Austin Pushes Forward With Social Service Review as Budget Pressures Persist
Austin city officials are pressing ahead with a comprehensive review of social service spending as they work to manage ongoing budget constraints, signaling that additional cuts to nonprofit contracts could follow.
City staff detailed the effort during a briefing last Tuesday to the Austin City Council Public Health Committee, where budget officials walked members through the scope, goals and timeline of the evaluation as part of ongoing budget planning.
The review stems from financial pressure following voters’ rejection of Proposition Q in 2025. The failed property tax increase would have expanded funding for homelessness services, mental health programs and other social supports. In response, city leaders revised the fiscal year 2025–26 budget and removed several planned investments.
During the Public Health Committee discussion, the city’s Budget Office outlined a multi-step review of social service contracts totaling tens of millions of dollars annually. Staff said they will first identify programs the city must continue for legal or operational reasons, then look for opportunities to streamline or consolidate services, and finally evaluate contracts based on performance, equity impacts and alignment with city priorities.
Budget officials told committee members that Austin spends a larger share of its general fund on social services than many comparable cities, prompting a reassessment as revenue growth slows. Staff emphasized that the evaluation is intended to better align limited resources with the city’s highest-impact programs.
Assistant City Manager Stephanie Hayden-Howard told the committee the process will be difficult but necessary given current fiscal constraints. Committee members acknowledged the need for budget discipline while stressing the importance of protecting essential services for vulnerable residents.
City staff said they plan to return with preliminary findings this spring, followed by additional briefings in late May or early June. The evaluation will inform development of the fiscal year 2026–27 budget, which begins Oct. 1 and is expected to include further changes to social service funding.
Bottom line: Organizations that rely on city funding, particularly nonprofits and service providers, may see changes to contracts, performance expectations or long-term funding strategies as the review progress. Stakeholders tracking Austin’s budget process or seeking insight into how these changes could affect programs, policy priorities or funding strategies can contact Bingham Group for analysis, monitoring and engagement support.
//Bingham Group