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IT[Special-Called Budget And Fiscal Affairs on May 11, 2022.]
IS 12:01 PM ON WEDNESDAY, MAY 11TH.I CALL THIS MEETING TO ORDER AND WOULD LIKE TO WELCOME ALL COUNCIL MEMBERS IN ATTENDANCE.
COUNCIL MEMBER AMY PECK, COUNCIL MEMBER TARSHA JACKSON.
COUNCIL MEMBER MARY ANNE HUFFMAN, VICE CHAIR EDWARD J. POLLARD, VICE MAYOR PRO TEM MARTHA CASTEX.
TATUM, COUNCIL MEMBER LETITIA PLUMMER.
AND COUNCIL MEMBER SALLY ALCORN AND STAFF FROM COUNCIL MEMBER CARLOS CIRO'S OFFICE, AND WE MISSING TIFFANY D. THOMAS.
COUNCIL MEMBER TIFFANY D. THOMAS.
WE'LL HEAR ABOUT IT FOR THE REST OF OUR LIVES.
BEFORE WE START, VICE CHAIR ED POLLARD, AS WE BEGIN THIS JOURNEY, THIS IS THE FIRST OF, I THINK WE HAVE 25 MEETINGS, UH, 23 INDIVIDUAL DEPARTMENTS, AND THEN, UH, THE, THIS ANALYSIS THAT WE'LL SEE THIS MORNING ON THE FIVE YEAR FORECAST.
ANY COMMENTS? NO COMMENTS AT THIS TIME.
IMMEDIATELY FOLLOWING THE SPECIALLY CALLED BFA TO GO OVER THE 2023 BUDGET WORKSHOP.
IT WILL BEGIN WITH THE FINANCE DEPARTMENT PRESENTING AT ONE O'CLOCK TODAY IN THE HOUSTON FIRE DEPARTMENT PRESENTING AT ONE 30.
ADDITIONALLY, THE BUDGET WORKSHOP SCHEDULE IS POSTED ON THE BFA WEBSITE.
ALL BUDGET WORKSHOPS WILL BE IN PERSON EXCEPT FOR PUBLIC SPEAKERS, WHICH HAVE THE OPTION TO COMMENT IN PERSON OR VIRTUALLY.
ARE THEY MEMBER? ANY MEMBERS OF THE PUBLIC WHO ARE HERE IN PERSON AND WOULD LIKE TO PARTICIPATE? THERE'S A SIGNUP SHEET IN THE FRONT TABLE.
UH, MY STAFF MEMBER CAROLINA WILL PRE MONITORING THE PUBLIC SPEAKERS LIST.
AS A REMINDER, THE ONLY PEOPLE ATTENDING PUBLIC OR PUBLIC SPEAK VIRTUALLY OR PUBLIC SPEAKERS.
THERE ARE FIVE VIRTUAL PUBLIC SPEAKERS SIGNED UP FOR THE PUBLIC COMMENT FOR THIS PARTICULAR MEETING.
WE WILL GET THEIR QUESTIONS AFTER THE PRESENTATIONS AND AFTER QUESTIONS FROM COUNCIL MEMBERS HAVE CONCLUDED.
AT THIS TIME, I'D LIKE TO WELCOME DIRECTOR TANTRA EMO TO PROVIDE THE FISCAL YEAR 2023 BUDGET OVERVIEW AND GENERAL FUND FIVE YEAR FORECAST.
ALSO LIKE TO WELCOME COUNCIL MEMBER DAVID ROBINSON TO THE PODIUM, TO THE HORSESHOE AND DEPUTY FINANCE CHAIR.
WILL CAYMAN AND COUNCIL MEMBER ABBY CAYMAN.
GOOD AFTERNOON, MAYOR PROAM AND COUNCIL MEMBER, I DUNNO IF YOU HAVE THE SLIDES ON.
I'M HERE JOINED BY WILLIAM DEPUTY DIRECTORS WILLIAM JONES.
UM, HE IS OVER THE FINANCIAL PLANNING AND ANALYSIS DIVISIONS PRESENTING THE FISCAL YEAR 2023 BUDGET OVERVIEW AND GENERAL FUND FIVE YEAR FORECAST.
FIRST, I DO WANT TO RECOGNIZE MR. JONES AND HIS LIMITED TEAM MEMBERS.
HOPEFULLY THEY'RE ALL HERE, UM, WHO ARE HERE TODAY, AS WELL AS CITYWIDE DEPARTMENTS FINANCIAL TEAM FOR PUSHING HARD TO PREPARE THIS BUDGET ON TIME IN FRONT OF US.
WE DO HAVE VERY LIMITED RESOURCES AND I'M SO, UH, PROUD AND PLEASED SO THAT WE CAN ACTUALLY GET THIS BUDGET DONE, UM, TIMELY.
WITH THAT, LET'S GO TO THE SLIDES.
SO AGAIN, UH, IN HERE WE WILL GO OVER THE BUDGET OVERVIEW AND THE BUDGET, REVENUES AND EXPENDITURES FOR THE GENERAL FUND, AS WELL AS THE FIVE YEAR FORECAST.
UH, AND, UH, WE WILL ALSO GO OVER SOME UPDATES ON THE OUTCOME BASED BUDGETING.
AGAIN, THIS IS THE FORWARD LOOKING STATEMENT SO THAT, UM, EVERYBODY'S AWARE THIS IS STILL BASED ON THE PROJECTIONS.
ANY CHANGES IN THE FUTURES WILL IMPACT OUR NUMBERS.
UH, THIS IS, AGAIN, THE FIVE-YEAR FORECAST BASED ON OUR ASSUMPTIONS, UH, THAT WE CAN DERIVE TODAY.
LET'S START WITH THE CITYWIDE EXPENDITURES INCLUDED, INCLUDING DEBT, SERVICE AND PAY.
AS YOU SEE, THE FISCAL YEAR 23 PROPOSED BUDGET FOR ALL FUNDS, INCLUDING DEBT SERVICE AND PAY AS YOU GO, IS AT $5.7 BILLION.
UH, THIS IS ABOUT $487 MILLION HIGHER THAN FISCAL YEAR 22.
CURRENT BUDGET AT AT 5.2 BILLION.
UH, THIS IS AN INCREASE OF 9.31%.
AGAIN, KEEP IN MIND THIS, UM, CITYWIDE EXPENDITURES INCLUDES,
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UM, TOTAL BUDGET INCLUDES GENERAL FUNDS, SPECIAL AND ENTERPRISE FUNDS.THIS DOES NOT INCLUDE THE SURFACE CHARGEBACK FUNDS, THE ENTERPRISE FUNDS.
AS YOU SEE IN THIS SLIDE, THE ENTERPRISE FUNDS ACCOUNTS FOR ABOUT THREE 64 MILLION OFF THAT $487 MILLION INCREASE.
UM, IF YOU SEE IN HERE, THE WATER AND SEWER HAD INCREASED FROM 1.3 BILLION TO 1.6 BILLION ALONE.
UH, AND THAT IS RELATED TO THE CONSENT DECREE AND OTHER DRINKING WATER PROJECTS.
UM, IN FISCAL YEAR 23, GENERAL FUND ALONE ACCOUNTS FOR ABOUT 48% OF THE CITY TOTAL FUNDS.
UH, AND AS YOU SEE IN HERE, THERE'S A SLIGHT DECREASE FROM FISCAL YEAR 22 TO REFLECT THE TOTAL COMPOSITIONS OF THE FUNDS, UH, FROM 51% TO 48%.
AGAIN, BECAUSE OF THE INCREASED ALLOCATIONS ON THE UTI, UH, BAN UTILITY SYSTEM ON THE GENERAL FUND, IT INCREASED BY 101 MILLION OR ABOUT THREE POINT 85% INCREASE, WHICH WE WILL GO THROUGH MORE DETAILS LATER ON.
AGAIN, THIS IS THE CITYWIDE FULL-TIME EQUIVALENT, UH, FOR CIVILIANS AND CLASSIFIED.
UM, AS YOU SEE IN HERE, THE TOTAL FTES WE HAVE FOR FISCAL YEAR 23 IS AT 21,000.
UM, A SLIGHT DECREASE FROM FISCAL YEAR 22.
CURRENT BUDGET, UH, AGAIN, AS MENTIONED, UH, BY THE MAYOR YESTERDAY, UH, THE FISCAL YEAR 23 PROPOSED INCLUDES CADET CLASSES FOR POLICE AND FIRE FOR FIVE CLASSES EACH, UH, WHILE IN FISCAL YEAR 22, CURRENT BUDGET.
IT INCLUDES SIX CADET CLASSES FOR POLICE AND FOUR CADET CLASSES FOR FIRE.
ANOTHER IMPORTANT NOTES TO PUT IN THE FISCAL YEAR 23 PROPOSED BUDGET IN HERE, THE GENERAL FUND, UH, IT INCLUDES TEMPORARY EMPLOYEES FOR THE HIGHER HOUSTON YOUTH PROGRAM, SO YOU WILL SEE SOME OF THOSE NUMBERS INCORPORATED IN THE GENERAL FUND FTES.
AGAIN, THIS IS ANOTHER DEEP DIVE OF THE GENERAL FUND, UH, COMPOSITIONS FROM THE CIVILIAN AND CLASSIFIED, UH, FROM FISCAL YEAR 15 TO FISCAL YEAR 23.
UH, AGAIN, ANOTHER THING TO POINT IN HERE, UH, KEEP IN MIND THE FISCAL YEAR 2020 AND FISCAL YEAR 21 FTES, UH, SEEMS TO BE LOWER.
AGAIN, THIS IS DUE TO THE REDEPLOYMENT THAT WERE, THAT WAS FUNDED OUT OF CRF AT THAT TIME.
SO THIS IS THE AMERICAN RESCUE PLAN ACT.
AS YOU ALL KNOW, THIS FISCAL YEAR, UH, 23 PROPOSED BUDGET ALSO INCLUDES FUNDING FROM THE ARPA, SIMILAR TO WHAT WE DID LAST YEAR.
UH, AGAIN, THIS IS JUST A REMINDER, ARPA WAS SIGNED INTO LAW, UH, MARCH 11TH, 2021, UH, PROVIDING 65.1 BILLION FEDERAL FUNDING.
OUR PORTION FOR THE CITY OF HOUSTON IS ABOUT $607.8 MILLION IN TWO TRENCHES.
SO WE RECEIVED THE FIRST TRANCHE LAST YEAR AROUND MAY, UH, OF $303 MILLION.
SO WE WILL BE EXPECTING THE SECOND TRANCHE SOMETIMES THIS MONTH.
HOPEFULLY, WE HAVE NOT YET RECEIVED IT.
UM, IT IS TYPICALLY, UM, STATED TO BE 12 MONTHS AFTER THE FIRST TRANCHE.
UM, THE CITY WOULD HAVE UNTIL DECEMBER 31ST, 2024 TO USE THE FUND AGAIN.
UNLIKE CRF, UH, ARPA RECOGNIZES THE ECONOMIC IMPACT DUE TO THE COVID-19 PANDEMIC AND PROVIDES FLEXIBILITY TO ADDRESS REDUCTIONS IN REVENUES DUE TO THE COVID-19 PUBLIC HEALTH EMERGENCY.
UH, THE CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUND FINAL RULE WAS AVAILABLE BY THE US TREASURY, UH, RELEASED ON JANUARY, 2022.
SO THIS BUDGET INCLUDES 160.1 MILLION IN THE ARPA UTILIZATIONS FOR THE PROVISIONS OF THE GOVERNMENT SERVICES RELATIVE TO THE REVENUE REDUCTIONS DUE TO COVID-19 PUBLIC HEALTH EMERGENCY.
OKAY, SO A QUICK OVERVIEW OF THE GENERAL FUND THAT WE ARE PROPOSING TODAY.
UM, THIS BUDGET INCLUDES 13.5% FUND BALANCE OF THE EXPENDITURES, LESS DEBT SERVICE AND PAY AS YOU GO, UH, WHICH IS ABOVE THE DESIRED MINIMUM OF 7.5%, AND THAT IS ABOUT $138 MILLION, UM, ABOVE THE 7.5%.
THIS BUDGET INCLUDES 3% PAY RAISES FOR THE MUNICIPAL EMPLOYEES, 6% PAY RAISES FOR THE FIREFIGHTERS, AND 4% PAY RAISES FOR THE POLICE CLASSIFIED.
UH, THIS PROPOSED BUDGET FULLY FUND THE BUDGET STABILIZATION FUNDS.
SO RIGHT NOW WE ARE OVER $20 MILLION SET ASIDE FOR THE BUDGET STABILIZATION FUND.
UH, AGAIN, AS MENTIONED, UM, THIS FUNDS FOR CADET CLASSES, FIVE CADET CLASSES, EACH IN POLICE AND FIRE, AND ALSO FULLY FUND ALL THREE PENSION SYSTEMS. SO THIS BUDGET DOES NOT INCLUDE FUND BALANCE DRAWDOWN NOR ONE TIME LAND SALES NOR PAYMENT DEFERRALS.
SO LET'S START WITH THE GENERAL FUND REVENUES.
UM, SO THIS IS THE NET CHANGE OF THE
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GENERAL FUND REVENUES, INCLUDING OTHER SOURCES.SO THAT INCLUDES SALE OF LAND AND TRANSFERS.
UM, COMPARED TO THE FISCAL YEAR 22 ESTIMATES, THE PROPOSED BUDGET, UH, INCREASED BY ABOUT 2.4%.
SO OUR 2.7 MILLION COMPARED TO THE FISCAL YEAR 22 ESTIMATES OF 2.67 MILLION.
LET'S START WITH THE BIGGEST INCREASE, WHICH IS FROM THE BOTTOM, WHICH IS PROPERTY TAX.
AND AGAIN, THIS IS BASED ON, UM, PROP PROPOSITION ONE AND H, UM, LIMITATIONS THAT WE HAVE, WHICH IS BASED ON THE POPULATIONS PLUS CPI.
KEEP IN MIND THE CPI IS ALREADY AVAILABLE AT THIS POINT AT FOUR POINT, UM, 4.8%.
THE POPULATION IS STILL AT 0% ASSUMPTIONS WAITING UNTIL, UM, THE US CENSUS BUREAU RELEASED IT SOMETIMES IN MAY.
UH, INTERGOVERNMENTAL, THIS IS INCREASED BY 10.4 MILLION COMPARED TO FISCAL YEAR 22 ESTIMATES.
AGAIN, THIS IS WHERE YOU SEE THE, UH, THE USE OF THE ARPA FUNDING, WHICH IS ONE 60 MILLION COMPARED TO FISCAL YEAR 22.
SO ROUGHLY THOSE ARE, UH, INCREASES IN THE INTERGOVERNMENTAL.
WE ALSO REFLECT TRANSFER FROM OTHER FUNDS, INCREASED BY 3.8 MILLION.
UM, THIS IS MAINLY FROM THE PARK HOUSTON FUNDS, UH, AS THE ECONOMY START BACK, UH, IN, UM, GOING BACK TO NORMAL.
SO YOU'LL SEE SOME OF THOSE PARKING FEES, UH, GENERATED.
AND SO THE TRANSFERS TO START COMING TO, UM, INCREASE IN FISCAL YEAR 23 CHARGES FOR SERVICES.
UM, THIS IS INCREASED DUE TO HIGHER THAN ANTICIPATED DIGITAL NETWORK AND NETWORK NOTES.
UM, WE ALSO HAVE OTHERS, UM, THAT IS NOTED IN HERE.
THIS IS BECAUSE OF THE INTEREST.
YOU KNOW, YOU SEE ALL THOSE, THOSE LOW INTERESTS IN IN LAST YEAR.
UH, BUT NOW WITH THE INCREASED CASH THAT WE HAVE, UH, WE ARE ARE PROJECTING AN INCREASE, UM, INTEREST IN OUR FISCAL YEAR 23.
UH, ANOTHER DECREASE IN HERE, I'M GONNA GO THROUGH THE DECREASES IS THE FRANCHISE FEES.
THIS IS, AGAIN, MAINLY ON THE TELEPHONE FRANCHISE, UM, THAT CONTINUES TO DECLINE.
AGAIN, THIS IS JUST THE COMPOSITIONS ALLOCATIONS IN THE GENERAL FUND REVENUE CATEGORIES BETWEEN FISCAL YEAR 23 PROPOSED AND FISCAL YEAR 22 ESTIMATES.
UH, AGAIN, THE BIGGEST CHUNK THAT WE HAVE IN OUR, UM, REVENUE SOURCES ARE TWO, PROPERTY TAX AND SALES TAX CONTINUE TO BE, UM, UH, OUR PRIMARY SOURCES, UM, THAT COMPOSE ABOUT 67, 70% OF THE GENERAL FUND.
UH, WE ALSO HAVE THE OTHER FUNDS AND FRANCHISE FEES AS NOTED IN HERE.
AGAIN, KEEP IN MIND THIS REVENUES INCLUDES THE FUNDING FROM ARPA OF ONE 60 MILLION IN THE INTERGOVERNMENTAL.
AGAIN, THIS IS JUST ANOTHER DIFFERENT LOOK, UH, ON A PIE CHART, UH, ON A BAR CHART.
AND YOU COULD SEE THE, UM, THE COMPARISON FROM FISCAL YEAR 15 ALL THE WAY TO FISCAL YEAR 23, PROPOSED BUDGET FOR THE PROPERTY TAX, SALES TAX FRANCHISE, AND OTHER REVENUES.
UM, YOU COULD SEE SOME OF THOSE DIP IN FISCAL YEAR 2020, UM, AND 21 SLIGHT, SLIGHT SLIGHT MOVEMENT BECAUSE AGAIN, BECAUSE OF THE COVID.
UM, NEXT SLIDE ON THE PROPERTY TAX REVENUES, UH, AGAIN, THIS IS BASED ON THE ESTIMATED TAXABLE VALUE OF TWO $89 BILLION, WHICH IS AN INCREASE OF 8.98%.
UH, THIS ESTIMATED TAXABLE VALUE IS THE NET OF THE TAX INCREMENTAL AGREEMENTS, WHICH, UH, IS 246.2 BILLION.
UH, AGAIN, POPULATION DATA FROM THE US CENSUS BUREAU AS OF JULY ONE, HAS YET TO BE RECEIVED.
SO, UH, OUR PROPERTY TAX REVENUES IN HERE IS ONLY BASED ON THE CPI INDEX OF 4.3%.
I MISSPOKE, I SAID 4.8 IS 4.28% INITIALLY, AND WE WILL ADJUST THESE CALCULATIONS ONCE THE US CENSUS BUREAU DATA IS AVAILABLE BY THE END OF MAY.
SO WITH THAT, THE INCREASED PROPERTY TAX REVENUES IS AT 3.9699999999999998%, WHICH IS 48.9 MILLION HIGHER THAN FISCAL YEAR 22 ESTIMATES.
UH, AGAIN, THIS IS STILL BASED ON THE OVER 65 AND DISABLED EXEMPTIONS AT 160,000, AND I KNOW MAYOR HAD MENTIONED YESTERDAY THAT HE PROPOSED TO INCREASE THAT, UM, OVER 65 AND DISABLED EXEMPTIONS FROM ONE 60,000 TO 260 THOUSANDS IN A SEPARATE, UM, UH, COUNCIL ACTIONS, UM, SOMETIMES IN JUNE.
UM, AGAIN, SO THIS IS BASED ON THE, UH, THE BUDGET VERSUS ACTUAL OF THE PROPERTY TAX REVENUES FROM FISCAL
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YEAR 19 TO FISCAL YEAR 23.UM, AGAIN, THE ADOPTED BUDGET SINCE FISCAL YEAR 15 IS BASED ON THE PROPOSITION ONE PLUS H.
UM, AND YOU COULD SEE THE DELTA BETWEEN THOSE, UM, WITH THE ACTUAL, SO FISCAL YEAR 22 ESTIMATES RIGHT NOW, UH, IS NOT PROJECTED TO BE CHANGING.
SO WE ARE STILL REMAINING OUR PROJECTIONS AT THE, UM, REVENUE CAP.
UM, AND AGAIN, FISCAL YEAR 23, PROPOSED BUDGET IS ALSO AT THE REVENUE CAP.
NEXT SLIDE, AND YOU'VE SEEN THIS BEFORE.
THIS IS JUST A, UM, A CHART TO SHOW THE IMPACT OF THE CHARTER CAP, UM, TO WHAT WE HAVE AT THIS, UH, AT THIS TIME, UH, SINCE FISCAL YEAR 17.
SO AGAIN, SINCE FISCAL YEAR 19, WE ALREADY, UM, HIT THE, UM, PROPERTY REVENUE CAP WHERE WE WERE BASED ON THE, UM, POPULATIONS PLUS CPI GROWTH, UH, IN OUR REVENUES.
UH, BUT IF WE DID NOT HAVE THAT, SO YOU COULD SEE IN HERE THE IMPACT OF THAT IS ABOUT 1.4 BILLION, UH, FROM FISCAL YEAR 15.
THE IMPACT OF THE PROP, UH, THE REVENUE CAP WE HAVE FOR FISCAL YEAR 23, AS YOU SEE IN THERE, IS AT $282 MILLION.
MOVING ON TO THE SALES TAX REVENUES, UH, AGAIN, WE ARE CONSERVATIVE AS WE ARE HEADING INTO FISCAL YEAR 23 BUDGET.
SO WE KEEP OUR PERCENTAGE GROWTH FOR, UH, FOR SALES TAX, UH, FLAT.
UM, THIS ESTIMATE REFLECT AND IMPROVEMENT TO THE ECONOMY CONDITIONS COMPARED TO FISCAL YEAR 2021, WHICH WAS SEVERELY IMPACTED BY COVID-19 PANDEMIC, UH, WHICH AFFECTED OUR NATIONAL AND GLOBAL GLOBAL ECO ECONOMY.
SO ALTHOUGH THE ENERGY SECTOR HAS CONTRIBUTED SIGNIFICANTLY TO THE HOUSTON ECONOMY, THE ONGOING VOLATILITY OF THE RUSSIANS, INVASIONS OF UKRAINE HAS CAUSED UNCERTAINTIES, UH, AMONG THE OIL INDUSTRY.
SO CURRENT AVERAGE OIL PRICE IS AT 1 0 9 0.77 PER BARREL.
SO THEREFORE, THE PROPOSED BUDGET ASSUMES NO GROWTH FROM THE FISCAL YEAR 22 ESTIMATES.
UM, UH, AND, AND WHEN WE, UH, LOOK AT DR.
GILMER, WHICH IS OUR CONSULTANTS ON THE SALES TAX AND THE ECONOMIST, UH, WHO'S FROM THE INSTITUTES FOR REGIONAL FORECASTING AT THE U OF H, UM, HE PROJECTED THE FISCAL YEAR 23 RANGE FOR THE CD SALES TAX, UH, RANGING FROM THE LOW OF 7 73 TO 812 MILLION.
SO WE ARE SOMEWHAT IN THE MIDDLE AT THIS POINT.
UH, AGAIN, IT'S A LOT, A LOT OF MOVING, UM, UM, FACTORS GOING FORWARD.
SO WE WANT TO BE CONSERVATIVE AND JUST WE LEAVE IT, UM, AS FLAT AT THIS POINT FROM FISCAL YEAR 22 ESTIMATES WE HAD SEEN, OF COURSE, AS YOU ALL SEE IT EVERY SINGLE MONTH, ARE PROJECTING INCREASING IN THE SALES TAX AS WE RECEIVE MORE RECEIPTS, UM, IN, IN THIS YEAR.
UM, BUT AGAIN, WE, WE DON'T KNOW WHAT WE, SO WE WANT TO LEAVE IT FLAT AT THIS TIME.
SO, OKAY, SO THIS IS THE TRENDS ON THE SALES TAX.
AGAIN, SALES TAX IS, UH, VERY VOLATILE.
UM, IT CHANGES VERY, VERY QUICKLY AS THE ECONOMY, UM, SHIFTED.
UM, YOU SEE WHAT HAPPENED WITH THE PANDEMIC, SO WITH THE DROP AND STAY AT HOME, SO THAT REVENUES, WHICH, UH, WOULD, WOULD DECREASE TREMENDOUSLY.
UM, SO AGAIN, COMPARISON FROM FISCAL YEAR 19, UM, WHERE WE ARE AT WITH OUR SALES TAX.
SO NOW WE ARE MOVING ON TO THE GENERAL FUND EXPENDITURES.
UM, SO AGAIN, THIS IS THE NET CHANGE FROM FISCAL YEAR 20 TO CURRENT BUDGET.
SO WE ARE REFLECTING ABOUT 3.85% INCREASE IN THE GENERAL FUND, UM, OF 2.7 BILLION COMPARED TO THE 2.6 BILLION.
UM, MAJOR CHANGES WE HAVE IN THERE IS THE, UH, ON THE OPERATING BUDGET.
UM, AGAIN, IT INCLUDES THE EMPLOYEE COMPENSATIONS, SO THAT IS AN INCREASE OF 44.6 MILLION.
SO THAT IS ON THE FIRE, POLICE AND MUNICIPAL PAY RAISES, UH, ALSO HAVE THE SURFACE CHARGEBACK FUNDS.
THIS IS RESTRICTED ACCOUNTS OF 18.35 MILLION.
UH, HEALTH BENEFITS INCLUDES ABOUT 14.7%, UH, 14.7 MILLION INCREASES IN HERE.
UM, OTHER SURFACE CHARGEBACK, AND I KNOW WE PUT THAT NOTE IN THERE IS, IS FOR THE CONTRACT ESCALATIONS AND, UH, NEW FACILITY OPERATING COST.
WE ALSO PROJECT SOME SAVINGS IN, IN THIS, UM, PROPOSED BUDGET, UH, MAINLY ON THE PENSION.
SO YOU SEE THE PENSION AND NOTE FOUR, UH, SHOWING A REDUCTION OF 2.3 MILLION.
THIS IS BECAUSE OF THE RATE CHANGES FROM THE MID POINT, THE MINIMUM POINT FOR THE FIRE PENSION AS THEY ARE FALLING
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BELOW THE MINIMUM CORRIDOR AT THIS POINT.AND ALSO DEFERRAL, IF YOU RECALL, WE HAD, UH, OUR BUDGET IN FISCAL YEAR 2020 AND 2021 INCLUDES, UH, DEFERRAL FOR THE WALKER, UH, LEASE BUILDING.
UM, SO NOW WE DON'T HAVE DEFERRAL ANYMORE, SO WE ONLY PAY, YOU KNOW, WHAT WE ARE OWED, UH, ON AN ANNUAL BASIS.
SO THAT SHOWS SOME SAVING, UM, ON THE DEBT SERVICE AND PAYS WHO GO, IT INCREASED BY 22.6 MILLION.
AGAIN, SOME OF THAT IS PERTAINING TO THE, UM, CAPTURED REVENUES, UH, PAY GO, UH, AS INCREASE IN THE CPIS INCLUDED IN THAT CALCULATION AS WELL.
AND ALSO, UH, TRANSFER OF THE DEBT SERVICE.
NOW THIS DOES NOT INCLUDE ANY PREPAYMENT FROM THE BUILDING INSPECTIONS.
IF YOU RECALL, OUR PREVIOUS BUDGET INCLUDES DEBT PREPAYMENT FOR THE BUILDING INSPECTION FUNDS.
SO THIS IS NOT INCLUDING THAT.
SO YOU WILL SEE SOME OF THOSE UPTICK 'CAUSE OF NO LONGER DEBT REPAYMENT FROM THE BUILDING INSPECTIONS INCLUDED IN THIS.
OKAY, AGAIN, THIS IS JUST A COMPARISON, UM, OF THE ALLOCATED, UM, GENERAL FUND EXPENDITURES INCLUDING DEBT SURFACE FROM FISCAL YEAR 23 TO FISCAL YEAR 22.
AGAIN, PUBLIC SAFETY STILL REMAINS THE, THE BULK OF, OF THE COMPOSITIONS IN THE GENERAL FUND.
UM, POLICE AND FIRE ALONE IS AT $1.55 BILLION.
SO COMPARED TO THIS $2.7 BILLION PROPOSED BUDGET, POLICE AND FIRE ALONE INCLUDES ABOUT 56.4% OF THE TOTAL BUDGET.
UH, ANOTHER ONE THAT I WANT TO POINT OUT IN HERE IS THE DEBT SERVICE.
SO THE DEBT SERVICE, UM, WHICH IS PLEDGED, UH, YOU KNOW, WITH THE PROPERTY TAX REVENUES THAT WE HAVE IS ABOUT 13% OF OUR, UM, UH, GENERAL FUND BUDGET.
AND YOU SEE THE REMAINING IS THOSE OTHER DEPARTMENTS, UM, INCLUDING SOLID WASTE.
I THINK SOLID WASTE IS IN ONE OF THOSE, UM, OTHER DEPARTMENTS.
SO THIS IS THE COMPOSITIONS OF THE PERSONNEL VERSUS NON-PERSONNEL.
UM, NOW, OVERALL, AGAIN, OUR GENERAL FUND, UM, 62% IS PERSONNEL.
I KNOW WE, WE KIND OF MENTIONED THAT EARLIER.
UM, 62% IS PERSONNEL, 38% IS IN OTHERS.
UM, OUT OF THAT 62 PERSONNEL, 76 OF THAT IS CLASSIFIED POLICE AND FIRE.
AGAIN, GOING BACK TO THE OTHERS, PER UH, PORTION OF THE 38%, UH, DEBT SERVICE IS ABOUT 42%.
YOU HAVE THE ENERGY COST IN THERE AND OTHER SERVICE AND CHARGEBACK.
SO THIS IS A SLIDE JUST TO GO THROUGH THE GENERAL FUND PENSION CONTRIBUTIONS ON A, UH, MAYOR HAD MENTIONED, RIGHT, THE PENSION REFORM WAS DONE IN 2017.
SO FROM THE UNFUNDED LIABILITY POINT OF VIEW, THE PENSION REFORM IN 2017 REDUCED THE PROJECTED UNFUNDED LIABILITY FROM 8.2 BILLION TO 1.5 BILLION.
UM, THAT IS REDUCTION ABOUT 6.7 BILLION FROM, UM, THE LIABILITY POINT OF VIEW.
BUT WHAT YOU SEE IN HERE IN THIS CHART IS THE, THE PROJECTED CITY PENSION CONTRIBUTIONS, UH, WITHOUT THE REFORM.
SO IF YOU LOOK AT THIS, THE SHADED AREA IN THERE, WITHOUT THE REFORM, WE WOULD'VE HAD TO SET ASIDE ANOTHER 1.4 BILLION ON THE OPERATING FUNDS TO PAY FOR THOSE CITY CONTRIBUTIONS.
UM, AGAIN, THE FULL IMPACT FROM SINCE FISCAL YEAR 18 ON THE C'S, UH, GENERAL FUND CONTRIBUTION IS ABOUT 1.4 BILLION, IF NOT BECAUSE OF THE PENSION REFORM.
SO FINALLY, THIS IS THE GENERAL FUND UNASSIGNED ENDING FUND BALANCE.
UM, SO AS MENTIONED, SO WE ARE NOW AT 13.46%, 13.5%.
UH, WE ARE AT 310.7 MILLION FUND BALANCE.
UM, SO THAT IS ABOUT 138 PER MILLION DOLLARS ABOVE THE 7.5%.
BUT ONE THING I DO WANT TO NOTE IN HERE, UM, THE FISCAL YEAR 22 AND THE FISCAL YEAR 23 FUND BALANCE IN HERE INCLUDES ARPA FUNDING.
UM, SO, YOU KNOW, I, I CANNOT STRESS ENOUGH ON, ON THE IMPORTANT TO PRESERVE FUND BALANCE BECAUSE OF WHAT'S COMING AHEAD IN FISCAL YEAR 25.
UM, ANOTHER THING TO PUT IN HERE, FISCAL YEAR 18 AMOUNT REQUIRES 7.5% FUND BALANCE IS ADJUSTED TO EXCLUDE THE, UM, 910 MILLION PENSION OBLIGATION BOND.
THIS IS BACK IN FISCAL YEAR NINE 18.
SO NOW WE ARE MOVING TO THE GENERAL FUND FIVE YEAR FORECAST.
AGAIN, THIS IS A FORECAST WHICH HAS SOME ASSUMPTIONS
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IN THE NEXT FIVE YEARS AT THIS POINT.UH, BUT YOU WOULD, YOU WOULD HOPEFULLY IT WOULD GIVE SOME IDEAS OF WHERE WE ARE GONNA BE IN THE NEXT FIVE YEARS.
UM, AGAIN, THIS PROJECTED GAP RANGE BASED ON THE CONSERVATIVE, PESSIMISTIC, UM, CONSERVATIVE AND OPTIMISTIC GROWTH IN THE REVENUES.
IT DOES NOT INCLUDE ANY ONE TIME LAND SALES.
UH, FOR OUR REVENUES, UH, PROPERTY TAX REVENUES, IT IS IN COMPLIANCE WITH PROPOSITIONS ONE AND EIGHT LIMITATIONS HOLDING THE SENIOR DISABLED EXEMPTIONS AT ONE 60,000.
AND THE PENSION ASSUMPTION IS BASED ON, AND THIS IS TO BE CORRECTED, UH, BASED ON EITHER MINIMUM OR MIDPOINT OF THE CORRIDOR BECAUSE OF THE CONDITIONS OF THOSE, UM, PENSION GROUPS ON THE EXPENDITURES ALSO INCLUDES LEGAL MANDATES, UH, STAFFING FOR NEW FACILITIES AND CONTRACTUAL ESCALATORS, STARTING WITH THE REVENUES.
SO I'VE TALKED ABOUT WHAT IS IN THE ASSUMPTIONS FOR THE FISCAL YEAR 23 PROPOSED BUDGET.
UM, SO ROUGHLY PROPERTY TAX GROWTH IS ABOUT 4%.
AGAIN, THE DRIVER OF THAT IS THE CPI, I MEAN, YEAH, IT'S THE CPI GROWTH RATE.
UH, WE HAVE NOT INCLUDING ANY POPULATIONS GROWTH RATE.
SO THIS IS STILL BASED ON THE 0% POPULATIONS, UH, WHICH WILL BE UPDATED ONCE WE HAVE THOSE DATA BY THE END OF MAY.
UH, AGAIN, SALES TAX GROWTH RATES IN FISCAL YEAR 23 REMAINS FLAT.
FRANCHISE FEES OVERALL, UH, IS REDUCTION OF 1.2%.
AGAIN, BULK OF THAT IS THE TELEPHONE FRANCHISE FEES THAT CONTINUES TO DECLINE.
UH, WE ALSO HAVE OTHER REVENUE GROWTHS AT 3.7%.
THIS IS ON THE INDUSTRIAL ASSESSMENT LESSONS AND PERMITS.
AS WE HAVE SEEN SOME, UM, REVENUE INCREASES IN FISCAL YEAR 22 AS THE ECONOMY STARTED TO PICK UP AND NO ONE TIME LAND SALES IN HERE.
SO YOU SEE THE PROJECTION FROM FISCAL YEAR 24 TO 27, UH, WHICH IS BASED ON THE LOW AND THE HIGH, UH, FOR OUR ASSUMPTIONS.
ON THE EXPENDITURE SIDE, AGAIN, WE'VE, WE'VE GONE THROUGH THE FISCAL YEAR 23, UH, ASSUMPTIONS.
UH, POLICE IS BASED ON A 4% INCREASE.
UH, FIRE IS BASED ON A 6% INCREASE.
PAY RAISES, MUNICIPAL EMPLOYEES IS BASED ON A 3%, UM, INCREASE.
UM, AND WE'VE GONE THROUGH THE, UH, THE PENSION CONTRIBUTIONS FOR FISCAL YEAR 2023, WHICH IS KNOWN AT THIS POINT IS AT THE 8.44 FOR H MEPS, WHICH IS BASED ON THE MIDPOINT.
UM, AGAIN, WE ALSO, WE ALSO HAVE THE LEGACY, UH, PENSION THAT WE HAVE TO PAY ON THE, UH, TO H MAPS AT ONE 42 MILLION H POPS IS BASED ON 31.98, WHICH IS THE MIDPOINT AT THIS POINT, AND THE FIRE PENSION AT 26 POINT 89, WHICH WAS, WHICH IS AT THE MINIMUM, UH, POINT OF THE CORRIDOR.
UH, WE HAVE THE GROWTH ASSUMPTION FOR HEALTH BENEFITS AT 4%, WHICH IS KNOWN AT THIS POINT.
AND AGAIN, THE DEBT SERVICE AND PAY U AS DESCRIBED EARLIER.
NOW GOING TO FISCAL YEAR 24 TO 27, THIS IS OUR ASSUMPTIONS GOING FORWARD.
UH, WE KNOW WHAT HAS ALREADY BEEN IN THE, UH, MEET AND CONFER, UH, WITH POLICE, WHICH IS 3% 24 AND 3.5% 25.
UM, SO WE ARE NOT USING ANY ASSUMPTIONS IN THE FUTURE AT THIS POINT, WHICH IS AT TBD AT THAT AT THIS POINT.
FIRE IS 6% IN 24 AND, AND TBD.
SO WE JUST REMAIN AT THAT POINT AT THAT, UH, FOR THIS ASSUMPTIONS.
AND ANOTHER 3% IN 24 FOR MUNICIPAL, UH, EMPLOYEES.
UH, AGAIN, H MAPS FOR, UM, 24 TO 27 IS BASED ON THE MIDPOINT OF CORRIDOR.
UM, POLICE AND FIRE IS GONNA BE LOOKING AT THE MINIMUM.
SO WE HAVE A RANGE OF MINIMUM AND, AND MIDPOINT, UH, BECAUSE IT'S STILL, BECAUSE THEY ARE GETTING CLOSE TO THE MINIMUM CORRIDOR.
SO WE ARE MAKING SOME ASSUMPTIONS AT THIS POINT BECAUSE IT'S STILL A MOVING NUMBER.
SO WE'RE MAKING THIS RANGE FOR POLICE AND FIRE, UH, AGAIN, ON THE HEALTH BENEFITS BECAUSE IT'S STILL ASSUMPTIONS GOING FORWARD.
WE ALSO DO A, A RANGE ON THE GROWTH FOR THE HEALTH BENEFITS, UH, FIVE TO 7%.
AND THE DEBT SERVICE, OF COURSE, IS BASED ON OUR DEBT SERVICE MODELS, WHICH IS, UH, PLAN PAYMENT FOR THE NEXT, UM, FIVE YEARS.
SO WITH THAT, WE GO TO THE NEXT SLIDE.
SO WE COULD MAP THIS OUT AND TAKE A LOOK AT WHAT THE, UM, UH, THE GAP IS GONNA LOOK LIKE.
SO THIS IS ROUGHLY WHAT WE ARE LOOKING AT IN THE NEXT FIVE YEARS.
KEEP IN MIND THIS DOES NOT INCLUDE ARPA FUNDING.
SO, YOU KNOW, I DON'T WANNA SKEW OUR, UM, VISIBILITY WITH MIXING THE ARPA FUNDING IN THIS DISCUSSIONS.
UM, AS YOU SEE IN FISCAL YEAR 23, YOU HAVE ABOUT ONE $60 MILLION GAP.
SO THAT'S WHAT ARPA FUNDING CAME IN.
[00:30:01]
DOES NOT INCLUDE ARPA FUNDINGS IN, IN THIS SCENARIO AS WELL.SO THAT IS SOMETHING THAT, UH, WE WILL BE INCORPORATING IN IN NEXT FISCAL YEAR.
AND GOING FORWARD, YOU COULD, YOU HAVE AN IDEA, UH, WHAT OUR RANGE OF, UM, UH, GAP LOOKS LIKE.
AGAIN, THIS IS NOT USING ANY UTILIZATIONS OF ARPA FUNDING.
SO LET'S TAKE A LOOK BACK AND SEE WHAT HAVE WE DONE AS A C.
UM, I KNOW YOU'VE ALL SEEN THE PFM STUDIES, UM, AND SO I DO WANT TO PUT, PUT FORTH, UH, WHAT HAS BEEN DONE TO, TO SEE WHERE WE ARE AT TODAY, BECAUSE IF THIS IS NOT DONE, THEN WE WOULD'VE BEEN IN A MUCH WORSE SITUATIONS AT THIS POINT.
FIRST, OF COURSE, IS THE PENSION REFORM THAT WAS DONE 2017.
YOU SAW WHAT THE IMPACT, IF THAT HAS NOT BEEN, UH, IF THAT WAS NOT DONE, UM, IN THAT CITY CONTRIBUTIONS AND UNFUNDED LIABILITIES OEP REFORM.
SO WE HAD SEEN SOME REDUCTIONS IN THE UNFUNDED LIABILITIES.
UM, SHARED SERVICES WE HAVE DONE JOINT PRO ON THE JOINT PROCESSING CENTER.
WE HAVE SHARED SERVICES WITH THE HARRIS COUNTY, UH, OF COURSE CONTINUING HIRING CONTROL, UH, THROUGH THE MAYOR STAFFING EFFICIENCIES PROGRAM.
UH, YOU'VE SEEN ALL THE, YOU KNOW, THE, THE CLAWBACK PROVISIONS THAT WE HAD, UM, UH, IMPLEMENTED COUPLE OF YEARS AGO.
UM, YOU'VE SEEN THE EMS FEE ADJUSTMENTS THAT WENT TO COUNCIL SEVERAL YEARS AGO AS WELL.
AND OF COURSE, THE HEALTH BENEFITS UPDATE, UH, NEGOTIATED CITYWIDE MEDICAL AND PRESCRIPTIONS, BENEFITS PLANS, IMPLEMENTED SPOUSAL SURCHARGE IF YOU ALL SEEN IT.
UH, AND ALSO PERFORM THE DEPENDENT ELIGIBILITY AUDIT.
AND THERE'S MAYBE OTHER STUFF THAT HAS BEEN DONE.
SO THESE ARE THE MAJOR ITEMS THAT I DO WANNA HIGHLIGHT, UH, BEFORE WE GO TO THE NEXT SLIDE.
SO AGAIN, WHAT'S NEXT? AGAIN, IT, IT'S IMPORTANT TO UNDERSTAND WHAT WE WORK WITH AT THIS POINT.
UH, WE DO HAVE THE LIMITATIONS ON THE PROPERTY TAX REVENUE CAP, UM, IN CITY CHARTER AND STATE CAP.
SO NOT JUST THE CITY'S, UH, LOCAL CAP, BUT THERE'S ALSO STATE CAP THAT WE HAVE TO WORK AND COMPLY WITH.
UM, ANOTHER LIMITATION IS PUBLIC SAFETY.
UM, IT IS SOMETHING TO, UH, TO NOTE THAT POLICE AND FIRE COSTS MAKE UP ABOUT 57% OF THE GENERAL FUND.
SO, WHICH IS THE, UM, ECONOMIC UNCERTAINTIES THAT WE ARE DEALING WITH AT THIS POINT, UH, COVID, AND OF COURSE THE, UH, WHAT HAPPENED IN RUSSIAN, UH, INVASIONS TO UKRAINE.
SO THAT WOULD IMPACT THE OIL PRICES, AGAIN, THE VOLATILITY IN THE ECONOMY.
SO ON THE SHORT TERMS, UM, IT IS IMPORTANT FOR US TO BUILD AND PRESERVE FUND BALANCE AGAIN, UH, TO BE CONSERVATIVE.
UH, CONTINUE TO LEVERAGE ARPA FUNDING TO ADDRESS REVENUE LOSSES, CONTINUE HIRING CONTROL, UH, AND ALSO LOOK FOR EFFICIENCIES AND COST CUTTING OPPORTUNITIES, UH, DEVELOPING NEW REVENUE SOURCES.
AND I MENTIONED KIND OF BRIEF, BRIEFLY MENTIONED THAT IN, IN THE PRESS CONFERENCE YESTERDAY.
UH, AND AGAIN, CONTINUE WORKING DAY ONE TO BUILD THE FUND BALANCE, UH, AS WE HEAD INTO FISCAL YEAR 23, 24 AND 25.
UM, IN THE LONG TERMS, AGAIN, CONTINUE TO LOOK INTO THOSE, UH, IMPLEMENTING PFM RECOMMENDATIONS THAT ARE SUPPORTED BY BOTH MAYOR AND YOURSELF CUSTODY CITY COUNCIL, UH, IN, IN WHICH ONE OF THAT, AS, AS YOU HAD SEEN IN THE PAST, IS THE OUTCOME BASED BUDGETING.
UM, SO WE ARE IN THE PROGRESS TO DO THAT.
AND SO WITH THAT, UM, WE HAVE AN UPDATE ON THE OUTCOME BASED BUDGETING, AND I WOULD REFER TO DEPUTY, DEPUTY DIRECTORS WILLIAM JONES.
AND TO MAYOR PROTI AND COUNCIL, UM, TIME TO SWITCH PACE A LITTLE BIT, TALK ABOUT SOMETHING A LITTLE FUN, AT LEAST IT IS TO ME.
UM, SO THIS IS A PROJECT I'VE BEEN VERY CLOSE TO SINCE THAT'S NOT FUN,
SO THIS IS A PROJECT I'VE BEEN CLOSE TO SINCE ABOUT 2011, 12.
UM, WE'VE BEEN MAKING SMALL INCREMENTAL PROGRESS THROUGHOUT THE YEARS.
UM, BUT NOW I'M EXCITED THAT WE'VE ACTUALLY LAUNCHED THIS PROJECT.
SO LAST SUMMER WE KICKED OFF PHASE ONE OF THE OUTCOME-BASED BUDGETING PROJECT.
SO IF YOU CAN BRING UP THE SLIDES, PLEASE.
SO IN PHASE ONE, IT WAS ESSENTIALLY A DISCOVERY PHASE.
SO WE BROUGHT IN THE CONSULTANT TO COME IN AND LOOK AT OUR PROCESS, LOOK AT OUR SYSTEMS, LOOK AT OUR TECHNOLOGY, AND DO AN ASSESSMENT.
UM, AND WITH THAT WE HAD, UH, A LOT OF WORKSHOPS WITH THE DEPARTMENTS.
AND LIKE I SAID, WE, THROUGHOUT THE YEARS, WE HAD ALREADY BEEN, YOU KNOW, WORKING WITH THE DEPARTMENTS, MAKING WHAT PROGRESS WE COULD ON, UH, WHAT OUR PROGRAMS AND HOW DO WE START, YOU KNOW, LOOKING AT OUR BUDGET A LITTLE DIFFERENTLY.
SO, UM, SO FROM PHASE ONE, WE CONDUCTED 45 WORKSHOPS.
UM, WE HAD OVER A HUNDRED PLUS PARTICIPANTS, ALL 26 DEPARTMENTS PARTICIPATED.
UM, AND WE WERE ABLE TO IDENTIFY THOU HUNDREDS OF PROGRAMS. UM, AND WE ALSO LOOKED AT, UH, SOME DIFFERENT VENDORS ON SOME TECHNOLOGY SOLUTIONS.
SO PHASE ONE, UM, WAS A VERY SUCCESSFUL PHASE.
[00:35:01]
SO WHEN YOU LOOK AT, UM, WHAT, WHAT DOES IT MEAN TO BE, TO, TO IMPLEMENT IT SUCCESSFULLY, WHAT DO WE HAVE TO DO? SO WE FOCUSED ON, YOU KNOW, THREE KEY THINGS, UH, THE PEOPLE, TECHNOLOGY AND PROCESS.UM, SO THOSE WERE SOME OF THE, THE FINDINGS AND RECOMMENDATIONS THAT WE LOOKED AT.
SO WHEN YOU LOOK AT THE PEOPLE, UM, ONE OF THE MOST IMPORTANT THINGS IS TO HAVE BUY-IN AT THE VERY TOP, UM, AT THE VERY TOP LEVEL WITH THE MAYOR.
AND WE DEFINITELY HAVE TO BUY IN FROM THE MAYOR.
ONE OF THE FIRST THINGS HE DID WHEN HE CAME IN THE OFFICE IS SIGNED EXECUTIVE ORDER ONE DASH 50, WHICH, UM, PRETTY MUCH OUTLINED A PERFORMANCE BASED BUDGET MODEL THAT THE CITY WOULD MOVE TOWARDS.
UM, AND WE ALSO HAVE BUY-IN FROM COUNCIL.
I KNOW COUNCIL MEMBER ALCORN HAS BEEN VERY INVOLVED WITH IT.
UM, WE HAD AN AMENDMENT, I WANNA SAY A COUPLE YEARS AGO THAT WE WOULD START THAT DISCOVERY PHASE.
SO, AND WE, WE DID COMPLETE THAT.
UM, AND THEN NOT ONLY AT THE TOP LEVEL, WE HAVE TO HAVE ENGAGEMENT WITH THE EMPLOYEES, THE, THE MANAGERS, THE PEOPLE THAT ARE ACTUALLY DOING THE WORK.
UM, AND AGAIN, WE'VE BEEN DOING THAT.
SO WE, WE, WE WANT TO KEEP THAT MOMENTUM THAT WE'VE HAD THROUGHOUT THE YEAR.
SO EVEN WITH THIS BUDGET, UM, I WORK WITH DEPARTMENTS TO MAKE SURE THEY'RE THINKING ABOUT THEIR, THEIR BUDGET IN TERMS OF PROGRAMS, HAVE THEM START, YOU KNOW, THINKING OF HOW THEY WOULD MEASURE THOSE THINGS.
AND I'LL SHOW YOU A, A A REALLY GOOD EXAMPLE LATER IN THIS PRESENTATION.
UH, SO PEOPLE IS VERY IMPORTANT.
UM, ONE OF THE THINGS I FOUND THROUGHOUT MY, MY TIME OF, UH, YOU KNOW, REVIEWING OUTCOME-BASED BUDGET AND PERFORMANCE-BASED BUDGET IS THAT TECHNOLOGY WAS A HUGE BARRIER FOR A LOT OF CITIES.
I THINK NOW IS THE, THE PERFECT TIME THAT WE, THE TECHNOLOGY HAS ADVANCED SO MUCH IN THE PAST FIVE YEARS.
A LOT OF CLOUD-BASED SOLUTIONS, A LOT OF SOLUTIONS THAT WILL ALLOW US TO TRACK PERFORMANCE.
UM, SO, AND I PRESENTED, UH, WITH TTII THINK LAST MONTH ALONG WITH, UH, HITS DEPARTMENT, UM, THAT WE ARE, WE HAVE FOUND A SOLUTION THAT MAY WORK FOR US.
SO, UM, SO THE TECHNOLOGY, LIKE I SAID, IS A VERY IMPORTANT PART AND WE'VE MADE A LOT OF PROGRESS AT THE INDUSTRY, HAS MADE A LOT OF PROGRESS IN THAT ON THAT FRONT.
AND PROBABLY ONE OF THE MOST IMPORTANT THING IS TO PROCESS.
ONE OF THE KEY THINGS WE FOCUSED ON, UM, MAKING SURE, 'CAUSE IT'S A MAJOR SHIFT FOR THE CITY TO GO FROM, YOU KNOW, THE INCREMENTAL BASED BUDGETING TO LOOKING MORE AT PERFORMANCE AND FOCUSING ON OUTCOMES.
UH, SO PROCESS IS ONE OF THE THINGS WE WE'RE GONNA SPEND A LOT OF TIME ON IN THE SECOND PHASE.
SO WHAT'S NEXT? UM, SO THE NEXT PHASE, UH, ONE OF THE FIRST THINGS, LIKE I SAID, IS FOCUSING ON THE PROCESS.
UM, SO REDESIGN AND INTRODUCE OUR BUDGET PROCESS, UM, STARTING WITH THE STRATEGIC PLAN.
SO ONE OF THE, THE MAJOR DIFFERENCES WITH OUTCOME-BASED BUDGET IS YOU START WITH YOUR STR YOUR STRATEGIC PLAN.
WHAT ARE THE OUTCOMES THAT THE CITIZENS EXPECT? WHAT ARE THE PRIORITIES OF THE CITY? UM, AND THEN WE BUILD FROM THERE.
SO WE BUILD OUR BUDGET KNOWING WHAT THOSE GOALS ARE SO THAT YOU KNOW HOW TO PRIORITIZE YOUR BUDGET AND BUILD YOUR BUDGET FROM THE GROUND UP.
UM, SO IN THIS NEXT PHASE, IT'S GONNA BE VERY IMPORTANT THAT WE DEVELOPED OUR PROCESS, DOCUMENT OUR PROCESS, UH, CHANGE OUR BUDGET CALENDAR.
WE HAVE TO LOOK AT WHAT NEW FORMS WE NEED TO CREATE.
UM, SO THAT'S GONNA BE, TO ME, ONE OF THE MOST IMPORTANT PROCESS BEFORE WE EVEN GET TO THE SYSTEM.
'CAUSE YOU DON'T WANT TO GET A SYSTEM AND THEN YOU'RE STILL TRYING TO FIGURE OUT YOUR PROCESS.
YOU WANNA GET A SYSTEM, HAVE YOUR PROCESS IN PLACE, AND TRANSITION ALL THAT OVER FIRST.
SO WE'RE GONNA FOCUS ON PROCESS FIRST.
AND THEN YOU SEE ON THE SECOND, UH, BULLET, WE'RE GONNA, THEN WE'RE GONNA LOOK AT IMPLEMENTING A COMPREHENSIVE BUDGET SOLUTION.
SO THAT'S THE, THE, THE TECHNOLOGY AND THE SYSTEM THAT I TALKED ABOUT.
SO ONCE ON, AND WHEN YOU LOOK AT, UH, BULLET POINT NUMBER THREE, THEN WE INTEGRATE ALL OF THOSE SOLUTIONS TOGETHER.
UM, THE PROCESS WITH THE SYSTEM AND MAKING SURE EVERYTHING WORKS TOGETHER.
UM, AND THEN ON NUMBER FOUR, AGAIN, AS I SAID, ONE OF THE MOST IMPORTANT THINGS IS PEOPLE MAKING SURE THAT THE EMPLOYEES, THE MANAGERS, UNDERSTAND THEIR ROLE IN THIS NEW BUDGETING FORMAT.
UNDERSTAND THAT WE, WE NEED TO TRACK PERFORMANCE.
UM, A A LOT OF DEPARTMENTS ALREADY DO IT, BUT IT DOESN'T DRIVE DECISIONS.
SO WE'RE GONNA NEED TO CHANGE THAT MENTALITY TO MAKE SURE THAT THEY'RE TRACKING PERFORMANCE FOR THE OUTCOMES THAT WE EXPECT, AND THAT WE'RE MONITORING THOSE AND MEASURING THOSE.
AND THEN AGAIN, REDEFINE THE TALENT, UH, PROVIDE STAFF WITH THE SUPPORT AND RESOURCES THAT THEY NEED TO BE ABLE TO DO THAT.
UM, THIS IS NOT A, IT'S NOT A EASY THING.
AND FROM WHAT I'VE SEEN WITH OTHER CITIES, THEY DO HAVE CHALLENGES.
UM, SO WE NEED TO MAKE SURE THAT THE STAFF HAS THE SUPPORT THAT THEY NEED TO BE ABLE TO, UH, TRACK THE, YOU KNOW, THE GOALS AND, AND BUILD THE BUDGET AND HAVE THAT, UH, BUY-IN FROM THE LEADERSHIP TO KNOW THAT, YOU KNOW, THIS IS, WE'RE ALL MOVING IN THE SAME DIRECTION.
SO THIS IS THE ONE I REALLY WANTED TO, TO FOCUS ON, TO SHOW YOU SOME OF THE WORK THAT WE'VE DONE.
SO THIS IS REAL DATA, UM, THAT WE DID WITH THE HITS DEPARTMENT.
UM, SO IT'S A PROTOTYPE, BUT IT'S BASED ON REAL DATA.
UM, SO WE TOOK THEIR, UH, THEIR REVOLVING FUND BUDGET IS, WHICH IS 98.1 MILLION.
SO WHAT THEY DID, IF YOU LOOK AT THE VERY BOTTOM, YOU'LL SEE THE PROGRAMS. UM, SO WE IDENTIFIED ABOUT 13 PROGRAMS WITHIN THE HITS DEPARTMENT.
SO IF YOU'RE LOOKING AT IT, YOU CAN SEE HOW MUCH MORE RELEVANT THAT THE DATA IS HERE.
[00:40:01]
THE BUDGET, YOU CAN SEE, UH, LOOKING AT THE FIRST ONE, UH, CITYWIDE CUSTOMER SERVICE, UH, 3 1 1 PROGRAM.UM, PEOPLE MAY NOT KNOW THAT, YOU KNOW, THE HITS INVOLVEMENT WITH THE 3 1 1 PROGRAM.
AND WHEN WE LOOK AT IT FROM A GLOBAL PERSPECTIVE, WELL, YOU KNOW, 3 1 1 IS AN A RA AS WELL.
AND THEN THE GOAL IS TO BE ABLE TO SHOW HOW MUCH ARE WE SPENDING ON 3 1 1.
THEN YOU START MEASURING WHAT IS THE CALL TIME, HOW LONG DOES IT TAKE TO RESPOND? AND THEN YOU CAN START MEASURING THAT TO SEE, OKAY, ARE, ARE WE, YOU KNOW, PERFORMING ACCURATELY OR DO WE NEED TO PUT MORE MONEY THERE OR DO WE NEED TO REASSESS? UM, AND THEN HOW, HOW LONG DOES IT TAKE FOR RESPONSES, UH, YOU KNOW, TO BE RESPONDED TO BY OTHER DEPARTMENTS? BUT UNTIL WE HAVE, IT'S, IT'S DIFFICULT TO SEE IN OUR CURRENT BUDGET.
BUT IF WE HAVE PROGRAM CALLED 3 1 1 THAT CROSSES OTHER DEPARTMENTS AND WE CAN SEE THE TOTAL COST OF WHAT IT IT IS TO RUN A 3 1 1 PROGRAM, THEN WE CAN MAKE BETTER DECISIONS ON HOW WE FUND THOSE PROGRAMS. UM, SO LIKE I SAID, ALTOGETHER IT'S ABOUT 13 PROGRAMS THERE, AND THEN YOU GO UP TO THE NEXT LEVEL.
NOW WE'RE GOING TO TIE THOSE PROGRAMS INTO THE PRIORITIES.
'CAUSE RIGHT NOW WE DON'T KNOW HOW MUCH WE'RE SPENDING ON THE PRIORITIES OF THE CITY.
SO THAT'LL BE ONE OF THE BIG CHANGES.
AND THEN YOU GO UP TO THE NEXT LEVEL, AND THEN WE TIE IT TO THE PLAN.
HOUSTON, THE, THE CORE STRATEGIES, UH, THAT THE, YOU KNOW, THE CITIZEN SURVEY, THAT WHAT THEY EXPECT RIGHT NOW, WE CAN'T TELL THEM HOW MUCH ARE WE SPENDING ON, UH, SUSTAINING QUALITY INFRASTRUCTURE FOR, LIKE I SAID, RIGHT NOW WE'RE JUST LOOKING AT HITS.
BUT IF WE, ONCE WE GET THIS ENTIRE THING UP AND RUNNING, THEN WE CAN, WE CAN PROVIDE THE CITIZENS, CITIZENS WITH BETTER DATA TO BE ABLE TO UNDERSTAND WHERE THEIR DOLLARS ARE GOING, AND ALSO PROVIDE COUNSEL WITH BETTER INFORMATION ON HOW WE CAN MAKE DECISIONS AND FUND THESE THINGS.
SO LIKE I SAID, I'M, I'M VERY EXCITED THAT, UM, WE WE'RE, WE'VE KICKED THIS PROJECT OFF OFFICIALLY.
UM, PHASE TWO IS GONNA, LIKE, IT'S GONNA BE A CHALLENGE.
SO THE GOAL IS WE ARE STILL AIMING FOR FY 24, UM, WITH THE HOPES OF FOR SURE, HAVING THE PROCESS IN PLACE.
NOW, THE, THE SYSTEM MAY TAKE A LITTLE MORE TIME, UM, BUT LIKE I SAID, THE PROCESS IS THE MOST IMPORTANT PART.
UM, BUT WE'RE DEFINITELY GONNA GET A SYSTEM, BUT WITHOUT THE PROCESS TO BE, THE SYSTEM CAN WAIT.
BUT WE'RE MOVING FORWARD WITH BOTH.
UM, SO BY FY 24, WE'LL HAVE SOME FORM OF, UM, OUTCOME-BASED BUDGETING TO, TO PRESENT TO YOU GUYS.
UM, SO ON THE NEXT SLIDE, AND THIS JUST SHOWS YOU KIND OF HOW THE, OUR REPORTING WOULD LOOK, TAKING THAT SAME DATA WITH HITS, YOU CAN SEE YOU GET THE PROGRAM DESCRIPTION, WHAT ARE THE GOALS OF THAT PROGRAMS, AND THEN YOU'LL SEE NOW WE'RE STARTING TO PUT MEASURES, TYING IT TO THOSE PROGRAMS. UM, AND THEN THROUGHOUT THE YEAR WE WOULD HAVE TO TRACK ARE WE, ARE WE HITTING THOSE TARGETS? IF NOT, THEN WHAT DO WE NEED TO DO? UM, SO IT, IT'LL, IT'S A DIFFERENT WAY OF LOOKING AT YOUR BUDGET, NOT FOCUSING ON HOW MUCH DO WE SPEND ON THIS DEPARTMENT, HOW MUCH DO WE SPEND ON THAT DEPARTMENT, BUT WHAT ARE THE PROGRAMS THAT WE'RE PROVIDING TO THE CITIZENS AND HOW ARE THEY PERFORMING? SO MY HOPE IS THAT NOT ONLY DO WE CHANGE, YOU KNOW, PROVIDE THE CITIZENS WITH BETTER INFORMATION ON HOW THEIR DOLLARS ARE BEING SPENT, BUT ALSO KIND OF CHANGE HOW COUNCIL CAN LOOK AT THE BUDGET AND GET AWAY FROM, YOU KNOW, THE LITTLE LINE ITEMS HERE AND THERE AND THE DEPARTMENT SPENDING THERE AND FOCUS ON THOSE PROGRAMS AND START, YOU KNOW, PAYING ATTENTION TO WHAT WE'RE MEASURING.
AND SO BEFORE I TURN IT OVER TO QUESTIONS, I DO WANT TO TAKE A MOMENT TO, UH, RECOGNIZE MY TEAM.
UM, I HAD THEM PUT ON THEIR SUNDAY'S BEST IN MARCH OVER HERE, SO I'M GONNA ASK THEM TO STAND UP.
YEAH, SO, SO THESE, THESE ARE THE PEOPLE THAT WORK NIGHTS AND WEEKENDS, UM, TO GET THIS BUDGET DONE.
AND ALL I HAVE TO DO IS BRIBE THEM WITH THE LITTLE FOOD AND, YOU KNOW, THEY, THEY PUT IN THE WORK.
SO I'M, TO SAY I'M PROUD OF THEM WOULD BE A HUGE UNDERSTATEMENT.
AND I THIS, AND I'VE HAD THE HIGHEST NUMBER OF VACANCIES I'VE EVER HAD GOING INTO A BUDGET CYCLE.
SO THEY DID TRIPLE THE WORKLOAD AND I'M EXTREMELY PROUD OF THIS GROUP HERE.
I CAN ADD, I MEAN, THE LAST 15 YEARS I'VE BEEN WITH THE CITY, I THINK THIS IS THE LEAST AMOUNT OF TEAMS WE HAVE TO DO THE BUDGET.
SO WE WILL BURN PEOPLE AND THEY ACTUALLY LEAVE.
SO YOU GUYS READY FOR QUESTIONS? YES.
YOU GOT THE EASY PART, UH, OVER WITH, HERE COMES THE TOUGH PART.
SO COUNCIL MEMBER SALLY ALCO WILL START US OFF.
AND I DID NOTICE A SLIGHT UP UPTICK IN THE FOOD LINE ITEM FOR THE FINANCE DEPARTMENT.
UM, UH, BUT THAT'S MONEY WELL SPENT AND THANK YOU GUYS FOR A GREAT JOB.
THIS IS A, A REALLY HUGE, HUGE UNDERTAKING AND WILL THANK YOU FOR ALL THE ATTENTION TO I'LL, I'LL COME BASE BUDGETING.
I JUST THINK THAT'S GONNA BE KEY TO LOOK AT AT OUR PROGRAMS AND SERVICES THAT WE PROVIDE.
IT'S VERY DIFFICULT TO SEE THAT IN OUR CURRENT BUDGET STRUCTURE AND I THINK THAT WILL REALLY HELP US TO PRIORITIZE.
[00:45:01]
HAPPY ABOUT THAT.I'LL JUST RUN THROUGH THE, A FEW QUESTIONS REALLY QUICK.
IT'S MY UNDERSTANDING THE $160 MILLION OF ARPA FUNDING THAT'S BEING PUT INTO THE 23 BUDGET AS PART OF THE FIRST TRANCHE OF MONEY, CORRECT? CORRECT.
AND THE, UM, THE NEXT TRANCHE OF MONEY, YOU HAD A SLIDE ON THERE THAT SAYS WE MUST HAVE THIS, IS IT JUST COMMITTED BY THE, BY 2024, END OF 2024 AND THEN BY 2026, IS THAT CORRECT? RIGHT.
IS WE OBLIGATED BY 24 AND SPENT OBLIGATED BY 24 AND SPENT BY 26 END OF YEAR 2026? YES.
ON THE INFLATION RATE, UM, YOU MENTIONED THAT A A 4.8% NUMBER AND A A 4.28% NUMBER.
SO FOR PURPOSES OF THE REV CAP COM COMPUTATION, IT'S 4.28.
IT'S NOT, I I GET THE FOUR IN THE EIGHT, BUT IT'S 4.28%.
SO IT'S, WE OPERATE UNDER THE LESSER OF THAT INFLATION RATE PLUS POPULATION OR 4.5%.
SO RIGHT NOW, UM, WE'D STILL BE UNDER CPI PLUS POPULATION.
AND ON THE, UM, ON THE, THAT SENIOR EXEMPTION, THE 160,000 THAT THE MAYOR ANNOUNCED WOULD BE GOING TO 260,000, I BELIEVE THAT'S NOT AN ASSUMPTION IN THE, IN THE PLAN FOR THIS YEAR, WHEN WOULD THAT KICK IN? SO THE, OR HAVE AN EFFECT? RIGHT.
SO THE, UM, THE EXEM, THE SENIOR TAX EXEMPTIONS AND DISABLED WILL BE IN EFFECT STARTING JULY ONE.
UM, AND SO THAT WOULD BE THAT, SO THAT IS NOT GONNA BE IMPACTING THE BUDGET BECAUSE THE BUDGET IS JUST BASED ON THE REVENUES.
UM, SO THAT WOULD BE IMPACTING THE CITIZENS WHEN WE ACTUALLY LOOK AT THE TAX RATES.
SO THEY WOULD HAVE SOME SAVINGS.
SO THAT DOESN'T HAVE ANY CORRECT.
AND THEN ON THE, UM, ON THE H MEPS LEGACY CONTRIBUTION, CAN YOU EXPLAIN THAT AGAIN? I THINK YOU BRIEFLY TOUCHED ON THERE WERE TWO CATEGORIES ON YOUR ASSUMPTIONS FOR PENSIONS.
ONE WAS THE LEGACY AND ONE WAS JUST A A RATE.
CAN YOU SO YEAH, SO REMEMBER IN THAT PENSION REFORM, UH, ONE OF THE, UM, ITEM THAT CAME OUT OF THAT, UH, SENATE BILL ON THE MUNICIPAL PENSIONS, UM, IT'S ACTUALLY TWO PORTIONS.
SO THERE IS A LEGACY AMOUNT, WHICH IS BASED ON A DOLLAR AGREEMENT ON THE DOLLARS PAYMENT FOR OUT YEARS.
AND ALSO A PERCENT RATE OF, OF PAYROLL.
AND SO, BUT NOT GONNA FIRE AND PENSION IS JUST BASED ON A, YOU KNOW, THE CORRIDOR MID POINT.
THANK YOU COUNCIL MEMBER ABBY CAYMAN.
SORRY, WE'RE HAVING TO SHARE MIKE'S, UM, DIRECTOR, THANK YOU FOR YOUR PRESENTATION TO THE ENTIRE TEAM.
UM, CONCERNED ABOUT, BUT FOR ARPA, WHERE WE WOULD BE IN THE PROJECTIONS, IN THE GAPS THAT YOU'RE SHOWING, UM, IN SOME OF THOSE SLIDES, IT'S EXTREMELY CONCERNING.
UM, DO WE KNOW, AND YOU MAY HAVE ALREADY SAID THIS, BUT JUST FOR THE PUBLIC, HOW MUCH PROJECTED, UM, HOW MANY PROJECTED DOLLARS WERE NOT CAPTURED DUE TO THE REVENUE LIMITATIONS IN THE CAP, UM, THAT ARE CURRENTLY IN PLACE? SO I KNOW I HAVE.
UM, SO THANK YOU FOR BRINGING THAT UP.
SO THAT IS THE IMPACT ON THE REVENUE CAP.
UM, SO THE IMPACT FOR FISCAL YEAR 23, IF, IF WE DON'T HAVE THE CAP, IT WOULD'VE BEEN ABOUT 282 MILLION THAT WE COULD HAVE USED, UM, TO SERVE THE CITY.
UM, SO THAT IS ONE OF, ONE OF THE, UM, ITEMS IN, IN YOUR STATEMENTS.
SO THE OTHER ONE IS, IF NOT FOR ARPA, THEN ESSENTIALLY YOU WOULD HAVE ABOUT $160 MILLION GAP TO CLOSE, WHICH COULD IMPACT PUBLIC SAFETY.
AND IT WAS ALSO STRIKING ON, UH, PAGE 17, THAT SINCE FISCAL YEAR 2015, THE FULL IMPACT OF THE PROPERTY TAX CAP HAS BEEN 1.8, ONE EIGHT, EXCUSE ME, BILLION DOLLARS.
SO THANK YOU FOR PROVIDING THAT.
UM, YOU, YOU STARTED TO EMPHASIZE IT, BUT WITH THE FUND BALANCE, HOW IMPORTANT IS THAT TO PRESERVE, ESPECIALLY WITH THE REVENUE LOSSES THAT WE'VE EXPERIENCED DURING THE PANDEMIC? VERY THANK YOU FOR BRINGING THAT UP.
VERY, BECAUSE IF YOU REMEMBER, WHAT WE HAVE FROM ARPA IS ESSENTIALLY TO REPLENISH THE REVENUE WE LOST.
SO IT'S NOT SOMETHING THAT NOW THAT WE HAVE THE MONEY, THEN THIS IS THE MONEY THAT WE SPEND TODAY, BUT THOSE ARE ENOUGH TO CO RECOVER THE REVENUE LOSSES WE HAVE.
AND AGAIN, ARPA IS GONNA BE ENDING IN FISCAL IN DECEMBER 31ST, 2024.
AND SO THAT MONEY IS NOT GONNA BE AVAILABLE.
SO THE HOPE IS THAT THE ECONOMY WOULD BE PICKING UP BACK AGAIN AT THAT POINT.
SO IT IS VERY, VERY IMPORTANT FOR US TO PRESERVE THIS FUND BALANCE AT THIS POINT.
[00:50:01]
QUEUE.MARTIN, THANK YOU SO MUCH FOR ALL THE WORK THAT EVERYONE'S DONE.
UM, I KNOW WE TALKED ABOUT THE IMPACT OF THE CAP, THE REVENUE CAP.
IS THAT MONEY COMPLETELY GONE OR IS THAT MONEY INJECTED WITH TO THE CITY IN OTHER WAYS, THROUGH MANAGEMENT DISTRICTS, THROUGH TERMS THROUGH OTHER, OTHER AVENUE? OR IS THAT JUST NOT IT'S NOT.
UM, SO REMEMBER WHEN WE, UM, WHEN WE HIT THE REVENUE, THE PROPERTY TAX REVENUE CAP BACK IN FISCAL YEAR 15, UH, WE ACTUALLY HAVE TO SET OUR GENERAL FUND BUDGET AT THE CAP, WHICH TRANSLATE WHEN YOU ACTUALLY GO THROUGH THE TRUTH AND TAXATIONS AND VOTING FOR THE TAX RATE TO MEET THAT REVENUE CAP, WE WOULD HAVE TO ADJUST OUR TAX RATES.
SO IT'S LOST BECAUSE ESSENTIALLY WE HAVE TO REDUCE THE TAX RATE TO BE AT THE REVENUE CAP.
AND THEN THE OTHER TWO MORE QUESTIONS.
I, I REALLY APPRECIATE WHAT YOU, HOW YOU LISTED IN MORE DETAIL WHAT WE DID IN TERMS OF IMPLEMENTING THE PFM REPORT.
DO YOU HAVE AN IDEA, AND I KNOW THIS IS TOTALLY AN APPROXIMATION AND MAYBE YOU DON'T EVEN KNOW, BUT DO YOU HAVE AN IDEA OF WHAT THAT NUMBER COLLECTIVELY WOULD LOOK LIKE IF YOU, IF YOU ADD DOLLAR, DOLLAR WISE MM-HMM
'CAUSE YEAH, 'CAUSE IT HAS TO ASK FOR INDIVIDUAL CALCULATIONS WITH THE UH, UM, NO WE DON'T, WE DON'T HAVE, I'M JUST CURIOUS TO SEE.
WE SPENT SO MUCH MONEY ON THAT REPORT.
I WOULD JUST BE CURIOUS TO SEE WHAT SAVINGS, YOU KNOW, HOW WE BENEFITED FROM MAKING THOSE ADJUSTMENTS.
WELL YOU COULD SEE ALREADY WITH THE PENSION REFORM MM-HMM
THAT WAS YEAH, NO, I KNOW THAT ONE.
SO WE HAVE THAT WITH THE OPEC REFORM, YOU, YOU, YOU GET THE IMPACT ON WHAT THE, YOU KNOW, POTENTIAL REDUCTIONS IN UNFUNDED LIABILITIES IN THERE, UM, HEALTH BENEFITS.
I THINK THAT WOULD REDUCE OUR HEALTH BENEFITS.
AND I THINK THAT WAS PRESENTED EARLIER AS WELL.
UM, YOU KNOW, THAT THAT COULD INCREASE, REDUCE OUR COST THIS YEAR BECAUSE OF THE HEALTH BENEFITS AS WELL.
NO, NO, I DEFINITELY SEE THE BENEFIT.
I JUST WOULD LOVE TO KNOW WHAT THE NUMBER WA YOU KNOW, COLLECTIVELY.
SO I'M GOING TO GO TO SLIDE 29.
WHAT'S NEXT? ADDRESSING THE GAP.
THE REASON WHY I'M BRINGING THIS UP IS THREE OF US SITTING AROUND HERE ARE LEAVING.
THIS IS OUR SECOND TO LAST BUDGET AND YOU'RE GONNA BE IN CHARGE OF THE NEXT COUPLE OF BUDGETS.
AND WHILE WE HAVE A REALLY GOOD PICTURE THIS YEAR, WE HAVE A ABYSMAL PICTURE AFTER WE LEAVE.
SHORT TERM BUILDING UP FUND BALANCE.
YEAH, WE'RE GONNA CONTINUE TO DO THAT.
YOU DO THAT BY ALL THESE INITIATIVES.
HIRING CONTROL, CREATING EFFICIENCIES, COST CUT, CUTTING OPPORTUNITY.
THAT MEANS INCREASING REVENUE SOURCES.
CONTINUING ONE DAY TO BUILD FUND BALANCE.
SO THE REALLY NUMBER ONE THING IS BUILD FUND BALANCE.
HOW DO YOU DO THAT? SO I'M GONNA GO TO PAGE 26 AND THERE WAS A QUESTION THAT WAS ASKED OF ME LAST WEEK TO PREPARE FOR THIS AND IT SAID, THE PERSON SAID, DAVE, HOW MUCH OF OUR RETIREMENT PAY, OUR DEFINED BENEFIT PAY THAT WE PAY EMPLOYEES IS INCLUDED IN OPAB OTHER POST-EMPLOYMENT BENEFITS.
DOES ANYBODY KNOW THE ANSWER TO THAT? ZERO.
OPAB HAS NOTHING TO DO WITH RETIREMENT PAY.
IT HAS EVERYTHING TO DO MAINLY WITH HEALTHCARE, DISABILITY AND THINGS OF THAT NATURE.
AND THE VERNACULAR AND THE, THE VERBIAGE AROUND HERE IS ALWAYS AROUND OPEP.
OPEP HAS NOTHING TO DO WITH OUR BIG BUGABOO THAT'S RETIREMENT PAY.
AND IF YOU LOOK AT SLIDE 26, CORRECT ME IF I'M WRONG, THE RETIREMENT PAY THAT WE'RE GONNA PAY THIS YEAR IN THIS BUDGET IS $436 MILLION.
IS THAT CORRECT? YES OR NO? NO, NO.
THE FOUR, THE 4 36 IS THE, THE DEBT PAYMENT IS FOR WHAT? WHERE IS THE RETIREMENT PAY THAT WE'RE OBLIGATED TO PAY FOR RETIREES IN FISCAL YEAR 2023? 'CAUSE I LOOKED THROUGH THIS BIG BOOK BOOK AND ALL I CAN FIND IS DEBT AND PAY AS YOU GO.
IS IT IN HERE? IT SHOULD BE IN THE HEALTH BENEFITS.
YEAH, IT WOULD BE IN THE HEALTH BENEFIT.
I'M LOOKING FOR A NUMBER 'CAUSE I LOOKED THROUGH IT AND I COULDN'T FIND IT.
I THINK IT'S NOT AS BIG AS POLICE.
BUT I THINK IT'S THE THIRD LARGEST EXPENDITURE THAT WE WILL HAVE TO PAY.
CORRECT ME IF I'M WRONG, OUT OF THE GENERAL FUND, WE DO HAVE THIS BREAKDOWN ON THE RETIREES CLASSIFIED IN CIVILIANS.
UM, SO WE CAN PROVIDE IT TO YOU.
WHAT IS THE NUMBER I WANT A NUMBER FOR? I HAVE TO PICK THEM UP EVERYONE TO HERE BECAUSE IT'S A BIG NUMBER THAT WE NEVER TALK ABOUT.
IT'S, WE, IT'S, IT'S ALL THERE.
UM, I KNOW I'M, ALL I HAVE IN HERE IS THE GENERAL FUND, BUT OF COURSE YOU'RE LOOKING AT THE CITYWIDE EXPENDITURES.
[00:55:01]
OKAY.IT'S A BIG NUMBER, RIGHT? MM-HMM
GENERAL FUND IS AT LEAST WHAT, 60.
AND THEN WHEN WE GO TO SLIDE 21, WE TALK ABOUT PENSION REFORM.
WELL MY OPINION A LOT OF THAT IS, IS, IS IS WORKING FANTASTIC, ESPECIALLY RATE OF RETURN BECAUSE WE ALWAYS GUARANTEED A RATE OF RETURN IN THE LAST COUPLE OF YEARS A MONKEY COULD HAVE RECEIVED GOT YOU.
ANYONE COULD HAVE DONE THAT IN THIS FISCAL YEAR.
I THINK IT'S GONNA BE A NEGATIVE RATE OF RETURN.
SO THE CORRIDOR IS GONNA HAVE TO BE LOOKED AT BECAUSE THAT CORRIDOR IS GOING TO KICK IN, WHICH IS A SOFTENING, A BLENDING OF A FIVE YEAR ANALYSIS.
SO I THINK WHILE YOUR PROJECTIONS, I DISAGREE WITH TWO OF YOUR PROJECTIONS.
NUMBER ONE, SALES TAX REVENUE AT ZERO.
I WENT TO THE GROCERY STORE LAST NIGHT 'CAUSE I HAVE FAMILY COMING IN THIS WEEKEND AND I DIDN'T BUY ANY MEAT OR ANY CHICKEN OR ANY PORK OR ANYTHING.
I BOUGHT HOUSEHOLD ITEMS, TOILET PAPER, THINGS OF THAT NATURE.
IT WAS $462 AND IT'S MY WIFE AND I.
SO I DON'T GO TO THE GROCERY STORE THAT OFTEN.
BUT SALES TAX ARE GONNA BE A, A COMPONENT OF THAT.
I THINK SALES TAX REVENUE IS GONNA CONTINUE AS WE'VE SEEN, CONTINUE TO INCREASE.
AND TO, TO CLASSIFY IT AS ZERO, I THINK, UH, ISN'T GONNA BE ACCURATE.
THE SECOND PART IS I THINK THE LIABILITY ON THE PENSION SIDE, WHILE WE'VE DONE A GOOD JOB OF MOVING IT FROM 8.2 TO 1.5, I THINK WE'RE GONNA HAVE A LITTLE BIT OF A KICKUP BECAUSE A GUARANTEED RATE OF THE RETURN SOFTENING THE MARKET, THE INTEREST RATES THAT WE'RE SEEING, ET CETERA.
SO MY ULTIMATE QUESTION IS, IS THAT HOW DO WE, LOOKING AT YOUR SLIDE OF LONG-TERM THINGS TO DO, IT HAS A BIG CATEGORY UP THERE OF THE PFM RECOMMENDATIONS.
SO THERE'S ONLY ONE THING YOU CAN DO, ONE THING ONLY AND TO MOVE EMPLOYEES FROM DEFINED CONTRIBUTION, BENEFIT TO DEFINED CONTRIBUTION.
WE MADE AN OBLIGATION TO OUR EMPLOYEES, DAVE MARTIN'S OPINION, AND WE LIVE UP TO THAT OBLIGATION.
SO IF YOU STARTED WORK YESTERDAY, YOU'RE GONNA RECEIVE A DEFINED BENEFIT PLAN.
YOU SOMEWHERE DOWN THE ROAD, YOU GOTTA BEGIN A DEFINED CONTRIBUTION PLAN TO GET RID OF THIS $463 MILLION OF GROWING LIABILITY THAT COMES OUT OF THE GENERAL FUND YEAR IN AND YEAR OUT.
UNTIL YOU DO THAT, WE WILL NEVER PASS A STRUCTURALLY BALANCED BUDGET.
YOU KNOW, THE MAYOR USED THE TERM YESTERDAY.
WELL IT'S A PRETTY CLOSE TO BEING STRUCTURALLY BALANCED AND IT'S A HARD THING TO DO.
YOU IT'S IN, IN GOVERNMENT BECAUSE OF THE DEFINED BENEFIT PLAN THAT WE HAVE.
SO UNLESS YOU ATTACK THAT, AND WHEN I LEAVE, I WANNA LEAVE THIS FINANCIAL POSITION OF THE CITY BETTER THAN I, I CAME IN WITH AND I WOULD INVITE A DISCUSSION ON THE MOVEMENT OF NEW EMPLOYEES, LET'S SAY JANUARY 1ST, 2023 FOR THEM TO MOVE TO A DIFFERENT BENEFIT PLAN LIKE WE'VE DONE, I THINK IN FOUR DIFFERENT INSTANCES, WE HAVE FOUR DIFFERENT RETIREMENT PLANS.
A FIFTH ONE OUT THERE HAS TO BE DEFINED CONTRIBUTION.
BECAUSE IF YOU DON'T DO THAT, YOU WILL CONTINUE TO BUILD YOUR LIABILITY YEAR AFTER YEAR AFTER YEAR, AND YOU WILL NEVER, EVER GET OUT OF IT.
DO YOU DISAGREE OR AGREE WITH THOSE STATEMENTS? THAT THAT IS ONE OF THE WAY TO REDUCE, IS THAT YES, DEFINE CONTRIBUTIONS, BUT I KNOW THERE'S A LOT OF, UM, FACTORS TO PLAY IN.
AND AGAIN, YOU ARE THE DECISIONS MAKER.
UM, BUT YES, IT'S ONE OF THE WAY, YEAH, I MEAN, IT'S, IT'S A TOUGH DISCUSSION TO HAVE BECAUSE PEOPLE WILL SAY, WELL, PAY IS DIFFERENT.
AND I THINK WE'VE DONE A OKAY JOB OF, OF PAY.
I LOOKED AT IT, UM, AS IT COMPARES TO CORPORATE, WE'RE LOSING A LOT OF GOOD PEOPLE TO CORPORATE, SO WE PROBABLY HAVE TO DO SOMETHING TO THE GENERAL PAY OF EMPLOYEES.
UH, WHEN I, I KNOW I HAVEN'T HEARD THE DING, I'M PROBABLY TALKING TOO LONG, BUT WHEN I TALK TO YOUNG COLLEGE GRADUATES,
WHEN I TALK TO, TO YOUNG COLLEGE GRADUATES AND ASK THEM, WHEN YOU GO TO WORK, WHAT ARE YOU LOOKING FOR? THEY NEVER ONCE MENTIONED.
I'M LOOKING FOR IN 40 YEARS WHAT MY, MY DEFINED CONTRIBUTION BENEFIT PLAN IS GONNA LOOK LIKE.
THEY WANT PAY, THEY WANT FAMILY TIME, WHICH WE IN HELP, WHICH WE DID WITH THE PARENTAL LEAVE.
THEY WANT, THEY WANT REALLY COST OF, UH, OF, YOU KNOW, REALLY EASE OF LIVING AND THINGS THAT MAKE THEIR LIFE FAMILY LIFE BALANCE A LOT BETTER.
I'LL COME BACK TO SUMMARIZE THAT.
I'LL GO NOW TO COUNCIL MEMBER ABEY CAYMAN.
[01:00:01]
AWAY FROM THIS CURRENT TOPIC, UM, BUT I, I DID WANNA ASK ONE THING AS WE'RE MENTIONING RETIREMENT, UM, ASSISTING THOSE WHO MAY NEED ASSISTANCE, THINGS OF THAT NATURE.HOW MUCH ARE OUR SENIORS AND DISABLED HOMEOWNERS GETTING WITH THE, UH, PROPOSED INCREASE IN THE HOMESTEAD EXEMPTION, OR HOW MUCH ARE THEY GOING TO BE SAVING? SO WE RUN SOME CALCULATIONS ON THAT.
UM, AGAIN, THIS IS GONNA BE A PROPOSAL THAT THE MAYOR'S GONNA BRING FORWARD SEPARATELY TO THE COUNCIL TO INCREASE THE, UM, UH, SENIOR AND DISABLED TAX EXEMPTIONS FROM ONE 60,000 TO 260,000.
SO WE LOOK AT AN AVERAGE, UM, AVERAGE HOMES OF 300,000, FOR EXAMPLE.
UH, WHEN WE LOOK AT THAT, NOW, KEEP IN MIND THERE IS ALSO A, UH, A STANDARD HOMESTEAD EXEMPTIONS, WHICH IS 20% OF THE VALUES, RIGHT? SO WHEN YOU LOOK AT THE AVERAGE HOME OF 300,000, UH, YOU'RE LOOKING AT ABOUT SAVING, THIS IS A APPROXIMATE, ABOUT $440 PER, UM, ANNUAL, THINK ABOUT FOUR $40 THAT THEY CAN SAVE.
THIS IS, AND AGAIN, THIS IS BASED ON OUR CURRENT TAX RATE.
COUNCIL MEMBER LETITIA PLUMMER.
AND JUST TO PIGGYBACK A LITTLE BIT ON THE MAYOR PROTE, I DO APPRECIATE, AND WE HAD A DISCUSSION IN ONE OF THE BUDGET MEETINGS ABOUT YOU'RE BRINGING FORTH SOME RECOMMENDATIONS, SHORT TERM AND LONG TERM.
I MEAN, IT'S, UH, THEY'RE PRETTY BROAD AND IT'S GONNA, WE'RE GONNA HAVE TO BE MORE SPECIFIC ABOUT 'EM.
UM, YOU KNOW, UM, WE'RE A PEOPLE BUSINESS AND I THINK WE HAVE MADE SOME STRIDES IN HEALTH BENEFITS, EVEN THE $75 SURCHARGE FOR SPOUSES, UM, THAT, THAT MADE AN IMPACT.
UM, PEOPLE LEFT AND WENT TO THEIR, THEIR OWN.
UM, YOU KNOW, IF A SPOUSE WENT TO THEIR OWN INSURANCE, I THINK THAT MADE IT BEING A PEOPLE BUSINESS.
YOU CAN'T GET AT THE STRUCTURAL IMBALANCES WITHOUT THINGS LIKE PENSION AND HEALTH BENEFITS AND THINGS AND THINGS, SAL, THAT IMPACT PEOPLE.
SO THEY ARE TOUGH DISCUSSIONS, MAYOR PROTO, BUT, BUT YOU'RE RIGHT ON THE MONEY.
I MEAN, THOSE ARE THE KINDS OF THINGS THAT WILL BRING US INTO STRUCTURAL BALANCE.
AT ONE POINT, AND I FORGOT TO MENTION, COUNCIL MEMBER DAVID ROBINSON, COUNCIL MEMBER CAROLYN EVANS SHABAZZ AND ROBERT GALLEGOS, COUNCIL MEMBER ROBERT GALLEGOS HAS JOINED US A LONG TIME AGO.
SO YOU DESERVE TO BE GOTTEN TWICE.
SO, UH, THERE ARE NO OTHER COMMENTS OR QUESTIONS FROM COUNCIL MEMBERS.
THIS IS FOR MR. WILL, CAN YOU GO BACK AND CLARIFY, UM, THE TRANSITION FOR THE, IT YOU TALKED ABOUT, UH, A PROCESS SPACE TWO AND THEN THE SYSTEM IMPLEMENTATION.
CAN YOU GIVE THE TIMELINE FOR THAT AGAIN? I DIDN'T CATCH THAT.
SO THE PROCESS IS WHAT WE'RE WORKING ON NOW.
UM, SO WHAT I'M, WHAT I'M WAITING FOR IS TO MAP OUT HOW LONG IS IT GONNA TAKE TO CHANGE THE PROCESS, AND THEN I CAN FIND OUT HOW LONG IT'S GONNA TAKE FOR US TO GET A SYSTEM IN PLACE.
SO I DON'T KNOW THE TIMELINE EXACTLY FOR THE SYSTEM, BUT I WILL KNOW PROBABLY BY NEXT MONTH OR SO.
SO, UM, MY LAST COMMENTS, I THINK IT'S SOMETHING WE NEED TO STUDY.
IS IT SOMETHING WE NEED TO IMPLEMENT ON A CERTAIN TIMEFRAME? I KNOW THAT'S FOR COUNCIL TO DECIDE AND TO DEBATE, BUT I THINK IT'S SOMETHING THAT WE REALLY NEED TO LOOK AT.
AND CAN YOU DO A HODGEPODGE OF DIFFERENT PLANS? WHAT ARE THE OPTIONS THAT ARE AVAILABLE TO REDUCE THE LONG-TERM LIABILITY? BECAUSE WE HAVE BALANCES BUDGET BY A NUMBER OF MEASURES.
THANK GOD FOR ARPA FUNDS, PREVIOUS LAND SALES AND DIVESTITURES OF PROPERTY.
THAT'S HOW WE'VE ALWAYS BALANCED THE BUDGET TO A CERTAIN DEGREE.
SO ONE OF THE THINGS THAT THE MAYOR SAID YESTERDAY IN HIS PRESS CONFERENCE, WHICH IS TOTALLY ACCURATE, WHEN THE CREDIT AGENCIES LOOK AT US, MOODY'S STANDARD AND POORS FITCH EVEN DONE IN BRADSTREET, UH, THEY LOOK AT THE VIABILITY, LONG-TERM VIABILITY OF THE CITY, AND THEY SAY, WELL, YOU'RE, AS HE SAID YESTERDAY, YOU'RE RESTRICTED BY THREE THINGS, REVENUE CAP.
WELL, THAT'S NOT GOING AWAY UNLESS THE STATE CHANGES.
UH, PENSION REFORM MOVING FROM 8.2 BILLION OF LIABILITY TO 1.5 BILLION A PLUS.
EXCELLENT IDEA, EXCELLENT CONCEPT THAT WORKS.
OPEP LIABILITY, OP E TRUST FUND OR CREATION.
AS COUNCIL MEMBER ALCORN MENTIONED, WE'VE DONE A FEW THINGS ON THE HEALTH BENEFITS SIDE FOR RETIREES, UH, TO MAKE THAT MORE FISCALLY PRUDENT FOR THE CITY.
UH, THE NEXT ITERATION OF THAT IS HOW DO YOU HANDLE THE LINGERING DEFINED BENEFIT PAYMENT THAT SOME FOLKS ARE RETIRING
[01:05:01]
IN THEIR FORTIES AND DRAWING RETIREMENT PAY IN THEIR FIFTIES.AND, YOU KNOW, WE'VE DONE A REALLY GOOD JOB OF, OF LOOKING AT DROP AND DOING SOMETHING WITH THAT.
BUT I, I WOULD RECOMMEND THAT THIS BODY STUDY THAT AND, UM, AND REALLY LOOK HARD AT MAYBE, UH, COMING UP WITH SOME TYPE OF A, A, A PLAN NOT FOR EXISTING EMPLOYEES, BUT FOR EMPLOYEES THAT AREN'T IN THIS BUILDING TODAY.
BECAUSE I BELIEVE WHEN YOU MAKE A COMMITMENT TO EMPLOYEES, YOU LIVE UP TO IT.
AND IF YOU HAVE THAT ON THE PAPER TODAY, YOU SHOULD BE RESPONSIBLE FOR THAT TILL THE DAY THAT THAT PERSON LEAVES AND RETIRES AND DOES OTHER THINGS.
BUT I STILL AM CONVINCED THAT THE LONG TERM FISCALLY PRUDENT THING, ACCORDING TO OUR CONSULTANTS THAT WE ENGAGED A COUPLE YEARS AGO, WAS LOOKING AT THAT.
WE DO HAVE FIVE PUBLIC SPEAKERS FOR THE FIVE YEAR FORECAST.
WE'LL START OFF WITH MS. SARAH BLANDING.
MS. BLANDING, WELCOME AGAIN, YOU'RE ACTIVE PARTICIPATOR IN THESE THANK YOU SABA BLANDING, STAR SIX, STAR SIX TO UN UNMUTE, MUTE.
AND IF NOT, WE WILL COME BACK TO YOU.
YOU, WE CAN SEE YOU, BUT WE CAN'T HEAR YOU.
STAR SIX, WE HAVE YOU NOW STAR SIX AGAIN SPEAK.
UM, I HAD A FEW QUESTIONS FOR Y'ALL.
UM, THE FIRST IS, UM, WHAT IS THE IMPACT OF THE VARIOUS COLLECTIVE BARGAINING AGREEMENTS, UM, ON THIS FORECAST? I'D LOVE TO HEAR Y'ALL DISCUSS IF YOU HAVE SOME TIME TODAY.
UM, AND KIND OF ALONG WITH THAT, UM, WHAT INFORMATION DO YOU HAVE ABOUT THE POTENTIAL, UH, FINANCIAL IMPACT OF PAY PARITY FOR FIREFIGHTERS, IF THAT ENDS UP HAVING TO BE IMPLEMENTED? I NOTICED THERE WAS A 6% INCREASE FOR FIREFIGHTERS, BUT I, UM, WASN'T A HUNDRED PERCENT SURE, UM, HOW THAT WOULD IMPACT THE BUDGET.
UM, AND YEAH, I GUESS, UH, OH, I'LL THROW IN ONE MORE QUESTION,
UM, MANY COUNCIL MEMBERS AND THE MAYOR HAVE MENTIONED INCREASING, UM, THE SIZE OF HPD AS A PRIORITY.
UM, THERE'S FIVE ADDITIONAL CADET CLASSES THAT ARE PROPOSED.
UM, WHAT ARE THE LONG TERM BUDGET IMPLICATIONS OF INCREASING THE CLASSIFIED HEADCOUNT FOR HPD, ESPECIALLY CONSIDERING, UM, THE PASSAGE OF HOUSE BILL 1900 LAST SUMMER.
SO, UM, I'LL LEAVE THE REST OF MY TIME, UH, FOR OKAY.
FIRST QUESTION WAS COLLECTED BARGAINING PROCESS.
I GOT THE FIRST QUESTION, HOW WAS IT WORKING? SO ON SLIDE 18, WE DO SHOW THE EMPLOYEE COMPENSATION IMPACT IN THE BUDGET, WHICH IS ABOUT 44.6 MILLION.
AND THAT INCLUDES, UH, ALL THREE, UH, EMPLOYEE GROUPS, BUT IT ALSO FACTORS IN ATTRITION AND THINGS LIKE THAT.
SO, UM, IT'S ABOUT 44 POINT, UH, 6 MILLION IN THIS BUDGET.
THAT'S MUNICIPAL POLICE AND FIRE.
UH, SO IF, IF YOU ASK FOR A 6% FIRE SPECIFIC, UM, I WILL HAVE TO, I DON'T HAVE IT ON THE SLIDES, BUT I CAN GIVE IT, UH, GET BACK TO YOU ON THAT.
AND WE WILL POST ALL THE ANSWERS TO SHAREPOINT, CORRECT? CORRECT.
UH, THE, THE OTHER QUESTION WAS POLICE CADETS RELATED TO BUDGET.
IF I READ THE NUMBERS RIGHT, I THINK THE NUMBER OF FTES, THE HEADCOUNT IN HOUSTON POLICE DEPARTMENT DECREASED FROM, UH, BY FI 4% LAST YEAR.
THE FISCAL YEAR 22 INCLUDES SIX CADET CLASSES, AND THEN IN THIS FISCAL YEAR, IT INCLUDES FIVE CADET CLASSES.
BUT OVERALL NUMBER OF POLICE DEPARTMENT EMPLOYEES CORRECT.
DECREASED BY 4% LAST FISCAL YEAR, CORRECT.
TO THIS FISCAL YEAR, ACCORDING TO YOUR PROJECTIONS, CORRECT.
NO, I WAS GONNA SAY, JUST TO CLARIFY, CLARIFY RETIREMENT ON, ON, ON HER QUESTION, IT'S NOT FIVE ADDITIONAL CLASSES, IT'S FIVE THAT'S, UH, SIX WAS IN THE BASE, SO WE ACTUALLY REDUCED TO FIVE.
SO IT'S NOT A, IT'S NOT A GROWTH IN, IN CLASSES.
SO IN TERMS OF THE BUDGET FOR THAT COST, THAT ACTUALLY WAS A LITTLE LOWER FOR THE CADET CLASSES FOR POLICE GOING INTO 23.
AND ACCORDING TO, UH, CHIEF NER, IT WAS FIVE CLASSES AT LIKE 55 CADETS, IT'S GONNA BE FIVE CLASSES AT 70 PLUS CADETS.
[01:10:01]
EQUIVALENT TO A SIX CLASS BUILT INTO THE FIVE CLASS PROCESS.MR. JASON OLIVER STAR SIX, PLEASE.
SO I, I WANTED TO FOLLOW UP BECAUSE I, I HEARD SABA ASK ABOUT THE IMPACT OF PAY PARITY AND WHAT MIGHT BE THE POTENTIAL IMPACT OF THAT, NOT THE SPECIFIC RAISE, THE 6 6 6 THAT WAS, THAT WAS IMPLEMENTED.
UM, DO YOU ALL HAVE THAT INFORMATION? NO.
NO, I WAS GONNA SAY, SO THAT WOULD HAVE TO BE A, A, A NEW ANALYSIS WHEN WE LOOKED WAY BACK, UH, I DUNNO, IT WAS A 2018 OR 19, WE WERE LOOKING AT THE PAY PARITY ANALYSIS.
SO MUCH HAS CHANGED SINCE THEN.
SO NO, I DON'T HAVE, WE DON'T HAVE THAT NUMBER RIGHT NOW.
THIS, THIS BUDGET PRESENTATION IS PURELY FOCUSED ON WHAT IS IN THE FISCAL YEAR 23 OPERATING BUDGET.
UH, IN THIS FISCAL YEAR 23 BUDGET, WE INCLUDE A 6% PAY RAISES FOR THE FIREFIGHTERS.
SO, SO THAT WOULD SIGNIFICANTLY PROBABLY CHANGE AND, AND INCREASE OUR LIABILITIES THOUGH, RIGHT? LIKE WE, I, IT WOULD BECOME A, WE GET MUCH CLOSER AND PROBABLY MOVE BEYOND THE PESSIMISTIC.
IS THAT THE CASE? I'M SORRY, SAY THAT AGAIN? WE, WE'D PROBABLY END UP MOVING LIKE MUCH CLOSER TO, OR PERHAPS BEYOND THE PESSIMISTIC, IF, IF THE DECISION ENDS UP GOING TOWARD THE FIREFIGHTERS, IS THAT THE CASE? SO IF THERE IS, IF THERE IS ANY CASES AND INCREASED EXPENSES THAT HAPPEN DURING THE FISCAL YEAR, THEN YES, IT WILL BE SOMETHING THAT WE WILL HAVE TO ADDRESS AT THAT POINT.
UM, AND, AND THE PERSONNEL CHALLENGES THAT YOU ALL MENTIONED FOR FINANCE, RIGHT? LIKE YOU TALKED ABOUT A HIGH NUMBER OF VACANCIES THAT SEEMS TO BE AN ISSUE ACROSS THE CITY'S DEPARTMENTS.
DO YOU SEE A NEED FOR MORE COMPETITIVE PAY IN THE CITY? AND, AND IF SO, DOES THAT LIKE FACTORED INTO YOUR PROJECTIONS COMPETITIVE PACE? OR IS IT, YEAH.
NO, I MEAN, I THINK IT'S A COMBINATION OF THINGS THAT YOU'RE SEEING ACROSS THE, IN THE CITY IS WHAT WE'RE SEEING THROUGHOUT THE UNITED STATES WITH THE GREAT RESIGNATION.
UM, SO IT'S A COMBINATION OF THINGS, AND I DO BELIEVE, YOU KNOW, THE CITY IS STARTING TO MOVE IN THE RIGHT DIRECTION WITH THE PARENTAL LEAVE TO, TO BE ABLE TO RETAIN EMPLOYEES, UM, OF COURSE PAY.
WE WE'RE ALWAYS LOOKING AT, UH, YOU KNOW, STUDYING CERTAIN POSITIONS TO SEE IF WE'RE PAYING APPROPRIATELY.
LIKE I KNOW WE PUT A LOT OF ATTENTION IN LEGAL AND FOR THE ATTORNEYS, UH, 'CAUSE THAT'S WHERE WE'RE LOSING A LOT OF, UH, UH, ATTORNEYS TO THE, BECAUSE OF PAY.
SO WE, WE ARE DOING THOSE THINGS.
SO I'M HOPING THAT, YOU KNOW, WITH THESE THINGS WE'RE DOING WE'LL, WE'LL START TO BE ABLE TO RETAIN MORE EMPLOYEES, BUT IT'S, UH, IT'S ACROSS THE NATION, NOT JUST THE, THE CITY THAT'S FACING THIS PROBLEM.
AND, AND IF I COULD ADD, KEEP IN MIND AS WELL, HUMAN RESOURCE DEPARTMENTS, UH, ALSO CONDUCTED THOSE, UM, MARKET STUDIES, RIGHT, WHICH IS BASED ON THE, UH, FINANCIAL POLICIES EVERY THREE YEARS.
AND THEN MY LAST QUESTION TO INCREASE THE FUND BALANCE IS A REDUCTION IN SPENDING ON CLASSIFIED OFFICERS A, A VIABLE STRATEGY TO ENSURE FISCAL SUSTAINABILITY SINCE THEY'RE ONE OF OUR LARGEST GENERAL FUND LIABILITIES.
IN THEORY, THE FUND BALANCE WILL BE INCREASED EITHER FROM THE INCREASED REVENUES OR REDUCTION IN EXPENDITURES.
IT'S JUST, YOU KNOW, BASED ON WHAT WE, WE DEALT WITH REVENUES AND EXPENDITURES, ANY INCREASE IN THE FUND BALANCE IS JUST A COMBINATIONS OF BOTH.
SHAREPOINT IS ONLY AVAILABLE TO COUNCIL MEMBERS AND STAFF, BUT IF YOU HAVE QUESTIONS AND YOU'D LIKE US TO ANSWER 'EM, EMAIL US AT DISTRICT E@HOUSTONTXDOT.GOV AND WE WILL WORK YOU TO GET THE QUESTIONS ANSWERED.
ONCE AGAIN, DISTRICT E@HOUSTONTX.GOV.
MR. BROWN, MR. ARIS BROWN STAR SIX, PLEASE.
UM, I HAVE A COUPLE OF QUESTIONS.
ONE OF THE QUESTIONS I WAS CONCERN ABOUT WAS THINKING ABOUT THE, UH, ONE OF THE SECTIONS WITHIN THE GENERAL FUND REVENUE SECTION.
UM, IT WAS FOCUSED ON INCREASING THE BUDGET BY TRANS FUNDS FROM PARK HOUSTON, AND THAT, I BELIEVE RELIES ON LIKE CARS AND PARKING COSTS, EVEN THOUGH HOUSTON HAS BEEN LIKE SLOWLY BUT SURELY IMPLEMENTING MORE BIKE ROUTES AND HOPEFULLY MORE RELIABLE PUBLIC TRANSIT.
SO ONE OF MY QUESTIONS WAS ABOUT THE PRIORITIES OF THE CITY, UM, IN THE COMING YEARS.
IS THIS, IS THERE STILL GOING TO BE A RELIEF UPON A CAR CENTRIC CITY AND RELYING UPON THE REVENUES THAT COME FROM CARS? AND I'M CURIOUS ABOUT HOW THAT ALIGNS WITH THE GOALS TO BE MORE, UM, ON, YOU KNOW, BIKE ROUTES AND WALKABILITY AND, UM, THAT SORT OF SORT
[01:15:01]
OF PROGRESSIVE IDEA, ESPECIALLY AS WE SEE UNCERTAINTY IN THE OIL INDUSTRY.SO THAT WAS ONE OF MY QUESTIONS.
ANOTHER ONE OF MY QUESTIONS WAS ABOUT THE OUTCOME BASED BUDGET.
UM, I, WE'VE HAD LIKE CONVERSATIONS ABOUT THIS WITH PAST, UM, BUDGET, UH, CONVERSATIONS, WORKSHOPS, ET CETERA, UM, IN WHICH LIKE COMMUNITY MEMBERS HAVE EXPRESSED THEIR CONCERNS AND WANTED TO, UM, OFFER IDEAS ABOUT HOW TO IMPLEMENT, UM, THE NEEDS OF THEIR COMMUNITY.
SO I'M CURIOUS ABOUT CERTAIN STAGES OF IMPLEMENTING OUTCOME BASED BUDGET.
YOU FACTOR IN COMMUNITY ENGAGEMENT AND AN ANALYSIS OF ETHICS AND COMMUNITY ETHICS.
I, I, I DID NOT GET THE FIRST ONE, BUT I THINK I, I THINK I FOLLOW YOUR SECOND QUESTIONS ON THE OUTCOME-BASED BUDGETING TO ENGAGE THE PUBLIC.
UM, RIGHT NOW, THE OUTCOME-BASED BUDGETING IS, UM, AN INTERNAL PROCESS SO THAT WE CAN PROVIDE THE INFORMATION RELEVANT TO, YOU KNOW, TO THE COUNCIL, UH, FOR DECISIONS, UH, WHICH IS BASED ON THE CURRENT PROGRAMS, UM, THAT IS IN THE DEPARTMENTS AT THIS POINT.
UM, I THINK THAT'S ALL I CAN ADD.
YEAH, I WOULD, I WOULD JUST ADD THAT, UH, THE PLANNED HOUSTON REALLY IS KIND OF DRIVING FROM THE COMMUNITY ENGAGEMENT.
SO IF PLANNING DOES ANOTHER AN, AN UPDATE TO THE PLAN HOUSTON OR ALL OF THAT WILL DRIVE, UM, SOME OF THE, THE C THE PRIORITIES, COMMUNITY INVOLVEMENT.
UM, UH, TO, UH, TO REPHRASE, I GUESS MY FIRST QUESTION, I'M LOOKING AT THE, UM, FUNDING, I THINK IT'S IN, IT'S A, THERE'S A, UM, A LITTLE FOOTNOTE, UM, THAT SAYS THAT THE INCREASE PRIMARILY IN TRANSFER FROM PARK HOUSTON FUND ON PAGE 10, UM, IT'S ON PAGE 10 OF THE FISCAL YEAR, 2023 GENERAL FUND REVENUE, INCLUDING OTHER RESOURCES.
THERE'S THE SUB NOTE SEVEN THAT SAYS THAT THERE'S AN INCREASE PRIMARILY IN TRANSFER FROM PARK FUNDS.
SO I'M CURIOUS ABOUT HOW THAT ALIGNS WITH BEING A LESS CAR-CENTRIC CITY AND HAVING MORE, UM, PEOPLE DRIVING OR HAVING PEOPLE MORE LIKE BIKING AND WALKING AND PUBLIC TRANSPORT, PUBLIC TRANSIT.
I'M CURIOUS ABOUT HOW THOSE TWO ALIGN AND WHETHER OR NOT THEY DO ALIGN.
IS THERE STILL A GOAL TO BE A LESS CAR-CENTRIC CITY, OR ARE WE STILL GOING TO RELY FOR THE NEXT COUPLE OF YEARS ON PARKING COSTS AND, AND THOSE SORTS OF THINGS, EVEN WITH THE UNCERTAINTY IN THE OIL INDUSTRY? I, I THINK I FOLLOW, I KNOW IT'S A LITTLE BIT MUMBLING, BUT I THINK I FOLLOW THE, JUST OF YOUR QUESTION.
SO YOU'RE GOING BACK TO SLIDE 10 WHERE WE HAVE AN INCREASED REVENUES TRANSFER FROM THE PARK HOUSTON FUND.
UM, SO BASED ON THE ORDINANCE CREATED FOR THE PARK HOUSTON FUND, UH, ESSENTIALLY, AND THAT IS A SPECIAL FUND.
UM, SO ESSENTIALLY ANY, UH, EXCESS FUND OVER, I BELIEVE IT'S 2 MILLION, IS TO BE TRANSFERRED TO THE GENERAL FUND.
UM, SO IN THE LAST YEAR, THE LAST TWO YEARS, OF COURSE, WITH THE STAY AT HOME AND THE PANDEMIC, THERE'S NO SUCH REVENUES GENERATED IN THAT SPECIAL FUND.
SO NOW THAT IT START PICKING UP, THEN THAT FUND HAS BEEN GENERATING REVENUES IN THAT SENSE.
THE ORDINANCE CAN BE PICKING UP BACK AGAIN WHERE ANY EXCESS OFFER 2 MILLION WILL BE TRANSFERRED TO THE GENERAL FUND.
SO THIS IS NOT IMPACTING THE CURRENT OPERATIONS OF THE SPECIAL FUND ITSELF.
THIS IS JUST A FINANCIAL THAT IS ALIGNED TO THE ORDINANCE CREATED FOR THAT FUND.
NEXT SPEAKER IS MR. CHRISTOPHER RIVERA.
CAN YOU HEAR ME? YES, WE CAN GO AHEAD.
I'M JUST GONNA GIVE A LITTLE CONTEXT FOR MY QUESTION.
UM, THIS, THIS FISCAL YEAR, THE HOUSING AND COMMUNITY DEPARTMENT WILL ONLY RECEIVE 0.01% OF WHAT THE HOUSTON POLICE DEPARTMENT IS EXPECTED TO RECEIVE IN FUNDING, EXAMINING THE OVERALL BUDGET, THE HOUSING DEPARTMENT WILL ONLY RECEIVE 0.01% FROM THE $2.74 BILLION GENERAL BUDGET.
AS THE CITY CUTS FUNDING FOR HOUSING, RENT IS CONTINUOUSLY INCREASING.
LOCAL REPORTS SAY RENT HAS GONE UP 23% IN HOUSTON, BOTH EXPERTS SAY THEY WILL NOT COME DOWN.
THE RENT INCREASE IS ONLY MAKING IT HARDER FOR HOUSTONIANS TO STAY SAFE AND SHELTERED.
JUST LAST WEEK THERE WAS 783 EVICTIONS FILED IN HOUSTON.
AND SINCE MARCH, 2020, THERE HAS BEEN OVER 85 EVICTIONS FILED.
HOUSTONIANS ARE STRUGGLING TO KEEP THEMSELVES SAFE BECAUSE THEY ARE LOSING THE ABILITY TO PAY THEIR HOMES OR APARTMENTS.
THE CITY NEEDS TO REIMAGINE PUBLIC SAFETY AND CONSIDER HOUSING PROGRAMS AS A SOLUTION TO PUBLIC SAFETY ISSUES.
NOW MY QUESTION IS, IN THE NEXT FIVE YEARS, HOW WILL THE CITY OF HOUSTON ADDRESS OUR GROWING PUBLIC SAFETY NEED FOR AFFORDABLE PERMANENT HOUSING PROGRAMS WHEN IT CONTINUES TO DEPLETE PUBLIC SAFETY SERVICES, LIKE HOUSING ONLY INCREASE INCREASED SERVICES THAT CRIMINALIZE COMMUNITIES
[01:20:01]
LIKE THE POLICE BUDGET.SO I KNOW ON HOUSING DEPARTMENTS, THE LARGE, UH, REVENUE SOURCE THEY HAVE IS THROUGH THE GRANTS A LOT.
A LOT OF THEIR OPERATIONS IS GRANT FUNDED.
UM, I THINK YOU MENTIONED ABOUT PUBLIC SAFETY IN THAT AREA.
I UNDERSTAND THAT POLICE DEPARTMENTS DO WORK HAND IN HAND WITH HOUSING DEPARTMENTS AND ANY OTHER DEPARTMENTS WHEN IT COMES TO PUBLIC SAFETY TO SUPPORT THOSE OPERATIONS AS WELL.
UM, YOU PROBABLY WILL GET MORE DETAILS FROM, YOU KNOW, HOUSING DEPARTMENTS WHEN WE DO HAVE THOSE SPECIFIC BUDGET WORKSHOP.
UH, BUT AGAIN, THIS IS A GENERAL FUND AND, AND THEY DO HAVE A SMALL PORTIONS IN THE GENERAL FUND BECAUSE THEY ARE LARGELY FUNDED OUT OF GRANTS.
HOW WILL WE BECAME BECOME SELF-SUSTAINABLE? AND JUST IN CASE WE LOSE THOSE FEDERAL GRANTS, IT WILL BE SOMETHING THAT WE HAVE TO ADJUST.
AND I THINK THAT'S, LIKE I SAID, UM, IT'S, IT'S ONE OF THOSE IMPORTANCE TO PRESERVE FUND BALANCE BECAUSE THOSE NEEDS WILL ARISE.
AND I THINK THAT'S WHY WE, WE HAVE THOSE, UM, UH, SET ASIDE, UM, FUND BALANCE, UH, TO PREPARE US GOING FORWARD.
I, UM, I THINK THAT'S AN OUTSTANDING QUESTION.
WE TALKED ABOUT THAT AT COUNCIL THIS MORNING.
I'M NOT SURE IF THERE IS SUCH A THING AS AFFORDABLE HOUSING.
WHAT I'M SEEING IN THE MARKETPLACE, EVERY TIME YOU TURN AROUND INTEREST RATES ARE GOING UP AND AFFORDABLE HOUSING COSTS ARE GOING THROUGH THE ROOF WITH THE COST OF MATERIAL.
THAT IS GONNA BE A CHALLENGE FOR US IN THIS WORLD THAT WE LIVE IN, IS HOW WE DEFINE AFFORDABLE HOUSING.
HOW DO WE DEAL WITH IT? AND I KNOW THAT THE HOUSING COMMITTEE IN THE HANDS OF TIFFANY THOMAS IS DOING A GREAT JOB WITH THAT AND WE'LL CONTINUE TO DO A GREAT JOB WITH THAT.
BUT THAT IS, THAT IS A TOUGH QUESTION TO ANSWER FOR ALL OF US.
LAST BUT NOT LEAST, MR. DOUG SMITH.
DOUG, I HOPE YOU'RE FEELING BETTER.
WELL, I FELT BETTER FOR DAYS, BUT I'M STILL TESTING NEGATIVE, POSITIVE, SO THAT'S WHY I'M NOT THERE TODAY.
BUT, UH, IN ANY CASE, A COUPLE OF QUESTIONS.
FIRST OF ALL, UH, DO I UNDERSTAND CORRECTLY THAT THE, UH, FIRST TRANCHE OF THE ARPA FUNDS AROUND $300 MILLION, ABOUT HALF WAS USED LAST YEAR AND HALF WAS USED THIS YEAR, AND YOU HAVE NOT TAKEN THE OTHER 300 MILLION INTO CONSIDERATION WHEN YOU DID YOUR PROPOSED, UH, WHAT WAS THE PROPOSED BUDGET GAP? I THINK I UNDERSTOOD YOU TO SAY THAT AND THEN I WANTED TO ADDRESS, UH, YOU TALKED ABOUT, UH, HOW WE, HOW WE, UH, CONTINUE TO, UH, ADDRESS THE GAP AND YOU SAY CONTINUE HIRING CONTROL.
AND YET WHEN I LOOK AT THE GENERAL FUND BUDGET, UH, BETWEEN 2021 AND THE PROJECTED 2023, THERE'S AN ADDITION OF 766 FULL-TIME EQUIVALENTS.
AND, UH, IN ADDITION TO THAT, UH, OBVIOUSLY THERE'S THE HUGE ONE, NOT HUGE, LARGE INCREASES IN PAY THAT YOU'RE GONNA HAVE TO DEAL WITH OVER THE NEXT THREE YEARS AS THE, UH, PREVIOUS ONES.
UH, THE AGREEMENTS COME IN AND FINALLY, I THINK, LET ME CHECK.
UH, THERE ON PAGE 76, EXCUSE ME, 26 OF YOUR PRESENTATION, UH, UNDER THE, UH, YOUR PROJECTIONS FOR THE POLICE AND THE, UH, FIREFIGHTERS, UH, YOU HAVE A LOW FOR THE POLICE OF 27 0 3 TO 32 12 AND YOU PROJECT THEM AT NEARLY THE FULL HIGH AMOUNT.
AND FOR THE FIRE DEPARTMENT, YOU PROJECT THEM AT THE VERY LOWEST AMOUNT.
AND I'M CURIOUS HOW YOU DECIDED TO, UH, DIFFERENTIATE THAT.
AND THEN FINALLY, ON THE UH, OUTCOME BASED BUDGET, UH, ON PAGE 33, YOU HAVE DIFFERENT, UH, CATEGORIES THAT NEED TO BE MET.
DO YOU HAVE TIMELINES FOR WHEN YOU EXPECT TO HAVE THOSE CATEGORIES? UH, DONE AND THAT'S IT.
I THINK THE FIRST QUESTION WAS RELATED TO FTES AND HE SAID THERE'S AN INCREASE OF FTES OF, I THINK IT WAS 700 SOME ODD.
SECOND QUESTION WAS A COUNTER, UH, PART OF THAT WITH PAY INCREASE IN PAY, 6% FOR FIRE, 4% FOR POLICE.
IT'S A COMBIN 3% FOR MUNICIPAL.
SO HOW DO YOU AFFORD THAT INCREASING FTES AND INCREASING PAY WITHIN THE CONFINES OF THE GENERAL BUDGET? I THINK THAT WAS HIS QUESTION.
AND AS IT RELATES TO YOUR GOAL TO ADDRESS THE GAP TO CONTINUE HIRING CONTROL, IT MAKES IT VERY DIFFICULT TO DO THAT, UH, WITH
[01:25:01]
THOSE FIGURES.I'M TRYING TO FOLLOW, WHEN YOU SAY INCREASING FTES, ARE YOU LOOKING AT THE CITYWIDE FTES FROM A SPECIFIC FISCAL YEAR? NO, JUST THE GENERAL FUND.
ON THE GENERAL FUND FTES ON PAGE 12.
HANG ON TABLE FIVE AT THE VERY BOTTOM.
BECAUSE IF I'M LOOKING AT PAGE SEVEN, WHICH IS GENERAL FUND SPECIFIC, UM, I'M SHOWING A REDUCTION FROM FISCAL YEAR 22 TO 23 FROM 13 SEVEN TO 13 FIVE.
I JUST WANNA MAKE SURE WE ARE ON THE SAME PAGE.
IT WAS 2021 WAS THE BASE YEAR BETWEEN 2021 AND PROJECTED 2023.
THERE'S AN INCREASE OF 766 WHEN YOU, WHEN YOU ADD BOTH THE REGULAR PLUS THE OVERTIME FTES.
KEEP IN MIND, IN FISCAL YEAR, AND I THINK WE HAVE THAT IN THE FOOTNOTE FISCAL YEAR 20 AND FISCAL YEAR 21, IT SHOWS A LOWER FTES BECAUSE OF THE REDEPLOYMENT THAT ARE FUNDED OUT OF CRF.
SO THAT FTES IN 21 AND 20 AND 2020 WERE KIND OF SKEWED BECAUSE OF SOME OF THOSE ARE FUNDED OUT OF CRF AND NOT OUT OF THE GENERAL FUND.
AND I THINK YOU ALSO ASKED ABOUT THE ASSUMPTIONS ON THE FIRE PENSION BACK IN PAGE 26, CORRECT? YES.
SO THE REASON WHY ON FIRE PENSION AND, UM, POLICE PENSION, WE HAVE THE LOW AND THE HIGH, UH, AGAIN, THIS IS ON THE PENSION CITY CONTRIBUTIONS, WHICH IS AGAIN, UM, GOVERNED BY THE, THE, THE PENSION REFORM.
UH, RIGHT NOW FOR THE FIRE PENSIONS, THEY ARE, UM, BELOW THE MINIMUM CORRIDOR.
SO WHEN YOU FALL BELOW THE MINIMUM CORRIDOR, THE CITY CONTRIBUTIONS WILL BE BASED ON THE MINIMUM POINT, NOT THE MIDPOINT.
AND THAT'S WHY WE PUT A RANGE.
BECAUSE THAT CAN CHANGE IN THE NEXT FIVE YEARS.
UH, QUESTION, WHAT IS CRF YOU REFERRED TO? CRF? WHAT IS THAT? C-R-F-C-R-F, THAT IS THE CORONAVIRUS RELIEF FUND.
THAT IS BASED ON THE CARES ACT.
AND I GUESS FINALLY, UH, DO YOU HAVE TIMELINES OR CAN YOU ASSIGN TIMELINES TO YOUR OUTCOME BASED, OUTCOME BASED BUDGET? UH, PAGE 33, UH, OF THE VARIOUS STEPS THAT HAVE TO TAKE PLACE BEFORE THIS HAPPENS.
UM, SO FIRST STEP WILL BE THE PROCESS.
SO I DO ANTICIPATE, UM, BY DECEMBER OF NEXT YEAR, WE WILL HAVE THE PROCESS IN PLACE.
WHAT I DON'T KNOW IS THAT THE SYSTEM WILL BE READY BY THEN, BUT THE GOAL IS FOR FY 24 BUDGET.
HOPEFULLY BY DECEMBER AT LEAST WE HAVE THE OUTCOME BASED BUDGETING PROCESS IN PLACE SO THAT WE CAN FOLLOW THE PROCESS.
BEFORE WE MOVE ON TO HOUSTON FIRE DEPARTMENT, ARE THERE ANY OTHER QUESTIONS OR COMMENTS FROM COUNCIL MEMBERS? WE HAVE NO OTHER PUBLIC SPEAKERS THAT HAVE SIGNED UP TO SPEAK IN PERSON, SO I WILL ASK AGAIN, IS THERE ANY COMMENTS OR QUESTIONS FROM COUNCIL MEMBERS BEFORE WE DISMISS THE GREAT CITY OF HOUSTON FINANCE TEAM? NO.