In a decisive move following the November rejection of Proposition Q, Austin officials announced on Dec 17 that they will cut and reallocate more than $5 million from the city’s social services contract budget.
Major Budget Cuts
The city’s fiscal year 2026 budget, approved in November, includes a reallocation of social services funds that totals $5,277,003. The total General Fund social services contract for FY26 is $74.2 million.
Breakdown by Department
- Economic Development: $451,859
- Homeless Strategies & Operations: $1,457,200
- Municipal Court/Austin Community Court: $629,565
- Public Health: $2,738,379
Impact on Nonprofits
Foundation Communities, an Austin nonprofit that provides affordable housing and support services for low-income families and people experiencing homelessness, will see its funding reduced by about $50,000. Executive Director Walter Moreau said, “We’re going to be cut on four contracts,” and added, “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 also noted, “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.”
City Manager’s Response
Austin City Manager T.C. Broadnax released a statement in which he 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.”
Fiscal Outlook for FY27
The memo also projects a $16.8 million reduction to the social services contract budget in FY27.
Key Takeaways
- Austin is cutting more than $5 million from its social services budget after voters rejected Proposition Q.
- The cuts target four departments, with the largest reductions in Public Health and Homeless Strategies & Operations.
- Nonprofit Foundation Communities will lose roughly $50,000, affecting programs for tax assistance, mental health, and transportation.
The city’s decision marks a significant shift in how Austin allocates resources after the Proposition Q vote, with lasting effects on community services.
