* This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting. [00:00:04] MY NAME IS DAVID ROBINSON. I'M [Special-Called Budget And Fiscal Affairs] THE, UH, COUNCIL MEMBER WHO'S CHAIRING THIS MEETING. IT'S A BUDGET AND FISCAL AFFAIRS COMMITTEE MEETING. IT IS THURSDAY, MAY 19TH, 2022, AND IT IS JUST PAST 9:00 AM NINE OH THREE. AND I CALL THIS MEETING TO ORDER, AND WE'D LIKE TO WELCOME ALL COUNCIL MEMBERS AND STAFF, UH, WHO ARE HERE IN ATTENDANCE, AND, UH, WE WILL RECOGNIZE THEM VERY SHORTLY. BUT FIRST, I WANTED TO MENTION THAT THIS BUDGET WORKSHOP, UH, PROCEDURES, UM, WILL FOLLOW ALL BUDGET. WORKSHOPS WILL BE CONDUCTED IN PERSON, AND OUR PUBLIC SPEAKERS HAVE THE OPTION TO COMMENT IN PERSON OR VIRTUALLY 48 HOURS PRIOR TO THE START OF A WORKSHOP. ALL PRESENTATION MATERIALS ARE UPLOADED TO SHAREPOINT AND HARD COPIES DELIVERED TO EACH COUNCIL OFFICE. ALL DEPARTMENTS HAVE BEEN DIRECTED TO PROVIDE WRITTEN RESPONSES WITHIN 48 HOURS OF THE CONCLUSION OF THEIR PRESENTATION TO ANY QUESTIONS POSTED BY COUNCIL MEMBERS TO SHAREPOINT. THE BUDGET WORKSHOP SCHEDULE IS POSTED ON THE BFA WEBSITE. QUESTIONS FROM COUNCIL MEMBERS CAN BE UPLOADED AT ANY TIME DURING THE BUDGET WORKSHOP PROCESS. THE EARLIER THE BETTER, BUT ALLOWING ALL THE DEPARTMENTS PLENTY OF TIME TO RESPOND, UH, TO THOSE QUESTIONS. ALL PUBLIC SPEAKERS SHOULD BE SIGNED IN TO SPEAK. IF YOU HAVE NOT SIGNED UP, PLEASE SIGN IN AT THE FRONT TABLE. UH, MY STAFF, UH, HERE TODAY INCLUDES STAFF FROM OUR MAYOR PRO TEM, UH, WITH CHIEF OF STAFF, JESSICA BEAMER, AS WELL AS CAROLINA HERE, WHO WILL BE MONITORING THE SPEAKER'S LIST FOR THE FISCAL YEAR 2023 BUDGET AMENDMENT. UH, THEIR TEMPLATE HAS BEEN UPLOADED AND IS AVAILABLE FOR COUNCIL MEMBERS ON THE SHAREPOINT BUDGET WORKSPACE. AND MAYOR TURNER HAS SENT OUT A MEMO TO ALL COUNCIL MEMBERS AND COUNCIL OFFICES TO ENSURE PRODUCTIVE DISCUSSIONS ON THE FISCAL YEAR 2023, PROPOSED BUDGET ONLY OPERATION, BUDGET RELATED AMENDMENTS WILL BE CONSIDERED. POLICY AMENDMENTS SHOULD NOT BE SUBMITTED AND WILL BE RULED OUT OF ORDER. AND PLEASE SEE THE MAYOR'S MEMO FOR ADDITIONAL GUIDELINES. UM, AMENDMENTS ARE DUE ON WEDNESDAY, MAY 25TH AT THE END OF BUSINESS. AND TODAY ON OUR AGENDA, WE WILL HEAR FROM, UH, THE CONTROLLER WITH A SPECIAL, UH, BFA TRENDS REPORT. WE'LL HEAR ALSO FROM THE CONTROLLER'S OFFICE. WE'LL HEAR FROM THE MAYOR'S OFFICE, FROM LEGAL, FROM PLANNING, FROM CITY COUNCIL, AND, UH, OUR OFFICE, UH, COLLECTIVELY AS WELL AS THE ADMINISTRATIVE AND REGULATORY AFFAIRS GROUP AND MUNICIPAL COURTS. TODAY IS OUR FINAL DAY OF THE BUDGET WORKSHOPS, AND AS A REMINDER, UH, THESE VIRTUAL MEETING RULES, THE ONLY PEOPLE ATTENDING VIRTUALLY ARE PUBLIC SPEAKERS. UH, WE HAVE SEVEN VIRTUAL PUBLIC SPEAKERS SIGNED UP FOR PUBLIC COMMENT, UH, TO SPEAK AFTER THE HOUSTON, UM, THE MUNICIPAL COURT'S PRESENTATION. AND THERE ARE TWO IN-PERSON SPEAKERS THAT WILL BEGIN AFTER THE V VIRTUAL PUBLIC SPEAKERS. WE'LL GET TO THE QUESTIONS AFTER THE PRESENTATION AND QUESTIONS FROM COUNCIL MEMBERS HAVE CONCLUDED. LET ME TAKE A MOMENT TO RECOGNIZE MY COLLEAGUES WHO ARE IN THE CHAMBER. THAT'S, UH, DR. CAROLYN EVANS SHABAZZ OF DISTRICT D, THE DISTRICT OF DESTINATION, AS WELL AS COUNCIL MEMBER AMY PECK FROM DISTRICT A. WE HAVE STAFF MEMBERS, UH, REPRESENTED FROM DISTRICT C, UH, FROM DISTRICT G FROM DISTRICT H. WE HAVE REPRESENTATIVES FROM THE VER VICE MAYOR, PRO TEMS OFFICE IN DISTRICT K, FROM DISTRICT F ON THE WEST SIDE, AS WELL AS THE AT LARGE POSITIONS, FOUR AND FIVE, AND, UH, REPRESENTING THE AT LARGE TWO OFFICE I 2:00 AM HERE AND WITH THAT CONTROLLER. IT'S GREAT TO SEE YOU THIS MORNING. WELCOME TO THE CHAMBER. AND SIR, THE FLOOR IS YOURS. THANK YOU. COUNCIL MEMBERS AND STAFF, UH, I'M PLEASED TO PRESENT THE TRENDS REPORT FOR THE FISCAL YEAR ENDING 2023. UH, AT THE TIME OF THIS REPORT, UH, THE ECONOMY IS SHOWING HOPEFUL PROGRESS IN THE RECOVERY FROM COVID-19 PANDEMIC. THE INFUSION OF MORE THAN 5 TRILLION IN FEDERAL STIMULUS NATIONWIDE HAS CONTRIBUTED TO THE GENEROUS, UH, ROBUST SALES TAX RECEIPT SEEN SINCE THE PASSAGE OF COVID RELIEF LE LEGISLATION IN HOUSTON. THE RECEIPT OF MORE THAN 1 BILLION IN RESPONSE AND RECOVERY FUNDING HAS BUOYED THE OTHERWISE BLEAK FISCAL OUTLOOK. SEEN PRE PANDEMIC. WE PROJECT THE INCREASES SEEN IN SEVERAL REVENUE SOURCES, NAMELY SALES TAX TO BE TEMPORARY. THE FY 23 PROPOSED BUDGET USES 160 MILLION IN AMERICAN RESCUE PLAN FUNDING TO ADDRESS A HABITUAL BUDGET DEFICIT. THIS DEFICIT WOULD'VE REQUIRED DRASTIC, UH, EXPENDITURE REDUCTION CITYWIDE ABSENT THE RECEIPT OF FEDERAL RECOVERY FUNDING. SO THIS STRUCTURAL DEFICIT, UH, EXISTED BEFORE COVID AND WILL EXIST AFTER [00:05:01] ARPA FUNDS ARE EXPENDED. UH, THE DECISIONS WE MAKE AFTER AND DURING THIS FISCAL YEAR, UH, WHILE WE HAVE THE BENEFIT OF THE FEDERAL DOLLARS, WILL DETERMINE THE SIZE OF THAT DEFICIT IN THE FUTURE. THE MORE THAN 606 MILLION MADE AVAILABLE THROUGH ARPA FUNDING PROVIDES THE CITY WITH A GOLDEN OPPORTUNITY TO MAKE TANGIBLE PROGRESS TOWARDS REDUCING THE STRUCTURAL DEFICIT. THE CONTROLLER'S OFFICE ENCOURAGES THE ADMINISTRATION AND COUNCIL TO ADDRESS THE CITY'S LONG-TERM FINANCIAL LIABILITIES WITH THESE FUNDS, AND AVOID ADDING LARGE RECURRING EXPENDITURES FOR WHICH CITY LEADERSHIP WILL HAVE LITTLE MEANS TO PAY IN THE FUTURE. WITH THAT, I'M PLEASED TO PRESENT THE TRENDS REPORT FOR FY 23. NEXT SLIDE. UH, WE'LL MOVE ON TO THE NEXT SLIDE. UH, THIS IS JUST A GRAPH, UH, SUMMARY OF ALL THE DIFFERENT FINANCIALS. UM, AND ON THIS SLIDE, UH, GENERAL FUND REVENUES, IT SHOWS THE CONTROLLER'S OFFICE GENERAL FUND FY 22 PROJECTIONS, UH, ARE FY 23 TRENDS, PROJECTIONS, AND THE HISTORICAL INFORMATION, UH, BACK TO FY 18. NEXT SLIDE. UH, IN THE GENERAL FUND REVENUES, UH, THE CONTROLLER, UH, THE CONTROLLER'S OFFICE IS PROJECTING AN INCREASE IN OUR GENERAL FUND REVENUE PROJECTION BY 15.8 MILLION, UH, OR 0.6, UH, TENTHS OF A PERCENT FROM OUR MARCH FY 22 MOFA PROJECTION. THE MAJOR DRIVERS OF OUR PROJECTED INCREASES ARE PROPERTY TAX AND INTERGOVERNMENTAL REVENUES. UH, THIS AMOUNT INCLUDES THE ARPA FUNDS, AND WE'VE SEEN, UH, STRONG SALES TAX NUMBERS MONTH OVER MONTH. UH, BUT WE BELIEVE, UH, THIS IS THE TEMPORARY, UH, CUMULATIVE RESULT OF A LOW INTEREST RATE ENVIRONMENT, UH, BUSINESS CONTINUING TO RETURN TO POST COVID, UH, ROUTINES. AND LASTLY, THE INFUSION OF MORE THAN 5 TRILLION IN FEDERAL STIMULUS INTO THE NATIONAL ECONOMY. NEXT SLIDE. PROPERTY TAX REVENUE. THE PROPERTY TAX REVENUE FOR FY 23 IS EXPECTED TO BE 3.9699999999999998% HIGHER THAN FY 22. UH, THIS AMOUNT COULD BE HIGHER AS TUR PAYMENTS HAVE YET TO BE PAID OUT. PROPERTY TAX REVENUE CONTINUES TO BE AN AREA OF INTEREST FOR OUR OFFICE AS WE MONITOR THE EFFECTS OF SENATE BILL TWO AND PROPOSITION ONE REVENUE CAP. THE CITY IS STILL SUBJECT TO THE PROVISIONS OF SENATE BILL TWO, AND WE BELIEVE THE VARIABLE IN PROP ONE'S METHODOLOGY, THE GROWTH INDEX HAS THE POTENTIAL TO TRIGGER SB TWO FOR THE FIRST TIME. SO AS OF TODAY, BOTH PROP ONE AND SB TWO APPLY TO THE CITY, BUT PROP ONE HAS BEEN FAR MORE RESTRICTIVE OVER TIME, AND THAT MIGHT CHANGE. NEXT SLIDE. THE TAXABLE VALUES BASED ON A PRELIMINARY EXPECTED TAXABLE VALUE FROM THE THREE APPRAISAL DISTRICTS, THE CONTROLLER'S OFFICE PROJECTS A 9.42% INCREASE IN TAXABLE VALUES. UH, THE FINAL TAXABLE VALUES ARE SUBJECT TO CHANGE AND WILL BE FINALIZED WHEN THE CERTIFIED ROLES ARE PROVIDED TO THE CITY. NEXT SLIDE. TAXABLE VALUE BY TYPE RESIDENTIAL PROPERTIES MAKE UP 53.4% OF TAXABLE VALUES AND COMMERCIAL PROPERTIES MAKE UP 43.8%. COLLECTIVELY, THE TWO PROPERTY TYPES MAKE UP 97.2% OF TAXABLE VALUES. AND AS YOU CAN SEE, UH, RESIDENTIAL AND COMMERCIAL VALUES, UH, LAST WERE EVEN IN FY 16. UH, SINCE THEN, WE'VE SEEN THE DISPARITY BETWEEN THE TWO WIDEN, AND WE BELIEVE THIS IS A RESULT OF THE MORE AGGRESSIVE APPRAISAL PROTESTS BY COMMERCIAL PROPERTY OWNERS AND ALSO THE SIGNIFICANT RESIDENTIAL DEVELOPMENT. NEXT SLIDE. SALES TAX FY 23 SALES TAX REVENUE IS PROJECTED TO INCREASE BY 4.76% FROM OUR FORECAST FY 22 SALES TAX PROJECTION. THIS DECREASES AN ANTICIPATED RESULT OF THE EFFECT OF FEDERAL STIMULUS, UH, TAPERING OFF. NEXT SLIDE. THE PROPERTY TAX RATE, THIS CHART SHOWS HISTORICAL PROPERTY TAX RATES. THE FY 23 RATE IS THE SAME AS THE FY 20 TWOS RATE, BUT WILL BE UPDATED ONCE THE PROP ONE CALCULATION IS FINALIZED, AND WHEN THE APPRAISAL DISTRICT'S CERTIFIED ROLES ARE MADE AVAILABLE. IT'S WORTH NOTING THAT FY 17 WAS THE FIRST YEAR THE CITY HAD TO DECREASE ITS TAX RATE TO MAINTAIN COMPLIANCE WITH PROP ONE. NEXT SLIDE. TOTAL FRANCHISE REVENUE. UH, TOTAL FRANCHISE REVENUE IS PROJECTED DECREASED BY 2.2% FROM FY 22. UH, TOTAL. FRANCHISE REVENUE HAS BEEN TRENDING DOWN IN RECENT YEARS. WE BELIEVE IT'S A CUMULATIVE RESULT OF SB 1152, AND THAT'S RELATED TO THE TELECOM INDUSTRIES, UH, STATEWIDE, AS WELL AS CONSUMERS MOVING AWAY FROM LANDLINES AND CUTTING THE CORD, UH, IE DIGITAL STREAMING INSTEAD [00:10:01] OF CABLE AND SATELLITE. NEXT SLIDE. MUNICIPAL COURT REVENUE. MUNICIPAL COURTS FINES AND FORFEITS ARE EXPECTED TO DECREASE BY 6% FOR FY 23 BASED ON AN EXPECTED DECREASE IN COLLECTIONS, UH, MOVING VIOLATIONS, FEES AND COURT OPERATIONS REVENUE. UH, WE'VE SEEN MUNICIPAL COURTS CONTINUE TO TREND DOWN OVER THE YEARS, AND OBVIOUSLY, COVID HAD A PRETTY OUTSIZED EFFECT ON THOSE REVENUES. NEXT SLIDE. UH, GENERAL FUND EXPENDITURE BUDGET. THE FY 23 GENERAL FUND TOTAL EXPENDITURE BUDGET IS EXPECTED TO INCREASE BY 3.8% OVER FY 22 PROJECTED EXPENDITURES, AND THAT'S AN INCREASE OF 101.7 MILLION. UH, THE USE OF ARPA FUNDS IS THE EQUIVALENT TO WHICH, UH, USE OF NON-RECURRING REVENUE SOURCE THAT ADDS PRESSURE TO THE CITY'S STRUCTURALLY IMBALANCED BUDGET. ARPA FUNDS MUST BE LEVERAGED TO ADDRESS THE CITY'S STRUCTURAL DEFICIT AND SOME OF ITS LONG-TERM LIABILITIES. INSTEAD, WE'RE ADDING RECURRING COSTS FOR WHICH, UH, WE DON'T HAVE RECURRING REVENUE TO MATCH, UH, BEYOND AND INTO THE FUTURE. SO THESE RECURRING COSTS, UH, WILL EXACERBATE, UH, AN ALREADY, UH, STRESSED, STRUCTURALLY IMBALANCED BUDGET. NEXT SLIDE. HERE YOU CAN JUST SEE THE GENERAL FUND BY PERCENTAGE AND FUNCTION. UM, PUBLIC SAFETY, AS YOU ALL KNOW, IS A LION'S SHARE OF THE, THE BUDGET AS A PERCENTAGE, AND YOU CAN SEE THE OTHER BREAKDOWNS. NEXT SLIDE. THE CASH FUND, UH, CASH VERSUS FUND BALANCE. UM, THE UNASSIGNED FUND BALANCE IS EXPECTED TO INCREASE BY 18.8 MILLION IN FY 22 AND DECREASE BY 58.8 MILLION IN FY 23. AND THE PROJECTED UNSIGNED FUND BALANCE FOR F UH, FOR FISCAL YEAR 2022 IS 300 MILLION, AND FOR 2023 IS 241 MILLION. NEXT SLIDE. UH, THE 7.5% FUND BALANCE REQUIREMENT, UH, THE FY PROJECTED ENDING FUND BALANCE IS EXPECTED TO BE 68 MILLION ABOVE THE REQUIRED SEVEN AND HALF PERCENT, UH, LESS DEBT SERVICE. AND PAYGO, UH, THIS REPRESENTS A FUND BALANCE OF 10.4% ABOVE THE REQUIRED 7.5%. UH, THIS IS PRIMARILY A RESULT OF THE ONE-TIME FINANCING SOURCES OFFERED THROUGH AMERICAN RESCUE PLAN AND THE 606 MILLION IN FUNDING. BUT THE GOOD NEWS IS WE DO HAVE A PRETTY SUBSTANTIAL FUND BALANCE AT THIS POINT IN TIME. MOVING ON, UH, PAGE 16. UH, NEXT SLIDE. UH, HOUSTON AIRPORT SYSTEM, UH, HAS REVENUE WAS SI, UH, SIGNIFICANTLY IMPACTED BY THE PANDEMIC, BUT OUR PROJECTIONS FOR FY 23 DEMONSTRATE A REBOUND AS MORE PEOPLE BEGIN TO TRAVEL BY AIR, AGAIN, AS BORDERS OPEN AND FOREIGN COUNTRIES RELAX. COVID REGULATIONS, WE'LL CONTINUE TO SEE MORE INTERNATIONAL ROUTES COME BACK ONLINE. UH, WE HAVE YET TO SEE INTERNATIONAL PASSENGER NUMBERS RETURN TO PRE PANDEMIC LEVELS, AND ARPA FUNDS ARE CONSIDERED GRANT DOLLARS AND ARE NOT INCLUDED IN THESE REVENUE PROJECTIONS. NEXT SLIDE. UM, AVIATION REVENUES. THE COVID-19 IMPACT ON AIRLINE TRAVEL HAS RESULTED IN 370 BILLION LOST IN AIRLINE REVENUE WORLDWIDE, AND AT ONE POINT, AIR TRAFFIC WAS DOWN NEARLY, UH, 70%. UH, SO YOU CAN SEE THE IMPACT THAT IT'S HAD, BUT AGAIN, UH, THINGS ARE STARTING TO REBOUND WITH THE EXCEPTION OF THE INTERNATIONAL AND SOME OF THE BUSINESS TRAVEL. NEXT SLIDE. UH, AVIATION EXPENSES, UH, EXPENDITURES ARE UP PRIMARILY DUE TO PERSONNEL EXPENDITURES INCREASING BY 6.3 MILLION OR 5.5% FROM FY 22. I WOULD, UM, CAUTION COUNSEL ON THIS, UH, THAT WE NEED TO BE VIGILANT ABOUT THIS VERY, UH, ITEM, UM, EXPENDITURES IN HAS GOING FORWARD, ESPECIALLY, UH, IF WE DO NOT SEE THAT AIR TRAFFIC, UH, BOTH BUSINESS AND INTERNATIONAL TRAVEL RETURNING TO, UH, PRE PANDEMIC LEVELS AND, UH, AGAIN, CONTINUE AT A, A GROWTH RATE THAT'S CONSISTENT. HISTORICALLY, UH, OTHER SERVICES AND CHARGES ARE UP BY 4% DUE TO CONTRACTUAL SERVICES AND INTERFUND POLICE AND FIRE SERVICES. NEXT SLIDE. UH, CONVENTION, ENTERTAINMENT, REVENUE AND EXPENSES. WE ANTICIPATE C AND E WILL CONTINUE TO SEE AN UPWARD TREND IN THE RECOVERY FROM THE PANDEMIC. AND FY 23 REVENUES ARE EXPECTED TO INCREASE BY 20.6% OR 17.4 MILLION FOR A TOTAL OF 102 MILLION. EXPENDITURES ARE EXPECTED TO INCREASE BY 18.6% OR 17.5 MILLION FOR A TOTAL OF 111.9 MILLION. THE FY 23 DEFICIT OF 9.9 MILLION ULTIMATELY WILL RESULT IN A [00:15:01] DECREASE IN THE ENDING TOTAL NET POSITION. SO THEY WILL DRAW THAT FROM FUND BALANCE, BUT THE HOPE IS THAT IN THE FUTURE, UH, THINGS CONTINUE. I KNOW, UH, COUNCIL MEMBER YOU'VE BEEN INVOLVED, UH, THERE AND SEEN THE STRUGGLES THAT THEY'VE BEEN DEALING WITH, BUT WE'RE HOPEFUL THAT, UH, THINGS RETURN AND THEY CAN BUILD UP FUND BALANCE IN THE FUTURE WITH FUTURE REVENUE. UH, NEXT SLIDE. CONVENTION AND ENTERTAINMENT REVENUES. UH, AS YOU KNOW, UH, CNI WAS SIGNIFICANTLY IMPACTED. UH, LARGE GATHERINGS AND EVENTS WERE CANCELED DUE TO COVID. SO THE PRIMARY, UH, CE REVENUE IS HOTEL OCCUPANCY TAX, UH, WHICH IS REPORTED AS NON-OPERATING REVENUE. HOTEL TAX COLLECTIONS ARE PROTECTED TO INCREASE BY 15.8 MILLION OR 20.5% WHEN COMPARED TO FY 22. AND THIS SHOWS THAT, UH, TRAVELERS ARE, ARE LARGELY RETURNING TO PRE PANDEMIC, UH, ROUTINES. C AND E IS ALSO SEEING A PROJECTED INCREASE IN OPERATING REVENUES BY 22.5% OR 1.7 MILLION. UM, THAT'S DUE TO INCREASES IN PARKING REVENUE AS A, AS A RESULT OF DOWNTOWN AREA WORKERS AND COMMUTERS, UH, RETURNING TO PRE PANDEMIC ROUTINES. NEXT SLIDE. UH, CE EXPENSES. THE CE IS PROJECTING AN INCREASE OF 18.6 OR 17.5 MILLION IN EXPENSES WHEN COMPARED TO FY 22. UH, THIS INCREASE IS PRIMARILY RESULT OF INCREASE DEBT SERVICE PAYMENTS AND INCREASE IN TRANSFER TO COMPONENT UNITS, NAMELY A TRANSFER OF 10 MILLION TO HOUSTON FIRST TO ADDRESS THEIR DEFICIT. NEXT SLIDE. THE COMBINED UTILITY SYSTEM REVENUE AND EXPENSES CUS EXPENDITURES ARE PROJECTED TO EXCEED REVENUES BY 50.2 MILLION IN FY 23, AND THAT'S PRIMARILY AS A RESULT OF INCREASED INVESTMENT IN SEWER AND WASTEWATER SYSTEMS, AND THAT'S WHAT'S LEGALLY OBLIGATED AS PART OF THE EPAS CONSENT DECREE. UH, AS YOU RECALL, THIS AGREEMENT STIPULATES 2 BILLION INVESTMENT MUST BE MADE IN THE NEXT 10 YEARS. OUR OFFICE IS NOTING AN INCREASE IN PERSONNEL COST, SALARY COST, AS WELL AS NEARLY 1.2 IN PERFORMANCE BASED BONUS FOR FY 23. SO AGAIN, UM, AS WE CONTINUE TO SEE THIS RECOVERY, WE NEED TO MAKE SURE NOT JUST IN OUR GENERAL FUND, BUT ALSO IN OUR ENTERPRISE FUNDS THAT WE ARE MANAGING OUR EXPENSES. NEXT SLIDE. COMBINED UTILITY SYSTEM REVENUE, THE CUS TOTAL REVENUE IS EXPECTED TO INCREASE BY 92.6 MILLION, PRIMARILY DUE TO INCREASED WATER AND SEWER SALES. UH, HOWEVER, THESE INCREASES ARE OFFSET BY DECREASES IN PROJECTED SALES OF SCRAPS AND OTHER REVENUE AND IMPACT FEES. NEXT SLIDE, CUS EXPENDITURES. UH, CUS TOTAL EXPENDITURES ARE EXPECTED TO INCREASE BY 328.1 MILLION, AND THAT'S DUE TO DEBT TRANSFER, TRANSFER TO CAPITAL PROJECTS AND MAINTENANCE COSTS, CHANGES IN OPERATING AND MAINTENANCE EXPENSES REFLECT INCREASES IN PERSONNEL EXPENSES, LARGELY DUE TO PAY FOR THE INCREASE IN FTE HEADCOUNT BY 123 AND FY 23. NEXT SLIDE. I THINK THAT'S THE END OF THE PRESENTATION, SO HAPPY TO ANSWER ANY QUESTIONS. THANK YOU VERY MUCH, CONTROLLER. APPRECIATE THAT. AND, UH, A NUMBER OF, UH, VERY HELPFUL OBSERVATIONS. AND, UM, WHILE I MIGHT HAVE A QUESTION OR TWO, I WONDER IF THERE ARE ANY FROM THE ARRAY OF COUNCIL MEMBERS ASSEMBLED. UM, WE DO HAVE FOUR VIRTUAL, WE THINK THERE ARE TWO VIRTUAL, UH, PUBLIC ATTENDEES ONLINE, AND WE MAY START WITH THOSE. UM, BUT I DO WANT TO, BEFORE GOING TO THAT, I WANT TO POINT OUT THAT, UM, YOU KNOW, YOUR, YOUR POINTS ABOUT THE AIRPORT SYSTEM AND HOUSTON FIRST ARE, UH, PARTICULARLY HELPFUL, I THINK TODAY FOR SOME OF THOSE EXTRACURRICULAR THINGS THAT WE REALLY HAVEN'T SEEN TOO MUCH OF HERE. WE DID HAVE A GOOD REPORT FROM THE DIRECTOR OF THE AIRPORT SYSTEM YESTERDAY, UH, WITH HIS BUDGET, AND THERE WAS SOME NARRATIVE AND DISCUSSION ABOUT THE SURROUNDING, UM, OVERALL CAPITAL CAMPAIGNS INVESTMENT THAT THEY'RE PUTTING INTO THE NEW FACILITY. SO APPRECIATE YOUR REMINDERS ON THAT. SO WITH THAT, I BELIEVE WE WILL GO TO THE PUBLIC SPEAKERS AND WE'LL CALL FIRST MS. SABA BLANDING. UH, MS. BLANDING, IF YOU'RE THERE, PLEASE UNMUTE BY HITTING STAR SIX. SHE'S UNMUTE. I THINK WE SEE, I, I BELIEVE I'M UNMUTED. CAN Y'ALL HEAR ME? YES. GOOD MORNING, MS. BLANDING. OH, WONDERFUL. MORNING. HOW ARE Y'ALL DOING TODAY? DOING WELL, THANK YOU. AND I APOLOGIZE, I WAS TRYING TO FINISH A WALK BEFORE YOU GOT TO US, BUT YOU'RE LIKE ON TOP OF IT TODAY, SO I'M, I'M OUTSIDE. YEAH. AND IT'S A LITTLE HARD TO HEAR YOU, SO IF YOU CAN SPEAK, UH, SLOWLY AND CLEARLY, THAT WOULD BE VERY HELPFUL. ABSOLUTELY. [00:20:01] UM, SO I JUST WANTED TO TAKE ADVANTAGE OF THIS NEW FORMAT AND GIVE Y'ALL A CHANCE TO BRAG ON YOURSELVES AND ASK, UM, WHAT IS THE ONE THING YOU'RE MOST PROUD OF HOUSTON ACCOMPLISHING IN 2021? AND ESPECIALLY FOR DISTRICT COUNCIL MEMBERS, I'M JUST CURIOUS, ESPECIALLY FOR YOUR DISTRICT SPECIFICALLY, WHAT YOU'RE MOST PROUD OF. WELL, THANK YOU FOR THAT NICE QUESTION THIS MORNING FROM THE GARDEN. I THINK I HEARD YOU SAY, UH, I DON'T SEE ANY COUNCIL MEMBERS, DISTRICT COUNCIL MEMBERS JUMPING TO RESPOND. I KNOW MY BIG DISTRICT, THAT'S THE, AT LARGE CITY, UH, VERY, VERY PROUD OF THE DIVERSITY OF OUR 11 DISTINCT DISTRICTS AND THE INCREDIBLE, UH, NATURE OF OUR COMMUNITIES AND OVERLAPPING NEIGHBORHOODS JUST MAKES ME PROUD TO, TO BE A PART OF, UH, EVERYTHING GOING ON IN THE CITY RIGHT NOW. MS. PLANNING, HOW ABOUT YOU? WHAT ARE YOU PROUD OF? OH, ME? YEAH. OH. UM, I REALLY APPRECIATED COUNCIL MEMBER PLUMMER, UM, AT HER AMENDMENT, ADDING THE ADDITIONAL TO MCO TEAM. SO ANYTHING WE CAN DO TO INVEST IN, IN MORE PREVENTATIVE, UM, DIRECT MENTAL HEALTHCARE IS ALWAYS A WIN ON MY PART. UM, AND I'M ALSO LOVING THE BIKE LANES Y'ALL ARE DOING, AND, UM, ALWAYS THE BAYOU EXPANSION IS AMAZING. IT'S A, IT'S A LONG LIST. SO THOSE ARE A TOP THREE TOP OF MIND. WELL, VERY GOOD. THANK YOU VERY MUCH FOR BEING HERE TODAY AND FOR YOUR ONGOING, UH, ATTENDANCE HERE. UM, OUR NEXT SPEAKER IS MR. JASON OLIVER, UH, JOINING US VIRTUALLY, MR. OLIVER, IF YOU CAN HIT STAR SIX OR SPEAK NOW, CALLING JASON OLIVER, IF YOU CAN UNMUTE AND JOIN US ONLINE. GOOD MORNING. UH, THANK YOU. HMM. UH, I'M THINKING ABOUT THIS PRESENTATION AND I'M WONDERING, SO THE STRUCTURAL DEFICIT IS, IS OF COURSE, SOMETHING THAT COMES UP EVERY YEAR. UH, IF WE GET RID OF THE REVENUE CAP, HOW WILL, UM, LIKE I THINK THAT'S AROUND 3, 280 OR SO MILLION. I'M WONDERING, UH, WILL THAT KIND OF GET US TO A PLACE OF BEING ABLE TO, TO FULLY FUND SOME OF THESE DEPARTMENTS THAT WE SEE ARE, ARE STRUGGLING, RIGHT? IF, IF WE DO, WILL THAT ADDRESS SOME OF THE NEEDS THAT, THAT WE'VE SEEN OVER THE PAST FEW DAYS? AND THEN ALSO IN TERMS OF ARPA FUNDS, WHERE ARE YOU SEEING SOME, SOME LIKE STRONG OPPORTUNITIES IN CANDIDATES FOR INVESTMENT, UH, THAT WE MAY OR MAY NOT BE DOING? I, I'M TRYING TO FIGURE OUT LIKE, ARE WE MAKING THOSE STRUCTURAL INVESTMENTS? THANK YOU. THANK YOU, MR. OLIVER FOR THE QUESTION. THE CONTROLLER MAY HAVE SOMETHING HE'D LIKE TO SAY. HERE HE IS. SURE. UM, THANK YOU FOR THE QUESTION. THE FIRST PART, UM, YOU KNOW, BEING ABLE TO REPEAL, AND AGAIN, I, I, I BELIEVE THAT WOULD HAVE TO BE THROUGH A VOTER REFERENDUM. THE, UH, PROPERTY REVENUE CAP, UH, UH, PROP ONE REV CAP, UH, THAT WOULD GO A LONG WAY, UH, TOWARDS ELIMINATING THE, UH, STRUCTURAL BUDGET IMBALANCE BASED ON, UH, THE CURRENT NUMBERS, THE CHALLENGES. WE ALSO HAVE, UH, SB TWO, THE STATEWIDE, UH, ROLLBACK RATE CAP, UH, THAT WE'D HAVE TO CONTEND WITH. UM, SO, YOU KNOW, IT MIGHT NOT BE AS EFFECTIVE AS AS POSSIBLE, BUT I KNOW THAT THERE HAS BEEN DISCUSSION ABOUT THAT. UM, YOU KNOW, ONE OF THE THINGS THAT I'VE SUGGESTED IN THE PAST, UH, HAVING BEEN HERE NOW FOR 19 YEARS AND REMEMBERING, UH, MAYOR BILL WHITE, HE, UH, PASSED AN AMENDMENT TO LIFT, UH, THE REVENUE CAP FOR A SPECIFIC PURPOSE, PRIMARILY FOR PUBLIC SAFETY. AND, UH, HE WAS ABLE TO THROUGH, UH, AGAIN, THROUGH REFERENDUM, UH, RAISE A $90 MILLION CAP FOR PUBLIC SAFETY. UM, YOU KNOW, THAT COULD POSSIBLY BE AN INTERIM STEP, AND I KNOW THE ADMINISTRATION HAS, HAS TOSSED THAT AROUND IN THE PAST. UM, TO THE SECOND QUESTION, YOU KNOW, THE, THE STRUCTURAL BUDGET IMBALANCES EXISTED BEFORE THIS ADMINISTRATION, EVEN AS FAR BACK, UH, BEFORE THE WHITE ADMINISTRATION, DURING THE BROWN ADMINISTRATION. UM, SO THE CHALLENGE IS IT KEEPS GROWING EVERY YEAR. AND, UH, UNFORTUNATELY, UH, THIS PARTICULAR YEAR, UH, BECAUSE OF ALL THE FEDERAL MONEY, UH, IT'S GOING TO GROW, UH, SUBSTANTIALLY MORE. AND THAT IS ONLY CUMULATIVE INTO THE FUTURE. UH, YOU KNOW, ONE OF THE THINGS I'VE KIND OF SAID AD NAUSEUM IS THE PFM REPORT THAT, UH, THE ADMINISTRATION AND COUNCIL, UH, YOU KNOW, APPROVED AND, AND AUTHORED, UH, BACK IN 2017, UH, THERE ARE, YOU KNOW, OVER 50 DIFFERENT ITEMS ON THERE. AND YOU, ONE OF THE THINGS IN TALKING TO THE VARIOUS, UH, CONSULTANT, UH, GROUPS THAT WE, UH, INTERACT WITH, AND THEY SAID, THIS IS A GREAT PLAN, BUT YOU NEED SOMEONE TO GO OUT AND IMPLEMENT IT. AND SPECIFICALLY IN THE CONSULTING WORLD, WHAT THEY CALL PMO PRO PROGRAM MANAGEMENT OFFICES, AND, AND IT, IT TAKES DOLLARS TO IMPLEMENT A LOT OF THESE THINGS. WELL, WE HAVE WONDERFUL EMPLOYEES AT THE CITY. YOU KNOW, WE'VE BEEN STRETCHED THIN. PEOPLE ARE [00:25:01] DOING, UH, MORE WITH LESS. SO, UH, TO ANSWER YOUR QUESTION, UM, ONE OF MY SUGGESTIONS WOULD BE TO TAKE SOME OF THESE FEDERAL DOLLARS, INVEST THEM TO IMPLEMENT PROGRAM MANAGEMENT OFFICES, ESSENTIALLY, YOU KNOW, CONSULTING GROUPS TO GO IN AND TO IMPLEMENT THESE, UH, PFM RECOMMENDATIONS, BECAUSE AS YOU ALL RECALL, UH, THE CUMULATIVE EFFECT OF, UH, INCREASED REVENUE AND REDUCTION IN EXPENSES PER THE, UH, REPORT, UH, WAS AROUND $300 MILLION. SO THERE'S, I THINK, A LOT OF OPPORTUNITIES TO, UH, SPEND THIS MONEY IN A WAY THAT IT DOESN'T CREATE A RECURRING, UH, EXPENDITURE IN THE FUTURE, BUT SPEND IT TO ACTUALLY REDUCE THOSE OR CREATE NEW REVENUE. UH, THANK YOU VERY MUCH, CONTROLLER. I THINK THAT'S A VERY HELPFUL, UH, RESPONSE TO MR. OLIVER. THANK YOU FOR YOUR QUESTION, SIR. AND, UH, I, I DON'T SEE ANY, UH, I DO SEE ONE COUNCIL MEMBER IN THE QUEUE JUST NOW. COUNCIL MEMBER ALCORN, GO AHEAD. THANK YOU CHAIR AND, AND THANK YOU CONTROLLER. I'M SORRY, I WALKED IN A LITTLE BIT LATE AND MAYBE YOU TALKED A LITTLE BIT ABOUT, UM, SINCE IT'S A TRENDS REPORT, UM, THE TREND OF, OF INFLATION AND THE TREND OF HIGHER INTEREST RATES, HOW DO YOU SEE THAT, UM, PLAYING OUT AND REVENUES AND EXPENDITURES? SO, YOU KNOW, IT IS A CHALLENGE. WE ARE IN A, A, A VERY, UH, INFLATIONARY PERIOD. WE ARE SEEING, UH, INFLATION NUMBERS THAT, YOU KNOW, HAVEN'T BEEN RECORDED, UH, SINCE, YOU KNOW, THE 1980S. UM, IT'S A CHALLENGE FOR THE CITY IN THE SENSE THE COST OF GOODS OF EVERYTHING WE PURCHASE ARE GOING UP. UM, YOU KNOW, REALLY, UH, TO ADD ONTO THAT, INTEREST RATES ARE RISING, SO THE COST OF DEBT SERVICE AND ISSUANCE. SO THESE ARE PUTTING FINANCIAL STRAINS ON THE BUDGET. UM, YOU KNOW, THE GOOD NEWS RIGHT NOW IS WE DO HAVE A LOT OF FEDERAL MONEY, YOU KNOW, SALES TAXES UP, PROPERTY TAXES UP. BUT ONE OF THE THINGS THAT I'VE, I'VE, I'VE TERMED, AND I'LL, I'M GONNA DATE MYSELF. WHEN I, I STARTED WORKING IN AN INVESTMENT BANK, UH, A ALAN GREENSPAN WAS A FEDERAL RESERVE CHAIR, AND TOWARDS THE END OF THE.COM BOOM, HE TERMED A COIN. HE, HE COINED A TERM IRRATIONAL EXUBERANCE BECAUSE, YOU KNOW, STOCKS ARE RISING, MONEY WAS COMING IN. AND, AND YOU KNOW, I'VE SAID, I THINK RIGHT NOW, AND AGAIN, I'VE BEEN HERE 19 YEARS, I'VE BEEN THROUGH THE.COM, I'M, YOU KNOW, 30 YEARS ALMOST IN, UH, FINANCIAL MARKETS. UH, IT SEEMS TO ME A LITTLE BIT LIKE IRRATIONAL EXUBERANCE. UH, WE'RE SEEING SALES TAX RECEIPTS OVER 20% ON AVERAGE. I MEAN, THIS IS GREAT NEWS, BUT THE, THE KEY FOR GOVERNMENTS IS IT HAS TO BE SUSTAINABLE. AND SO THE, THE COMBINED FACTOR OF INCREASED INFLATION INCREASES IN INTEREST RATES THAT ARE GONNA HIT DEBT SERVICE, AND THEN THIS KIND OF FALSE SENSE OF SECURITY ON REVENUES. UM, YOU KNOW, I'M, I'M, AS I SAID, MORE CAUTIONARY, UH, GOING FORWARD AND, AND FOR THIS FISCAL YEAR, UH, YOU KNOW, THINGS ARE GOOD AND, AND PROBABLY NEXT FISCAL YEAR, BUT WHEN WE RUN OUT OF THE FEDERAL, UH, ARPA MONEY, UH, WHEN THAT'S LIMITED IN, IN DECEMBER OF 2024, YOU KNOW, REALLY WHAT'S GONNA SUPPLANT THAT. AND, AND YOU'VE TALKED ABOUT IT IN THE PAST, WE REALLY, THE, THE KEY IS MATCHING RECURRING EXPENDITURES WITH RECURRING REVENUES. SO WE CAN'T HAVE A ONE-TIME FINANCING SOURCE WITH RECURRING EXPENDITURE. THANK YOU, COUNCIL MEMBER AND YOUR RESPONSE CONTROLLER. YOU HAVE IF, GO AHEAD. SURE. UH, JUST ONE MORE QUESTION ABOUT THE, UM, THE, THE RECENT CHANGES TO THE OPE, UM, YOU KNOW, TO, TO OUR RETIREE BENEFITS, WHICH WE'LL BRING DOWN OUR LONG-TERM LIABILITY, ARE, ARE YOU STILL IN FAVOR OF LOOKING INTO A OPE TRUST AS WELL? YES, AND I AM, AND THIS IS A GREAT EXAMPLE, AND ONE OF THE THINGS THAT'S MENTIONED IN THE PFM REPORT. UM, YOU KNOW, IF WE SET UP AN OPE TRUST ESSENTIALLY, UH, WE ARE ABLE TO NOT JUST DO PAYGO FOR THESE, UH, RETIREE HEALTHCARE BENEFITS, UH, WE WOULD ACTUALLY INVEST THAT SIMILAR TO THE WAY WE DO IN THE PENSION, WE WOULD EARN A RETURN ON THAT MONEY. UM, THE CHALLENGE IN STARTING THE OPE TRUST IS THAT WE'VE NEVER HAD THE MONEY TO BE ABLE TO FUND IT INITIALLY. AND NOW WE'RE SITTING ON THIS HUGE AMOUNT OF FEDERAL MONEY, UH, WHAT WE CAN ACCOMPLISH BY PUTTING, YOU KNOW, 30, MAYBE $40 MILLION INTO SEED AND OPEP TRUST IS FIRST AND FOREMOST WE CAN SECURE HEALTHCARE BENEFITS FOR RETIREES. 'CAUSE AS YOU ALL KNOW, AROUND THIS TABLE, THOSE ARE NOT PROTECTED BY STATE LAW. WE COULD VOTE AS A COUNCIL BODY TOMORROW AND ELIMINATE ALL OF THE RETIREE HEALTHCARE BENEFITS, BUT MORE IMPORTANTLY, WE CAN USE A HIGHER DISCOUNT RATE WHEN WE ARE EVALUATING THAT UNFUNDED LIABILITY. SO BY PUTTING A $30 MILLION SEED AND STARTING AN OPEP TRUST, WE COULD SIGNIFICANTLY REDUCE THE LONG-TERM UNFUNDED LIABILITY OF THE OPEP. AND WE COULD DO SIMILAR TO WHAT WE DID WITH THE PENSIONS, WE HAD HAD AN $8 BILLION UNFUNDED LIABILITY, AND NOW, UH, CLOSER TO 1.5 BILLION, EVEN WITH THE REFORMS THAT COUNCIL PASSED PREVIOUSLY ON OPEP, WE'RE STILL GONNA SEE PROBABLY IN THE NEXT 15 YEARS, UH, 4 BILLION OR, OR, YOU KNOW, THREE PLUS BILLION DOLLARS UNFUNDED LIABILITY. THIS OPEG TRUST SPENDING THAT AMOUNT OF MONEY WOULD GO A LONG [00:30:01] WAY TO REDUCING THAT LONG-TERM UNFUNDED LIABILITY. THANK YOU, CONTROLLER. THAT'D BE A GREAT START. UM, APPRECIATE THE QUESTION. COUNCIL MEMBER ALCORN. UM, WE'RE GONNA HEAR FROM STAFF, FROM COUNCIL MEMBER HUFFMAN'S OFFICE. HI, CONTROLLER. I HAVE TWO QUESTIONS ABOUT THE PFM REPORT THAT YOU BROUGHT UP. ONE, GIVEN IT HAPPENED IN 2017, EVEN THOUGH WE PAID LIKE $500 MILLION FOR IT. UM, DO YOU THINK, GIVEN ALL THOSE CHANGES SINCE THEN, THOSE RECOMMENDATIONS ARE STILL RELEVANT TODAY, AND THEN TWO, IN YOUR OPINION, COULD ARPA DOLLARS BE NOT CERTAIN BETTER SPENT, BUT SPENT ON IMPLEMENTING SOME OF THOSE COST SAVINGS THAT THE PFM REPORT RECOMMENDS? YEAH, SO GOOD QUESTION. UM, I THINK AROUND $580,000 THAT WE SPENT ON THE REPORT, UM, ABSOLUTELY, UH, TO THE EXTENT THE ARPA MONEY IS, IS FUNGIBLE, AND WE CAN USE SOME OF THAT FOR IMPLEMENTING THESE IDEAS. UM, I WOULD THINK THERE WOULD PROBABLY NEED TO BE A REFRESHER IN THE SENSE THAT YES, IT HAS BEEN, YOU KNOW, FIVE YEARS. UM, BUT I THINK THE GOOD NEWS IS BASED ON INFLATION AND SOME OF THESE OTHER THINGS, THERE MIGHT ACTUALLY BE MORE OPPORTUNITY TO SAVE MONEY TODAY THAN IN THE PAST. UM, BUT I THINK THAT THE CHALLENGE IS, UM, YOU KNOW, IDENTIFYING THE RIGHT TEAMS TO BE ABLE TO GO OUT AND DO THIS, THAT HAVE EXPERIENCE DOING IT IN OTHER CITIES, AND, UH, CAN DO IT IN A COST EFFECTIVE MANNER. UM, BECAUSE ONE OF THE THINGS I HAVE SEEN, UM, HISTORICALLY AT THE CITY IS, YOU KNOW, WE'VE SPENT MONEY ON PROJECTS LIKE THIS AND WE SPENT A LOT OF MONEY ON 'EM, AND THEY HAVEN'T UTILIZED THE, THE RESULTS. UM, SO I, I THINK IT'S IMPORTANT, UH, WHO YOU'D SELECT, BUT I THINK ABSOLUTELY, I THINK THAT WAS KIND OF THE POINT I MADE EARLIER. UM, WE NEED TO BE USING THESE FEDERAL DOLLARS TO REDUCE, UH, THE STRUCTURAL IMBALANCE IN THE FUTURE BY ADDING MORE REVENUE OR REDUCING RECURRING EXPENDITURES RATHER THAN ADDING RECURRING EXPENDITURES. SO THANK YOU FOR THAT RESPONSE. UM, AND THAT GETS TO THE END OF OUR QUESTIONS FROM THE HORSESHOE. UH, AND I JUST WANTED TO GET ONE FURTHER BIT OF, UH, COMMENTARY FROM YOU. YOU QUOTED GREENSPAN WITH THE IRRATIONAL EXUBERANCE OF TIMES, UH, PAST AND, UH, IN ONE OF YOUR CHARTS FOR THE SALES TAX REVENUE. YOU SPOKE ABOUT THE TAPERING OFF EFFECT OF SOME OF THE STIMULUS. AND, UM, CURIOUS ABOUT THAT. HAVING HEARD RECENTLY THIS STATE'S COMPTROLLER, UH, MR. HAGER TALK ABOUT, UM, WHERE WE ARE WITH SOME OF THE INCREDIBLE RETURNS THAT WE WERE GETTING THROUGH LAST YEAR. JUST IF, UH, IF IN YOUR OPINION, IS THAT PART OF THE IRRATIONAL EXUBERANCE OR IS THAT, WHAT'S ABOUT TO TAPER OFF? WELL, I THINK IT'S, IT'S TO THIS POINT, THE IRRATIONAL EXUBERANCE I THINK WE'RE SEEING YESTERDAY IN THE STOCK MARKET, FOR EXAMPLE, WE'RE DOWN 1100 POINTS ON THE DOW. I MEAN, I THINK, YOU KNOW, INFLATION, ALL THESE THINGS, UH, REALLY IT'S THE, YOU KNOW, MULTI-TRILLION DOLLARS OF MONEY THAT'S BEEN PUMPED INTO THE ECONOMY THAT'S JUST PUSHED EVERYTHING UP. IT'S PUSHED THE STOCK MARKET UP. THE RATES OF, UH, YOU KNOW, INTEREST RATES BEING LOWERED HAVE DONE THAT AS WELL. UM, BUT DEFINITELY I THINK FROM US, I, I, I CAN'T REMEMBER A TIME AT THE CITY WHERE WE HAD A EIGHT MONTH ROLLING AVERAGE OF OVER 20% IN SALES TAX. NOW, YOU KNOW, YOU HAVE TO COUCH THAT IN THE, YOU KNOW, UH, HISTORICALLY BECAUSE COVID IT WAS DOWN QUITE A BIT. BUT EVEN WITH COVID, UH, BEING DOWN, UM, YOU KNOW, THE REBOUND IS SPECTACULAR. SO, UM, YOU KNOW, JUST A PRINCIPLE FOR GOVERNMENTAL BUDGETING, YOU KNOW, YOU REALLY JUST PLAN ON HAVING A 3% TO 5% INCREASE HOPEFULLY EVERY YEAR. UH, AND YOU BASE IT OFF THAT, AND IF YOU GO WAY BELOW THAT OR YOU GO WAY ABOVE THAT, THAT DELTA STARTS TO GET VERY DIFFICULT TO MANAGE. SO I THINK WE'RE, SO WE WERE DOWN AND NOW WE'RE, UH, SO HIGH UP. I JUST CAUTION THE BODY THAT, YOU KNOW, IT'S NOT GONNA SUSTAIN ITSELF. AND YES, WE DO EXPECT SALES TAX TO, UH, NORMALIZE NEXT YEAR AND, AND, AND EVEN BE DOWN, UH, YEAR OVER YEAR. BUT AGAIN, THAT'S BECAUSE WE'RE UP PROBABLY IN THE YEAR UP 20% THIS YEAR. AND THESE ARE GOOD THINGS. IT'S JUST YOU HAVE TO PREPARE WHEN YOU HAVE VERY VOLATILE TIMES, YOU HAVE TO MAKE, UH, KIND OF MORE LONG-TERM STRATEGIC DECISIONS IN THE SENSE THAT IT'S NOT GONNA GO UP ANOTHER THREE OR 5% PROBABLY NEXT YEAR. IT'S DEFINITELY NOT GONNA GO UP 20% AGAIN NEXT YEAR. SO I APPRECIATE THAT VERY MUCH. THANKS FOR THAT. UH, FINAL COMMENT, AND I THINK THIS DOES CONCLUDE OUR SPECIAL CALL BFA COMMITTEE MEETING. UM, SO THANK YOU. CONTROL. * This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting.