Check out this chart from the CDC. I’m sorry if the numbers are blurry. Notice how many more deaths there are in the two columns on the far right for the youngest age groups. 
Today, in a press conference involving a number of public health officials, Dr. Jason Pickett, who was filling in for Escott, defended the projection, saying that the sheer number of AISD students made the high death toll plausible. 

Both Escott and Pickett said that the case fatality rate for minors could range from 0.03 to over 1%. That is a range so wide as to be useless, but I cannot believe they are really suggesting the rate could be over 1%. The case fatality rate for COVID-19 is not even 1% for the general population. 

What makes this extra frustrating is that there are actually very serious concerns about re-opening schools. There could be a big risk to staff and to the families of students. I think they’re right to hold off on re-opening at this time. But raising the prospect of mass death among students is irresponsible and will make it much harder for the community to make a rational decision about when schools can be re-opened. 

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Is the Tesla deal worth it for Austin?

Tomorrow the Travis County Commissioners Court may vote to grant Tesla major tax breaks to set up a massive manufacturing facility in eastern Travis County. Tesla already secured a much bigger tax break from the Del Valle School District, but it is also seeking breaks from its county taxes. 

This is a big deal. This could be an opportunity for thousands of good-paying jobs that don’t require college degrees — something that will be particularly welcome as we try to claw our way back from a recession that has disproportionately impacted low and middle-wage service workers.

Like many (perhaps most) other corporations, Tesla is run by an entitled narcissist who gets what he wants by bullying and lying. That’s certainly a relevant factor when assessing Tesla’s stated commitment to being a good community partner, but it shouldn’t be a deal-breaker. I’ll take good jobs from a bad person. 

Tesla’s mega-douche CEO Elon Musk. Credit: Wikicommons

What we’re offering Tesla 
The original proposal was that Tesla would get an 80% property tax rebate for the first ten years and a 65% rebate for the next ten. That has since been restructured to now say: 

70% rebate for the first $1.1 billion invested
75% rebate for investment between $1.1 billion & $2 billion
80% rebate for investment beyond $2 billion

I assume Tesla plans on investing more than $2 billion and this is therefore a vastly improved deal since it will guarantee the company an 80% tax break in perpetuity. In a memo, county staff defends the new proposal: 

If Tesla invests the original amount ($1.1 billion) the restructured deal is essentially a wash with the original proposal; above that amount is a net gain for the community, both in terms of jobs and economic activity, and fiscal gains for the County.

What we get in return
County staff has estimated that the Tesla property will generate $8.8 million in tax revenue for the county over the first ten years of the deal assuming a $1.1 billion investment. However, the total could be much higher if the investment and the corresponding land value is higher.

Whatever happens is certainly a marked improvement from the $6,400 a year that the county is currently getting from the unused property. However, we shouldn’t be comparing what Tesla offers compared to what the vacant land offers. We should be comparing Tesla’s offer to what that land could offer. In other words, what is the chance that, if not for Tesla, one or more other employers would occupy the land in the near future?

It’s unlikely that another use would rival Tesla in size and jobs, but it might still be something that generates more tax revenue than the vacant land. What’s the opportunity cost to the county of putting a 70-80% property tax break on that land forever? 

Tesla has agreed to “build a road that serves as a flood evacuation route for the residents of Austin’s Colony,” the residential area to the east.

But I don’t see any discussion of what the likely impact of the factory will be on the surrounding infrastructure. In addition to the thousands of car trips that the employees will add to nearby roads, notably FM 969 and FM 973, the constant arrival and departure of trucks transporting parts and vehicles will no doubt be a burden on the roads, which are not cheap to repair. 

Workers rights
Tesla has committed to paying all workers $15/hr. But I don’t see any language that would prevent them from getting around this requirement via contract workers. Although there is language about construction worker pay, there should also be provisions to ensure that other workers who are likely to be contracted (food service, maintenance, custodial) are paid a living wage. 

Finally, you know that if it were City Council Tesla were dealing with, Greg Casar and others would be putting pressure on the company to take a “neutral” stance in response to union organizing and not try to discourage workers from unionizing. Even better, the company could agree to voluntarily recognize the union once more than half of the workers sign a union card, as opposed to forcing a secret ballot election. The concessions contractors at the airport, for instance, agreed to such a deal. 

So far there has not been a similar push from the sleepy commissioners court. Tesla’s representatives have skated around the question of labor relations by stating that it’s up to workers whether they want to unionize. No shit. That’s the law, which Tesla has a history of disregarding

The near total absence of unions in Texas is not a good thing. It’s a very bad thing that contributes to our high poverty rates and nation leading rate of worker deaths. “Progressive” local governments should do what they can to help workers get a seat at the table.