The Austin City Council’s decision to authorize a tax increase of as much as 13 percent is a reminder that the city’s leaders have some tough questions to answer before they finalize the 2012 levy later this year. It is also a reminder that it is up to city residents to demand answers to those questions.

It seems inevitable that state aid to cities will decrease again and again, bringing each year a new round of budget problems for Austin. As those aid payments (which have made Austin one of the state’s lowest-taxing cities) shrink, how will Austin leaders balance tax increases against spending reductions?

And when it comes necessary to cut expenses, how can priorities be set that will assure minimal disruptions to services that are important to city residents? For example, is it better to scrimp on library staffing (local jobs) or by cutting back on dues to lobbying organizations (spent primarily at the Capitol)?

What is the role of reserve funds, sometimes also called “rainy day” funds? Beyond the minimum needed to balance cash flow, does it make sense for any government to have reserves set aside, given that those extra funds could otherwise have been left in the taxpayers’ pockets until needed?

Those, and many other questions, should occur to taxpayers and city leaders alike. Because one thing is clear: Changes in power at the Capitol — both political and demographic — are going to shift more financial burden to local governments, and figuring out how to manage that burden will mean finding a balance between the extremes of taxation and spending. Doing that will almost certainly require new and innovative approaches, starting with asking and answering some tough questions.