Austin’s city council is trimming more than $5 million from its social services budget after voters rejected a $109 million property tax increase. The decision follows the November approval of the fiscal year 2026 budget, which was altered in response to the public’s opposition to Proposition Q. The cuts will reshape how the city funds nonprofits and public programs that rely on municipal contracts.
Background: Proposition Q and the FY26 Budget
Proposition Q had been designed to deliver $109 million in additional property tax revenue, a figure built into July’s proposed budget. When voters overwhelmingly rejected the measure, the city was forced to revisit its funding strategy. City Council approved the FY26 budget in November, simultaneously signing off on reallocating social services funds.
Reallocation Details
According to the December 17 City Memo, the total General Fund social services contract for FY26 is $74.2 million. The memo also states that $5,277,003 will be reallocated. The breakdown by department is as follows:
- Economic Development – $451,859
- Homeless Strategies & Operations – $1,457,200
- Municipal Court/Austin Community Court – $629,565
- Public Health – $2,738,379
These figures represent the total amount being reduced or reallocated across the city’s social services contracts.
Impact on Foundation Communities
Foundation Communities, an Austin nonprofit that provides affordable housing and support services for low-income families and people experiencing homelessness, is among the organizations set to receive reduced funding. “We’re going to be cut on four contracts,” said Walter Moreau, who is the Executive Director of Foundation Communities. “It’ll shrink the number of hours that we’re open to help people get their taxes done. Fewer people that we can help get benefits. It’ll shrink our mental health program for folks who are homeless. And our transportation program for folks who are homeless.”
Moreau said the organization will lose about $50,000 due to the budget cuts. “I know the budget’s tight, but to immediately come out with the first cuts to the most vulnerable and poor in our community is morally wrong,” Moreau said.
Matt Mackowiak’s Perspective
Matt Mackowiak serves as the Co-chair of Save Austin Now, a PAC that strongly opposed Proposition Q. He said that the city making such cuts is a step in the right direction. “I’m sure if money were infinite, we could look at doing all things for all people all the time,” Mackowiak said. “Our city needs to be more respectful of taxpayer dollars.”
Mackowiak added that he understands making cuts is a hard decision but emphasized that the priority should be on spending money efficiently. “No one is saying that these organizations don’t do good work, or that they shouldn’t be doing what they’re doing,” Mackowiak said. “It’s just saying that there are limits.”
City Manager’s Statement
KXAN reached out to the City of Austin on this story. In a statement, Austin City Manager T.C. Broadnax said:
> “During the FY26 budget process and adoption in November, a reallocation of social services funding was approved. The decision to reduce and reallocate funding for social services contracts was a difficult decision. However, the failure of Proposition Q sent a clear message that city government cannot be all things to all people.”
> “Staff have begun the process of notifying impacted partner agencies and organizations regarding the changes to their City contracts via phone calls, virtual meetings, and written notification. Given the number of impacted organizations, staff wanted to meet with our partner agencies before they heard about any changes through other sources.”
> “As part of the FY27 budget process, the City plans to conduct an inventory of all contracts across departments that provide social or community services with the goal of identifying duplication of service(s), realizing efficiencies by merging similar agreements, and ensuring that our investments are fiscally sustainable.”
The memo also said that there is an anticipated $16.8 million in reductions to the social services contract budget in FY27.
Key Takeaways
- Austin will reallocate $5,277,003 from its FY26 social services budget after rejecting Proposition Q.
- Foundation Communities will lose roughly $50,000, affecting four programs.
- City officials plan a $16.8 million cut in FY27 and aim to streamline contracts for fiscal sustainability.
The city’s decision underscores the challenges of balancing limited resources with the need to support vulnerable populations while maintaining fiscal responsibility.
