[Budget and Fiscal Affairs on October 31, 2023]
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OFFICE, MICHAEL KNOX'S OFFICE AND SALLY ALCORN'S OFFICE.THERE ARE ANY MEMBERS OF THE PUBLIC THAT WOULD LIKE TO PARTICIPATE IN PUBLIC COMMENTS.
THERE'S A SIGNUP SHEET IN THE FRONT TABLE TO MY LEFT, TO YOUR RIGHT, MY STAFF MEMBER YASMIN WILL BE MONITORING THE PUBLIC SPEAKERS LIST.
AND WELCOME TO STAFF FROM COUNCIL MEMBER CAROLYN, EVAN SHABAS, OFFICE COUNCIL MEMBERS AND STAFF.
PLEASE HOLD YOUR QUESTIONS UNTIL THE END OF THE PRESENTATION AT, OF DEADLINE YESTERDAY, 3:00 PM THERE WERE NO PUBLIC SPEAKERS.
IF THERE ARE ANY MEMBERS OF THE PUBLIC THAT WOULD LIKE TO SPEAK AGAIN, PLEASE SIGN UP WITH MY STAFF.
UH, I'LL SO LIKE TO WELCOME STAFF FROM COUNCIL MEMBER AMY PECK'S OFFICE.
AT THIS TIME, I'D LIKE TO WELCOME CONTROLLER CHRISTOPHER BROWN AND DIRECTOR WILL JONES TO PROVIDE THE MONTHLY FINANCIAL REPORT.
GOOD MORNING, MR. CHAIRMAN, STAFF MEMBERS, COMMITTEE MEMBERS.
I'M PLEASED TO PRESENT THE MONTHLY FINANCIAL REPORT FOR THE PERIOD ENDING SEPTEMBER 30TH.
IN THE GENERAL FUND, THE CONTROLLER'S OFFICE IS PROJECTING ENDING FUND BALANCE OF 392.1 MILLION FOR FY 24.
THIS IS 45.8 MILLION LOWER THAN THE PROJECTION OF THE FINANCE DEPARTMENT.
BASED ON OUR CURRENT PROJECTIONS, THE FUND BALANCE WILL BE APPROXIMATELY 206.8 MILLION ABOVE THE CITY'S TARGET OF HOLDING 7.5% IN RESERVES.
OUR REVENUE PROJECTION INCREASED BY 2 MILLION FROM THE AUGUST, 2023 MONTHLY FINANCIAL REPORT.
INTERGOVERNMENTAL REVENUES INCREASED BY 2 MILLION DUE TO ADDITIONAL REIMBURSEMENTS FROM THE CHARITY CARE PROGRAM.
EXPENDITURE ESTIMATES INCREASED BY 30 MILLION FROM THE AUGUST, 2023 REPORT, PRIMARILY DUE TO A 600,000 INCREASE FROM THE PURCHASE OF HEAVY RESCUE VEHICLES FOR FIRE.
A 679,000 INCREASE IN LIBRARY, PRIMARILY, UH, RELATED TO THE FREEDMAN TOWNS VISITOR CENTER COSTS A 5.5 MILLION INCREASE IN PARKS EXPENDITURES FOR THE MAYOR'S.
LOVES OUR PARKS COMPLETE COMMUNITIES INITIATIVE.
A 500,000 INCREASE IN THE PLANNING DEPARTMENT'S EXPENDITURE FOR OPERATIONS OF THE HOUSTON B CYCLE PROGRAM, A 2.1 MILLION INCREASE IN POLICE FOR THE IN-CAR CAMERA SYSTEM, A 6.6 MILLION INCREASE IN THE SOLID WASTE DUE TO ILLEGAL DUMPING TEMPORARY PERSONNEL SERVICES, THE PURCHASE OF VEHICLE TRACKING SYSTEM AND TRUCK SCALE REPLACEMENT, A 14.1 MILLION INCREASE IN THE GENERAL GOVERNMENT DUE TO FUNDING FOR THE SIDEWALK PROGRAM RES, UH, RENOVATIONS FOR THE BETHUNE EMPOWERMENT CENTER IN JONES HALL, REPAIR OF DECORATIVE LIGHTS ON THE SOUTHWEST FREEWAY AND THE IMPLEMENTATION OF THE RESILIENCE HUB.
MOVING ON TO THE ENTERPRISE FUNDS, THE COMBINED UTILITY SYSTEM OPERATING EXPENSES INCREASED BY 61.7 MILLION, PRIMARILY DUE TO HIGHER EMERGENCY REPAIR COSTS ON WATER MAIN BREAKS AND WASTEWATER FACILITY MAINTENANCE, WE ARE PROJECTING NO CHANGES FROM THE ADOPTED BUDGET AMOUNTS IN THE AVIATION OPERATING FUND CONVENTION AND ENTERTAINMENT OPERATING FUND, THE STORM WATER FUND, OR THE DEDICATED DRAINAGE AND STREET RENEWAL FUND THIS MONTH.
IF YOU LOOK AT OUR COMMERCIAL PAPER AND BONDS, ALL OF OUR VARIABLE RATE DEBT IS BELOW THE 20% THRESHOLD.
UH, MR. CHAIRMAN, I'LL MOVE ON TO THE, UH, SWAP AND INVESTMENT REPORT.
THE QUARTERLY INVESTMENT REPORT.
AS OF SEPTEMBER 30TH, THE CITY HAD 5.4 BILLION INVESTED IN OUR GENERAL INVESTMENT POOL.
UH, FITCH HAS RATED THIS POOL ITS HIGHEST RATING THAT OF AAA INVESTMENTS ARE 447 MILLION HIGHER THAN LAST YEAR.
AND THIS IS ATTRIBUTABLE TO THE COMMERCIAL PAPER ISSUANCES IN THE GENERAL FUND AVIATION AND COMBINED UTILITY SYSTEMS. AS OF SEPTEMBER 30TH, 2023, THE GENERAL INVESTMENT POOL WAS YIELDING 2.806%, WHICH IS UP FROM 2.5 TO 2% YIELD IN THE PREVIOUS QUARTER.
MOVING ALONG TO OUR QUARTERLY SWAP REPORT, THE CITY HAD A NET PAID FOR THE FISCAL YEAR ENDING SEPTEMBER 30TH, 2023 FROM ITS SWAPS OF 2.5 MILLION.
UH, THE FAIR VALUE FOR BOTH SWAPS AS OF SEPTEMBER 30TH, 2023 WAS NEGATIVE 70 MILLION.
SO THAT'S APPROXIMATELY 52 MILLION LESS THAN THE PRIOR QUARTERS, NEGATIVE 122 MILLION.
SO I KNOW MR. CHAIRMAN, YOU'VE TALKED A LOT ABOUT THESE SWAP POSITIONS.
UH, DEFINITELY, UH, TRENDING IN THE RIGHT DIRECTION ON THE FAIR VALUE AND, UH, WE'LL CONTINUE TO MONITOR THOSE IF THE OPPORTUNITY PRESENTS ITSELF TO, UH, GET OUT OF THOSE SWAPS.
THIS IS THE THREE PLUS NINE FINANCIAL REPORT FOR THE PERIOD ENDING SEPTEMBER 30TH, 2023.
PROJECTIONS ARE BASED ON THREE MONTHS OF ACTUAL RESULTS AND NINE MONTHS OF PROJECTIONS FOR THE GENERAL FUND.
OUR REVENUE PROJECTION IS 1.9 MILLION HIGHER THAN THE ADOPTED BUDGET AND THE PRIOR MONTH, THE VARIANCE FROM PRIOR MONTH'S PROJECTION IS DUE TO HIGHER ANTICIPATED CHARITY
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CARE PROGRAM.REIMBURSEMENTS ON OUR EXPENDITURE SIDE IS 30.3 MILLION HIGHER THAN THE ADOPTED BUDGET AND THE PRIOR MONTH, THE VARIANCE FROM PRIOR MOST PROJECTIONS IS PRIMARILY DUE TO 14.1 MILLION INCREASE IN GENERAL GOVERNMENT.
AND THIS IS TO REFLECT, UH, FUNDING FOR SIDEWALK, THE SIDEWALK PROGRAMS, THE BETHUNE EMPOWERMENT CENTER, JONES HALL, UM, REPAIR DECORATIVE LIGHTS ON THE SOUTHWEST, SOUTHWEST FREEWAY AND RESILIENCE OF IMPLEMENTATION.
UH, 6.6 MILLION INCREASE IN SOLID WASTE DEPARTMENT DUE TO CITYWIDE AND LEGAL DUMPING, UH, HIGHER THAN ANTICIPATED TEMPORARY PERSONNEL SERVICES, UH, VEHICLE TRACKING SERVICES AND TRUCK SALE REPLACEMENT PURCHASE.
AND WE HAVE A 5.5 MILLION INCREASE IN PARKS, UH, DUE TO SUPPORT THE MAYORS OF OUR PARKS COMPLETE COMMUNITIES INITIATIVES 2.1 MILLION INCREASE IN POLICE DEPARTMENT FOR THE PURCHASE OF IN-CAR CAMERA SYSTEM, 679,000 IN HOUSTON PUBLIC LIBRARY, UM, TO PRIMARILY TO SUPPORT THE NEW, NEW FRIEDMANS SOUND VISITOR CENTER.
602,000 INCREASE IN THE FIRE DEPARTMENT, PRIMARILY DUE TO, UH, CHEMICAL, BIOLOGICAL, RADIOLOGICAL NUCLEAR, UM, EXPLOSIVE DETECTION SPECIAL VEHICLE PURCHASE, UH, 500,000 IN PLANNING DEPARTMENT TO REFLECT THE B CYCLE, UH, TRANSITION PROGRAM.
AND WE'RE CURRENTLY PROJECTING THE ENDING FUND BALANCE OF 437.9 MILLION, WHICH IS 28.3 MILLION LOWER THAN LAST MONTH, AND 17.7% OF ESTIMATED EXPENDITURES, LESS DEBT SERVICE AND PAY AS YOU GO.
THE FUND BALANCE IS 252.5 MILLION ABOVE THE TARGET AT 7.5% OF EXPENDITURES, EXCLUDING DEBT SERVICE FOR THE ENTERPRISE AND SPECIAL REVENUE FUNDS.
UH, WE AGREE WITH THE CONTROLLER'S FORECAST.
SO I'LL MOVE ON TO THE SPECIAL FUNDS.
UM, ON THE HOUSTON OPIOID ABATEMENT FUND.
UH, THIS IS A NEW FUND AND REVENUES INCREASED BY 2.2 MILLION FROM A STATEWIDE OPIOID SETTLEMENT AGREEMENT AND DISTRIBUTED BY THE TEXAS OPIOID ABATEMENT TRUST COMPANY HAS STATED IN THE ORDINANCE EXPENDITURES INCREASED BY 2.2 MILLION FOR ADDRESSING THE PUBLIC HEALTH EMERGENCY PERTAINING TO OPIOID CRISIS.
WE ALSO HAVE THE PLANNING AND DEVELOPMENT SPECIAL REVENUE FUND EXPENDITURES INCREASED BY 684,000 DUE TO HIGHER THAN ANTICIPATED, UH, MANAGEMENT CONSULTING SERVICES FOR PLAN REVIEW AS A RESULT OF HIGHER PERMANENT ACTIVITIES.
UH, SO MOVING ON, I'LL TOUCH A LITTLE BIT ON THE HOUSTON ECONOMY.
UH, FOR THE ENERGY, THE AVERAGE OIL PRICE OF 89.43 FOR THE MONTH OF SEPTEMBER, 2023 WAS 9.9% HIGHER THAN PRIOR MONTH'S AVERAGE PRICE OF 81.39 COMPARED TO THE SAME PERIOD LAST YEAR, THE PRICE HAS INCREASED BY 6.1%.
THE AVERAGE OIL RIG COUNT OF 510 FOR THE MONTH OF SEPTEMBER, 2023 WAS 2.1% LOWER THAN PRIOR MONTHS.
THE RIG COUNT YEAR OVER YEAR COMPARISON FOR THE MONTH OF SEPTEMBER DECREASED BY 14.7%.
SO MOVING ON TO EMPLOYMENT, ACCORDING TO THE BUREAU OF LABOR STATISTICS, THE PRELIMINARY TOTAL NON-FARM EMPLOYMENT IN THE HOUSTON METROPOLITAN AREA STOOD AT 3.5 MILLION IN AUGUST 2ND, 2023 UP APPROXIMATELY 0.2% COMPARED TO LAST MONTH.
AND WHEN COMPARED TO THE SAME PERIOD LAST YEAR, NON-FARM EMPLOYMENT IS UP 5.7%.
THE PRELIMINARY UNEMPLOYMENT RATE FOR THE MONTH OF AUGUST, 2023 WAS 4.9% COMPARED TO, UH, LAST MONTH AT 4.8%.
IN AUGUST, 2022, THE UNEMPLOYMENT RATE WAS 4.6%.
SO MOVING ON TO HOME SALES, THE LATEST REPORT PREPARED BY HOUSTON ASSOCIATION OF REALTORS FOR THE MONTH OF SEPTEMBER SHOWS THE TOTAL SINGLE FAMILY HOME SALES OF 6,886 WERE 10.9% LOWER COMPARED TO SEPTEMBER, 2023 OF 7,728.
THE MEDIAN PRICE DECREASED BY 2.2% TO 333,000.
AND THE AVERAGE PRICE INCREASE BY 0.8% TO 416 SINGLE FAMILY HOME INVENTORY REACHED 3.5 MONTH OF SUPPLY IN SEPTEMBER AND INCREASED 0.9 MONTHS YEAR OVER YEAR.
THAT CONCLUDES MY REPORT, BUT I DID, I DIDN'T TOUCH ON SALES TAX, SO WE HAVEN'T MADE ANY CHANGES TO SALES TAX THIS MONTH, BUT I DID WANNA PROVIDE KIND OF AN UPDATE ON, ON WHERE WE ARE AS A CITY WITH SALES TAX.
UM, SO AS FOR THE FIRST COUPLE OF MONTHS, SO RIGHT NOW WE'VE ONLY RECEIVED, UH, JULY AND AUGUST SALES TAX RECEIPTS.
AND FOR THE FIRST COUPLE OF MONTHS WE ARE UP, UM, I THINK JULY WE'RE UP 2.6%.
AND I BRING THAT UP BECAUSE OUR PROJECTION WE BUILT, UM, FOR THIS FY 24 BUDGET WAS CONSERVATIVE AT, UM, A NEGATIVE 3%.
NOW, BACK IN MARCH, I KNOW THE CONTROLLER REFERENCED, UH, YOU KNOW, DR.
GILMER AND HIS REPORT AND HIS BACK IN MARCH, DR.
GILMORE'S REPORT WAS SHOWING FOR FY 24 THAT WE WOULD BE AT A NEGATIVE 10%.
UM, AND DURING THAT TIME WHEN WE WERE BUILDING OUR BUDGET, UM, YOU KNOW, I HAVE TO LOOK AT A LOT OF DIFFERENT THINGS TO DETERMINE WHAT OUR SALES TAX PROJECTION WILL BE.
I CAN'T TAKE ONE, UM, YOU KNOW, FORECASTER'S PROJECTION AND BUILD A BUDGET ON THAT.
SO WE, WE DID TAKE, TAKE INTO ACCOUNT WHAT DR.
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THEN, WHICH WAS NEGATIVE 10%.UM, WE, WE DO OUR OWN FORECAST WHERE WE LOOK AT, YOU KNOW, ALL PRICE.
WE LOOK AT UNEMPLOYMENT, WE LOOK AT ALL THOSE THINGS TO TRY AND BUILD WHAT WE THINK IS THE MOST REALISTIC, BUT ALSO CONSERVATIVE, UM, SALES TAX PROJECTION.
GILMORE'S LATEST PROJECTION, AND HE IS NOW PROJECTING INSTEAD OF A NEGATIVE 10%, HE'S PROJECTING A NEGATIVE 0.2%.
ESSENTIALLY, HE'S SAYING OUR SALES TAX IS FLAT, RIGHT? AND NOW OUR PROJECTION IS EVEN MORE CONSERVATIVE THAN WHAT HE WAS PROJECTING.
UM, AND I SAY THAT TO SAY THAT IT
UM, AND ONE OF THE THINGS I, I SAID IS COMING OUT OF THE PANDEMIC, IT, A LOT OF THE FORECASTERS, THE ECONOMISTS HAD NO IDEA WHAT WAS GOING TO HAPPEN.
IT, IT'S A CHALLENGE, ESPECIALLY WHEN YOU'RE ACCOUNTABLE FOR THE BUDGET AND YOU HAVE TO PROVIDE THE BEST PROJECTION TO THE MAYOR, TO THE COUNCIL FOR YOU GUYS TO BE ABLE TO MAKE THE DECISIONS.
I HAVE TO CONSIDER ALL THAT WHEN I MAKE A PROJECTION.
I CAN'T JUST TAKE THE WORST CASE SCENARIO AND SAY, THAT'S WHAT WE'RE GOING TO RUN WITH.
AND I BRING THAT UP BECAUSE IF, IF YOU, IF YOU READ ANY PART OF THAT GREATER HOUSTON PARTNERSHIP REPORT, UM, THEY WOULD HAVE YOU BELIEVE THAT MY PROJECTION IS EXTREMELY UNREALISTIC AND NOT LIKELY, BUT THE CONTROLLER'S PROJECTION OF NEGATIVE 11% IS THE, THE PROBABLE PROJECTION.
AND SO THAT'S A LITTLE FRUSTRATING FOR ME, GIVEN THAT, YOU KNOW, THEY HAVE NO IDEA WHAT IT TAKES TO, YOU KNOW, DO A FORECAST AND BE ACCOUNTABLE FOR THE BUDGET.
BECAUSE DO YOU KNOW WHAT HAPPENS IF, IF THE CONTROLLER'S PROJECTION DOESN'T COME TRUE? I MEAN, IF THE CONTROLLER'S PROJECTION DOESN'T COME TRUE, WE GET MORE MONEY IN OUR FUND BALANCE.
IF MY PROJECTION DOESN'T COME TRUE, WE'RE LAYING OFF EMPLOYEES, RIGHT? SO I TAKE MY PROJECTION VERY, VERY SERIOUSLY.
AND FOR, FOR, AND, AND THE, THE MISINFORMATION ABOUT, YOU KNOW, HOW OUR PROJECTION IS EXTREMELY UNLIKELY AND NOT, IT, IT, IT SHOWS THAT THEY REALLY HAVE NO CLUE ON WHAT IT TAKES TO DO A, A PROJECTION, RIGHT? SO, LIKE I SAID, IF I, WHEN I BUILD, WHEN I'M BUILDING THE BUDGET IN FEBRUARY, MARCH AND APRIL, WE HAVE TO PROVIDE A PROJECTION THAT IS NOT ONLY CONSERVATIVE, BUT ALSO REALISTIC.
BECAUSE THAT PROJECTION DETERMINES WHAT HAPPENS IN TERMS OF DO WE LAY OFF PEOPLE? DO WE CUT SERVICES? I DON'T HAVE THE LUXURY OF SAYING, UH, IT'LL JUST, WE GET MORE IN OUR FUND BALANCE.
SO I JUST, YOU KNOW, I I, I HAVE TO BRING THIS UP BECAUSE IT, IT, IT'S A LITTLE MISLEADING TO THINK THAT, UM, WE ARE JUST GIVING THIS SUPER OPTIMISTIC SALES TAX PROJECTION, AND IT'S UNREALISTIC RIGHT NOW.
AS I SAID, JULY AND AUGUST, WE'RE UP 2%.
SO I JUST THINK PEOPLE NEED TO BE VERY CAREFUL, UM, ABOUT HOW THEY PUT OUT THE INFORMATION IF THEY DON'T FULLY UNDERSTAND WHAT IT REALLY TAKES TO, TO DO A PROJECTION AND TO BUILD A BUDGET AND TO HAVE TO BE ACCOUNTABLE FOR THOSE DECISIONS THAT COME OUT OF THAT PROJECT.
I HAVE TO BE ACCOUNTABLE FOR IT.
I CAN'T SAY IT JUST GOES TO FUND BALANCE AND WE HAVE MORE MONEY.
SO, UM, LIKE I SAID, I, I, I DIDN'T LIKE THAT
THAT IS, UH, I, I, I ALMOST DON'T HAVE WORDS TO SAY ABOUT HOW, HOW FRUSTRATING IT IS TO BE THE PERSON THAT IS ACCOUNTABLE FOR, FOR THE PROJECTION THAT I, THAT I PUT FORWARD AND THE ACTIONS THAT CAN COME FROM IT.
AND TO READ SOMETHING THAT IS, YOU KNOW, TO SAY THAT MY PROJECTIONS IS EXTREMELY UNLIKELY AND THAT I'M SOMEHOW JUST, YOU KNOW, PULLING THINGS OUT OF THE SKY.
SO, UM, SALES TAX IS, IT'S VERY TRICKY.
UM, AND LIKE I SAID, COMING OUT OF THE PANDEMIC, UM, NO ONE HAS EVEN BEEN CLOSE.
NOT ONLY JUST TALKING ABOUT MYSELF OR THE CONTROLLER.
SO YOU GOTTA TAKE A LOT OF THAT STUFF, UM, WITH A GRAIN OF SALT OF WHAT THE, AND DR.
GILMER HAVE A LOT OF RESPECT FOR DR.
GILMER AND I WILL CONTINUE TO USE HIS, HIS PROJECTIONS AS WE GO FORWARD AS A GUIDE.
UM, BUT WE, WE PUT IN THE WORK, WE PUT IN THE WORK TO, TO BE ABLE TO PROVIDE THOSE PROJECTIONS.
AND I GUARANTEE YOU, IT IS NOT DONE LIGHTLY.
IT IS NOT DONE WITH, UH, YOU KNOW, AN EXTREMELY OPTIMISTIC LENS.
SO I JUST HAD TO, YOU KNOW, PUT THAT OUT THERE, UH, AND, AND MAKE SURE THAT PEOPLE UNDERSTAND WHAT IT REALLY TAKES TO DO THIS, THIS WORK.
AND IT, IT, IT'S EXTREMELY, UH, CHALLENGING.
AND SO, UM, THAT'S ALL I HAVE TO SAY ABOUT THAT.
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I WANTED TO PUT THAT OUT THERE.AND, UM, I APPRECIATE YOUR COMMENTS.
UM, JUST AS, UM, AS AN EDITORIAL OF, OF NUMBER OF OUR COUNCIL MEMBERS ARE NOT HERE RIGHT NOW, BECAUSE UNFORTUNATELY WE HAVE A CONFLICTING HPD CADET GRADUATING CLASS.
SO MANY OF 'EM ARE EN ROUTE TO THE GRADUATION CLASS, INCLUDING YOURS TRULY, WHO WILL LEAVE HERE IN A COUPLE OF MINUTES TO MAKE SURE THAT I DO MAKE THE GRADUATING CLASS, ESPECIALLY SINCE MAYOR TURNER IS OUT THIS WEEK.
BUT, UM, I READ THE GHP REPORT, NOT ONCE, NOT TWICE, BUT THREE TIMES.
I'VE HAD A CONVERSATION WITH MR. BOB HARVEY ABOUT THE GHP REPORT, WHO APOLOGIZED FOR MANY OF THE ERRORS THAT ARE IN THE REPORT.
AND I WILL BRING UP SOME COMMENTS TOMORROW IN BFA, UH, PRE AT THE COUNCIL MEETING, 'CAUSE I DON'T HAVE TIME TO GET INTO THAT RIGHT NOW.
UH, REGARDING THAT REPORT, AND IF YOU REMEMBER RIGHT, METRO PROJECTED 11% DECREASE IN SALES TAX REVENUE.
THE CONTROLLER'S OFFICE WAS NEGATIVE 11%.
THE ADMINISTRATION FOR THE CITY IS NEGATIVE THREE.
SO GILMER TAKES IT DOWN 11 POINTS, BASICALLY FROM 11% NEGATIVE TO FLAT.
IF I DID THAT IN THE PRIVATE SECTOR, I'D GET FIRED.
11 POINTS IS A BIG DIFFERENTIAL BECAUSE SALES TAX REVENUE IN THE CITY OF HOUSTON ARE LARGE NUMBERS.
AND WHEN WE PUT OUT REPORTS THAT BASE IT ON, 11% DECREASE.
AND TODAY, I KNOW IT'S A, A TOUGH NUMBER TO HIT, UH, BUT EVERYBODY'S READING THIS REPORT AND LOOKING AT IT, AND YOU CAN TURN ON THE TV STATION AND LOOK AT EVERYTHING THAT PEOPLE THAT ARE RUNNING FOR OFFICER ARE SAYING.
AND QUITE FRANKLY, IT'S ERRONEOUS.
AND WE'LL TALK ABOUT THAT A LITTLE BIT TOMORROW, TOMORROW, INCLUDING THE G HP'S POSITION ON OUR NET POSITION.
SO THIS WILL BE MY LAST COMMENT, AND WE'LL GO TO QUESTIONS FROM COUNCIL MEMBERS AND STAFF.
YOU SHOULD BE IN CHARGE OF WHAT YOUR MISSION IS.
THE GHP IS THE ECONOMIC DEVELOPMENT MACHINE FOR THE CITY OF HOUSTON.
AS I LOOK AROUND THE LANDSCAPE FOR THE STATE OF TEXAS, I DON'T BELIEVE WE'RE GETTING OUR FAIR SHARE OF COMPANIES MOVING INTO THE CITY AS PLACES LIKE AUSTIN, SAN ANTONIO, DALLAS, AND FRISCO, FRISCO, TEXAS OF ALL CITIES, THEY'RE KICKING OUR REAR WHEN IT COMES TO BRINGING IN GOOD FORTUNE 1000 BUSINESSES INTO THE CITY.
TOYOTA, CHARLES SCHWAB, AMAZON, PGA OF AMERICA.
THE LIST GOES ON AND ON AND ON.
SO WHAT THE GHP SHOULD DO IS CONCENTRATE ON YOUR MISSION.
YOUR MISSION IS ECONOMIC DEVELOPMENT AND ATTRACTING THESE COMPANIES AND WORKING REAL HARD TO BRING 'EM INTO THE CITY OF HOUSTON SO THAT OUR SALES TAX REVENUE CONTINUES TO INCREASE ALONG WITH OUR COMMERCIAL REVENUE ON PROPERTY AND OUR RESIDENTIAL REVENUE ON PROPERTY.
SO, UM, KUDOS TO THE CONTROLLER'S OFFICE ON THE INVESTMENT SIDE OF IT, AND I KNOW WE HAVE, UH, UH, VERNON SITTING OUT THERE AND, UH, GOOD JOB VERNON.
UH, 3% INCREASE IN THESE TROUBLESOME TIMES WHEN THE ECONOMY IS GOING DOWN IN THE INVESTMENT SIDE AND THE STOCK MARKET ARE GOING DOWN.
THREE PERCENT'S A PRETTY DARN GOOD NUMBER, SO KUDOS TO THE CONTROLLER'S OFFICE AND VERNON AND ALL THE THINGS THAT YOU'RE DOING ON THAT SIDE.
BUT, UM, WE'LL GET INTO QUESTIONS FROM COUNCIL MEMBERS.
UH, WE'LL START OFF WITH COUNCIL MEMBERS.
UM, I WAS JUST GOING TO ASK ABOUT HOW MUCH OF THE 14.1 INCREASE IN GENERAL GOVERNMENT WAS GONNA THE SIDEWALK PROGRAM? UH, I BELIEVE IT WAS 5 MILLION.
AND THEN WE ALREADY HAD BUDGET AT 1.8.
SO A TOTAL OF ABOUT 6.8 MILLION FOR SIDEWALKS.
AND, AND SO, AND COUNCIL MEMBER ALCO WAS FRONT AND CENTER WITH THAT ISSUE, SO THANK YOU AND YOUR OFFICE FOR DOING THAT AND KEEPING US UP TO SPEED ON THAT.
CAROLYN, EVAN SHABAZZ'S OFFICE.
AND THANK YOU BOTH FOR THOSE, UH, REPORTS.
MY QUESTION WAS IN REFERENCE TO THE ILLEGAL DUMPING PROJECT.
I THINK YOU SAID THAT IT, IT EXCEEDED ITS AMOUNT BY SOME PERCENTAGE, UH, FOR, UH, YEAH, SO WE HAD A, WE HAD A 6.6 MILLION INCREASE IN SOLID WASTE DEPARTMENT DUE TO, UH, ILLEGAL DUMPING PROGRAM.
SO THERE WAS, UH, MONEY INCREASED IN SOLID WASTE TO ADDRESS ILLEGAL DUMPING.
MY QUESTION, THANK YOU FOR THAT.
MY QUESTION WOULD BE, DO YOU HAVE ANY DATA REFLECTING WHERE THOSE ADDITIONAL FUNDS WERE SPENT IN REFERENCE TO THE ACTIVITY OF COLLECTING THE LEGAL DUMPING? I HAVE TO DEFER THAT TO DIRECTOR AL.
OH, I WANT TO, UH, COUNCIL LADY WANTS TO THANK YOU BOTH FOR THE BANK ON HOUSTON PROGRAM.
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WE'VE BEEN WORKING WITH THAT OFFICE, UH, MS. LEWIS AND WHATNOT, SHE'S GONNA BE, UH, ON A COUPLE OF EVENTS IN, UH, THE, THE SUNNYSIDE MULTIPURPOSE CENTER.WE DON'T HAVE ANY ADDITIONAL QUESTIONS FROM COUNCIL MEMBERS.
SO, UM, IF I MAY, I TOOK OFFICE IN 2013.
BEFORE THAT, UH, THE CITY OF HOUSTON, UH, UNDER ANISE PARKER IN 2011 AND 2012, BEFORE ANY OF US CAME INTO OFFICE, UH, WE BALANCED OUR BUDGET BY SELLING LAND.
UH, WE SOLD THE POLICE STATION.
UH, WE DID ONE TIME, UH, SALES, UH, IN ORDER TO BALANCE A BUDGET, AND I THINK IT WAS IN 11 AND 12, I BELIEVE IN 12.
THERE WAS A VOLUNTARY FURLOUGH, WASN'T EXACTLY A LAYOFF OF EMPLOYEES, BUT A NUMBER OF PEOPLE DID TAKE THAT FURLOUGH AND THEN CAME BACK LATER.
SO AT THAT TIME, WE BALANCED THE BUDGET WITH, UM, DIVESTITURES OF CITY PROPERTY AND ALSO WITH, UM, FURLOUGHS AND THINGS OF THAT NATURE.
SO MR. JONES, HAS A CITY OF HOUSTON IN THE LAST EIGHT YEARS, SOLD ANY LAND TO BALANCE BUDGETS, NOT, NOT TO BALANCE THE BUDGET, BECAUSE THAT WAS A POINT IN THE GHP REPORT THAT WE WERE CONTINUING TO SELL LAND.
AND I'LL LET THE CONTROLLER GIVE HIS POINT ON THAT AS WELL, TO BALANCE THE BUDGET.
AND YES, WE, WE SELL LAND THROUGH COUNCIL MEMBER COSTELLO'S OFFICE AND THINGS LIKE THAT WHERE, UH, WE MAKE A DIFFERENCE, BUT THE ASSETS THAT ARE VALUABLE, ASSETS OF THE CITY, I DON'T REMEMBER US DOING THAT IN THE LAST EIGHT YEARS.
I DO REMEMBER THAT HAPPENING IN THE 2011, 2012 TIMEFRAME, RIGHT? THAT'S CORRECT.
WE, WE DON'T INCLUDE ONE TIME LAND SALES AS A WAY TO BALANCE THE BUDGET IF IT, IF IT SELLS THROUGHOUT THE YEAR, IT'S A SURPLUS TO THE FUND BALANCE.
UM, SO TO THE BALANCING OF THE BUDGET, UH, YES, WE HAVE, WE'VE SOLD, UH, OFF THE TOP OF MY HEAD, UH, $17 MILLION PIECE OF PROPERTY ACROSS FROM, UH, THE AS, UM, SORRY, UH, MINUTE MAID.
UH, WE, AS YOU ALL RECALL, AGAINST MY BETTER JU OR MY ADVICE, UH, WE TOOK QUITE A BIT OF MONEY OUTTA A HEALTH BENEFITS FUND DURING COVID.
UM, WE'VE TAKEN MONEY FROM SPECIAL REVENUE FUNDS.
ALL THESE THINGS HAVE BEEN DONE, UM, IN PART TO BUILD UP FUND BALANCE TO TRY AND KNOW, MAKE SURE THAT WE HAVE A BALANCED BUDGET.
UM, YOU KNOW, THE ISSUE, UH, JUST GOING BACK VERY QUICKLY, UH, THE REPORT, UH, THAT GILMER HAD, UH, THE ISSUE IS THAT THAT WASN'T MADE PUBLIC.
WE HAD A, WE HAD A REPORT IN MARCH THAT SAID, WHICH WE HAVE OUR TOP ECONOMIST IN THE CITY OF HOUSTON SAYING, YOU KNOW, 10% REDUCTION IN SALES TAX.
SO AGAIN, MY OFFICE HAS TO PLAN FOR THE AVAILABILITY OF FUNDS.
SO WE HAVE TO LOOK AT ALL SCENARIOS.
SO WE HAVE THE TOP ECONOMIST IN THE CITY OF HOUSTON SAYING, SALES TAX, OUR NUMBER TWO LARGEST SOURCE OF REVENUE IS GONNA BE DOWN 10%.
THAT WASN'T SHARED, I THINK WITH ANYONE FROM COUNCIL.
WE BUILT A BUDGET, UH, ON INFORMATION THAT WAS INCOMPLETE.
I UNDERSTAND DIRECTOR JONES IS IN A VERY DIFFICULT POSITION BECAUSE, YOU KNOW, YOU, YOU HAVE TO BUILD THE BUDGET, AND OBVIOUSLY YOU HAVE TO MAKE SOME TOUGH DECISIONS THROUGH THAT PROCESS.
BUT, YOU KNOW, AS YOU ALL SIT AROUND HERE TODAY, A PERFECT EXAMPLE, UH, YOU KNOW, WE'RE SPENDING 30 PLUS MILLION DOLLARS ON, YOU KNOW, DIFFERENT EXPENDITURES.
THE BUDGET'S INCREASING 30 MILLION.
AND WE'RE DOING THAT IN PART, IN A SHORT TERM THINKING THAT WE HAVE A HUGE FUND BALANCE.
WELL, WHAT IF BILL GILMER IS RIGHT? I SAW HIM AND HE SAID, I'VE ACTUALLY, UH, INCREASED MY 10% FORECAST TO DOWN 11%.
UH, I SAW HIM AT THE, UM, HOT TAX SALES MEETING FROM HOUSTON FIRST.
SO THAT WASN'T, BUT TWO MONTHS AGO.
NOW, MIRACULOUSLY, THERE'S A REPORT THAT IT'S UP, YOU KNOW, 10 OR 11% FROM THERE.
WE HAVE TO PLAN FOR ALL SCENARIOS.
UH, YOU KNOW, MY CONTENTION TOO, ON TRYING TO GET PEOPLE TO UNDERSTAND WE HAVE A STRUCTURALLY IMBALANCED BUDGET.
WE'RE USING ONE TIME FINANCING SOURCES, WHICH, OKAY, NOT THE SALE OF LAND, BUT WE'VE USED $160 MILLION OF FEDERAL FUNDS TO BALANCE THE BUDGET.
I MEAN, AGAIN, FROM THE GOVERNMENT ACCOUNTING, UH, STANDARDS, YOU DO NOT USE ONE TIME FINANCING SOURCE TO FUND RECURRING REVENUES, BECAUSE EVENTUALLY THAT GOES AWAY.
AND SO, YOU KNOW, WHAT I'VE BEEN TRYING TO DO
AT SOME POINT, THERE IS GOING TO BE PAIN.
YOU'RE GOING TO HAVE TO MAKE TOUGH DECISIONS.
DIRECTOR JONES AND I UNDERSTAND TOUGH DECISIONS, UH, YOU KNOW, MAYBE THIS BUDGET, YOU DON'T HAVE TO LAY PEOPLE OFF, BUT, BUT THERE ARE GONNA HAVE TO BE LAYOFFS.
WE'RE GONNA HAVE TO FIND THAT 160 MILLION.
AND NOW AS WE CONTINUE TO INCREASE SPENDING TOWARDS THE END OF THIS ADMINISTRATION, YOU KNOW, WE'RE GONNA HAVE TO GO OUT AND FIND WHATEVER THAT DELTA IS AND MAKE IT UP.
UM, I HOPE GILMER IS NOW RIGHT WITH THIS REV REVISED, UH, ESTIMATE.
[00:25:01]
UM, YOU KNOW, I HAVE NOT BEEN ABLE TO TALK TO HIM ABOUT IT.UH, WE'VE SENT HIM A LOT OF QUESTIONS.
UM, BUT I, I, I FEEL DIFFERENTLY.
I THINK WE HAVE TO BE TRANSPARENT.
WE HAVE TO BE HONEST ABOUT WHAT OUR SITUATION IS.
AS DIFFICULT AS IT MAY BE, WE NEED TO LOOK INTO THE FUTURE AND RUN THIS CITY LIKE A BUSINESS AND NOT LIKE A GOVERNMENT THAT JUST, JUST LOOKS AT YEAR TO YEAR, UH, BUDGETS.
UH, AND, AND I DO APPRECIATE THE GREATER HOUSTON PARTNERSHIP'S LEADERSHIP AND RICE, UH, KINDER UNIVERSITY'S, UH, LEADERSHIP ON, UH, BRINGING THIS ISSUE TO LIGHT.
AS YOU ALL RECALL, I WAS IN THIS EXACT SAME SCENARIO 10 YEARS AGO.
I HAD EVERYONE CALLING ME OUT FOR SAYING, WE'VE GOT A PENSION PROBLEM, WE'VE GOT A PENSION PROBLEM, WE'VE GOT A PENSION PROBLEM.
AND EVERYONE SAID, AH, NO, NO PENSION PROBLEM.
BUT YOU KNOW, MUCH TO THE CHAGRIN OF, OF MANY, THE PARTNERSHIP TOOK THE LEADERSHIP AND THEY PUT A REPORT OUT AND SAID, WE HAVE A HUGE PENSION ISSUE.
AND IT GOT THE ATTENTION IN THE BUSINESS COMMUNITY.
AND THAT NARRATIVE BEGAN TO SPIN UP THROUGH THE ELECTION.
AND LO AND BEHOLD, THANKS TO MAYOR TURNER, UH, AND THIS ADMINISTRATION, UH, THE PENSION PROBLEM WAS SOLVED.
THE FIRST, UH, PATH IN SOLVING THESE LARGE PROBLEMS IS WE HAVE TO GET EVERYONE ON THE SAME PAGE.
I WANT US TO ALL GET ON THE SAME PAGE, BUILD A PLAN OF HOW NOT WE'RE GONNA FIX THIS YEAR'S BUDGET, NEXT YEAR'S BUDGET, BUT IN THE OUT YEARS.
BECAUSE IF WE HAVE TO CUT TWO, THREE, $400 MILLION OUTTA THE BUDGET IN THREE TO FOUR YEARS, THAT IS GOING TO BE EXTREMELY DIFFICULT FOR THIS CITY.
AND THIS CITY HAS A CHARGE TO BE THE ECONOMIC ENGINE.
THE PARTNERSHIP CAN BRING THE BUSINESSES HERE.
BUT IF WE DON'T HAVE, YOU KNOW, SAFE STREETS, UH, RUNNING WATER, THINGS LIKE THAT, BASIC CITY SERVICES, YOU KNOW, PEOPLE ARE GONNA GO TO OTHER CITIES.
WE'RE IN COMPETITION WITH THESE OTHER CITIES.
I, I DON'T, YOU KNOW, PARTICULARLY LIKE GETTING UP HERE AND HAVING TO DO THIS.
I DO IT, BUT HOUSTON NEEDS IT.
AND YOU KNOW, I'M, I'M PRO HOUSTON, SO THANK YOU.
SO I DID READ GILMORE'S REPORT AND GILMER DID REVISE HIS PROJECTIONS.
HE MOVED FROM 10% DOWN TO FLAT.
THAT'S A 10 POINT DIFFERENTIAL.
I WOULD ARGUE THAT IT'S AN 11 POINT.
IF YOU LOOK AT YOUR PROJECTIONS AND METRO'S PREDICTION, THAT'S A HUGE NUMBER.
YES, WE LIVE IN AN UNCERTAIN WORLD EACH AND EVERY DAY.
BUT WHEN THE GHP REPORT IS BUILT UPON AN 11% REDUCTION IN SALES TAX REVENUE, WHICH IS A VALUABLE PART OF THE ASSET SIDE FOR THE CITY OF HOUSTON, THE REVENUE SIDE, AND WE SIT IN HERE TODAY WHERE EVERYBODY'S REVISING THEIR PROJECTIONS, THAT MAKES A SIGNIFICANT DIFFERENCE.
SO I'M GONNA GET INTO MORE OF THIS IN MY QUESTIONS TOMORROW BECAUSE I HAVE TO BE AT THE HOUSTON POLICE DEPARTMENT CADET CLASS.
SO, UH, LOOK FORWARD TO CONTINUING THIS DIALOGUE.
I THINK, UM, WHERE I SIT, YOU ARE TWO VERY SMART MEN.
SOMETIMES YOU AGREE, SOMETIMES YOU DISAGREE.
BUT MY POINT IN LAST MONTH WAS BRINGING TO LIGHT THAT THE ADMINISTRATION'S PROJECTIONS HAVE BEEN ON TARGET WHILE THE CONTROLLERS WERE NOT ON TARGET.
YOU ARE AT 11 AND NOW IT'S FLAT.
BUT I, I GIVE KUDOS TO EVERYONE.
I GIVE KUDOS TO VERNON LEWIS ON OUTSTANDING REPORT ON THE INVESTMENT SIDE BECAUSE HE'S IN CHARGE OF THAT.
BUT WHEN I READ A REPORT LIKE THAT AND I TALK TO THE HEAD OF THE GHP AND THEY APOLOGIZED FOR DOING THE REPORT.
SO I WOULD'VE LOVED TO HAVE BEEN A PART OF THE REPORT AND PROVIDING INFORMATION.
I WAS NOT REACHED OUT TO, NOR WAS WILL JONES, NOR WAS ANYONE IN THE CITY I THINK YOU WERE REACHED OUT TO.
AND I THINK YOU PLAYED A PART IN THAT.
BUT THEY ADMIT THERE WERE MASSIVE ERRORS IN THE REPORT.
AND I LOOK AT THE PEOPLE THAT WERE RESPONSIBLE FOR THAT REPORT.
AND WE HAVE A PROFESSOR AT RICE, OKAY, NEIL, GO LIGHTLY, WHO I WORKED WITH VERY A LONG TIME.
NEIL'S NOT A FINANCE AN ACCOUNTING GUY.
AND, UM, I, I, I, I THINK WE COULD HAVE DONE A BETTER JOB.
THEY COULD HAVE DONE A BETTER JOB OF GETTING MORE EXPERTS INVOLVED IN THAT PROCESS AND REALLY PRESENTING A REPORT THAT, UH, THAT PEOPLE CAN LOOK AT TODAY AND USE IT AS A LITMUS TEST AND A BENCHMARK FOR THINGS TO COME INSTEAD OF WHAT THEY'RE DOING RIGHT NOW IS THEY'RE BASICALLY APOLOGIZING FOR IT.
THAT WAS MY CONVERSATION WITH THEM.
AND I THINK THAT WAS THE MAYOR'S CONVERSATION WITH THEM.
I THINK THAT WAS ANDY KIN'S CONVERSATION WITH THEM.
AND I JUST SAW THEM, UH, LAST WEEK AT TMC THREE AND SAME TYPE OF DIALOGUE.
SO ANYWAY, LET'S GET INTO THIS A LITTLE BIT MORE TOMORROW.
UH, I APOLOGIZE 'CAUSE I'M GONNA HAVE TO RUN OUTTA HERE, BUT WE DON'T HAVE ANY PUBLIC SPEAKERS SIGNED UP.
UH, EARLIER THIS YEAR, BUDGET AMENDMENT WAS PASSED TO INCREASE THE VISIBILITY OF THE CITY'S AUDIT REPORTS AS A RESULT OF THE AMENDMENT.
WE'LL BE REVIEWING TWO AUDITS AT THE NEXT SCHEDULED BFA MEETING.
WE'VE WORKED WITH THE CONTROLLER'S OFFICE TO CREATE GUIDELINES FOR BRINGING AUDITS TO BFA WITHIN 45 DAYS OF AN AUDIT RELEASE.
NO MORE THAN THREE AUDITS WILL BE PRESENTED IN THE SINGLE BFA AND THE CONTROLLER AND CITY
[00:30:01]
AUDITOR WILL REPORT ON THE SCOPE OF THE REPORT RELEASE.SO, BEFORE WE ADJOURN TODAY, PLEASE MAKE NOTE OF THE NEXT REGULARLY SCHEDULED BUDGET AND FISCAL AFFAIRS COMMITTEE MEETING WILL BE TUESDAY, DECEMBER 5TH AT 10:10 AM NO, NO OTHER COMMENTS OR QUESTIONS.