City Council is set to adopt a budget later this week that will set aside $25 million which will likely be used to pay for police raises called for in a labor contract the city is still negotiating over with the Austin Police Association.

But Council members don’t actually know how much the raises will cost and are unlikely to know before they vote to adopt the budget, Aug. 14. The contract price tag, however, is likely to swallow up that entire set-aside amount – a figure that could help fund the dozens of budget amendments Council has proposed to pay for community programs like services for people experiencing homelessness, parks maintenance, and more firefighters.

What’s more, Council can’t even say if the proposed contract will undermine the kind of police oversight called for in the voter-approved Austin Police Oversight Act, because Council members have yet to see the full language used in the oversight portion of the contract (some CMs tell us they’ve seen just “snippets” of language).

The city has already reached an agreement with the APA on one oversight measure that justice advocates warn is in violation of the APOA. It’s possible the city will be paying a hefty fee for a contract that actually weakens police oversight. (The city says it will make the contract language public “prior to any Council action.”)

Regardless of how the contract affects the APOA, a conservative estimate is that it will cost at least $15 million, but likely between $20 million and $30 million. A police pay incentive package approved by Council in 2023, which included a 4% raise for officers and various stipends and recruitment/retention incentives, cost $15 million; the APA’s initial offer for the new contract asks for a 12% raise in year-one of the contract.

Many people around City Hall view the 12% raise as absurd. It would completely wreck the city’s budget at a time when the city’s Financial Services Department is forecasting a budget deficit of around $15 million by the end of Fiscal Year 2026. The city has not yet proposed a counter-offer (a bargaining session was scheduled for Monday, Aug. 12, but canceled while city negotiators continue to refine their counter, a city spokesperson says), though it’s unlikely officers will get less than a 4% raise, because that’s what every other city employee is getting.

But it doesn’t change the fact that City Manager T.C. Broadnax’s budget asks Council to set aside $25 million for “future labor agreements with [the city’s] sworn workforces.” Some of that money could be used to pay for Fire Department and EMS wages, but their contracts are already negotiated. The police department’s to-be-determined wage package could easily require using the full reserved amount – and that’s money that could be used to fund virtually all of Council’s budget amendments.

The accounting can be tricky to nail down, but here’s the gist of it: Council’s budget priorities, as proposed last week at a work session, cost about $11.2 million in single-year expenses and $22 million in ongoing expenses. A single-year expense would include, for example, the cost of building portables at the Gus Garcia Recreation Center in North Austin to accommodate more senior activities. An ongoing expense would include hiring full-time employees to maintain those portables (and other parks facilities).

As of now, the city’s budget office estimates that Council will have about $10.3 million in the budget to pay for those priorities. City Hall sources say the budget office is working hard to find more money in the city’s various couch cushions, but the final figure is unlikely to move all that much.

So, as is, Council members will be fighting over a pot of money that can only fund about one-third of their budget wish list. A wish list that could be funded virtually in its entirety if they could tap into the $25 million fund.

Longterm budget ramifications are a significant consideration. The cost of wage increases compounds every year – increasing base police pay by 12% in year one of their contract makes the 4% raises in every other year more expensive than if the year-one raise was only 5%, for example. That compounding cost, on top of the potential threat to the APOA, has Equity Action advisor Kathy Mitchell alarmed. “We’re talking about a contract that could cost hundreds of millions of dollars over five years,” Mitchell said. “And for all that cost, the city is capitulating to the idea that they are getting oversight in exchange.

Council Member Ryan Alter says he and his colleagues have discussed how to “responsibly maintain” the city’s public safety departments “without eating up the budget of every other department.” The police budget is most difficult to work with, because state law makes it nearly impossible for cities to ever reduce police spending – and this budget cycle is even trickier because of the unknown cost of the police contract.

“We want officers to get raises like other public employees,” Alter said. “But we’re not going to break the budget for a contract. The city’s negotiating team needs to bring Council a contract we can afford.”