Austin at Large: What’s Public, What’s Private

I've always admired how subtle the donor service is at the Butler Trail Boardwalk, for which the Trail Conservancy raised $3 million; Waterloo Park's approach is not like this (Photo by Mike Clark-Madison)

In my drafts folder I have two columns that got held to make room for the vagaries of the news cycle, so I'm going to try to synthesize them here and see if any of you share in my cognitive dissonance. To summarize: I think we should let Austin Energy operate more like a private utility, but I have qualms about the city Parks and Recreation Department's enabling the private control of public space. Am I alone in feeling this?

Power to the People?

Austin Energy is by a wide margin the largest city department. In the city budget it is what's called an enterprise fund, meaning it's self-supporting and doesn't need taxpayer money from the city General Fund. In reality, AE's $1.6 billion in annual revenue – more than the entire $1.3 billion General Fund – is about $265 million more than it needs to operate and service its existing debt, the non-optional stuff. So $115 million of that is transferred into the General Fund to make sure the non-self-supporting departments can cover their non-optional expenses as well. That is, coincidentally, almost exactly the annual budget of PARD. (Austin Water also kicks in $47 million to the General Fund; most other city enterprise funds, like the airport and convention center, do not generate much surplus. All these numbers are from the fiscal 2023 approved budget.)

City Hall conventionally describes this as a dividend being returned to the ratepayers who own the utility. You could also see it as a roundabout way to charge an extra sales tax on those ratepayers – it works out to a bit shy of another half cent – to fund city services. Austin Energy also funds and runs the billing and customer care for all the other utilities and the 311 call center, which is probably for the best from a customer perspective but is all on top of the $115 million. This has always been baked into the budget cake, and when Austin Energy says it needs to raise rates to cover its basic revenue requirement – because it's actually running losses every year and spending down a $200 million-ish cash reserve – it's taken as given that its non-optional costs include these expenditures on things unrelated to its core operations as a power company.

In the negotiations over the AE base rate case we reported on last week, which City Council is slated to vote on today (Thursday, Dec. 1), the effective starting number for the opposition was the $6 million revenue requirement proposed by the independent consumer advocate. That number presumes that if AE is operating at a loss it should maybe stop giving its money away and servicing other city departments for free. This won't happen. But maybe it should. On the one hand, AE's a city department, Council is its board of directors, it should respond to the community's values. The many ways in which the utility has done so over the last two decades could be explored at book length. On the other hand, we own this business, and we want it to be successful because keeping the lights on is in itself a community benefit, and maybe allowing it to run more like a private utility (note: this is an extremely complicated subject) would be in our interest as the owners.

That Mean, Mean Green (Space)

So above I said PARD costs roughly as much as the AE transfer, which is true as far as the city budget goes. But that doesn't really cover the cost of operating and maintaining the city's park system, some of which is vast and ecologically fragile, some of which is incredibly heavily used. In contemporary times, PARD has been very assertive about augmenting its budget – leveraging the inherent value of its best sites for commercial purposes (e.g., ACL Fest) and presenting its high-need areas to the philanthropic community for assistance, since it's an easy ask from a fundraising perspective as it aligns with multiple priorities (health, kids, climate) of big funders.

This model has been very successful for the waterways that define Downtown – Shoal Creek, Waller Creek, and Lady Bird Lake and their trails and green spaces and shores, ecologically fragile, heavily used. All are now fully in the care of conservancies that do not just support but actually do some of the non-optional work of PARD in places used by thousands of residents and visitors every day, and don't just cover the costs of big capital investments like the Butler Trail Boardwalk and the Moody Amphitheater at Waterloo Park but manage those public spaces day to day. How do you feel about that?

Some unmixed thoughts: I'm glad more of the park system isn't falling into perhaps unavoidable neglect. I don't like the degree to which Waterloo Park publicly flatters its donors and is only really a park when it's not a concert venue (again, leveraging a high-value park site). But I think the Water­loo Greenway vision is cool overall, as are those of the groups managing Shoal Creek and Pease Park and the Butler Trail. But how far can we extend this network of well-aligned wealthy people to gladly shoulder what is ultimately our obligation as taxpayers who would like to feel that these spaces still belong to we who own the city?