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ADVENTURE.[Budget and Fiscal Affairs]
GOOD MORNING EVERYONE.WELCOME TO THIS MORNING'S CITY OF HOUSTON BUDGET AND FISCAL AFFAIRS COMMITTEE REPORT.
TODAY IS TUESDAY, NOVEMBER 1ST, 2022.
I AM MAYOR PRO TEM DAVE MARTIN.
I AM JOINED THIS MORNING BY CO-CHAIR COMPS MEMBER EDWARD J. POLLARD OF DISTRICT J COMPS.
COUNCIL MEMBER SALLY A ALCORN.
STAFF FROM AMY PECK, DISTRICT A.
ABBY CAMAN CAYMAN, DISTRICT C CAROLYN, EVAN SHABAZZ, DISTRICT D MARY NAN HUFFMAN, DISTRICT G CARLOS CISNEROS, DISTRICT H VICE MAYOR PROAM.
MARTHA CASTEX TATUM, DISTRICT J MICHAEL KNOX, POSITION ONE, LETITIA PLUMMER, POSITION FOUR STAFF FROM THOSE OFFICES.
I'D LIKE TO CALL THIS MEETING TO ORDER.
WELCOME ALL THE COUNCIL MEMBERS, IF THERE ARE ANY MEMBERS OF THE PUBLIC WHO ARE HERE IN PERSON AND WOULD LIKE TO PARTICIPATE IN THE PUBLIC COMMENT SECTION.
THERE IS A SIGNUP SHEET AT THE FRONT TABLE.
MY STAFF MEMBER MICHAEL, WILL BE MONITORING THE PUBLIC SPEAKERS LIST.
COUNCIL MEMBERS AND STAFF, PLEASE HOLD YOUR QUESTIONS UNTIL THE END OF THE PRESENTATIONS.
AT THIS TIME, I'D LIKE TO WELCOME CONTROLLER CHRISTOPHER BROWN AND DIRECTOR WILL JONES TO PROVIDE THE MONTHLY FINANCIAL REPORT.
I'M WEARING MY ASTRO TIE AND I'VE BEEN LUCKY WITH IT.
SO YOU MAY, PEOPLE MAY GET TIRED OF SEEING IT, BUT AS LONG AS THEY WIN, I'LL WEAR IT.
UH, GOOD MORNING, MR. CHAIRMAN, COUNCIL MEMBERS AND STAFF, I'M PLEASED TO PRESENT THE MONTHLY FINANCIAL REPORT FOR THE PERIOD ENDING SEPTEMBER 30TH, 2022.
THE CONTROLLER'S OFFICE IS PROJECTING ENDING FUND BALANCE OF 300.8 MILLION FOR FY 23.
THIS IS 37.7 MILLION LOWER THAN THE PROJECTION OF THE FINANCE DEPARTMENT.
BASED ON OUR CURRENT PROJECTIONS, THE FUND BALANCE WILL BE APPROXIMATELY 127.2 MILLION ABOVE THE CITY'S TARGET OF HOLDING 7.5% IN RESERVES.
THE FY 23 BEGINNING FUND BALANCE IS 16.5 MILLION LOWER, I'M SORRY, 16.5 MILLION HIGHER THAN THE FY 22 ENDING FUND BALANCE.
UH, THIS INCREASE IS DUE TO YEAR END ADJUSTMENTS TO REVENUES AND EXPENDITURES.
UH, THAT WILL NOT BE FINALIZED UNTIL THE 2022 ANNUAL COMPREHENSIVE FINANCIAL REPORT
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IS PUBLISHED.OUR REVENUE PROJECTIONS INCREASED BY 16 MILLION FROM OUR AUGUST, 2022 REPORT.
PROJECTED SALES TAX REVENUE INCREASE BY 20 MILLION DUE TO HIGHER THAN EX UH, THAN ANTICIPATED RECEIPTS.
UH, THIS INCREASE IS OFFSET BY A DECREASE IN INTERGOVERNMENTAL REVENUES OF 4 MILLION.
EXPENDITURE ESTIMATES INCREASE BY 6 MILLION FROM THE AUGUST, 2022 REPORT, AND THIS WAS DUE TO A 4.5 MILLION INCREASE IN THE SOLID WASTE DEPARTMENT'S COLLECTION COST RELATED TO ILLEGAL DUMPING AND BULK WASTE, A 2.5 MILLION INCREASE FOR GENERAL GOVERNMENT FOR THE RENOVATION OF JONES HALL AND A 1.6 MILLION DECREASE IN THE HEALTH DEPARTMENTS' EXPENDITURES.
LOOKING AT OUR ENTERPRISE FUNDS, UH, WE HAD NO, UH, CHANGES IN ANY OF OUR ENTERPRISE FUNDS.
UM, MOVING TO THE COMMERCIAL PAPER AND BONDS, ALL OF OUR VARIABLE RATE DEBT IS, UH, WELL BELOW THE 20% THRESHOLD.
SO I WILL, UH, CONTINUE ON TO THE QUARTERLY INVESTMENT REPORT.
AS OF SEPTEMBER 30TH, 2022, THE CITY HAD $5.1 BILLION INVESTED IN OUR GENERAL INVESTMENT POOL.
FITCH RATINGS REVIEWED THIS POOL AND ASSIGNED ITS HIGHEST RATING.
THAT OF AAA INVESTMENTS ARE 334 MILLION HIGHER THAN LAST YEAR.
AND THIS IS DUE TO THE REIMBURSEMENTS TO THE AMERICAN RESCUE PLAN ACT FROM AVIATION INCREASE IN FUNDING FROM THE CAPITAL PROJECTS FUND AND SPECIAL REVENUE FUND.
AS OF SEPTEMBER 30TH, THE GENERAL INVESTMENT POOL WAS YIELDING 1.379%, WHICH IS UP FROM THE 1.075% YIELD IN THE PRIOR QUARTER.
AND FINALLY, MOVING ON TO OUR QUARTERLY SWAP REPORT ALONG WITH OUR INVESTMENT REPORT.
WE INCLUDE IN THIS MOFA THE QUARTERLY SWAP REPORT AS REQUIRED BY THE CITY SWAP POLICY.
THE CITY HAD POSITIVE RECEIPTS FOR THE FISCAL YEAR ENDING JUNE 30TH, 2022, FROM ITS SWAPS OF $1,320,234.
AND THE FAIR VALUE FOR THE SWAPS AS OF SEPTEMBER 30TH, 2022 WAS NEGATIVE 113 MILLION, WHICH IS APPROXIMATELY 20 MILLION LESS THAN LAST QUARTER.
AND, UH, MR. CHAIRMAN, I KNOW, AS YOU OFTEN COMMENT, WE ARE SEEING THAT NEGATIVE FAIR VALUE CONTINUE TO DECREASE, UH, AND WE'LL BE MONITORING THOSE FOR THE ULTIMATE OPPORTUNITY TO EXIT OUT OF THOSE IN THE FUTURE, UH, IF THE MARKET ALLOWS.
GOOD MORNING AND GOOD MORNING.
UH, THIS IS A THREE PLUS NON-FINANCIAL REPORT FOR THE PERIOD ENDING SEPTEMBER 30TH, 2022.
PROJECTIONS ARE BASED ON THREE MONTHS OF ACTUAL RESULTS AND NINE MONTHS OF PROJECTIONS FOR THE GENERAL FUND.
OUR REVENUE PROJECTION IS 4 MILLION LOWER THAN THE ADOPTED BUDGET AND PRIOR REPORT.
THE VARIANCE FROM PRIOR MONTHS PROJECTIONS ARE DUE TO A 4 MILLION DECREASE IN INTERGOVERNMENTAL.
FOR THE FOLLOWING, WE HAD 4.4 MILLION DECREASE TO REFLECT LOWER THAN ANTICIPATED.
UH, CHARITY CARE PROGRAM REIMBURSEMENT, UH, 2.5 MILLION, UH, DECREASE DUE TO CHANGE IN FUNDING MECHANISM ASSOCIATED WITH THE 1115 WAIVER PROGRAM.
AND THEN A 2.5 MILLION INCREASE IN ARPA REVENUE LOSS FOR, UH, THE RENOVATION OF JONES HALL, WHICH IS OFFSET WITH THE EXPENDITURES FOR JONES HALL.
UH, 488,000 INCREASE IN ELIGIBLE REIMBURSEMENT TO HEALTHCARE PROVIDER UNDER THE CARE CARES ACT PROVIDER RELIEF FUND.
ON OUR EXPENDITURE SIDE, OUR PROJECTION IS 6.1 MILLION HIGHER THAN THE ADOPTED BUDGET.
AND THE PREVIOUS REPORT, THE VARIANCE FROM PRIOR MONTHS PROJECTIONS IS PRIMARILY DUE TO 4.5 MILLION INCREASE IN SOLID WASTE DEPARTMENT DUE TO ADDRESS, UH, CITYWIDE ILLEGAL DUMPING AND BULK WASTE COLLECTION.
UH, 2.5 MILLION INCREASE IN GENERAL GOVERNMENT FOR THE RENOVATION OF JONES HALL, AGAIN, WHICH IS OFFSET BY INCREASE IN REVENUE 974,000 INCREASE IN THE HOUSTON HEALTH DEPARTMENT TO REFLECT THE MONKEYPOX WASTEWATER TESTING AND COSTS ASSOCIATED WITH THE HABITABILITY PROGRAM.
AND THEN, UH, 459,000 INCREASE IN A RA DUE TO HIGHER VOLUME OF, UH, SPAY AND NEUTER AT BARK ANIMAL SHELTER.
THEN WE HAVE A 356,000 DECREASE IN THE FIRE DEPARTMENT TO REFLECT BILLING COLLECTIONS FEE RELATED TO THE LOWER THAN ANTICIPATED CHARITY CARE PROGRAM AND 2.5 MILLION DECREASE IN HEALTH DEPARTMENT DUE TO THE CHANGE IN THE 1115 WAIVER PROGRAM.
SO WE ARE CURRENTLY PROJECTING THE ENDING FUND BALANCE OF 338.5 MILLION, WHICH IS 10.1 MILLION HIGHER THAN THE ADOPTED BUDGET, AND 14.6% OF EXPENDITURES, UH, LESS DEBT SERVICE AND PAY AS YOU GO.
THE FUND BALANCE IS 165 MILLION ABOVE THE TARGETED 7.50 CENTS OF, UH, 7.5% OF EXPENDITURES EXCLUDING DEBT SERVICE AND PEGO ON THE ENTERPRISE FUNDS.
WE ARE PROJECTING THE FOLLOWING FORECAST CHANGES, UH, FOR BAR
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SPECIAL REVENUE FUND EXPENDITURES INCREASED BY 459,000.AGAIN, THE SAME INCREASE WE SAW FROM THE GENERAL FUND TRANSFER TO HIGHER, UH, DUE TO HIGHER VOLUME OF SPAY AND NEUTER AT BARK ANIMAL SHELTERS.
UM, AS A RESULT, THE OPERATING TRANSFER TRANSFERS IN ALSO INCREASED BY 459,000.
SO JUST A BRIEF UPDATE ON THE ECONOMY.
LOOKING AT THE ENERGY, THE AVERAGE ALL PRICE OF $84 AND 26 CENTS FOR THE MONTH OF SEPTEMBER WAS 10% LOWER THAN PRIOR MONTH'S AVERAGE PRICE OF $93 67 CENTS.
COMPARING FROM THE SAME PERIOD OF LAST YEAR, THE PRICE HAS INCREASED BY 17.6% ON THE EMPLOYMENT SIDE, THE BUREAU OF LABOR STATISTICS, THE PRELIMINARY TOTAL NON-FARM EMPLOYMENT IN THE HOUSTON METRO AREA STOOD AT 3.3 MILLION IN AUGUST OF 2022.
UP APPROXIMATELY 0.2, UH, PERCENT.
UH, THE PRELIMINARY UNEMPLOYMENT RATE FOR THE MONTH OF AUGUST WAS 4.6% COMPARED TO PRIOR MONTHS.
UH, AND LOOKING AT THE HOME SALES, THE LATEST REPORT PREPARED BY HAR FOR THE MONTH OF SEPTEMBER, 2022 SHOWS THE TOTAL SINGLE FAMILY HOME SALES OF 7,006, UH, 7,664 WERE 17% LOWER COMPARED TO SEPTEMBER OF 2021.
THE MEDIAN PRICE ROSE BY 14.7% TO 343,950.
AND THE AVERAGE PRICE INCREASED BY 11.6, UH, PERCENT TO 414,776.
AND THE SINGLE FAMILY HOME INVENTORY, UH, REACHED 2.7 MONTH OF SUPPLY IN SEPTEMBER.
UH, INCREASED ONE MONTH, YEAR OVER YEAR.
AND I THINK IN CLOSING, UH, I DID WANT TO JUST HIGHLIGHT, UH, I THINK COUNSEL, YOU GUYS SHOULD HAVE RECEIVED AN UPDATE ON THE OPEN FINANCE.
SO THE OPEN CHECKBOOK WILL BE GOING LIVE, I WANNA SAY THIS THURSDAY, NOVEMBER THE THIRD.
UM, AND THE OTHER THING I DID WANNA HIGHLIGHT, I DIDN'T TALK ABOUT THE SALES TAX 'CAUSE WE'RE NOT CHANGING OUR PROJECTION THIS MONTH, BUT I DID WANT TO GIVE JUST AN UPDATE OF WHERE WE ARE SO FAR THIS YEAR.
SO WE HAVE RECEIVED JULY AND AUGUST, UH, SO FAR THIS YEAR.
JULY, I BELIEVE WAS 13% HIGHER THAN PRIOR YEAR, AND AUGUST WAS ABOUT 15.7% HIGHER.
SO WE ARE STILL SEEING DOUBLE DIGIT INCREASES IN THE SALES TAX.
STILL TOO EARLY FOR US TO ADJUST OUR PROJECTION, BUT IF YOU LOOK AT WHERE, WHERE WE ARE AT 807 MILLION, UM, IN ORDER TO HIT THAT, WE WOULD HAVE TO COME IN NEGATIVE 5% FOR THE REMAINDER OF THE, OF THE YEAR.
SO, SO FAR STILL GOOD NEWS, WE'LL PROBABLY LOOK AT AROUND DECEMBER OR SO TO ADJUST OUR SALES TAX PROJECTION.
SO WE'LL KEEP MONITORING IT AND HOPEFULLY THE DOUBLE DIGIT GROWTH CONTINUES.
UM, BUT FOR FOR NOW, WE'RE, WE'RE NOT GONNA MAKE ANY CHANGES.
WE HAVE A COUPLE OF COUNCIL MEMBERS IN QUEUE FOR QUESTIONS.
JUST A REMINDER THAT EACH COUNCIL MEMBER WILL RECEIVE TWO MINUTES PER THE COMMITTEE RULES.
FIRST IS VICE CHAIR ED POLLARD.
THANK YOU MAYOR PRO, TIM, AND GOOD MORNING TO EVERYONE.
I THANK YOU BOTH FOR YOUR PRESENTATIONS.
I WAS GONNA HIT ON SALES TAX, UM, AND THE QUESTION WAS GONNA GO TO THE CONTROLLER.
I I, I KNOW YOU, UM, READ A LOT OF TRENDS AND TRY TO UNDERSTAND THE, UH, POSSIBLE BEHAVIOR PATTERNS BASED ON THE ECONOMIC CIRCUMSTANCES THAT WE'RE IN.
AND WE SEE THESE REALLY, UH, HIGH INFLATION NUMBERS RIGHT ACROSS THE BOARD THAT'S HITTING FAMILIES, UH, IN THEIR POCKET BOOKS TOUGH, BUT WE'RE ALSO SEEING THESE DOUBLE DIGIT, UM, SALES TAX NUMBERS.
AND, UM, AS A ECONOMIC WELL ECONOMISTS OR A A FINANCIAL ADVISOR, DO YOU HAVE ANY, UH, FEEDBACK OR INSIGHT ON WHY YOU THINK OUR SALES TAX NUMBERS ARE HITTING THESE HIGH MARKS, EVEN THOUGH, UH, WE HAVE SO MUCH INFLATION, UM, AND PEOPLE TALK ABOUT POSSIBLY GOING INTO A RECESSION? CAN YOU KIND OF GIVE US SOME, SOME INSIGHT ON THAT? YEAH, SURE, SURE.
UM, YOU KNOW, FIRST AND FOREMOST GENERAL COMMENTS, WE ARE CONTINUING TO, CONTINUING TO SEE PRETTY ROBUST SALES TAX NUMBERS.
UH, TO MY SURPRISE, WE'VE, UH, MY OFFICE, AS YOU'VE SEEN IN THE REPORT, UH, THIS MONTH CAME UP 20 MILLION.
SO THAT'S A PRETTY, UH, BIG JUMP.
UM, YOU KNOW, UH, DIRECTOR JONES AND I HAVE DISCUSSED THAT, YOU KNOW, WE'RE GONNA PROBABLY LOOK AT DECEMBER AND SEE HOW HOLIDAY SALES TAX, UH, COMES IN BEFORE, UH, WE CONTINUE TO MAKE ADJUSTMENTS.
BUT I THINK IF THE TREND CONTINUES, YOU KNOW, WE PROBABLY WILL ADJUST UP.
UM, AS PER YOUR QUESTION ON INFLATION, I MEAN, I, I THINK IRONICALLY, INFLATION IS ONE OF THE DRIVERS BECAUSE, UH, ESSENTIALLY IF YOU LOOK AT INFLATION AND THE INCREASED COST OF, OF GOOD, SO EVERYTHING IS MORE EXPENSIVE.
AND AS, UH, YOU ALL KNOW, UH, WE PAY A, A SALES TAX, UH, EIGHT AND A QUARTER PERCENT, THE CITY RECEIVES A PORTION OF THAT.
UM, BUT WHEN YOU'RE BUYING EXIT, UH, YOU KNOW, $6, UH, A DOZEN INSTEAD OF $3 A DOZEN, UH, YOU KNOW, WE'RE ESSENTIALLY GETTING MORE SALES TAX FOR THAT.
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DRIVING IT.UM, I THINK THE RESILIENCY OF THE ECONOMY, HAVING A DIVERS DIVERSIFIED ECONOMY AND TO, UM, YOU KNOW, DIRECTOR JONES'S RECENT REPORT ABOUT, UH, THE PRICE OF OIL, WE STILL ARE SEEING, YOU KNOW, OIL IN THAT, UH, YOU KNOW, GOOD RANGE FOR, FOR HOUSTON AND THE 80 PLUS DOLLAR A BARREL.
UH, SO WE'RE, WE'RE CONTINUING TO SEE KIND OF THE BUSINESS ACTIVITY.
AND IF YOU LOOK AT IT FROM THE, YOU KNOW, OIL AND GAS SIDE, UH, THEY'RE HIRING PEOPLE.
THEY'RE, UH, MAKING EXPANSIONS ON CAPITAL PROJECTS AND THINGS LIKE THAT.
SO I THINK THAT'S, THAT'S DRIVING.
YOU KNOW, AT SOME POINT THERE'S A LOT OF DISCUSSION ABOUT, UH, YOU KNOW, RECESSION NATIONALLY.
UH, HOPEFULLY IT'S A LIGHT ONE AND HOPEFULLY, YOU KNOW, HOUSTON ISN'T, UH, AS AFFECTED BY IT.
BUT, YOU KNOW, WE'LL WAIT AND SEE AND WE'LL CONTINUE TO KEEP OUR NUMBERS A LITTLE BIT MORE CONSERVATIVE AS WE GET THROUGH THE END OF THE YEAR.
WE'LL, WE'LL ADJUST UP IF NEEDED.
DIRECTOR, DID YOU WANNA JUMP IN AT ALL? YEAH, I MEAN, IT'S, IT CONTINUES TO DEFY EXPECTATIONS EVEN FROM, YOU KNOW, WHEN YOU LOOK AT LAST YEAR WHERE IT CAME IN A HUNDRED MILLION HIGHER THAN WHAT WE ANTICIPATED AND WHAT THE EXPERTS ANTICIPATED, AND THAT TREND IS CONTINUING.
UM, BUT I DO AGREE WITH THE CONTROL.
I THINK INFLATION IS CONTRIBUTING SOMEWHAT TO IT.
UM, WE HAVEN'T SEEN A DROP IN THE UNEMPLOYMENT IN THE HOUSTON AREA.
UM, WE HAVEN'T SEEN, UM, THE OIL PRICES ARE STILL UP, SO, UM, IT'S SOMETHING WE HAVE TO, WE STILL HAVE TO BE CAUTIOUS ABOUT, BUT, UH, AND MONITOR, BUT IT DOES CONTINUE TO DEFY EXPECTATIONS.
WE USED TO, YOU KNOW, HEAR KIND OF PANIC FROM THE HEALTH DEPARTMENT ABOUT THE, WHEN THE 1115 WAIVER PROGRAM WENT AWAY.
IS THIS CHARITY CARE PROGRAM KIND OF REPLACING IT? SOMEWHAT.
I MEAN, IS, I KNOW PROBABLY NOT TO THE SAME MONETARY EXTENT.
RIGHT, BUT IS THAT WHAT'S HAPPENING? THAT THAT IS WHAT'S HAPPENING? SO THIS, THIS NEW CHARITY CARE PROGRAM, WILL, WE PLACE THE 1115 WAIVER? SO WITH THE 1115 WAIVER, THE, THE GENERAL FUND IS A PART, IS A MATCH.
UM, AND SO WITH THIS NEW PROGRAM, IT, IT, IT WON'T REQUIRE A MATCH.
IT'LL GO STRAIGHT TO, UH, YOU KNOW, THE HEALTH SPECIAL FUND.
UM, I'M STILL TRYING TO GET SOME OF THE DETAILS.
I DON'T, I'M NOT SURE IF THE, THE FUNDING IS AS ROBUST AS IT WAS WITH THE 1115 WAY PROGRAM.
BUT IT IS BEING REPLACED BY THAT CHARITY AND, AND WE'RE ABLE TO FUND THOSE PROGRAMS. NOTHING'S BEEN CO TOTALLY ELIMINATED.
NO, NOTHING'S BEEN TOTALLY ELIMINATED.
LIKE I SAID, WE HAVE TO SEE HOW, UH, HOW THE FUNDING COMPARES TO WHAT WE WERE RECEIVING UNDER 1115 WAIVER TO, TO KNOW WHETHER OR NOT SOME OF THOSE PROGRAMS WILL HAVE TO BE, YOU KNOW, SCALED DOWN SOME.
BUT WE DON'T KNOW THAT JUST YET.
BUT THE PROGRAM IS NOT BEING COMPLETELY ELIMINATED AS WE THOUGHT PREVIOUSLY.
AND CONTROLLER BROWN, YOU'VE, YOU'VE OFTEN SAID THAT, AND I AGREE THAT WE ARE, WE RUN A BIG SURPLUS IN OUR HEALTH BENEFITS FUND AND THAT MONEY IS RETURNED BACK TO, UM, THE DEPARTMENTS JUST TO USE ON WHATEVER.
AND IF YOU COULD, DO WE TRACK THAT MONTHLY OR DO WE JUST LOOK AT THE END OF THE YEAR? I KNOW CLAIMS COME IN AT DIFFERENT TIMES AND IT'S HARD TO JUDGE, KIND OF JUDGE, BUT DO WE TRACK, UM, SURPLUS AND THE HEALTH BENEFITS FUND ON A MONTHLY BASIS? EITHER ONE OF YOU CAN ANSWER AND THEN CONTROL AROUND THOUGH, IF YOU WOULD, UM, KIND OF OPINE ON ON WHAT MIGHT BE A BETTER WAY TO HANDLE THAT SURPLUS.
UH, I BELIEVE WE, WE TRACK IT MONTHLY.
I KNOW IT'S DIFFICULT TO RECONCILE.
SO I WOULD SAY THAT, AGAIN, AS WE ALWAYS FOOTNOTE, UNTIL THE END OF THE YEAR AND WE'VE, UH, COMPLETED THE AUDIT, WE DON'T KNOW WHAT THE ACTUAL AMOUNT WAS, UM, UNTIL THE AUDIT IS COMPLETE.
UH, YOU KNOW, I'VE LONG SAID THAT, UH, THIS MONEY IS SET ASIDE, UH, FOR THE BENEFIT OF, OF HEALTH, UH, BENEFITS.
AND SO, UM, YOU KNOW, WE SHOULD BE USING THOSE SURPLUSES IN THAT SAME VEIN.
AND I KNOW WE'VE DISCUSSED A LOT ABOUT, UH, ADDRESSING THE OTHER POST-EMPLOYMENT BENEFITS, UNFUNDED LIABILITY, THE OPE LIABILITY, AND HAVING A STREAM OF CASH FLOWS TO HELP, UH, FUND AN OPEP TRUST HAS BEEN SOMETHING THAT'S BEEN ON THE TABLE.
SO, UH, I KNOW YOU AND I HAVE DISCUSSED, UH, THE IDEA OF TAKING SOME OF THOSE HEALTH BENEFIT FUNDS AND USING THAT, UH, TO FUND THE OPEP TRUST, RIGHT? AND, AND THAT WOULD ESSENTIALLY REDUCE THAT UNFUNDED LIABILITY RATHER THAN JUST SWEEPING THAT MONEY BACK INTO THE GENERAL FUND AND THEN JUST USING IT ON ORDINARY EXPENSES.
THAT WOULD BE A RECOMMENDATION.
YEAH, AND, AND IF I COULD ADD TOO, SO WE DO TRACK IT MONTHLY, UM, AND THE, THE SURPLUS THAT WE'VE SEEN IN PAST YEARS, WE, WE ARE NOT SEEING NOW.
SO THERE, THERE WON'T BE A RETURN, LIKE WE'VE SEEN IN PAST YEARS, YOU KNOW, CLAIMS ARE HIGHER, UM, SO THAT THE FUND IS STILL HEALTHY.
UM, BUT THE WAY WE SET THE FINANCIAL POLICIES, THERE'S A MAXIMUM FUND BALANCE.
I DON'T REMEMBER THE EXACT FORMULA, BUT THE, THE RETURN WOULD ONLY HAPPEN IF YOU EXCEEDED THE MAXIMUM FUND BALANCE AMOUNT.
AND FROM MY CONVERSATIONS WITH DIRECTOR CHEEKS AND, AND, AND CARLA, THE CFO, WE'RE NOT, WE'RE NOT THERE LIKE WE WERE A FEW YEARS AGO, SO WE, I WOULDN'T ANTICIPATE ANY RETURNS, BUT WE ARE, WE'RE ALSO LOOKING AT, YOU KNOW, OPTIONS OF WHEN WE GET TO THAT POINT WHERE WE MAY HAVE A RETURN AGAIN, HOW WOULD WE HANDLE IT? BUT WE'RE NOT SEEING THAT RIGHT NOW.
SO ONE COMMENT AND THEN A, A QUESTION, UH, NO ONE ELSE IS IN QUEUE.
I THINK SALES TAX REVENUE, I THINK DIRECTOR JONES, YOU SAID IT WAS UP 13% IN JULY, 15% IN
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AUGUST.RISING INTEREST RATES, WE'RE GONNA CONTINUE TO SEE THIS AS LONG AS INFLATION KEEPS MOVING UPWARD, AND I THINK THE SALES TAX, UH, THE REVENUE, UH, THAT WE'RE SEEING WILL CONTINUE TO INCREASE UNLESS THE INFLATION COMPONENT COMES DOWN.
A QUESTION TO CONTROLLER BROWN, I ALWAYS ENJOY READING YOUR INTERNAL AUDIT REPORTS.
UH, I, I, DIRECTOR BROWN, COURTNEY BROWN, UH, I MEAN, COURTNEY SMITH DOES A GREAT JOB OF, UH, OF THOSE REPORTS.
AND IN MY WORLD, WHEN YOU READ A REPORT THAT SAYS MATERIAL WEAKNESSES TO INTERNAL CONTROLS, IT BRINGS A SIGNIFICANT RED FLAG UP.
AND I READ THE FLEET REPORT, AND THE FLEET REPORT HAD A NUMBER, A NUMBER OF INCIDENTS THAT WERE WARNING TO ME, UH, THE SINGLE MOST IS WE'RE VIOLATING STATE AND FEDERAL TAX LAWS BY NOT COLLECTING TAX ON THE USAGE OF OUR TAKE HOME VEHICLES.
WE WOULD BE LIABLE FOR THAT IF WE DON'T DO THAT.
SO, UM, ANY COMMENTS FROM THIS REPORT AND THE FINDINGS OF IT, AND MORE IMPORTANTLY, WHAT HAPPENS AFTER THESE REPORTS? MAYBE, I'M NOT SURE HOW MANY PEOPLE READ THE INTERNAL AUDIT REPORTS, BUT, UM, WHEN YOU LOOK AT THIS ONE, THIS ONE WAS THE MOST EGREGIOUS ONE THAT I'VE SEEN SINCE I'VE BEEN ON COUNCIL.
SO WHERE DO WE GO WITH THIS REPORT FROM AN INTERNAL AUDIT STANDPOINT, AND MORE IMPORTANTLY, WHAT ARE WE DOING TO ADDRESS MATERIAL WEAKNESSES AND INTERNAL CONTROLS? WELL, FIR FIRST COMMENT IS, THANK YOU FOR BRINGING THIS, UH, TO THE ATTENTION OF, OF THIS BODY BECAUSE, YOU KNOW, IT'S FRUSTRATING FROM, UH, MY POSITION, UM, NOT ONLY AS THE CONTROLLER, BUT A DEPARTMENT DIRECTOR THAT'S CHARGED WITH DOING A LOT OF THESE AUDITS.
WE WILL DO THESE, UH, AS YOU ALL KNOW, AND YOU RECEIVE THEM, AND I KNOW THEY'RE LONG AND AND BORING, BUT SOMETIMES THEY DON'T GET THE ATTENTION.
AND, AND TO ANSWER YOUR QUESTION, UH, YOU KNOW, WE'VE IDENTIFIED SAVINGS, WE'VE IDENTIFIED MATERIAL WEAKNESSES, WE'VE IDENTIFIED ALL THESE DIFFERENT TYPE OF OPPORTUNITIES FOR EFFICIENCIES.
UM, BUT QUITE FRANKLY, A LOT OF TIMES IT'S PRODUCED, PEOPLE TALK ABOUT IT FOR A COUPLE WEEKS AND THERE IS NO, UH, FOLLOW UP OR IMPLEMENTATION.
UM, THAT IS NOT SOMETHING THAT MY OFFICE IS CHARGED WITH.
THAT WOULD BE SOMETHING THAT, UH, QUITE FRANKLY, DIRECTOR JONES, THE MAYOR AND THE ADMINISTRATION WOULD HAVE TO DO.
AND I, I, I KNOW A LOT OF THESE THINGS TAKE ADDITIONAL RESOURCES, AND IT'S A CHALLENGING TIME.
BUT, UM, TO YOUR POINT WHERE WE'RE, UH, DEFICIENT IN CERTAIN AREAS THAT HAVE LONG TERM, UH, RAMIFICATIONS, IT'S SOMETHING THAT WE SHOULD IMPLEMENT.
NOW, WE WILL DO FOLLOW UP AUDITS.
AS YOU SAW, UH, WE HAD TO DO, UH, WITH THE LIFE SAFETY BUREAU AND THE FIRE DEPARTMENT, WE DID AN AUDIT.
AND PEOPLE VERY SIMILAR TO YOUR, UH, COMMENTS TODAY SAID, I, I CAN'T BELIEVE THAT WE'RE HAVING THESE DEFICIENCIES.
AND, UH, NOTHING WAS DONE FOR FIVE YEARS.
AND, UH, THAT WAS COINCIDENTALLY WHEN THE, UH, LONDON GRENFELL FIRE AND PEOPLE STARTED SAYING, HEY, THIS IS SOMETHING THAT'S A, A REAL PUBLIC SAFETY ISSUE.
AND TO THE MAYOR'S CREDIT AND ADMINISTRATION'S CREDIT AND, UH, CHIEF PENA'S CREDIT, THEY, THEY TOOK ACTION AND MADE SOME PRETTY SUBSTANTIAL REFORMS. AND I WOULD SAY HOUSTON SAFER AS A RESULT TODAY.
SO, UM, TO ANSWER YOUR QUESTION, I THINK THAT'S SOMETHING THAT, UH, AND, AND PROBABLY DIRECTOR JONES CAN DO A FOLLOW UP AND LOOK AT FLEET, YOU KNOW, THAT'S A, UH, GONNA BE A DEPARTMENT, UH, THAT'S GONNA HAVE TO BE AN INITIATIVE FROM THE DEPARTMENT LEVEL, I THINK.
BUT, UH, WITH THE ADMINISTRATION, UM, PUSHING THAT, I MEAN, I WOULD, I WOULD INVITE COUNCIL MEMBERS TO TAKE A LOOK AT ESPECIALLY SOME OF THE RESULTS AND RECOMMENDATIONS.
UM, A NUMBER OF 'EM WERE SIGNIFICANT AS IT AFFECTS MATERIAL WEAKNESSES.
UM, EMPLOYEES WITH TAKE HOME VEHICLES NOT ALWAYS REVIEWED ANNUALLY.
ANNUALLY, UH, THE RECOMMENDATIONS I THINK WERE SPOT ON.
I THINK A LOT OF THIS, IF YOU READ THE BASIS OF IT, THEY HAVE 25% VACANCIES IN THEIR DEPARTMENT.
SO THEY'RE TRYING TO DO A LOT OF THINGS WITHOUT THE MANPOWER TO DO THEM.
BUT WHEN YOU HAVE A LINE ON PAGE 15, IT SAYS, IT EQUATES TO APPROXIMATELY $603,000 PER YEAR IN UNPAID THV DEDUCTIONS, THV BEING TAKE HOME VEHICLES.
AND, UM, A TOTAL OF SEVEN INDIVIDUALS DID NOT HAVE ANY OF THE DEDUCTIONS DURING THE PERIOD THAT WAS TESTED IN YOUR AUDIT REPORT.
SO, UM, I THINK WE NEED TO LOOK AT THESE A LITTLE BIT CLOSER.
YOU KNOW, I'LL, I KNOW IT'S AN ADMINISTRATION'S RESPONSIBILITY, UM, BUT I WOULD LOVE TO SEE A FOLLOW-UP REPORT AS TO THE RECOMMENDATIONS.
I THOUGHT THEY WERE PRETTY THOROUGH BY, UH, COURTNEY SMITH.
I'D LOVE TO KNOW WHAT THE FLEET DEPARTMENT IT SAYS TOWARDS THESE.
ARE THEY LOOKING AT IT AND SAYING, YEAH, WE RECOGNIZE WE HAVE SOME DEFICIENCIES, OR, AND HERE'S WHAT WE'RE DOING TO CORRECT THEM BECAUSE, AND IF THIS COMES TO A POSITION WHERE WE'RE AUDITED BY STATE AND FEDERAL GOVERNMENT, WE'RE LIABLE FOR THAT.
UH, THAT MONEY THAT'S ACCUMULATING RIGHT NOW FOR NOT MAKING THE DEDUCTIONS,
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UH, TO THE INDIVIDUALS.SO, UM, I THOUGHT IT WAS AN INTERESTING REPORT.
MAYBE I'M A NERD AND I LIKE READING ALL THE FINANCIAL DATA, BUT IT WAS, UH, IT WAS PRETTY EYE-OPENING BECAUSE IT'S, UH, IT WAS, I MEAN, YOU IDENTIFIED SOME PRE OR MS. SMITH AND YOUR DEPARTMENT IDENTIFIED SOME SIGNIFICANT, UH, MATERIAL WEAKNESSES TO INTERNAL CONTROLS, WHICH IN ORGAN ANY ORGANIZATION, THAT'S THE MOST EGREGIOUS STATEMENT THAT AN AUDITOR CAN MAKE IS MATERIAL WEAKNESSES IN INTERNAL CONTROLS.
SO, UH, ONE LAST CLOSING COMMENT IF YOU ALLOW ME, AND I JUST WANTED TO SAY GREAT, ALLY ALCO WITH A QUESTION, SO I'M SORRY.
GREAT WORK TO, UM, UM, CITY AUDITOR COURTNEY SMITH AND HER TEAM FOR, YOU KNOW, THEY, THEY'VE HAD A LIMITED AMOUNT OF RESOURCES AND TO CONTINUALLY PUT THESE OUT, ESPECIALLY DURING COVID AND SUCH, THERE HAD BEEN A RECOMMENDATION, UH, I KNOW, UH, SEVERAL COUNCIL MEMBERS HAD RECOMMENDED OVER TIME THAT, UH, WHEN WE DO THESE AUDITS, THAT THEY COME AND ACTUALLY GET PRESENTED TO THIS COMMITTEE OR A COMMITTEE.
AND, UH, THAT MIGHT HELP FOR COUNCIL NOT ONLY TO ASK QUESTIONS, BUT TO BRING THE LIGHT.
SO THAT'S SOMETHING THAT OUR OFFICE STANDS READY TO DO IF SOMEONE DECIDED THAT THAT IN FACT WAS SOMETHING THAT NEEDED TO BE DONE.
AND WE HAVE, WE HAD AN INQUIRY TO THIS FROM A PUBLICATION, SO ANYTIME IT GETS TO THAT POINT, UH, IT'S ELEVATED THE, THE POSITION OF THIS.
SO, UH, COUNCIL MEMBER SALLY ALCORN, THANK YOU CHAIR, AND I'D CERTAINLY SUPPORT CHAIR AND VICE CHAIR BRINGING THESE AUDITS TO COMMITTEE.
UH, ON THE ARPA FUNDS, CAN YOU JUST GIVE A QUICK ACCOUNTING OF WHERE WE ARE? HOW MUCH IS LEFT, HOW MUCH IS GONE? UM, I, I THINK I HAVE A, SO I KNOW ON, ON ARPA.
SO AS OF OCTOBER 31ST, THE TOTAL SPEND RIGHT NOW IS 323 MILLION, UH, WHICH INCLUDES EXPENSES ON PROJECTS OF 21 MILLION IN REVENUES, REVENUE REPLACEMENT OF 302 MILLION.
SO OUT OF THE 607 MILLION, UH, SO FAR WE SPENT 323.
NO OTHER COUNCIL MEMBERS IN QUEUE.
SO DIRECTOR JONES, ALWAYS GOOD TO SEE YOU.
CONTROLLER BROWN, ALWAYS GOOD TO SEE YOU.
EACH MONTH WE HAVE THE, UH, THIS ANNUAL REPORT AND THE MONTHLY REPORT.
SO, UH, THANKS FOR YOUR DILIGENCE.
AND WE'LL MOVE ON TO PUBLIC SPEAKERS.
SO WE HAVE ONE PUBLIC SPEAKER THAT IS SIGNED UP TODAY TO SPEAK, AND THAT'S MR. DOUG SMITH.
LAST MONTH I WAS HERE AND POINTED OUT THAT THE ADOPTED BUDGET WAS NOT AVAILABLE ONLINE ONLY THE PROPOSED BUDGET.
AND I'M HAPPY TO REPORT THAT THE ADOPTED BUDGET IS NOW ONLINE.
AND WITH THAT HAPPENING, I WAS ABLE TO GO IN AND TAKE A LOOK AT IT AND LOOK AT THE PROP ONE AND PROP H CALCULATIONS, WHICH IS ONE OF THE MAIN REASONS I WANTED TO SEE IT.
AND I ALSO HAVE THE NO NEW, UH, REVENUE TAX RATE CALCULATIONS.
THE ONE THING I'M MISSING, UH, STATE LAW WAS PASSED A COUPLE YEARS AGO, LIMITING THE AMOUNT, UH, TAXING ENTITIES COULD CHARGE.
AND I DON'T, I HAVE NOT SEEN THAT CALCULATION FOR THE CITY AND I DON'T KNOW WHERE IT IS, BUT I WOULD LIKE TO SEE THAT, UH, IF THAT'S POSSIBLE.
ANY SPECIFIC ENTITY OR WHAT DO YOU LIMIT THE TAX ENTITIES AMOUNT TAX ENTITIES COULD CHARGE? WELL, THE CITY IS LIMITED, I BELIEVE IT'S 3.5%.
AND I WOULD ASSUME THERE'S PROBABLY A CALCULATION THAT NEEDS TO BE DONE TO MAKE SURE THEY'RE MEETING THAT RELATED TO THE PROPOSITION, I'M ASSUMING RELATED TO THE LAW THAT WAS PASSED BY THE STATE A COUPLE OF YEARS AGO.
I'LL ASK THAT QUESTION IN FINANCE, PLEASE.
SECONDLY, I WAS GLAD TO HEAR THAT OPEN CHECKBOOK IS GOING TO BE ACTIVE IN THE NEXT WEEK.
UH, I WAS SENT A LINK TO OPEN BUDGET AND I TOOK A LOOK AT IT.
IT LOOKS FANTASTIC, BUT I HAVE A QUESTION AND I'M WONDERING IF YOU ALL HAVE HAD A TUTORIAL ON THAT.
UH, AND IF THAT TUTORIAL IS ONLINE, BECAUSE IT'S VERY DIFFICULT TO OPEN THE LINK AND TRY TO FIGURE OUT WHERE TO GO.
UH, AND I WOULD LIKE, UH, I DON'T KNOW WHETHER THERE WAS A ZOOM MEETING OR WHAT IT WAS, BUT IF THERE'S A WAY TO TAKE A LOOK AT THAT AS FAR AS THE BUDGET IS CONCERNED.
AND ALSO THEN ONCE THE NEW CHECKBOOK IS PUT IN PLACE, I WOULD LIKE TO TAKE A LOOK AT THAT.
AND WE, AND WE HAD A TUTORIAL, AND I THINK WHEN EVERY NEW COUNCIL MEMBER COMES IN, THEY ALSO HAVE THE SAME THING THAT COUNCIL MEMBER SALLY ALCORN.
I WAS JUST GONNA SAY, WE DID DO A TUTORIAL AND, AND OUR, OUR TEAM WOULD BE HAPPY TO HELP YOU IF YOU JUST WANNA CALL KIND OF TO WALK THROUGH SOME OF THE BASICS WITH YOU.
THERE WASN'T, THERE WASN'T A VIDEO OR ANYTHING WE WERE ON WITH PEOPLE FROM FINANCE.
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UM, BUT WE CAN SHARE WHAT WE LEARNED IN THAT.WE MIGHT WANNA CONSIDER DOING A TUTORIAL AND SHARING IT WITH THE PUBLIC.
UH, YEAH, I THINK A YOUTUBE OR SOMETHING WOULD BE GREAT.
TO, TO, IF WE WANT THIS TO BE OPEN FINANCE, IT SHOULD BE OUT THERE IN THE, IN THE WORLD.
I'LL CERTAINLY MAKE THAT REQUEST OF FINANCE.
AND THEN ONE FINAL THING, THIS JUST POPPED UP WHEN I WAS LOOKING AT THE MONTHLY REPORT ON PAGE 2.2 OF THE MONTHLY FINANCIAL REPORT.
THIS IS CONVENTION ENTERTAINMENT FACILITIES FACILITY REYNOLDS BUDGET WAS 1,000,521 AND YEAR TO DATE IS THE SAME AMOUNT, 1,000,521.
AND I DON'T KNOW WHETHER, I DON'T, I DON'T UNDERSTAND THAT SINCE WE'RE ONLY THREE MONTHS INTO THE YEAR.
SO, BUT THAT'S ALL I HAVE TO SAY.
AND YOU'RE TALKING ABOUT THE CONTROLLER'S PROJECTION AT 1.5 AND FINANCE, I'M TALKING ABOUT, I'M TALKING ABOUT, UH, UNDER THE ENTERPRISE FUNDS CONVENTION AND ENTERTAINMENT FACILITIES.
FACILITY RENTALS, UNAUDITED, PRELIMINARY, 1 5 2 1, ADOPTED BUDGET, CURRENT BUDGET, YEAR TO DATE, AND THEN THE PROJECTIONS.
AND THE YEAR TO DATE EXPENDITURES REVENUES ARE THE SAME AS THE CURRENT BUDGET.
THIS IS ON PAGE 2.2, SECTION TWO, PAGE TWO, LOOKING AT IT.
SO YOUR QUESTION IS RELATED TO FACILITY RENTALS VERSUS TOTAL OPERATING REVENUE.
QUESTION IS THEY SHOW THE BUDGET OF MILLION 521 AND THEY'RE SAYING THEY'VE ALREADY RECEIVED ALL OF THAT.
1,000,521 YEAR TO DATE IS THE WAY I READ THIS, THEY RECEIVED THE REVENUE OF 1,000,521 ALREADY.
WHEREAS IF YOU LOOK AT THE NEXT LINE PARKING, THEY ONLY RECEIVED A MILLION OF THE 7 MILLION.
ANY OTHER QUESTIONS? COUNCIL MEMBER SALLY ALCORN, YOU? I'M DONE.
ANY OTHER QUESTIONS? SEEING NONE, UH, IF THERE ARE NO OTHER COMMENTS, THIS MEETING IS ADJOURNED.