AUSTIN (KXAN) — The City of Austin has developed plans to increase city employees’ minimum wage, according to a memo from the city. There are two options, and they each have an $18 per hour wage for the 2023 fiscal year, which would then increase annually until 2027.
The difference in the options is the proposed wage for fiscal year 2027. Option No. 1 proposes an increase of $1 per year until 2027, ending with a wage of $22 per hour. Option No. 2 proposes an increase of about $2 per year until 2027, ending with a wage of $27 per hour.
Earlier this summer, the Austin City Council voted to raise the minimum wage for city employees to $22 per hour. The resolution directed City Manager Spencer Cronk to “develop a plan and timeline” for the increase from $15 to $22, a city spokesperson said.
The resolution recommended that if the $22 per hour increase isn’t deemed feasible in the 2023 fiscal year budget, then Cronk should raise the hourly rate, “by the most significant amount possible.”
In 2014, the City Council passed a resolution to direct the City Manager to provide staff support for a stakeholder process to develop recommendations regarding the City’s Living Wage rate and policy.
During that process, stakeholders met seven times from January to May 2015, provided their recommendations to Council, and then briefed the Council. After the presentation to Council, the City Manager, in conjunction with the annual budget process, brought forward a plan to increase the living wage rate to $15 per hour by 2020.
The process was similar this year: The Human Resources Department (HRD) provided staff support by convening meetings with the community organizations that participated in the previous Living Wage Stakeholder Group. Other organizations were invited upon the Group’s recommendation.
The Group met four times: Jan. 26, Feb. 9 and 23, and March 9, 2022. Like the previous process, the group recommended a living wage.
Right now, approximately 5,000 employees, regular, sworn, and temporary, are paid under $22 per hour.
The fiscal year 2023 proposed budget includes an increase in the living wage to $18 per hour. The tables below show the projected annual and cumulative costs of increasing the living wage to $22 and $27 per hour by 2027.
The tables offer a static cost based on the implementation of $18 per hour
in fiscal year 2023. The future year costs are based on the projected increase starting in fiscal year 2024.
The proposed budget for fiscal year 2023, which was released on July 15, includes an updated financial forecast showing projected revenue and expenditures for the General Fund through fiscal year 2027. While small surpluses are anticipated in the intervening years, a General Fund deficit of $8.9 million is currently anticipated by fiscal year 2027.
According to the memo, instituting Option No. 1 would lead to a projected $10.5 million deficit in fiscal year 2026 and increase the anticipated fiscal year 2027 deficit to $28.1 million. Instituting option No. 2 would lead to a projected $5.9 million deficit in fiscal year 2025 and increase the anticipated fiscal year 2027 deficit to $60.3 million.