[Budget and Fiscal Affairs on May 30, 2023.]
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EVERYONE, COUNCIL MEMBERS, MEMBERS OF THE PUBLIC.MY NAME IS EDWARD POLLARD, COUNCIL MEMBER FOR DISTRICT J AND THE VICE CHAIR OF THE CITY OF HOUSTON'S BUDGET AND FISCAL AFFAIRS COMMITTEE, COUNCIL MEMBERS AND STAFF.
WE HAVE ONE PRESENTATION TODAY PER COMMITTEE RULES.
WE WILL BE TAKING QUESTIONS AT THE CONCLUSION OF EACH PRESENTATION.
EACH COUNCIL MEMBER WILL HAVE TWO MINUTES TO SPEAK.
I CALL THIS MEETING TO ORDER AND WOULD LIKE TO WELCOME ALL COUNCIL MEMBERS.
IN ATTENDANCE, WE HAVE COUNCIL MEMBER AMY PECK, COUNCIL MEMBER CAROLYN EVAN SHABAZZ, AND WE ALSO HAVE STAFF FROM, UM, ABBY CAYMAN, CHAIR, DAVE MARTIN, MIKE KNOX, AND LETICIA PLUMMER, AS WELL AS VICE MAYOR PRO TEM MARTHA CASTEX TATUM.
THERE WERE NO PUBLIC SPEAKERS THAT SIGNED UP BEFORE 3:00 PM ON THE DEADLINE YESTERDAY.
IF YOU ARE HERE IN PERSON AND WOULD LIKE TO BE ADDED TO THE PUBLIC SPEAKERS LIST, PLEASE SIGN IN ON THE LIST LOCATED ON THE DESK TO MY LEFT AND YOUR RIGHT PUBLIC SPEAKERS WILL BE ADDRESSED AT THE CONCLUSION OF ALL PRESENTATIONS.
AT THIS TIME, I WOULD LIKE TO WELCOME CONTROLLER CHRIS BROWN AND DIRECTOR WILL JONES TO PROVIDE THE MONTHLY FINANCIAL REPORT AND GENERAL APPROPRIATIONS.
GOOD MORNING COUNCIL MEMBERS AND STAFF.
UH, MR. VICE CHAIRMAN, I'M PLEASED TO PRESENT THE MONTHLY FINANCIAL REPORT FOR THE MONTH ENDING APRIL 30TH, 2023.
THE CONTROLLER'S OFFICE IS PROJECTING AN ENDING FUND BALANCE OF 380.2 MILLION FOR FY 23.
THIS IS 40.3 MILLION LOWER THAN THE PROJECTION.
THE FINANCE DEPARTMENT, BASED ON OUR CURRENT PROJECTIONS, THE FUND BALANCE WILL BE APPROXIMATELY 204.8 MILLION ABOVE THE CITY'S TARGET OF HOLDING 7.5% IN RESERVES.
OUR REVENUE PROJECTIONS INCREASED BY 21.8 MILLION FROM THE MARCH, 2023 REPORT, AND THAT WAS DUE TO THE FOLLOWING.
PROPERTY TAX INCREASED BY 8.4 MILLION, AND THAT WAS DUE TO HIGHER THAN ANTICIPATED RECEIPTS.
SALES TAX INCREASED BY 10 MILLION AND THAT WAS ALSO DUE TO HIGHER THAN ANTICIPATED RECEIPTS.
MIXED BEVERAGE TAX INCREASED BY 1.5 MILLION, AND THAT WAS DUE TO HIGHER THAN ANTICIPATED RECEIPTS AS WELL.
OUR OTHER FRANCHISE FEES INCREASED BY 246,000 AND THAT WAS DUE TO HIGHER CABLE FRANCHISE FEE AND SOLID WASTE HAULER FRANCHISE FEE COLLECTIONS.
CHARGES FOR SERVICES INCREASED 445,000 DUE TO HIGHER AMBULANCE FEE COLLECTIONS.
MUNICIPAL COURTS FINES AND FORFEITS INCREASED BY 884,000, AND THAT WAS DUE TO HIGHER FINES COLLECTED FROM MOVING VIOLATIONS.
INTEREST INCOME INCREASED BY 375,000 DUE TO THE INCREASE IN INTEREST ON BANK DEPOSITS.
AND OUR EXPENDITURE ESTIMATES ARE UNCHANGED FROM THE MARCH 20TH, 2023 REPORT.
WE HAVE NO PROJECTED CHANGES IN ANY OF OUR ENTERPRISE OR SPECIAL REVENUE FUNDS.
I'LL MOVE ON TO OUR COMMERCIAL PAPER AND BONDS, AND AS YOU CAN SEE, ALL OF THE VARIABLE RATE DEBT IS BELOW THE 20% THRESHOLD.
UM, THIS IS THE 10 PLUS TWO FINANCIAL REPORT FOR THE PERIOD ENDING APRIL 30TH, 2023.
FISCAL YEAR 2023 PROJECTIONS ARE BASED ON 10 MONTHS OF ACTUAL RESULTS AND TWO MONTHS OF PROJECTIONS FOR THE GENERAL FUND.
OUR REVENUE PROJECTION IS 101.3 MILLION HIGHER THAN THE ADOPTED BUDGET, AND 18.2 MILLION HIGHER THAN LAST MONTH.
THE VARIANCE FROM LAST MONTH'S PROJECTION IS DUE TO 15.5 MILLION INCREASE IN PROPERTY TAXES DUE TO HIGHER THAN ANTICIPATED COLLECTIONS.
1.6 MILLION INCREASE IN INTEREST TO REFLECT HIGHER THAN ANTICIPATED
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CASH RECEIPTS AND 1.1 MILLION INCREASE IN MISCELLANEOUS OTHER DUE TO HIGHER THAN ANTICIPATED UNCLAIMED PROPERTY OVERPAYMENTS OVER THREE YEARS.ON OUR EXPENDITURE PROJECTIONS IS 29.3 MILLION HIGHER THAN THE ADOPTED BUDGET AND REMAINS UNCHANGED FROM LAST MONTH.
WE ARE CURRENTLY PROJECTING THE ENDING FUND BALANCE OF 420.5 MILLION, WHICH IS 18.2 MILLION HIGHER THAN PRIOR MONTHS, AND 18% OF ESTIMATED EXPENDITURES, LESS DEBT SERVICE AND PAY AS YOU GO.
THE FUND BALANCE IS 245.1 MILLION ABOVE THE TARGETED 7.5% OF EXPENDITURES EXCLUDING DEBT SERVICE AND PEGO FOR THE ENTERPRISE FUNDS.
WE'RE PROJECTING, UH, NO FORECAST CHANGES AND THANK YOU VERY MUCH.
UH, DIRECT DIRECTOR JONES, WOULD YOU, WOULD YOU CONSIDER YOUR PROJECTIONS AND WHEN YOU ALL AS A FINANCE DEPARTMENT PUT, PUT TOGETHER YOUR NUMBERS TAKING A CONSERVATIVE APPROACH? YES.
SO THAT MEANS YOU CONTROLLER TAKE A VERY CONSERVATIVE APPROACH.
AND, YOU KNOW, WE HAVE TO CERTIFY THE AVAILABILITY OF FUNDS.
SO, YOU KNOW, MY, UH, BACKGROUND PRIOR TO GETTING INTO PUBLIC SERVICE WAS IN, UH, TRADING AND INVESTMENT BANKING.
AND I ALWAYS HAD A STRATEGY OF, UH, BEING, UH, ON THE MORE CONSERVATIVE SIDE.
AND I HAD A A HEADS YOU IN, TAILS YOU IN.
SO, YOU KNOW, THE GOOD NEWS IS, UH, I WILL SAY, UH, AT THIS POINT, UM, YOU KNOW, THE FINANCE ADMINISTRATION, UH, THERE ARE, UH, PROJECTIONS THIS YEAR, UH, PARTICULARLY AS WE LOOK AT SALES TAX ARE MORE ACCURATE.
UM, WE HAD BEEN MORE CONSERVATIVE, UH, BUT AGAIN, WE'VE SEEN AN UNPRECEDENTED INCREASE IN SALES TAX FROM LAST YEAR.
WE WERE UP 15% INCREASE LAST YEAR.
THIS YEAR WE'RE STILL DOUBLE DIGITS AT 11% IN CLIMBING.
WE'LL PROBABLY SEE ME CONTINUE TO INCREASE OUR SALES TAX NUMBERS, BUT AT THE END OF THE DAY, UM, WE HAVE TO CERTIFY THE AVAILABILITY FUND.
SO I'M ONLY GONNA CERTIFY THE AMOUNT OF MONEY THAT I AM CONFIDENT THAT WE WILL IN FACT GET, IF I'M WRONG.
AGAIN, BACK TO THAT HEADS YOU IN, TAILS YOU IN, WHICH, YOU KNOW, THIS, THIS YEAR IT SEEMS LIKE I HAVE BEEN WRONG AND DIRECTOR JONES HAS BEEN MORE RIGHT.
BUT THE GOOD NEWS IS IF YOU STICK WITH MY PROJECTIONS, YOU'RE GONNA HAVE EXTRA MONEY.
AND THIS IS REALLY THE THING IS WE CONTINUE TO LOOK TO BUILD FUND BALANCE BECAUSE WE KNOW THAT THE FEDERAL FUNDS ARE EXPIRING AND WE ALSO KNOW, UM, STATISTICALLY THAT WE CANNOT CONTINUE TO SEE DOUBLE DIGIT GROWTH IN SALES TAX.
SO I WILL SAY THIS IS AN ANOMALY YEAR YET AGAIN AFTER LAST YEAR, BUT I DON'T EXPECT THAT TREND TO CONTINUE.
DIRECTOR JONES, UH, YOU, YOU REPORTED IN YOUR, YOUR REPORT THAT WE CURRENT, UH, WE ARE CURRENTLY PROJECTING THE ENDING FUND BALANCE OF 420.5 MILLION, UM, IN THE PROPOSED BUDGET, WASN'T IT, AT 402 MILLION? CORRECT.
UM, AND SO WE'VE ALREADY GONE UP 18.
OH, YOU HAVE IT, WHICH IS 18.2 HIGHER THAN OKAY.
AND, AND JUST TO BE CLEAR TOO, I, I WILL.
SO WE'LL NEXT, NEXT WEEK WHEN THE BUDGET IS ON THE AGENDA, THERE WILL BE SOME RED LINE CHANGES AND ONE OF THE THINGS THAT WE WILL RED LINE IS TO INCLUDE THIS, UH, INCREASE IN FUND BALANCE AS PART OF THE 23 BUDGET, WHICH WILL ROLL OVER TO INCREASE THE, THE ENDING FUND BALANCE FOR 24.
SO I WILL, SINCE THAT CHANGE HAPPENED RIGHT AFTER WE PROPOSED A BUDGET, I AM GOING TO ADJUST THE BUDGET TO CAPTURE THAT FUND BALANCE INCREASE.
WHERE DO, WHERE DO YOU THINK WE'LL END UP AT THE VERY END? UM, WE'RE AT FOUR 20 NOW, FOUR 20.
UM, WE'RE AT 4 0 2 JUST LAST MONTH.
AND, AND REALLY THAT BIG CHANGE CAME FROM THE, THE PROPERTY TAX WITH THE COLLECTIONS BEING HIGHER THAN ANTICIPATED.
AND WE, WE COULDN'T HAVE KNOWN THAT, UM, WHEN THE BUDGET WAS PROPOSED.
UM, SO I THINK, UH, WE'LL, THAT, THAT'S A PRETTY GOOD NUMBER.
THE, THE ONLY OTHER CHANGES THAT I THINK WE, WE WILL SHOW, NOT I THINK WE WILL SHOW, IS WE, WE DO HAVE SOME VACANCY SAVINGS AND PERSONNEL SAVINGS THAT WE'LL SHOW TOWARDS THE END OF THE YEAR AS WE FINALIZE SOME OF THE, THE, UH, PROJECTIONS FOR YEAR END.
SO THERE WILL BE SOME MORE SAVINGS IN TERMS OF ON THE EXPENDITURE SIDE.
SO YOU THINK WE'LL BE ABOVE FOUR 20.5? YES.
SO JOINING US IN CHAMBERS, WE HAVE COUNCIL MEMBER SALLY ALCORN, COUNCIL MEMBER MICHAEL KUBOSH, AND COUNCIL MEMBER DAVID ROBINSON.
WE ALSO HAVE STAFF OF COUNCIL MEMBER CARLOS CISNEROS.
FIRST IN THE QUEUE IS COUNCIL MEMBER MICHAEL KOSH.
UM, THERE'S BEEN, UH, A NUMBER OF ARTICLES THAT I'VE SEEN, UH, IN THE CHRONICLE CONCERNING THE POPULATION GROWTH OF THE CITY OF HOUSTON THIS PAST YEAR.
UH, AND IT, AND IT SHOWED THAT IT WAS, UH, IT WAS LESS
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THAN 1%.UH, IN FACT IT WAS CONSIDERABLY LESS THAN THAT.
AND SO I KNOW WE USE THAT FIGURE.
UH, DO WE ROUND IT UP? DO WE, DO WE LEAVE IT WHERE IT'S AT? UH, HOW DO WE DO IT WHEN WE, WHEN WE'RE TRYING TO, TO IMPLEMENT THE REVENUE CAP THAT, THAT, UH, THE PROPERTY TAX CAP, RIGHT? THAT THAT AFFECTS IT.
CAN EITHER ONE OF YOU ANSWER THAT? YEAH, I MEAN, I CAN TAKE THAT ONE.
SO WHEN WE PROPOSED THE BUDGET, SINCE WE DON'T KNOW THE POPULATION, WE PROPOSED A BUDGET AT 0% POPULATION GROWTH.
NOW THAT WE HAVE THE POPULATION, THAT WILL ALSO BE ANOTHER RED LINE CHANGE, AND IT WILL BE EXACTLY AS THE US CENSUS, WE DON'T ROUND UP.
SO IT'LL BE WHATEVER THE POPULATION, AND I WANNA SAY IT WAS POINT 0.6 OR POINT, I DON'T REMEMBER THE EXACT NUMBER, BUT IT TRANSLATES TO AN ADDITIONAL 7 MILLION, UM, TO THE PROPERTY TAX CAP THAT WILL BE RED LINED.
SO IT, IT, WE, WE FOLLOWED THE US CENSUS BUREAU POPULATION NUMBER.
WELL, I NOTICED THAT IN, IN THE WATER BILL RATING, THEY ROUNDED IT UP TO 1%.
WILL, WILL BOTH OF YOU GENTLEMEN BE HERE ON THE DAY THAT WE VOTE FOR THE BUDGET? CAN WE COUNT ON YOU TO BE IN CHAMBER IN CASE WE HAVE A QUESTION? OH, YEAH.
AND, AND SO THAT POPULATION EXTRA 7 MILLION JUST FLOWS RIGHT TO THIS FUND BALANCE.
WE'LL LIFT THAT FUND BALANCE, RIGHT? RIGHT.
AND, AND YOU'LL SEE THAT AGAIN WHEN WE PRESENT THE BUDGET NEXT WEEK, IT'LL HAVE THE RED LINE CHANGE WITH THAT ADJUSTMENT.
AND DIRECTOR JONES, I, I DON'T KNOW IF I'M NOT FAMILIAR, THE $1.1 MILLION INCREASE DUE TO HIGHER THAN ANTICIPATED UNCLAIMED PROPERTY OVERPAYMENTS.
WHAT DOES THAT MEAN? YEAH, I THINK THAT THEN I, I CAN GET YOU MORE INFORMATION, BUT I THINK THAT'S AFTER A CERTAIN AMOUNT OF TIME WHERE, WHERE PEOPLE THAT OVERPAID AND THEY DON'T, UM, GO AND GET OR GET THEIR REFUND BACK.
THEN IT COMES BACK TO THE JURISDICTION WHERE THE PROPERTY TAX THEY WERE PAYING FOR TAXES OR, YEAH.
WELL, THAT LOOKS LIKE ALL THE COUNCIL MEMBERS IN QUEUE.
UH, WE HAVE ONE PUBLIC SPEAKER, MR. DOUG SMITH, SO YOU ALL CAN BE DISMISSED.
AND THANK YOU FOR YOUR PRESENTATION.
UH, HOPEFULLY DID YOU ALL GET, UH, THIS HANDOUT THAT I GAVE, UH, TO, DOES EVERYBODY HAVE IT? OKAY, FINE.
THESE RELATE TO, UH, QUESTIONS THAT I HAD REGARDING THE BUDGET.
UH, AND THE FIRST ONE IS REGARDING, UH, THE CITY'S REVENUE.
UH, AND WE KEPT HEARING FROM THE ADMINISTRATION THAT THE CITY SUFFERED A HUGE LOSS IN REVENUES BECAUSE OF COVID.
AND IF YOU LOOK AT THE GENERAL FUND HISTORY FROM 2018 THROUGH 2024 BUDGET, THAT IS NOT THE CASE.
THE REASON THEY WERE ABLE TO CLAIM SO MUCH REVENUE LOSS IS BECAUSE TREASURY HAD A VERY LIBERAL CALCULATION OF CALCULATING REVENUE LOSS.
BUT IN GENERAL, THE CITY DID NOT SUFFER ANY REVENUE LOSS EXCEPT FOR ONE YEAR.
AND I THINK IT'S IMPORTANT THAT CITIZENS RECOGNIZE THAT.
SECOND QUESTION, UH, WAS REGARDING THE, UH, PROP ONE LIMITS ON PROPERTY TAX.
IF YOU LOOK AT THE THIRD SHEET THERE, YOU CAN SEE THAT THE FINANCE DEPARTMENT IS PROJECTING AN 8.2373 INCREASE IN PROPERTY TAXES.
AND IF ANYONE REALLY UNDERSTANDS HOW THE, UH, DEPARTMENT CAME UP WITH THIS AMOUNT, I WOULD APPRECIATE SITTING DOWN WITH YOU AND GOING THROUGH IT BECAUSE THE ANSWER THEY GAVE ME, UH, I DO NOT UNDERSTAND IT.
IT DOESN'T, IT DOESN'T JIVE WITH ME.
AND I REALLY THINK THIS IS CRITICALLY IMPORTANT TO UNDERSTAND 'CAUSE THERE'S A LOT OF MONEY INVOLVED.
AND THEN THE THIRD QUESTION IS QUESTION 12.
UH, AND THAT IS, HOW DID THE 23 PROPERTY TAX ESTIMATE ON PAGE 11 THREE OR UH, UH, TWO DASH 11 INCREASE SO MUCH OVER THE CALCULATED CAP? HOW CAN WE, WE CALCULATE WHAT THE CAP IS AND THEN THEY ARE SHOWING THAT WE'RE GONNA COLLECT ABOUT $90 MILLION MORE THAN THAT, AND I DON'T UNDERSTAND HOW WE CAN STAY WITHIN THE CAP AND HAVE THAT HAPPEN.
AND THEN FINALLY, UH, I SAID WHAT STEPS WERE, THIS WAS IN QUESTION 13, WHAT STEPS WERE TAKEN LAST YEAR TO REDUCE THE OPE LIABILITY? I HAD HEARD ABOUT CONVERSATIONS ON THIS AND THEY DIDN'T ANSWER MY QUESTION.
THEY JUST SAID THE CITY INSTITUTED REFORMS FOR OPEP LAST YEAR.
WHAT WERE THOSE REFORMS? AND THEY DID NOT ANSWER THE QUESTIONS.
SO THOSE ARE THE QUESTIONS I HAVE.
I WISH YOU WOULD LOOK AT THEM AND IF ANYBODY HAS ANY INSIGHT THEY COULD GIVE ME, I'D APPRECIATE IT.
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THANK YOU, DOUG.COUNCIL MEMBER CAROLYN, EVAN SHABA.
THANK YOU, UH, MR. CHAIR AND I, I'M NOT GETTING READY TO TRY TO ANSWER YOUR QUESTIONS.
OH, UH, IF YOU COULD MAKE THAT SUGGESTION NOW, JUST TO PUT IT ON THE RECORD.
UM, I, UH, CANCELED MY APPEARANCE AT MOST OF THE BUDGET HEARINGS BECAUSE THE BUDGET CAME OUT ONE DAY AND THE NEXT DAY THE HEARING STARTED AND I SPENT FIVE HOURS AT MY COMPUTER TRYING TO COME UP WITH, UH, INTELLIGENT QUESTIONS REGARDING THE BUDGET.
AND WHAT I WOULD LIKE TO SEE, AND THIS IS NOT FOR NOW, BUT WE CAN THINK ABOUT IT FOR NEXT YEAR, I THINK THERE SHOULD BE A MUCH LONGER PERIOD BETWEEN THE TIME THE BUDGET COMES OUT AND WHEN THE BUDGET HEARINGS START.
THERE'S NO REASON TO HAVE STARTED THEM SO EARLY.
WE HAVE A WHOLE MONTH LEFT BEFORE YOU ACTUALLY HAVE TO CERTIFY THE BUDGET WHEN YOUR FISCAL YEAR ENDS.
AND THAT'S WHY I DON'T UNDERSTAND WHY THERE WAS SUCH A RUSH.
IT'S HARD ON YOU ALL TOO BECAUSE YOU HAVE YOUR REGULAR TUESDAY AND WEDNESDAY MEETINGS, AND THEN YOU HAVE ALL OF YOUR BUDGET HEARINGS ALL JAMMED INTO ABOUT A 10 DAY PERIOD.
SO I THINK THAT SHOULD BE EXPANDED IN THE FU THE THE SPREAD SHOULD BE EXPANDED.
AND THAT'S WHAT I MENTIONED TO YOU.
THANK YOU DOUG, UM, FOR ALWAYS KEEPING US ON OUR TOES DOWN HERE.
WE, UH, THE OPEP, WE CAN DEFINITELY GET YOU SOME INFORMATION ON THE EP REFORMS THAT WERE INSTITUTED.
I EITHER, I THINK THE BEGINNING OF LAST YEAR, RIGHT? YEAH, THE BEGINNING OF LAST YEAR.
SO IT'S STUFF LIKE, YOU KNOW, THE LONG, THE, REDUCING THE AMOUNT OF TIME, YOU KNOW, OR LENGTHENING THE AMOUNT OF TIME YOU WORK HERE AND SOME, SOME BENEFITS CHANGE AND STUFF LIKE THAT.
BUT I CAN GET YOU THAT INFORMATION ON THE TAX CALCULATION, MAN, I ASK EVERY YEAR AND I GET AN, AN EXPLANATION AND I WALK OUTTA THERE THINKING I REALLY HAVE IT UNDER CONTROL ON THE PRO, NOT ONLY ON THE CITIES, UH, RE UH, PROPERTY TAX CAP, BUT ALSO ON THE STATE ONE.
AND THEN EVERY YEAR I'M LIKE SCRATCHING MY HEAD AND KIND OF RE TRYING TO REMEMBER.
IT'S A COMPLICATED CALCULATION, BUT HAPPY TO THE EXTENT THAT I CAN, UM, EXPLAIN IT.
UM, WHEN THE MAYOR PROMO PRO, UH, PUT THE, UH, ORDINANCE ON THE, OR THE RESOLUTION BEFORE US TO APPROVE, UH, THE, THE BUDGET HEARING DATES AND THE SCHEDULE, I WAS THE ONE THAT VOTED NO AGAINST IT BECAUSE I THOUGHT IT WAS TOO BIG OF A RUSH.
BEFORE WE ADJOURN, PLEASE NOTE A SPECIAL CALLED BUDGET AND FISCAL AFFAIRS COMMITTEE MEETING WILL BE ON MONDAY, JUNE 12TH TO DISCUSS THE FISCAL YEAR 2024 CIP AT 10:00 AM.
IF THERE ARE NO OTHER COMMENTS OR QUESTIONS, THIS MEETING IS ADJOURNED.