Austin Metric

Mayor Kirk Watson recently proposed a new Comprehensive Efficiency Assessment (CEA) for the City of Austin. On its face, the proposal has merit. The "comprehensive" designation stems from its focus on department-by-department auditing, offering a chance at genuine insights that yield operational improvements. This is a significantly better approach than the "mile-wide, inch-deep" audits seen in many other cities, such as the $580,000 EY engagement in Houston that many local conservatives keep touting.

However, the current language of the proposal carries significant fiscal and operational risks. Without guardrails, the Mayor’s proposed schedule implies roughly ten six-figure audits annually to cover ~35 major departments/enterprise divisions every three years. This scale of activity threatens to either consume the Auditor’s entire $5 million annual budget or necessitate a massive influx of new spending on external consultants.

Before Council moves forward, we must clarify the goal of the CEA. The central problem in many recent "waste" discussions is a pervasive misunderstanding of the difference between austerity and productivity.

Austerity is cutting public services and goods that are valuable but lack political protection. This is done in to meet a required spending level. Spending goes down, but so does the public goods and services delivered to residents. Typically those with the least political power experience the brunt of austerity. Productivity, by contrast, is delivering the same or more public goods at a lower per-unit cost. This enables reductions in spending without sacrificing government services and public goods.

Austerity is not that complicated, operationally speaking. Elected officials cut programs with the least vocal constituencies. It doesn't require hiring private sector technocrats. On the other hand, productivity requires wading into operational complexities. Expertise and capacity matter. To ensure the CEA delivers productivity rather than austerity (with a side of consultant bloat), the Mayor's proposal needs several fixes.

1. Establish Fiscal Guardrails

The City should not write a blank check for external reviews.

Space out the audits. The proposed three-year cycle is too aggressive and costly. A 5-year minimum cycle allows for thorough review without constant churn.

Cap total spending. CEA projects should have a $0.30 per capita spending cap. This would limit spending to roughly $300,000 in 2026 or a bit over 5% of the Auditor's current budget.

Cap performance-based bonuses. Establish a $250,000 maximum performance-based award per CEA project that the Auditor can offer. Performance-based compensation structures may be used by the Auditor to (1) have audits pay for themselves by creating upside for the auditor to find real savings, and/or (2) to stretch consulting budget dollars available in the current year by promising future bonus payments. Council should be clear about how much of this type of procurement it will allow.

Tie CEA growth to Lege cap. Both caps should have an automatic annual 3.5% growth limit. If the Legislature constrains the City's Operations & Maintenance (O&M) revenue growth to 3.5%, our administrative overhead for auditing should face the same constraint.

2. Build In-House Capacity

Relying solely on external consultants is inefficient. Each new consulting team must start from step one, learning the City's systems and people from scratch. They often lack the dexterity to support the optimal long-term implementation of identified solutions.

Create an Independent Budget Analyst (IBA). Council should establish a San Diego-style IBA function within the Auditor’s office as part of this ordinance update. City management staff needs a check in the form of structurally adversarial oversight provided by independent civil servants with deep, permanent institutional expertise. External consultants cannot provide that level of scrutiny 24/7/365. An IBA can succeed at driving efficiency without the CEA. The CEA without an IBA will struggle to create productivity. They are complementary.

Fund a "Continuous Improvement" Team. Council should support an in-house transformation team dedicated to picking up external recommendations and driving them to implementation.

3. Eliminate Conflicts of Interest

The Ordinance must explicitly state that the firm conducting the assessment cannot be awarded the follow-up implementation contract. We cannot create incentives for firms to tailor their recommendations to privilege their own proprietary capabilities. Implementation should be handled by the in-house transformation team or through a new competitive bid that excludes the CEA authors.

The public often finds peace of mind in the idea of an "independent" outside voice examining the books. But that peace of mind comes at a steep price if it merely results in expensive reports gathering dust or consultants just teeing up perpetual work. By building in-house capacity and strict fiscal limits, we can ensure the CEA is a tool for genuine productivity, not just a costly exercise in political optics.