SAN ANTONIO – Despite an expected $127 million revenue shortfall in the next fiscal year, city staff say they will present a balanced budget to city council members on Thursday.

The $2.9 billion proposed budget is $7.7 million less than what council passed for the FY 2020, but includes numerous cuts to balance out the expected revenue reduction because of the COVID-19 pandemic. However, City Manager Erik Walsh says no city employees will lose their jobs, and community services like libraries, youth programs, and senior services should not see major changes beyond the hiring freeze for city employees and some of the lower level aspects of the departmental budgets.

Walsh gave local news outlets, including KSAT, an overview of the budget ahead of the Thursday morning presentation. City staff also provided a summary of the proposed budget’s highlights, though not the full document.

The proposed budget does not reflect any effort to “defund” the police as some activists have called for, though Walsh said he is proposing a process that could lead to permanent changes.

COST-CUTTING

The economic outlook is slightly rosier for the general fund - the largest portion of the city’s budget - than it was in June. Instead of needing to cut $109 million in spending over two years, city staff now expect they need to cut $87 million.

The proposed budget calls for cutting $38 million in FY 2021 and the other $49 million in FY 2022.

The list of cost-saving measures for the general fund in FY 2021, according to a summary of budget highlights, include:

• Hiring freeze, no pay increase, and other cost adjustments for civilian employees - $14 million
• Reduced annual street maintenance ($110 million to $102 million) - $8 million
• Suspension of economic development incentives - $5.5 million
• Cuts to police overtime - $3.4 million
• Using CARES Act money for workforce development - $2.2 million
• No more contribution to Hemisfair Park Area Redevelopment Corp. (expired) - $1.7 million
• Reduced consultant services for SA Tomorrow Comprehensive Plan - $1.4 million
• Reduced travel, fuel, and other operating expenses - $1.6 million

As the pandemic continues to stifle travel and tourism, expected shortfalls in revenue from the Hotel Occupancy Tax, the Henry B. Gonzalez Convention Center, and the Alamodome, would trigger $36.3 in cuts related to those revenue streams. That would include $19.9 million cut from the convention center and Alamodome operations and $9.9 million from what the city contributes to Visit San Antonio.

The city previously furloughed 266 employees working at the Henry B. Gonzalez Convention Center, the Alamodome and other departments that rely on revenues generated by the HOT Fund. About 90 were recalled in May and June, Walsh said, while the other 170 have been offered spots in other city departments.

The Airport Fund is another trouble spot as the city projects close to a $34 million shortfall. It expects just 4.7 million passengers to pass through the airport in FY 2021 compared to 10.4 million in FY 2019.

Walsh said the city has built the CARES Act money it received into its financial planning for a three-year period. It is also making cuts to operations and planned capital projects.

POLICE DEPARTMENT BUDGET INCREASED

There are only slight changes proposed for the SAPD budget, including cutting $3.4 million from the overtime budget and moving $1.3 million and 20 Crisis Response Team workers over to the San Antonio Metropolitan Health District as part of a larger move to bring all the city’s violence prevention programs under Metro Health.

Because of scheduled 5 percent officer pay raises, though, the net change to the department’s budget will be an increase, up from $479.1 million to about $487 million.

The city also plans a COPS Grant that would pay for 25 new police officer positions dedicated to domestic violence prevention and intervention. Walsh said the city would use the overtime savings to come up with the $1.6 million in necessary matching funds.

Activists around the country, including in San Antonio, have called for cities to “defund” the police in the wake of the killing of George Floyd in Minneapolis. However, Walsh said he is not recommending that for the upcoming budget. Instead, he said he would be proposing a process that would include examining the department’s functions, and could result in a new policing model.

The steps, as laid out in the budget summary provided by the city, are:

1. review foundational issues in our department including accountability and discipline;
2. determine community expectations of the police department;
3. incorporate stakeholder input from the community;
4. identify funding and alternative response mechanisms;
5. develop a new model for providing public safety and community support moving forward.

Walsh said he does not expect a report from the council and Public Safety Committee until April of 2021. So any changes that would come out of the process wouldn’t be reflected until later budgets.

The city manager said he wanted to ensure what he laid out to the council for an option is “a deliberate approach that benefits everyone.”

“I do think that if we’re going to change what the police department does or the role of the police department, that we go through that discussion about what what encounters do we want them to be in and how do people feel about it?” Walsh said.

“If it’s a conversation that - and a deliberate effort that we want to go through - then it’s going to require a lot of hard work. It’s going to require a lot more work than just the month of July to carve up and assign responsibilities.”

COPING WITH COVID-19

Of the $376 million in federal dollars the city received the CARES Act, Walsh said the city plans to spend $236 million by the end of September or early October - about the time the new fiscal year starts. The $270 million worth of Coronavirus Relief Funds the city received must be spent by Dec. 30

While city staff anticipate there will be more federal funding coming, they have not included it in the budget.

City staff also included $5.25 million for the Risk Mitigation Fund, which helps struggling families make their rent and utility payments. It was just a $1 million program in FY 2020 until the COVID-19 pandemic hit, spurring the city to rebrand it as the COVID-19 Emergency Housing Assistance Fund and pump its budget up to $50.3 million.

The city currently sends about $500,000 out to residents each day. So $5.25 million is unlikely to last long on its own, though Walsh indicated they hope additional federal funding could again bolster the program.

Metro Health will receive a $3.6 million more in its budget - roughly a 23 percent increase, though it was not clear how much of that relates directly to the pandemic response.

The $191 Recovery & Resiliency Plan also contains portions, such as job training, that would last into FY 2021 and are included in the budget.

OTHER HIGHLIGHTS

• Despite the cuts tied to the HOT Fund, which normally provides all of its funding, the Department of Arts & Culture’s budget would remain level at $11.5 million thanks to the use of general funds and grants through the city’s so-called recovery & resiliency plan. The department funds community arts agencies and festivals, which saw their funding abruptly slashed this fiscal year when the pandemic hit.
• The first $43 million of the proposed $102 million street maintenance budget would be used for projects that were deferred in FY 2020. The remaining funds would be allocated based on street conditions in the council districts and the size of the network.
• The budget includes a proposal to use one of two currently unassigned “winter holidays” for employees on Juneteenth.
• $1.1 million will go to AlamoPROMISE to provide scholarships to Alamo College students.
• Walsh is proposing lowering civilian health insurance premiums by 10 percent to offset no pay raise.

NEXT STEPS

The city council will have a series of budget work sessions beginning Aug. 11 and lasting until mid-September. The city is adjusting its normal process for input, which is scheduled for Aug. 17 through Aug. 31.

The council is expected to pass a final budget on Sep. 17. The fiscal year begins Oct. 1 and will run through Sep. 30, 2021.

All budget sessions will be live streamed at www.sanantonio.gov/TVSA, the City’s Facebook page and can be watched on AT&T channel 99, Spectrum 21, Grande 20 or digital antenna 16.1. Residents can also call 210-207-5555 to listen live.