* 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. [Budget and Fiscal Affairs Committee on September 2, 2025.] [00:00:14] BUDGET AND FISCAL AFFAIRS COMMITTEE MEETING. I'M SALLY ALCORN, CHAIR OF THE BUDGET AND FISCAL AFFAIRS COMMITTEE. I'M JOINED BY MY VICE CHAIR, MARIO CASTILLO. COUNCIL MEMBER JOAQUIN MARTINEZ, VICE MAYOR PRO TEM AMY PECK, MAYOR PRO TEM MARTHA CASTEX. TATUM, COUNCIL MEMBER JULIAN RAMIREZ. COUNCIL MEMBER ABBY CAYMAN. COUNCIL MEMBER WILLIE DAVIS. STAFF FROM COUNCIL MEMBER MARY NAN HUFFMAN'S OFFICE AND STAFF FROM COUNCIL P, STAFF FROM COUNCIL MEMBER PLUMMER'S OFFICE ONLINE. SO WE HAVE A FULL AGENDA, SO WE'LL GET RIGHT TO IT. WE'LL START WITH THE MONTHLY FINANCIAL REPORT. SO I THINK WE'RE GOING TO HAVE WILL JONES PRESENT, DEPUTY CONTROLLER AND MELISSA DEBOWSKI, FINANCE DIRECTOR. OKAY. YOU READY FOR ME? READY? OKAY. UH, GOOD MORNING, MADAM CHAIR, COUNCIL MEMBERS AND STAFF. I'M HERE TODAY TO PRESENT THE MONTHLY FINANCIAL REPORT FOR THE PERIOD ENDING JULY 31ST, 2025. IN THE GENERAL FUND, THE CONTROLLER'S OFFICE IS PROJECTING AN ENDING FUND BALANCE OF 328.1 MILLION OR 12.9% OF EXPENDITURES, LESS DEBT SERVICE AND PAY AS YOU GO. THIS IS, UH, 17.5 MILLION LOWER THAN THE PROJECTION OF THE FINANCE DEPARTMENT, AND THE DIFFERENCE IS DUE TO A LOWER REVENUE PROJECTION. UM, BASED ON OUR CURRENT PROJECTIONS, THE FUND BALANCE WILL BE APPROXIMATELY 137.6 MILLION ABOVE THE CITY'S TARGET OF HOLDING 7.5% OF TOTAL EXPENDITURES, EXCLUDING DEBT. THE FY 26 BEGINNING FUND BALANCE IS 8.1 MILLION HIGHER, UH, THAN THE FY 25 ENDING FUND BALANCE REPORTED IN JUNE. THE INCREASE IS DUE TO YEAR END ADJUSTMENTS TO REVENUES AND EXPENDITURES THAT WILL CONTINUE UNTIL WE FINALIZE THE ANNUAL COMPREHENSIVE FINANCIAL REPORT. FOR THE GENERAL FUND REVENUE, WE HAVE INCREASED OUR REVENUE PROJECTION BY 55 MILLION FROM OUR FY 2026 TRENDS REPORT AS FOLLOWS, PROPERTY TAX INCREASED BY 43.9 MILLION, AND THIS IS DUE TO, UH, THE CENSUS POPULATION THAT CAME AFTER THE PROPOSED BUDGET AND AFTER WE PRESENTED OUR TRANS REPORT, WHICH IS REFLECTED IN THE ADOPTED BUDGET. NOW, UM, TRANSFERS FROM OTHER FUNDS INCREASED BY 9.6 MILLION, PRIMARILY DUE TO RECOVERY OF THE THREE 80, UH, REIMBURSEMENTS FROM UH, T 24. AGAIN, THIS WAS SOMETHING WE PROJECTED IN JUNE. WE'RE JUST NOW, UH, SHOWING, REFLECTING THAT IN OUR, UH, THIS FIRST MOFA AND DIRECT INTER FUND INCREASED BY 1.3 MILLION TO REFLECT HIGHER REIMBURSEMENTS FROM AIRPORT FOR POLICE SERVICES, UH, FOLLOWING PAY RAISES. ON THE EXPENDITURE SIDE, WE'RE MAKING NO CHANGES AND WE'RE ALSO MAKING NO CHANGES ON THE ENTERPRISE FUNDS. UH, FOR COMMERCIAL PAPER AND BONDS. THE CITY'S PRACTICE HAS BEEN TO MAINTAIN NO MORE THAN 20% OF THE TOTAL OUTSTANDING DEBT FROM EACH TYPE OF DEBT AND VARIABLE RATE STRUCTURE, WHICH IS IN LINE, UH, WITH RATING AGENCY'S GUIDANCE OF 25% FROM TIME TO TIME. THE CITY'S ENTERPRISE CREDITS HAVE EXCEEDED THIS THRESHOLD ON AN INTERIM BASIS AS THEY HAVE UNDERTAKEN LARGE CAPITAL IMPROVEMENT PROJECTS OR MAJOR EXPANSIONS. UH, THANK YOU. AND THAT COMPLETES MY REPORT. GOOD MORNING. THIS IS THE ONE PLUS 11 FINANCIAL REPORT FOR THE PERIOD ENDING JULY 31ST, 2025. FISCAL YEAR 26 PROJECTIONS ARE BASED ON ONE MONTH OF ACTUAL RESULTS AND 11 MONTHS OF PROJECTIONS. LOOKING BACK ON FISCAL YEAR 25, UM, IN ACCORDANCE WITH GOVERNMENT ACCOUNTING STANDARDS FOR GOVERNMENTAL FUNDS. THE FINAL, UH, REVENUES FOR FY 25, WE'LL INCLUDE REVENUES EARNED THROUGH JUNE 30TH, ONLY IF THEY'RE COLLECTED BY THE END OF AUGUST. UH, SO THOSE ITEMS ARE, UM, STILL PENDING, UM, PENDING THE FINALIZATION OF THE ANNUAL COMPREHENSIVE FINANCIAL REPORT. SO, UH, EXPENDITURES ALSO CONTINUE TO BE, UH, WERE CONTINUED TO BE RECORDED UNTIL, UM, AUGUST 31ST. SO, UM, BASED ON THE REVENUES AND EXPENDITURES SO FAR FOR FISCAL YEAR 25, THE CURRENT PRELIMINARY UNDESIGNATED FUND BALANCE FOR THE GENERAL FUND IS 422 MILLION, WHICH IS THE SAME AS OUR JUNE MOFA PROJECTION. AND SO, AS I MENTIONED, THE RESULTS ARE NOT FINAL UNTIL THE PUBLICATION OF THE ACT FOR, WHICH WILL BE SOMETIME PROBABLY IN DECEMBER. SO MOVING TO FISCAL YEAR 26, OUR REVENUE AND EXPENDITURE PROJECTIONS REMAIN AT BUDGET. UM, JUST AN UPDATE ON THE SALES TAX, SALES TAX RECEIPTS, UM, FOR JUNE. AND THIS IS, UM, AGAIN, THIS KIND OF GOES TO THE PRIOR YEAR STILL, BUT, UM, SALES TAX RECEIPTS FOR JUNE, UH, WERE 7.6 MILLION HIGHER THAN THE SAME PERIOD LAST YEAR, WHICH IS ABOUT 9.9% HIGHER THAN THE SAME PERIOD LAST YEAR. UH, SO WE ARE GONNA [00:05:01] CONTINUE TO MONITOR SALES TAX OF COURSE, AS WE ENTER, UH, FY 26, WE'RE CURRENTLY PROJECTING THE ENDING FUND BALANCE TO BE 345.6 MILLION, WHICH IS 40.7 MILLION HIGHER THAN THE ADOPTED BUDGET, AND IS 13.6% OF ESTIMATED EXPENDITURES NOT INCLUDING DEBT SERVICE AND PAY AS YOU GO PROJECTS. AND THAT, UH, THE FUND BALANCE REPRESENTS 155 MILLION ABOVE THAT MINIMUM OF HOLDING 7.5% FOR THE ENTERPRISE SPECIAL REVENUE AND OTHER FUNDS. WE'RE NOT PROJECTING ANY CHANGES AT THIS TIME. THAT CONCLUDES MY REPORT. THANK YOU VERY MUCH. DIRECTOR, ON THE SALES TAX NUMBERS, DOES THAT, DOES THAT INCLUDE, ARE WE, ARE THEY DEDUCTING THE AMOUNT MEMBER? IS THAT HAPPENING YET? SO THE AUDIT, UM, THE AUDIT THAT WE TALKED ABOUT A COUPLE MONTHS AGO, UM, WE STILL HAVEN'T HEARD BACK FROM THE STATE ON THEIR FINAL RESULTS. THE STATE COMPTROLLER'S OFFICE WAS SENDING IT TO A HIGHER LEVEL OF REVIEW INTERNALLY, UM, JUST TO MAKE SURE THAT THEY HAD THE RIGHT NUMBER. WHAT THEY HAD INDICATED TO US IS IT WAS GONNA BE AROUND $25 MILLION. RIGHT. AND WHAT WE'VE TALKED ABOUT PRELIMINARILY WITH THEM IS, UM, ONCE WE DO HAVE TO START PAYING BACK THAT AUDIT FINDING, SPREADING IT OVER, I THINK A BELIEVE IT'S A 43 MONTH PERIOD MM-HMM . WHICH COMES OUT TO ABOUT $600,000 A MONTH. WE HAVEN'T STARTED THAT REPAYMENT YET, BUT IT IS SOMETHING THAT WE CONTINUE TO MONITOR. AND DO YOU ANTICIPATE THAT BEING IN THE NEXT FEW MONTHS OR WHO KNOWS? WHENEVER THEY GET YEAH. GET IT FIGURED OUT. OKAY. WE DO STAY IN REGULAR CONTACT WITH THEM. WE REACH OUT TO THEM AT LEAST ONCE A MONTH TO TALK TO THEM ABOUT. SURE. I WAS ALSO GONNA ASK ABOUT SB 10 AND, AND WHAT, AND WHAT'S GOING, I KNOW THAT IN OCTOBER WE'LL BE APPROVING A TAX RATE, AND I KNOW YOU GUYS ARE BUSY CALCULATING ANYTHING, UM, WILL FEEL FREE TO OPINE ALSO. BUT, UM, COLLEAGUES, AS YOU KNOW, AT, AT THE, AT THE STATE LEGISLATURE, THEY'RE CONSIDERING A CHANGE TO THE VOTER OR APPROVE TAX RATE FROM THREE POINT A HALF PERCENT, THAT THEN YOU GO TO THE VOTERS TO 2.5%. AND JUST WANTED, UM, WANTED TO GET YOUR INPUT ON ON HOW THAT, IF THAT DOES, UM, COME TO FRUITION, HOW THAT MIGHT AFFECT OUR, OUR NUMBERS. SURE. SO, UM, WHATEVER, UH, CHANGES THE LEGISLATURE MAKES WITH THIS PENDING LEGISLATION, UH, WON'T IMPACT THE TAX RATE THAT WE ADOPT THIS YEAR, WOULD IMPACT THE TAX RATE FOR THE FOLLOWING YEAR. UM, BUT JUST IN TERMS, LOOKING HISTORICALLY, WE DID AN ANALYSIS TO SEE IF OUR, UM, STATE CAP MULTIPLIER WAS 2.5% INSTEAD OF 3.5%, WHAT WOULD THAT HAVE MEANT FOR US? IT BASICALLY BRINGS THE STATE CAP IN ALIGNMENT WITH OUR CAP, ROUGHLY. I MEAN, THEY'RE, THEY'RE DIFFERENT FORMULAS, DIFFERENT CALCULATIONS, BUT HISTORICALLY OUR LOCAL CAP HAS BEEN MORE RESTRICTIVE THAN THE STATE CAP. AND THIS WOULD KIND OF BRING THE STATE CAP DOWN CLOSER TO WHAT WE SEE LOCALLY BASED ON HISTORICALS. MR. JONES, DO YOU HAVE ANYTHING TO ADD? NO, I WOULD AGREE. AND, UH, I GUESS WHERE THE CONCERN WOULD COME IS IF THEY GO BELOW THE TWO AND A HALF PERCENT. I'VE HEARD TALKS OF MAYBE 1%. I DON'T, I DON'T KNOW WHERE THEY ARE WITH THE AMENDMENTS ON THAT, BUT, UM, IF THAT WOULD BE A CONCERN, THERE WAS ONE AMENDMENT IN THE HOUSE, I KNOW THAT EXEMPTED PUBLIC SAFETY SPENDING, SO I DID SEE THAT. UM, COUNCILS MEMBER RAMIREZ, THANK YOU, MADAM CHAIR AND, UM, DIRECTOR DEBOWSKI WITH REGARD TO POTENTIAL LEGISLATIVE CHANGES, UM, THAT, UH, STATE CAP BEING LOWERED, UH, WOULD NOT AFFECT OUR ABILITY TO GO TO THE VOTERS FOR, LET'S SAY A PUBLIC SAFETY EXCEPTION. RIGHT. SO ON THE LOCAL SIDE, WE COULD STILL, OF COURSE, GO TO THE VOTERS TO ASK FOR OUR OWN EXCEPTIONS FOR PUBLIC SAFETY OR OTHER NEEDS. WE COULD ALSO GO TO THE VOTERS AND ASK TO AMEND THE CHARTER. UM, ON THE STATE SIDE, THEY ALSO HAVE A PROCESS TO GO TO THE VOTERS TO SEEK AN AMOUNT ON TOP OF WHATEVER THE STATE CAP LIMITATION IS. OKAY. SO WE ALL ALWAYS HAVE THAT, RIGHT? IN OTHER WORDS, GO TO THE VOTERS AND SEE IF THEY FEEL DIFFERENTLY ABOUT IT BASED ON THE WAY THE STATUTE IS TODAY. YES. OKAY. AND, UH, DIRECTOR JONES QUESTION ABOUT YOUR PROJECTIONS FOR PROPERTY TAX INCREASE MM-HMM . DUE TO REVISION OF THE POPULATION ESTIMATE. UM, IS THAT SOME SORT OF A FORMULA THAT THE CONTROLLER OFFICERS USE? NO, I MEAN, WE'RE IN LINE WITH FINANCE. IT'S JUST THAT WHENEVER, UH, THE BUDGET WAS PROPOSED AND WHEN WE DID OUR TRENDS REPORT, WE DIDN'T HAVE THE, THE US CENSUS BUREAU NUMBERS YET. SO WE BOTH ASSUMED 0% GROWTH. AND THEN WHEN THAT NUMBER CAME OUT, I THINK IT WAS CLOSER TO 6%. SO FINANCE RED LINED THE BUDGET TO SHOW THAT 43 MILLION. AND I'M JUST SHOWING THE EXACT EXACT SAME THING HERE, BUT I GUESS IS THERE SOME SORT OF FORMULA THAT X AMOUNT OF POPULATION GROWTH IS GONNA TRANSLATE INTO Y AMOUNT OF PROPERTY TAX GROWTH? OH, YEAH, BECAUSE OF, OF THE WAY THE, THE PROP CAP WORKS IS THE, THE CPI PLUS THE POPULATION. I SEE. OKAY. THANK YOU. I'D LIKE TO TAKE THIS OPPORTUNITY TO WELCOME COUNCIL MEMBER TIFFANY THOMAS, WHO IS ONLINE AND COUNCIL MEMBER TARSHA JACKSON STAFF FROM HER OFFICE ALSO ONLINE. I SEE NO OTHER QUESTIONS FOR THE MONTHLY FINANCIAL REPORT. SO THANK YOU VERY MUCH FOR YOUR PRESENTATIONS. AND MR. JONES, IF YOU'LL STAY, YOU'RE NEXT. [00:10:02] WELL, JONES WILL BE PRESENTING ON THE ECONOMIC EVALUATION OF DISASTER PREPAREDNESS. I THINK HE HAS A FANCIER, FANCIER TITLE THERE, BUT IT'S BASICALLY DEALING WITH, UM, VERY, UH, GOOD TIMING AS WE'LL BE DISCUSSING THAT LATER. AND, AND COUNCIL MEMBER CAYMAN'S BUDGET AMENDMENT, BUT, UH, PRESENTATION ON THE FINANCIAL PREPAREDNESS FOR NATURAL DISASTERS, RIGHT? ESSENTIALLY WEATHERING THE STORM. SO IT'S VERY TIMELY. UM, SOMETHING WE HAVE BEEN LOOKING AT PRESENTING FOR A WHILE NOW. UM, AND THE TIME IS JUST PERFECT WITH IT NOW, ESPECIALLY WITH THE DISCUSSIONS THAT'S GONNA BE HAPPENING WITH THE BUDGET STABILIZATION FUND. UH, SO IF YOU CAN GO TO THE NEXT SLIDE, PLEASE. UM, SO BEFORE I EVEN GET INTO THE PRESENTATION, I DO KIND OF WANNA SET UP, UH, ONE OF THE TOP PRIORITIES OF THE CONTROLLER'S OFFICE IS, UH, TO PROVIDE WHAT WE CALL INSIGHTS, WHICH IS WHAT THIS REPORT IS. AND IF YOU RECALL, I DID A PRESENTATION OF A FEW MONTHS AGO ON, ON OVERTIME. UH, IT WAS VERY WELL RECEIVED BY EVERYONE . UM, PEOPLE HAD A LOT OF NICE THINGS TO SAY ABOUT ME BECAUSE OF THAT REPORT. SO, UM, I DECIDED TO COME BACK AND START GIVING YOU MORE REPORTS, YOU KNOW, BUT I, REALITY IS, YOU KNOW, UH, YOU KNOW, OUR GOAL IS TO PROVIDE SOME IN-DEPTH IMPORTANT, UH, DETAILS ON, YOU KNOW, WHAT'S HAPPENING WITH CITY FINANCES AND BRING IT TO COUNCIL, UM, AND TO THE PUBLIC. SO THROUGHOUT THE YEARS OR THROUGHOUT THE YEAR, UH, YOU'LL SEE, UH, US COME FORWARD WITH, WITH MORE INSIGHTS, LOOKING IN TOPICS THAT'S IMPORTANT TO YOU GUYS AND TOPICS THAT'S IMPORTANT, UH, TO THE CITY OF HOUSTON. SO THAT'S WHAT A, A BROADER OVERVIEW OF WHAT OUR, OUR GOAL AND ONE OF OUR TOP PRIORITIES IS AS IT COMES TO LOOKING AT CITY FINANCE. NEXT SLIDE, PLEASE. SO, UM, SO WHAT THIS PRESENTATION IS, AGAIN, IS JUST GONNA TAKE A LOOK AT, UH, HISTORICAL DISASTERS. UH, THE FREQUENCY SEVERITY, IT'S GONNA LOOK AT, UH, THE, THE FINANCIAL IMPACT. UM, SO, AND IT'S ONLY GONNA FOCUS ON GENERAL FUND. I WANNA BE VERY CLEAR, I'M ONLY LOOKING AT GENERAL FUND. THAT IS WHERE WE HAVE A STRUCTURAL, UH, BUDGET ISSUE. SO THAT'S WHERE WE'RE GONNA FOCUS ENTERPRISE FUNDS, YOU KNOW, THEY, THEY TOO HAVE TO DEAL WITH DISASTERS AND HAVE TO BE PREPARED FINANCIALLY. BUT THIS IS NOT THE FOCUS TODAY. AND I WANNA BE VERY CLEAR THAT THIS IS NOT, UM, UH, A FOCUS ON HOW THE CITY RESPONDS TO DISASTERS, HOW OUR PUBLIC SAFETY MOBILIZES AROUND DISASTERS. UM, WE KNOW THAT, YOU KNOW, WE, WE HAVE OUR FIREFIGHTERS AND OUR POLICE OFFICERS DO A FANTASTIC JOB WHEN, WHEN EMERGENCIES HAPPEN. UH, THIS IS NOT AN EVALUATION ON THAT, THIS IS STRICTLY LOOKING AT, UH, THE ECONOMIC IMPACT. SO, NEXT SLIDE, PLEASE. OKAY. SO WE'LL, WE'LL TALK ABOUT A LITTLE BIT THE HISTORY AND CLIMATE. WE'LL, LIKE I SAID, WE'LL LOOK AT SOME ECONOMIC VULNERABILITIES, UH, TAKE A LOOK AT OUR DISASTER RESERVES AND THEN OFFER SOME OPPORTUNITIES. UH, NEXT SLIDE, PLEASE. OKAY. SO, OF COURSE, FIRST WE'RE GONNA TAKE A LOOK AT, UH, YOU KNOW, THE HISTORY OF THE DISASTERS. TAKE A LOOK BACK AT, YOU KNOW, SOME OF THE, THE, ESPECIALLY THE HOUSTON REGION, HOW WE'VE BEEN IMPACTED BY DISASTERS. NEXT SLIDE, PLEASE. OKAY. SO, DISASTER COSTS NATIONWIDE HAVE ESCALATED, UH, PRETTY DRASTICALLY OVER THE PAST DECADES. DECADES. UM, IN THE EIGHTIES, TOTAL DISASTER COSTS WERE ABOUT 220 BILLION, AS YOU SEE THERE. BY 2000 TENS, UH, IT HAD BALLOONS, SO CLOSE TO A TRILLION. UM, AND AGAIN, THIS IS NATIONWIDE. AND ALREADY IN THE 2020S, WITH HALF THE DECADES STILL TO GO, WE'VE SEEN 746 BILLION IN DISASTER COSTS. SO WE STILL HAVE, UH, QUITE A FEW YEARS LEFT IN, IN, IN THE DECADE. THE MAIN DRIVER, UH, OF THE COSTS ARE TROPICAL CYCLONES, WHICH INCLUDE HURRICANES, UH, TROPICAL STORMS, UH, AND DEPRESSIONS. UH, THESE ACCOUNTS FOR MORE THAN HALF OF THE DISASTER COSTS SINCE 1980, AVERAGING ABOUT 53% AND 2000 THAT SHARE PEAKED AT, UH, UH, PEAKED AT ABOUT 70% UNDERSCORING HOW DESTRUCTIVE HURRICANES AND TROPICAL STORMS CAN BE. UH, THE HOUSTON GULF REGION PLAYS A BIG ROLE IN THESE NATIONAL FIGURES. UM, OUR AREA IS FREQUENTLY HIT BY, UH, SOME OF THE MOST COSTLY STORMS. OF COURSE, WE HAD HURRICANE HARVEY, IKE, AND MORE RECENTLY HURRICANE BERYL. SO THIS PUTS HOUSTON ON THE FRONT LINE OF THE NATION'S RISING DISASTER COSTS. SO, I GUESS A TA KEY, THE KEY TAKEAWAY FROM THIS SLIDE IS THE US IS SEEING DISASTERS GROW NOT ONLY IN FREQUENCY, BUT ALSO IN FINANCIAL IMPACT. AND HOUSTON IS SITTING ON, SITTING ON THE GULF, IS DIRECTLY CONTRIBUTING TO AND EXPERIENCING THESE SHARP INCREASES. NEXT SLIDE, PLEASE. SO, AGAIN, SO HURRICANE, UH, THEY DRIVE COSTS HIGHER, UH, WITH HOUSTON AMONG THE HARDEST HIT. SO THE CHART SHOWS, OF COURSE, THE TOP 10 COSTLIEST, SLIGHT CLONES LED BY HURRICANE KATRINA, UH, AT 201 BILLION, FOLLOWED BY HARVEY AT 160 BILLION AS THE, YOU KNOW, SECOND COSTLIEST STORM. UM, AND OF COURSE, HURRICANE IKE BACK IN 2008, BUT ABOUT 43 BILLION. SO, AND IMPORTANTLY, UH, RECENT STORMS DOMINATE THE LIST. SO SIX OUT OF THE, OF THE 10 COSTLIEST STORMS HAVE OCCURRED SINCE 2015. SO THIS TELLS US THAT, YOU KNOW, NOT ONLY ARE THE STORMS TO RECOVER MORE [00:15:01] FREQUENT, THEY'RE ALSO BECOMING MORE EXPENSIVE. AND AGAIN, HOUSTON IS RIGHT IN THE BULLSEYE THAT, UM, WITH TWO OF THE, THE, UH, TOP 10 MOST COSTLIEST STORMS. NEXT SLIDE, PLEASE. SO, AGAIN, LOOKING OVER THE DECADES FROM THE 80, SO, UH, YOU KNOW, HOUSTON HAS FACED ABOUT 25 FEMA DECLARED, UH, DISASTER SINCE 1983. AND AGAIN, YOU KNOW, 10 OF THOSE DISASTERS HAVE OCCURRED SINCE 2015, SHOWING, YOU KNOW, A CLEAR UPTICK. UM, THE VAST MAJORITY OF THESE STORMS ARE DRIVEN BY, UH, STORMS AND FLOODING, UH, 13 MAJOR SEVERE STORMS AND FLOODING EVENTS IN 1980. UH, THIS MAKES THE SINGLE MOST COMMON DISASTER TYPE WE EXPERIENCE. UM, AND WE JUST WITNESSED THAT THIS PAST WEEKEND, UH, WITH EITHER THE FLOODING OVER THE MEMORIAL DAY, UH, I MEAN MEMORIAL DAY, LABOR DAY WEEKEND, UH, WHAT, YOU KNOW, A LOT OF RAIN, A SHORT AMOUNT OF TIME, AND WE SAW WHAT HAPPENED. UM, SO AGAIN, THE, THE STORMS AND FLOODING IS THE MAJOR, UH, THE, THE MOST TYPE OF DISASTER THAT THE HOUSTON AREA EXPERIENCES. IN ADDITION, HOUSTON HAS PHASE FIVE TROPICAL STORMS AND FIVE HURRICANES HIGHLIGHTING, HIGHLIGHTING THE REGION'S EXPOSURE, UH, TO GULF WEATHER SYSTEMS. UM, AND THEN EVEN, YOU KNOW, THERE'S A COUPLE OUTLIERS ON THERE. YOU'LL SEE THE, OF COURSE, THE PANDEMIC AND THEN WINTER STORM URI, WHICH WAS KIND OF THE FIRST OF ITS KIND FOR US IN, IN THE AREA. AND AGAIN, LIKE I SAY, LAST YEAR WE, WE DEALT WITH HURRICANE BARREL AND, UH, THE DERECHO WINDSTORMS, UH, NEXT SLIDE, PLEASE. OKAY, SO TODAY, FEMA, UH, RANKS HARRIS COUNTY NUMBER ONE NATIONALLY IN HURRICANE RISK. SO, UH, WE ACTUALLY TIE WITH, UH, IS IT MIAMI-DADE COUNTY, FLORIDA FOR THE HIGHEST, THE HIGHEST SCORE YOU CAN GET IS A HUNDRED, AND THAT'S WHAT WE SCORED. SO BASICALLY, THE FEMA USES A HURRICANE RISK SCORE THAT FACTORS IN, YOU KNOW, EXPECTED FINANCIAL LOSSES, UH, SOCIAL VULNERABILITY AND COMMUNITY'S ABILITY TO RECOVER. UM, AND AS YOU'VE JUST SEEN OVER THE, THE PAST COUPLE SLIDES, HOUSTON, WE ARE, WE, WE, WE TEND TO HAVE SOME OF THE MOST COSTLY STORMS COME THROUGH OUR AREA. UM, SO AGAIN, SO FOR, FOR US, THIS IS NOT A, A STATISTIC. UH, WE ALREADY, WE'VE SEEN THE CONSEQUENCES. UM, AGAIN, HURRICANE HARVEY COST 160 BILLION. WE HAD HURRICANE IKE, UM, AGAIN, WE HAD TWO, UH, STORMS LAST YEAR. UM, SO THESE DISASTERS HIGHLIGHT THE HARRIS COUNTY IS NOT ONLY AT THE MAXIMUM RISK ON PAPER, BUT WE HAVE FACED SEVERE, UH, FINANCIAL HUMAN IMPACTS IN REALITY. SO, NEXT SLIDE, PLEASE. SO NOW WE'RE GONNA TAKE A LOOK AT SOME OF OUR ECONOMIC VULNERABILITIES, THESE THINGS THAT KIND OF RESTRICT US FROM BEING ABLE TO, UM, YOU KNOW, FUND MORE TOWARDS DISASTERS. AND, AND WE'RE ALL USED TO SOME OF THESE TERMS, A STRUCTURAL BUDGET DEFICIT, FOR EXAMPLE, WHERE OUR RECURRING REVENUES, UM, ARE NOT ENOUGH TO COVER OUR RECURRING EXPENSES. UH, WE TALKED ABOUT THE PROPERTY TAX CAP. UH, WE HAVE THE VOLATILITY OF OUR SALES TAX REVENUE. UH, THEN OF COURSE, WE HAVE STATE AND LEGISLATIVE POLICIES THAT IMPACT OUR ABILITY, UH, TO, TO, TO DRIVE REVENUE. SO IF YOU GO TO THE NEXT SLIDE, PLEASE. THERE WE GO. UM, SO LET'S TAKE A LOOK AT, AS WE ALL KNOW, WE, WE DO HAVE A STRUCTURALLY, UH, BALANCED BUDGET PROBLEM WHERE OUR RECURRING REVENUE IS NOT ENOUGH TO COVER RECURRING EXPENSES. AND AS A RESULT, WE'VE HAD TO DIP INTO OUR FUND BALANCE, UH, TO MAKE UP THAT DIFFERENCE. UM, SO IF YOU LOOKING AT THAT CHART, YOU'LL, YOU'LL NOTICE THE ORANGE WHERE, UH, WE GENERATED A LOT MORE REVENUE, AND THAT WAS SOLELY DUE TO ARPA FUNDING. UM, YOU KNOW, DURING THE PANDEMIC WHERE WE RECEIVED ARPA DOLLARS TO HELP RECOVER REVENUE LOSS, UH, THOSE FUNDS HAVE BEEN EXPENDED. UM, AND NOW WE'RE BACK TO OUR UNDERLYING, UH, STRUCTURAL BUDGET, UH, SITUATION. UM, SO IF YOU LOOK, SO IN FY 25, UH, YOU SEE LIKE ONE OF THE LARGEST DRAWS ON THE FUND BALANCE AT 145, UH, THE BUDGET WE JUST ADOPTED, THAT'S ABOUT 76 MILLION. UM, AND THEN, UH, JUST USING, UH, YOU KNOW, THE DIRECTOR OF BAKIS FIVE YEAR BASELINE PROJECTION JUST TO SHOW WHERE, UH, THE, THE GAP COULD GO BASED ON THEIR BASELINE PROJECTION. UM, SO AGAIN, UH, THIS JUST KIND OF HIGHLIGHTS THAT WE STILL HAVE THAT UNDERLYING STRUCTURAL, UH, BUDGET PROBLEM WHERE WE ARE FORCED TO KIND OF USE OUR RESERVES. OF COURSE, I KNOW THAT, YOU KNOW, WE, WE HAVE THE EY PLAN. THERE ARE THINGS THAT WE ARE TRYING TO DO TO ADDRESS THAT ISSUE. UM, JUST PRESENTING THE FACTS AS IT IS NOW. NEXT SLIDE, PLEASE. UM, AGAIN, WE JUST KIND OF TALKED ABOUT THIS. STATE AND LOCAL, UH, LAWS RESTRICT OUR ABILITY TO GENERATE PROPERTY TAX REVENUE. AND ALSO ON THE EXPENSE SIDE, WE ALL KNOW ABOUT OUR PROPERTY TAX CAP. UM, WE'VE HAD TO REDUCE OUR TAX RATE, I WOULD THINK NINE OUT OF THE LAST 11 TIMES. UM, I THINK ACCORDING TO FINANCIAL PROJECTION, IT'S COST US ABOUT 2.6 BILLION ALMOST SINCE WE HIT THE CAP. UM, WE JUST TALKED ABOUT, YOU KNOW, [00:20:01] SB NINE OR 10, WHAT IT'S GONNA DO TO THE CAP. AND THEN OVER TIME, THERE'S BEEN SOME OTHER, UH, YOU KNOW, LAWS THAT HAVE, UH, IMPACTED, SEVERELY IMPACTED OUR ABILITY WITH REVENUE. LIKE, FOR EXAMPLE, IF YOU REMEMBER THE SB 1152 THAT IMPACTED, UH, OUR FRANCHISE FEES, UH, COST IN THE CITY, CLOSE TO 20 MILLION. UM, AND SO, YOU KNOW, THESE LAWS REALLY KIND OF, WE'RE ALREADY STRUGGLING WITH A STRUCTURAL DEFICIT, AND NOW WE'RE HAVING TO FACE, UH, THESE OTHER, YOU KNOW, UH, RESTRICTIONS. AND ON THE EXPENSE SIDE, WE ALSO HAVE, UM, YOU KNOW, SOME LAWS THAT KIND OF, UH, DICTATE HOW WE CAN, UH, MANAGE OUR PUBLIC SAFETY POLICE BUDGET, YOU KNOW, HB 1900, YOU CAN'T REDUCE, YOU KNOW, THE POLICE BUDGET BY MORE THAN WHAT THE OVERALL BUDGET REDUCES. UM, SO AGAIN, THAT'S OUR LARGEST EXPENSE. SO THAT'S SOMETHING THAT WE KIND OF HAVE TO MANAGE. AND OF COURSE, UH, YOU KNOW, OTHER LEGISLATION PENDING, UH, PROPOSING, UH, SPEND CAPS. NEXT SLIDE, PLEASE. AND SO, AGAIN, WE ALL KNOW POLICE, FIRE, UH, MAKE UP THE MAJORITY OF OUR BUDGET. AND THEN WHEN YOU ADD DEBT, UH, IT REALLY, UH, IT'S ALMOST JARRING WHEN YOU KINDA LOOK AT THE CHART TO SEE HOW MUCH OF OUR BUDGET IS TIED UP IN THREE, UH, THREE BUSINESS AREAS, IF YOU WILL, POLICE FIRE MAKING UP 58%. THEN OF COURSE, DEBT, ANOTHER 17%. THOSE THREE ALONE IS 75% OF OUR, UH, GENERAL FUND BUDGET, WHICH LEAVES, UH, THE REMAINING 25, 20 5%, UH, FOR ALL OF THE OTHER DEPARTMENTS. SO AGAIN, UM, LIMITED IN, IN FLEXIBILITY IN HOW WE CAN, UH, MOVE DO WITHIN OUR BUDGET WHEN OVER 75% IS TIED UP IN PUBLIC SAFETY, UH, AND DEBT. NEXT SLIDE, PLEASE. OKAY, SO NOW WE'RE, TAKE A LOOK AT THE POLICIES AS THEY EXIST NOW, AND HOW DO WE COMPARE TO OTHER CITIES, AND HOW DO WE COMPARE AGAINST, YOU KNOW, WHAT'S THE RECOMMENDED BEST PRACTICE? SO FIRST LOOKING AT OUR POLICY, NEXT SLIDE, PLEASE. AND SO, SO ACCORDING TO OUR FINANCIAL POLICIES, WE'RE TO MAINTAIN A MINIMUM FUND BALANCE OF 7.5% OF EXPENDITURES, LESS DEBT, AND A BUDGET STABILIZATION FUND MINIMUM, WHICH IS THE GREATER OF 1% OF GENERAL FUND EXPENDITURES, LESS DEBT, OR 20 MILLION. AND I KNOW AGAIN, WE'RE GONNA BE TALKING ABOUT, UH, SOME COUNCIL AMENDMENTS A LITTLE BIT LATER. UH, NEXT SLIDE PLEASE. SO, AGAIN, JUST KIND OF TAKING A LOOK, IN RECENT YEARS FUND BALANCE HAS BEEN USED TO COVER, LIKE WE'VE TALKED ABOUT, BUDGET DEFICITS. UM, AND WHEN YOU LOOK AT, YOU KNOW, THAT, THAT TOP CHART OF, OF THE FUND BALANCE, WE'VE HAD SOME RECORD, UH, FUND BALANCE IN THESE PAST FEW YEARS, PARTICULARLY LOOKING AT FY 24, UM, YOU KNOW, THAT REACHED 567 MILLION. UH, AND THAT'S 23.4% ABOVE OUR POLICY MINIMUMS. SO THE, BUT THE EXCESS AND FUND BALANCE THAT WE'VE RECEIVED, WE'VE HAD TO USE TO HELP BALANCE THE BUDGET. UM, AND THEN WHEN YOU LOOK DOWN AT THE BUDGET STABILIZATION FUND, UM, IT HASN'T GROWN ABOVE WHATEVER THE MINIMUM WAS. AND YOU'LL SEE THE DIPS IN THERE WHENEVER WE HAVE A DISASTER AND WE HAVE TO DIP INTO THAT, AND THEN WE HAVE TWO YEARS TO PAY THAT BACK. BUT IT NEVER GROWS MORE THAN, UH, THE MINIMUM OF OUR, OUR POLICY. SO EVEN THOUGH WE HAVE SOME OF THESE RECORD, UH, YEAR ENDING FUND BALANCES, THAT'S BEEN USED TO HELP WITH OUR STRUCTURAL BUDGET ISSUE. NEXT SLIDE, PLEASE. OKAY. SO I THINK THIS SLIDE IS VERY HELPFUL JUST TO KIND OF, SO YOU CAN KIND OF SEE HOW WE COMPARE TO, TO OTHER CITIES. UM, AND WHEN YOU LOOK AT IT, UH, OF COURSE OUR, WITH OUR MINIMUM RESERVES OF 7.5% PLUS THE 1%, YOU KNOW, WE, WE RANGE FROM EIGHT TO 9%, UH, WHICH IS PRETTY, UH, SHALLOW COMPARED TO SOME OF OUR COUNTERPARTS. UH, WHEN YOU LOOK AT LIKE DALLAS, WHERE 19 TO 20%, SAN ANTONIO, 15 TO 16%, UH, MIAMI 20%. THEN ALSO WHEN YOU LOOK AT, UH, SOME OF THOSE CITIES, UH, THEY ALS THEY HAVE SEPARATE RESERVES FOR, UH, YOU KNOW, ECONOMIC TYPE DOWNFALLS OR OTHER CONTINGENCIES IN ADDITION TO BUDGET STABILIZATION FUNDS. UM, BUT WHEN YOU LOOK AT, UH, WHAT'S RECOMMENDED IN BEST PRACTICE FROM GFOA, IT IS RECOMMENDED, UH, YOU KNOW, TWO MONTHS OF YOUR EXPENDITURES OR ABOUT 16.7%. SO YOU CAN SEE THAT WE, WE DO FALL, FALL SHORT OF THAT. NEXT SLIDE, PLEASE. SO, AGAIN, LIKE I'VE ALREADY SAID, UH, YOU KNOW, SHALLOW RESERVES LEAVE HOUSTON FINANCIALLY VULNERABLE, UM, AT EIGHT TO 9%, WE ARE BELOW THE RECOMMENDED 16.7%, UH, FROM GFOA, AND WE'RE A LITTLE BEHIND PERCENTAGE WISE COMPARED TO SOME OF OUR OTHER COUNTERPART COUNTERPARTS. UH, SO THE RESERVE, UH, DEBT IS INSUFFICIENT COMPARED TO, UH, THOSE STANDARDS. SO LET'S TAKE A LOOK AT SOME OPPORTUNITIES. UM, NEXT SLIDE PLEASE. YEAH, THERE WE GO. UH, OKAY, SO JUST, I JUST WANTED TO TAKE A LOOK AT SOME, SOME OPTIONS. OF COURSE, THE, JUST RAISE THE MINIMUM FUND BALANCE. I, I KNOW THAT SOUNDS LIKE A, YOU KNOW, JUST A SIMPLE THING TO DO, BUT OF COURSE, WE'VE TALKED ABOUT SOME OF THOSE ECONOMIC [00:25:01] VULNERABILITIES. UM, BUT, UH, WE SHOULD STRIVE TO TRY AND RAISE THAT MINIMUM AMOUNT OF SEVEN AND A HALF. UM, AND JUST TO KINDA GIVE YOU AN EXAMPLE, IF YOU'RE, IF YOU WERE TO GO FROM SEVEN AND A HALF TO EIGHT, THAT WILL REQUIRE ANOTHER 25 MILLION ADDED TO THAT MINIMUM, UH, BALANCE. UH, BUT WE SHOULD STRIVE TO, TO GET TO THAT POINT TO WHERE WE ARE ABLE TO INCREASE THAT, UM, AND THEN INCREASE THE BUDGET STABILIZATION FUND. UH, RIGHT NOW, AGAIN, WE'RE AT 1% OF EXPENDITURES. UM, AND I, LIKE I SAID, I KNOW SOME, SOME COUNCIL MEMBERS HAVE, UH, PUT SOME THINGS FORWARD TO TRY AND HELP ADDRESS THAT. SO I KNOW YOU'LL TALK ABOUT THAT LATER. UM, ALLOCATE, UH, ACCESS ABOVE, UH, THE MINIMUM. SO AGAIN, WE, WE SAW, YOU KNOW, WE HAD SOME RECORD FUND BALANCES, UM, AND WE'VE, YOU KNOW, IT, IT WOULD BE IDEAL IF OUR POLICIES, UH, KIND OF DICTATED MORE SO WHAT TO DO WITH SOME OF THAT EXCESS RESERVES RIGHT NOW. IT KIND OF JUST FLOWS THE FUND BALANCE AND, YOU KNOW, IN ORDER FOR US TO USE IT, UM, IT, IT SHOULD, IT SHOULD NOT BE FOR RECURRING EXPENSES. UM, BUT, UH, WE COULD STRENGTHEN SOME OF THOSE POLICIES TO ALLOCATE A PORTION OF THAT TO THE BUDGET STABILIZATION FUND. AGAIN, I, I'VE, I'VE READ SOME OF THE AMENDMENTS AND I, I CAN SEE THAT COUNCIL'S KIND OF THINKING A LITTLE BIT IN THAT DIRECTION ALREADY. UM, AND THEN JUST AN, UH, AN IDEA OR AN OPPORTUNITY ALLOCATE SPECIAL FUND CLAWBACKS, UM, PART OF OUR FINANCIAL POLICIES, WE DO HAVE CERTAIN SPECIAL FUNDS WHERE WE CLAW BACK, UH, YOU KNOW, ANY EXCESS. AND IT GOES BACK TO THE GENERAL FUND REVENUE. SINCE I THINK 2019, WE'VE CLAWED BACK ABOUT, UH, I WANNA SAY 9 MILLION OR SO. UH, SO WE COULD ADD A LITTLE MORE STRENGTH TO THE FINANCIAL POLICIES AND, AND, AND ALLOCATE THAT TO, UH, THE BUDGET STABILIZATION FUND AS OPPOSED TO JUST GOING TO THE GENERAL FUND RESERVES. AND THEN ALSO KIND OF SEPARATE IN OUR BUDGET STABILIZATION FUND, UH, WHERE WE COMBINE, UH, YOU KNOW, FINANCIAL DISASTERS WITH, UH, NATURAL DISASTERS. UM, LIKE I SAID, SOME OF THE OTHER CITIES HAVE SEPARATE, UH, CONTINGENCIES TO DEAL WITH DIFFERENT DISA THAT WAY THE DISASTER MONEY IS JUST FOR DISASTERS, AS WE'VE SEEN. WE ARE PRONE TO MORE TO DISASTER. SO, UM, TO KIND OF SEPARATE THAT FINANCIAL ASPECT OF IT. UM, AND SO I THINK THOSE ARE SOME OPTIONS WE CAN, AGAIN, FINANCIAL POLICIES IS THAT IS WHERE WE HAVE THE OPPORTUNITY TO, TO STRENGTHEN, UH, SOME OF THESE RESERVES. AND AGAIN, I DO APPRECIATE, YOU KNOW, THE COUNCIL MEMBERS LOOKING AT DURING THE BUDGET PROCESS TO SEE HOW YOU GUYS COULD CONTRIBUTE AND, AND, AND HELP BUILD UP THOSE, THOSE RESERVES. NEXT SLIDE, PLEASE. OKAY. SO, UH, IN CLOSING, UM, LIKE I SAID, HOUSTON HAS A HISTORY OF DISASTERS AND ONGOING FINANCIAL PRESSURES, BUT WITH DELIBERATE, UH, POLICY CHOICES, WE CAN BUILD STRONGER RESERVES AND BE BETTER PREPARED FOR THE FUTURE. SO THANK YOU. THAT CONCLUDES MY PRESENTATION. THANK YOU VERY MUCH, MR. JONES. GREAT PRESENTATION. AND I'LL GO TO QUESTIONS NOW. COUNCIL MEMBER CAYMAN. THANK YOU. UM, I'LL ALSO SAY THANK YOU FOR THE TIMING OF THIS. UH, WHILE I DON'T KNOW IF THIS WAS PLANNED THIS WAY, I WASN'T AWARE, BUT AGAIN, WE'RE ABOUT TO TAKE UP, AS YOU REFERENCED SOME OF THE BUDGET AMENDMENTS RELATED TO THE BUDGET STABILIZATION FUND, WHICH IS OUR RAINY DAY FUND. RIGHT? UM, IT'S ALSO NOT LOST ON ME, RIGHT? YOU REFERENCED KATRINA AND HARVEY WERE RIGHT SMACK DAB IN THE ANNIVERSARY OF THOSE STORMS AND THE RECOVERY EFFORTS. I NOTICED THOUGH, IN THE, UH, COST PRODUCTIONS YOU HAD, Y'ALL HAD, WHICH IS A GREAT PRESENTATION, UH, PROVIDED THE COST OF HURRICANE SPECIFICALLY, BUT THAT DIDN'T INCLUDE, FOR EXAMPLE, THE COSTS OF THE WINTER STORMS. MM-HMM. OR THE, THE FLOODS THAT MAY NOT HAVE BEEN FEDERALLY DECLARED OR THE COM COMBINATION, RIGHT? BARREL ALONE MAY NOT HAVE MADE THAT LIST, BUT COMBINE THAT YEAR WITH THE DERECHO THAT BALLOON THE COST FOR THAT YEAR. SO THERE'S, IN ADDITION TO THAT LIST, I WOULD SAY EVEN MORE NUMBERS THAT I THINK WE CAN POINT TO TO SHOW HOW COSTLY THIS IS AND HOW FREQUENTLY THESE STORMS ARE OCCURRING. CORRECT. UM, I WANT TO THANK Y'ALL FOR NOT JUST POINTING OUT THE ISSUE, BUT COMING UP WITH SOME SUGGESTIONS FOR US TO TALK THROUGH. UM, YOU KNOW, IN CITY BUDGETING, WE USE A LOT OF PERCENTAGES, A LOT OF TIMES WHEN REALLY WE'RE TR, EXCUSE ME, TRYING TO GET DOWN TO THE NUMBERS. UM, AND SOME OF YOUR SUGGESTIONS, AGAIN, WHEN WE'RE COMPARING TO OTHER CITIES, FOR EXAMPLE, MY BUDGET AMENDMENT WE'RE GONNA BE HEARING LATER HAD, UM, I GUESS INCREASED THE FLOOR FROM 20 TO 25 MILLION AND WOULD REQUIRE ANNUAL REPLENISHMENT, BECAUSE AGAIN, WE'RE SEEING THESE STORMS MORE AND MORE FREQUENTLY. UM, IS 25 ENOUGH? IS IT A GOOD STARTING PLACE? WHAT ARE, WHAT ARE YOU SEEING? BECAUSE AGAIN, WE COMPARE PERCENTAGES TO OTHER CITIES, BUT OTHER CITIES HAVE DIFFERENT BUDGET SIZE, SO IN PERCENTAGES, CAN YOU TEASE THAT OUT A LITTLE BIT? YEAH, I MEAN, LIKE I SAID, UM, IT'S DEFINITELY A GOOD START. [00:30:01] UM, AND SO AGAIN, IF YOU THINK ABOUT HOW 1% IS EQUAL TO ABOUT 25 MILLION, RIGHT? AND SO OUR, RIGHT NOW, OUR POLICY REQUIRES, UH, 1%, SO, YOU KNOW, 5 MILLION, LIKE I SAID, IT'S A GOOD START. BUT WHEN YOU LOOK AT IT IN COMPARISON TO LIKE WHAT A 1% IS, WE'RE TALKING 25 MILLION. RIGHT? OKAY. AND THEN LASTLY, ON SLIDE 11, UM, WE'VE ALWAYS HAD TO STRUGGLE WITH A BUDGET DEFICIT CHALLENGE, RIGHT? A STRUCTURALLY BALANCED BUDGET. THAT IS SOMETHING THAT MOST CITIES GRAPPLE WITH. THAT'S NOTHING NEW, BUT I SEE, YOU KNOW, WE WERE IN THE RED IN 2019, RIGHT? YOU HAVE NEGATIVE SEVEN, NEGATIVE 39 NEGATIVE ONE. IT GOES UP BECAUSE OF THE FEDERAL FUNDING, SOLELY BECAUSE OF ARPA. YEAH. AND, AND WE ARE GRATEFUL FOR THOSE DOLLARS, RIGHT? RIGHT, RIGHT. BUT THEN THERE IS A MUCH LARGER DROP THAN WHAT WE SAW IN, FOR EXAMPLE, 2019. YEAH. WHAT EXPLAINS THAT JUMP, FOR EXAMPLE, THAT THAT BALLOONING OF US GOING INTO THE RED? RIGHT. AGAIN, IT, IT'S A COMBINATION OF, UH, A LOT OF THE, THE ECONOMIC VULNERABILITIES. WE TALK ABOUT THE RISING COST, UM, AND THEN, BUT THE REVENUE NOT RISING AT THAT SAME LEVEL. SO WHEN YOU'RE COMING OFF OF ARPA DOLLARS, I'M TALKING 160 PLUS MILLION, UH, INFUSED. AND SO WHEN YOU LOOK AT THOSE, IF YOU WERE TO TAKE THOSE OUT, IT WOULD PROBABLY, YOU WOULD PROBABLY SEE MORE OF A STEADY, UH, DROP TOWARDS THAT 1 45. UM, SO AGAIN, IT'S JUST A RISING COST AND, AND, YOU KNOW, LIMITED REVENUE GROWTH. UM, BUT LIKE I SAID, THE ARPA DOLLARS REALLY, UH, INFUSED A LOT OF OF REVENUE INTO THE CITY. UM, BUT THE UNDERLYING PROBLEM WAS STILL THERE EVEN DURING THE ARPA TIME. SO THAT'S, THAT'S WHY YOU SEE SUCH A BIG DROP. YOU'LL PROBABLY SEE MORE OF A STEADIER DROP WITHOUT THE ARPA. THANK YOU. I DO WANNA RECOGNIZE THAT. UM, THREE COUNCIL MEMBERS ARE ONLINE COUNCIL, COUNCIL MEMBER CAROLYN, EVAN SHABAZZ, COUNCIL MEMBER FRED FLICKINGER, AND COUNCIL MEMBER TWILA CARTA. THEY HAVE BEEN ON AND HEARD YOUR PRESENTATION, SO WELCOME. AND I'LL GO TO THE MAYOR PRO TEMP. UH, THANK YOU CHAIR. THANK, UH, THANK YOU FOR THE PRESENTATION. I THINK IT'S GOOD INFORMATION. THE, THE QUESTION THAT, THAT LOOMS IN MY MIND ON PAGE 17, UM, WHERE WE ARE LOOKING AT, UM, OTHER CITIES, OUR PEER CITIES AND THEIR, UM, RECOMMENDED BEST PRACTICES. I'M ALWAYS INTERESTED IN KNOWING HOW OTHER CITIES ARE FINANCING, UH, THINGS IN THEIR CITIES. AND I, I RECOGNIZE WE DON'T HAVE A TRASH FEE, WE DON'T OWN OUR WATER. RIGHT? ARE THERE SOME OTHER IDEAS FROM OTHER CITIES THAT WE AREN'T CONSIDERING IN THE CITY OF HOUSTON? I, I WOULD LIKE FOR US TO DO A, YOU KNOW, WE ALWAYS TALK ABOUT OTHER CITIES, RIGHT? YOU KNOW, A A DEEPER DIVE INTO SOME POSSIBILITIES, UM, IN HOUSTON, LIKE MAYBE SOME OTHER CITIES ARE DOING. IS THERE ANYTHING THAT JUST KIND OF JUMPS OUT AT YOU? UM, THAT COULD BE SOMETHING WE COULD DO IN HOUSTON. I MEAN, NOTHING JUMPS OUT. I MEAN, WE COULD, YOU KNOW, TRY AND GO AND LOOK AT A LITTLE MORE DETAIL TO SEE WHAT THE OTHER CITIES ARE DOING. I'D BE LIKE, YOU MENTIONED GARBAGE FEES, AND, UH, OF COURSE HERE WITH OUR, OUR CAP, UH, IT KIND OF PUTS US AT A SEVERE HANDICAP COMPARED TO SOME OF THOSE CITIES. MM-HMM . UM, BUT YEAH, I MEAN, AS SOME, I WOULD LOVE TO TAKE A LOOK AT THAT AND SEE IF THERE ANY, IF THERE'S ANYTHING THAT JUMPED OUT, JUMPS OUT. UM, BUT MOST LIKELY IT'S GONNA BE THINGS LIKE THE GARBAGE FEE AND THEM NOT HAVING CERTAIN, UH, RESTRICTIONS ON REVENUE GROWTH THAT WE HAVE. YEAH. EVERY TIME I, I SEE THE, THE PEER CITIES, I WAS LIKE, I WANT US TO BE LOOKING AT APPLES TO APPLES. YEAH. AND IT, IT'S, I KNOW THAT'S HARD. IT IS VERY HARD. IT'S VERY HARD BECAUSE EVERY CITY IS UNIQUE. UM, BUT I REALLY WANT TO KIND OF DIVE INTO WHAT OTHER OPPORTUNITIES MAY BE OUT THERE THAT WE, YOU KNOW, HAVEN'T, HAVEN'T THOUGHT ABOUT. UM, I MEAN, THE HARD BUT EASY THOUGHT IS, YOU KNOW, A FEE. I'M, I'M THINKING HOW CAN WE RESTRUCTURE SOMETHING WITHOUT A FEE? UM, WHAT, WHAT CAN WE DO IF, IF SOMEBODY ELSE, ANOTHER CITY IS DOING SOMETHING MAYBE THAT WE JUST HAVEN'T THOUGHT ABOUT? YEAH, NO, WE CAN TAKE A LOOK. AND I KNOW, UH, WELL, I'M SURE EY TOOK A LOOK AT A LOT OF THOSE THINGS AS WELL. UM, BUT YEAH, THAT IS ABSOLUTELY SOMETHING WE CAN TAKE A LOOK AT AS WELL. THANK YOU. YEAH. WELL, ON DALLAS, ON THIS SLIDE, SO THEY'VE, THEY HAVE A 13.7% MM-HMM . MINIMUM. RIGHT. OKAY. LIKE, AND THEN THEY'RE A CONTINGENCY RESERVE. THAT'S, IS THAT LIKE THEIR RAINY DAY FUND, THEIR BUDGET STABILIZATION FUND? RIGHT. AND THEY HAVE A, WELL, THEY HAVE A SEPARATE EMERGENCY RESERVE AS WELL, SEPARATE AND APART FROM THE, THE REGULAR FUND BALANCE MM-HMM . AND I SEE THAT THAT'S A-J-F-O-A KIND OF RECOMMENDATION, BUT WHAT, LIKE, WHY, I MEAN, 20, WE KEEP IT IN THERE, WE KEEP IT, IT'S PART OF FUND BALANCE. AND WHAT, WHAT, WHAT IS THE BENEFIT [00:35:01] OF SEPARATING IT OUT? WELL, I GUESS, UH, TO KIND OF PRESERVE THAT FUND BALANCE SOLELY FOR DISASTERS, UM, BECAUSE LIKE I SAID, WE, WE, WE FACE DISASTERS NEARLY EVERY YEAR NOW. UM, AND, YOU KNOW, SOME WITH THE, THE FINANCIAL DISASTERS, UH, LIKE I SAID, WE ARE, AND I GUESS IT DEPENDS ON, UH, WHAT DO WE CONSIDER A FINANCIAL DISASTER? THAT, TO ME, THAT CAN BE SOMEWHAT LOOSELY INTERPRETED. I MEAN, SOME PEOPLE MAY SAY WE'RE ALREADY IN A FINANCIAL DISASTER, WE JUST WANT TO BE ABLE TO NOT, YOU DON'T WANT TO TOUCH IT SO EASILY. AND SO TO, TO BE DISCIPLINED, YOU REALLY WANNA SEPARATE, YOU DON'T WANNA LUMP EVERY POTENTIAL TYPE OF DISASTER POSSIBLE INTO THAT. LIKE, WE NEED TO BE PREPARED FOR THESE STORMS AND DISASTERS. SO THAT'S WHY IT'S JUST A GOOD PRACTICE TO SEPARATE. OKAY. THANK YOU VERY MUCH. ANY OTHER QUESTIONS, COLLEAGUES? OKAY, THANK YOU. WILL APPRECIATE THE PRESENTATION AND THE WORK THAT THE CONTROLLER'S OFFICE DID ON THAT. THANK YOU. WE WILL MOVE NOW TO AGENDA ITEM FOUR, FINANCIAL POLICIES UPDATE, AND WE WILL ALSO ADDRESS COUNCIL MEMBER CAYMAN'S BUDGET AMENDMENT 8.01. SO WELCOME BACK FINANCE DIRECTOR, MOLES DKI. OKAY. ALL RIGHT. UM, SO WE HAVE A FEW PAPER COPIES IF YOU NEED THEM, BUT THEY'RE ALSO, PRESENTATION IS ALSO ON THE SCREEN. UH, SO GOING TO AN OVERVIEW OF THE FINANCIAL POLICIES, UH, THE FINANCIAL POLICIES, UM, ON THE SECOND SLIDE, THEY'RE, UM, I THINK THIS MUST BE A DIFFERENT, MUST HAVE A DIFFERENT, OKAY. WELL THAT WASN'T THE RIGHT SLIDE DECK THEN. SORRY. UM, CAN YOU, WILL, CAN YOU GIVE US A MINUTE? WE'LL STRAIGHTEN IT OUT. YEAH, THAT WAS A VERSION CONTROL ISSUE. OKAY. UM, SO YOU HAVE THE PAPER COPIES. SO JUST AN OVERVIEW OF THE POLICIES. THE FINANCIAL POLICIES ARE BROAD IN SCOPE AND COVER SEVERAL DIFFERENT AREAS, INCLUDING FINANCIAL PLANNING, OPERATING AND CAPITAL BUDGET DEVELOPMENT, DEBT MANAGEMENT, INTERNAL FINANCIAL CONTROLS, AND ECONOMIC DEVELOPMENT AS WELL. UM, SO ON THE SECOND SLIDE, YOU SEE THERE'S SECTIONS ONE THROUGH N UM, BROKEN OUT INTO THE, UH, DIFFERENT CATEGORIES. AND THE NEXT SLIDE, SLIDE THREE. SO THAT FOR THE ONE ON THE SCREEN, I DON'T KNOW, IT'S NOT, IT'S NOT TRACKING AT ALL. THAT'S A YEAH, IF WE, IF Y'ALL WANNA SEND REAL QUICK, JORDAN OKAY. THE NEW SLIDES, WE CAN GET 'EM UP ON THE SCREEN. SURE. IF NOT, UH, I MEAN, AND THAT WILL BENEFIT THE PEOPLE ONLINE, BUT IF NOT, UM, YOU HAVE A HARD COPY IF YOU'RE HERE, IF YOU'RE ONLINE, GIVE US A SECOND. AS SOON AS WE GET IT, WE'LL GET THAT UP. OKAY, THANK YOU. WE WILL SCAN IT IN, DON'T WORRY. WE'LL SCAN IT IN AND GET IT UP. TAKE FIVE. EVERYBODY MIGHT BE FASTER FOR THEM TO SEND IT. THE FIRST FOUR FIVE WOULD PICK UP, DID YOU WANT TO TALK MM-HMM . AND THEN HOWEVER YOU WANNA HANDLE IT. DIRECTOR, IF YOU WANNA JUST TO KIND OF TALK THROUGH, I KNOW YOU CAN FIND THE FINANCIAL POLICIES IN THE BUDGET BOOK, AND YOU CAN FIND THEM ONLINE. MM-HMM . AND THAT'S WHAT THESE PAGES, AND THAT'S WHAT THOSE FIRST PAGES REPRESENT. WE ALSO INDICATE IN THE BUDGET WHETHER ANYTHING'S IN, WHETHER WE'RE IN COMPLIANCE OR NOT IN COMPLIANCE. MM-HMM . SO IF YOU CAN TALK A LITTLE BIT ABOUT THAT. SURE. YEAH. AND JUST AS SOME BACKGROUND, I KNOW WE SPENT A LOT OF TIME TALKING ABOUT FINANCIAL POLICIES, AND THE AVERAGE MEMBER OF THE PUBLIC MIGHT THINK, WELL, WHERE ARE THESE FINANCIAL POLICIES YOU ALWAYS TALK ABOUT? SO, UM, YOU CAN FIND 'EM IN A COUPLE DIFFERENT PLACES. UM, FIRST ON THE FINANCE DEPARTMENT WEBSITE, UM, ON OUR HOME SCREEN, THERE'S A LINK TO THE FINANCIAL POLICIES, UM, AS INDICATED, UM, IN THE SLIDES. AND THEN THE SECOND PLACE YOU CAN FIND 'EM IS INCLUDED INSIDE THE, UM, BOTH THE PROPOSED BUDGET BOOK AND THE ADOPTED BUDGET BOOK. SO IN THE PROPOSED BUDGET BOOK EVERY YEAR, UH, WE PUT WHAT WE CALL A, UH, THE CURRENT STATUS OF EACH POLICY, WHETHER THEY'RE IN COMPLIANCE, OUT OF COMPLIANCE OR IN PROGRESS. AND THEN IN THE ADOPTED BUDGET BOOK EVERY YEAR, UM, THERE'S A SECTION FROM, FOR THE FINANCIAL POLICIES WHERE WE PUT THE CURRENT STATUS, BUT THEN [00:40:01] WE ALSO PUT WHAT WE CALL THE COMPLIANCE STATEMENT. UM, SO THAT'S WHERE IT TELLS A LITTLE BIT MORE INFORMATION ABOUT WHY WE'RE IN COMPLIANCE OR WHY WE'RE NOT IN COMPLIANCE. AND IF WE'RE NOT IN COMPLIANCE, WHAT IS OUR PLAN TO GET IN COMPLIANCE IN THE FUTURE. SO YOU CAN FIND THAT IN THE, IN THE BUDGET BOOK. AND THEN AS BACKGROUND ON THE FINANCIAL POLICIES, UM, THERE ARE BASIC FINANCIAL POLICIES. UM, WERE ADOPTED BY RESOLUTION BACK IN 1988, UM, BACK IN, UH, 2014, UM, A REFRESHED VERSION, A MUCH EXPANDED VERSION OF THE FINANCIAL POLICIES WERE ADOPTED. THEY WERE A PAGE AND A HALF BEFORE . I WAS HERE WHEN WE DID THOSE OTHER ONES. THE THE 28 WHATEVER, THE 19 WHATEVER. WHEN, WHEN, WHEN WAS THAT? WHEN WERE THE FIRST ONE? 2014? NO, THE EARLIER ONES. 1988. THE 1988 ONES WERE A PAGE AND A HALF. SO NOT A WHOLE LOT OF MEAT TO THOSE ONES. SO KELLY DOW, THE DIRECTOR, UH, THE, THE FINANCE DIRECTOR AT THE TIME, REALLY PUSHED US TO UPDATE THOSE. AND THAT WAS A, A PRODUCT OF, OF THAT. YES, I KNOW THAT WAS A MAJOR EFFORT. AND, UM, SO THAT WAS UPDATED IN 2014. UH, IN 2015, UM, ADDITIONAL POLICIES WERE ADDED TO INCLUDE PROVISIONS REGARDING PAY AS YOU GO FUNDING. AND THEN IN 2018, UM, THERE WAS AN UPDATE TO THE FINANCIAL POLICIES, UH, TO, UM, I DON'T KNOW IF IT, I THINK IT WAS AT THAT TIME THERE WERE SOME MULTIPLE CHANGES, BUT ONE OF THEM WAS TO, UH, PUT INTO PLACE THE REQUIREMENTS TO REVIEW THE POLICIES EVERY TWO YEARS. UM, AND SO SINCE THAT TIME, WE'VE BROUGHT, BROUGHT THEM BACK IN 2020, UM, TO REVISE THEM AND UPDATE THEM. UM, THE 2020 UPDATE INCLUDED UPDATES RELATED TO FEDERAL, UH, REQUIREMENT CHANGES, CLARIFICATION OF CERTAIN, UM, CONTENT, UM, ITEMS RELATED TO DEBT, FINANCIAL REPORTING AND ECONOMIC DEVELOPMENT. AND THEN THE LAST UPDATE IN 2023, UM, THE POLICIES WERE REVISED AND UPDATED, UH, WITH THE PRIMARY CHANGE BEING TO ADD THE, A WHOLE ADDITIONAL SECTION RELATED TO TS POLICIES. SO ON THE NEXT SLIDE, UM, SECTION B FOUR, THIS IS THE SECTION THAT STATES THAT THE POLICY SHOULD BE REVIEWED AT LEAST EVERY TWO YEARS. UM, AND THE RESULTS OF THE REVIEW ARE TO BE PRESENTED TO THE BUDGET FISCAL AFFAIRS COMMITTEE, AND ANY PROPOSED AMENDMENTS SHOULD BE PRESENTED, UH, TO CITY COUNCIL FOR CONSIDERATION. SO TYPICALLY WE WOULD BRING THOSE, UM, BY ORDINANCE TO COUNCIL FOR ADOPTION. SO EVERY TWO YEARS, THE GOAL IS TO REVIEW THE POLICIES FOR IMPROVEMENT. UM, IF THERE'S A POLICY THAT'S NOT CLEAR, IF IT COULD BE WRITTEN MORE CLEARLY, UM, TO REFLECT WHAT'S GOING ON TODAY, UH, ARE, IS THERE LANGUAGE THAT'S CONFUSING OR CONFLICTING, UM, PARTICULARLY WITH OTHER, UM, LAWS OR POLICIES, AND HOW CAN WE DO THINGS BETTER? UH, THIS REVIEW ALSO AND INCLUDES NOT JUST THE FINANCE DEPARTMENT, BUT THE ECONOMIC DEVELOPMENT, UM, GROUP AS WELL. SO WE WORK WITH, UH, GWEN TILLSON AND HER TEAM. SO ON THE NEXT SLIDE, THE PROPO PROPOSED AMENDMENT. UM, THIS IS A PROPOSED BUDGET AMENDMENT BY COUNCIL MEMBER CAYMAN AMENDMENT 8.01, UH, PERTAINED TO THE BUDGET STABILIZATION FUND, UH, TO INCREASE THE, THE MINIMUM, UM, BUDGET STABILIZATION AMOUNT FROM THE GREATER OF 1% OR 20 MILLION TO BE THE GREATER OF 1% OR 25 MILLION. AND THEN THE SECOND, UM, PROPOSED ITEM WAS TO, UM, CONTEMPLATE ALLOCATING SUFFICIENT FUNDS OR REPLENISHING THE BUDGET STABILIZATION FUND WITHIN 365 DAYS. AND THE CURRENT LANGUAGE READS THAT THE FUNDING SHOULD BE REPLENISHED AT THE END OF THE SECOND SUBSEQUENT FULL FISCAL YEAR. SO WE WANNA BREAK THIS, UM, BREAK THIS DOWN, UM, INTO ITS DIFFERENT PIECES ON THE NEXT SLIDE. SLIDE EIGHT. SO SLIDE EIGHT SHOWS THE POLICY, THE WAY IT'S WORDED NOW, UM, WITH THE 20 MILLION AND THE, UH, GREATER OF THE 1% OR 20 MILLION, AND THEN THE, UH, THE LANGUAGE ABOUT THE SECOND FULL FISCAL YEAR. SO, UM, IN THE CONVERSATIONS AT THE TIME OF THE BUDGET, UM, WE DID, WE SUPPORT THE CHANGE OF THE POLICY, THE INCREASE TO THE MINIMUM BEING THE 1% OR THE 25 MILLION. UM, THE, THE CONCERN ON OUR END COMES WITH THE RESTORING FUNDS WITHIN THE 365 DAYS IN LIEU OF THE TWO FISCAL YEARS, AND KIND OF, UM, TALK ABOUT TIMING AND WHY WE FEEL THAT'S PROBLEMATIC FROM OUR STANDPOINT, UM, GOING FORWARD. SO ON THE NEXT SLIDE, SLIDE NINE, UM, THE WAY THE FEMA PUBLIC ASSISTANCE PROGRAM WORKS IS THAT IT'S A REIMBURSEMENT BASED GRANT PROGRAM. SO THE CITY, BY ITS NATURE, HAS TO COMPLETE THE WORK, UH, INCLUDING PERMANENT WORK, PAY THE VENDORS AND SUBMIT THE DOCUMENTATION, SHOWING PROOF OF PAYMENT TO FEMA AND TDO IN ORDER TO GET THE PROJECTS, UM, COMPLETELY OBLIGATED AND GET THE REIMBURSEMENTS RECEIVED BACK AND ULTIMATELY CLOSED OUT. UM, JUST TALKING ABOUT ON THE SECOND BULLET BULLET POINT, THIS CAN BE A LENGTHY, UM, PROCESS. EVEN [00:45:01] JUST TALKING ABOUT THE MOST RECENT DISASTERS THAT WE HAD, UH, THE DIRE AND HURRICANE BARREL, WE'RE STILL WORKING WITH FEMA TO COMPLETE AND OBLIGATE THOSE PROJECT WORKSHEETS, ALTHOUGH WE HAVE GOTTEN SOME ADVANCED FUNDING FROM THEM, AND THEY HAVE BEEN GOOD PARTNERS AS FAR AS TIMING THE PROCESS DOES, DOES TAKE TIME. THEY, THEY GO IN AND THEY ACTUALLY COME, UM, MOVING, SORRY, MOVING DOWN TO THE NEXT SLIDE. UM, FEMA ACTUALLY COMES IN TDO AND THEY GO THROUGH LINE BY LINE, LOOKING OVER WHERE WE ARE RIGHT NOW IS LOOKING AT HPD OVERTIME COSTS. THEY'LL EXAMINE ALL THE TIME CARDS, UM, FOR EACH INDIVIDUAL OFFICER THAT WORKED OVERTIME TO VALIDATE THAT TIME, TO VALIDATE THAT THE DOLLAR AMOUNT IS CORRECT. AND IT'S A VERY, IT'S A VERY TEDIOUS PROCESS. UM, IT'S CUMBERSOME, BUT IT'S NECESSARY TO MAKE SURE THAT WE DON'T HAVE ANY DE OBLIGATIONS OR LOSE OUT ON FUNDING. SO WE DO WANNA TAKE THE TIME TO FOLLOW THAT PROCESS AND MAKE SURE THAT WE'RE, UM, YOU KNOW, DOCUMENTING EVERYTHING THAT WE CAN. TYPICALLY WHAT WE SEE IS THAT IN THE PAST, IT IS MORE THAN 365 DAYS AFTER THE DISASTER EVENT, THAT WE WOULD HAVE FINALLY CLOSED OUT THOSE, UM, THOSE PROJECT WORKSHEETS. AND WHAT WE FEEL IS, YOU KNOW, NO LONGER A RISK OF DE OBLIGATION FROM FEMA AS FAR AS OUR, OUR REIMBURSEMENTS. SO ON THE NEXT SLIDE, BEST PRACTICES AND PITY COMPARISONS. COMPARISONS. UM, I KNOW WE TALKED ABOUT THAT IN THE PREVIOUS PRESENTATION. UM, THERE ARE CERTAINLY, UM, OTHER PEER CITIES THAT HAVE, OF COURSE, WE'RE TALKING ABOUT THE DOLLAR AMOUNT HIGHER, UM, THRESHOLDS. BUT IN TERMS OF THE TIME TO REPLENISHMENT, UM, THERE ARE, THERE ARE DEFINITELY CITIES AND BEST PRACTICES THAT ALLOW FOR THE REPLENISHMENT OF UP TO TWO YEARS OR SOMETIMES EVEN MORE. GFOA ACTUALLY ALLOWS UP TO A THREE YEAR REPLENISHMENT PERIOD FOLLOWING THE DISASTER FROM, FROM AN EXTREME EVENT. SO ON THE NEXT SLIDE, I DID WANT TO POINT OUT ANOTHER THING THAT, UM, GFOA ALSO RECOMMENDS. GFOA ALSO STRESSES THE IMPORTANCE OF INSURANCE, WHICH PLAYS AN EQUALLY IMPORTANT ROLE IN DISASTER RECOVERY IN ADDITION TO JUST HAVING CASH RESERVES. UM, SO ONE THING THAT WE REALLY HAVE WORKED TO IMPROVE SINCE HURRICANE HARVEY. UM, BACK AT THE TIME OF HURRICANE HARVEY, OUR TOTAL FLOOD INSURANCE COVERAGE LIMIT WAS A HUNDRED MILLION DOLLARS. AND THAT INCLUDED OUR CITY FACILITIES PLUS THESE, UH, FACILITIES THAT HOUSTON FIRST CORPORATION LEASES FROM THE CITY. UM, SO SINCE THAT TIME, UH, THE PREVIOUS ADMINISTRATION AND THIS ADMINISTRATION HAS CONTINUED ON WITH INCREASING THE, UM, COMBINED FLOOD COVERAGE, UH, FOR CITY PROPERTIES, WHICH WILL REALLY HELP WHEN WE HAVE, UM, AN EVENT THAT HAS DAMAGE TO OUR PROPERTY AS WELL AS I'LL TALK ABOUT BUSINESS ERUPTION. SO RIGHT NOW, UM, HISTORICALLY THAT A HUNDRED MILLION DOLLARS ARE OUR COMBINED FLOOD COVERAGE NOW TOTAL $600 MILLION, WHICH IS AN INCREASE OF 500 MILLION FROM THE TIME. UM, AND THAT, UM, THE COVERAGE SIMILARLY IS HIGH FOR NAME STORMS IN HURRICANE. SO THIS IS SOMETHING THAT THE ADMINISTRATION AND REGULATORY AFFAIRS DEPARTMENT HANDLES, UM, THE INSURANCE POLICIES FOR THE CITY, THEY COME ON AN ANNUAL BASIS TO, UM, GET COUNCIL APPROVAL FOR THE REFRESHED POLICY, LAYING OUT THE, THE POLICY, THE LIMITATIONS AND THE PREMIUMS THAT WE PAY. THE INSURANCE THAT WE HAVE ALSO COVERS BUSINESS INTERRUPTION INSURANCE, WHICH WE DID, UM, UTILIZE PART OF THAT DURING HURRICANE HARVEY WHEN, UM, OF COURSE WE HAD A LOWER LIMIT. SO THE BUSINESS INTERRUPTION, UM, I BELIEVE WAS PART OF THE LIMIT THAT WE HAVE. BUT NOW WE HAVE BUSINESS INTERRUPTION COVERAGE THAT WOULD ALLOW, UM, PROTECTION AGAINST LOST REVENUE DUE TO A STORM THAT WOULD DAMAGE PROPERTY. AND THE LIMIT ON THAT IS AN ADDITIONAL $596 MILLION. UM, AND THAT COVERS THE AIRPORT SYSTEM, GENERAL SERVICES AND, UM, HOUSTON FIRST CORPORATION, THE, THE FACILITIES THAT ARE MANAGED THERE. ON TOP OF THAT, THE CITY ALSO MAINTAINS TERRORISM, PROPERTY INSURANCE COVERAGE, UH, WITH THE $250 MILLION LOSS LIMIT, UH, FOR ALL OF OUR LOCATIONS AND PROPERTIES. AND I KNOW I'M TALKING ABOUT THESE HIGH DOLLAR AMOUNTS AND WHAT'S COVERED ALL OF THIS INSURANCE OBVIOUSLY COSTS MONEY, RIGHT? THE HIGHER THE LIMIT YOU WANT, THE MORE PREMIUM THAT YOU'RE GOING TO PAY JUST LIKE YOU WOULD ON YOUR OWN INSURANCE THAT YOU HAVE FOR YOUR, YOUR HOUSE OR YOUR CAR. UM, AND SO IN ADDITION TO THE AMOUNT OF MONEY THAT WE HAVE SEP SEPARATE AND SET ASIDE IN THE BUDGET STABILIZATION FUND, THE CITY IS SPENDING A SIGNIFICANT AMOUNT MAINTAINING THIS PROPERTY INSURANCE AS WELL. SO IN TERMS OF THE CURRENT STATUS OF THE BUDGET STABILIZATION FUND, UM, AS I MENTIONED, THE POLICY MENTIONS THAT YOU REPLENISH THE BUDGET STABILIZATION FUND, UM, WITHIN TWO FISCAL YEARS AFTER THE DATE OF THE EVENT. UM, SO WE TRIED TO PROACTIVELY LOOK AT, AT THE TIME WE PROPOSED THE BUDGET, TRIED TO PROACTIVELY LOOK AT WHEN WE KNOW WE DON'T HAVE TO REPLENISH THE FUND UNTIL FISCAL YEAR 27, BUT IS THERE AN AMOUNT THAT WE FEEL WE'RE FAR ENOUGH ALONG IN THE [00:50:01] FEMA PROCESS NOW OF VALIDATING THOSE TIMECARDS AND MAKING SURE THAT WE'RE GONNA GET THAT FEMA REVENUE TO REPLENISH AT LEAST PART OF THE BUDGET STABILIZATION FUND TO SET IT ASIDE. AND THE AMOUNT THAT WE FELT COMFORTABLE AT THE TIME WE PROPOSED AND ADOPTED THE BUDGET WAS AN ADDITIONAL $12 MILLION OUT OF THE, UM, THE TOTAL. SO THAT BROUGHT THE TOTAL BUDGET STABILIZATION FUND NOW IS, UH, PLANNED TO BE 14.4 MILLION BY THE END OF FISCAL YEAR 26. AND, UM, BASED ON I MENTIONED WHERE WE ARE WITH THE FEMA PROCESS, WE DON'T BELIEVE WE'RE GONNA BE ABLE TO REPLENISH THE BUDGET STABILIZATION FUND UP TO THE, THE 25 MILLION, ALTHOUGH WE SUPPORT THAT POLICY IN FISCAL YEAR 26 WITHOUT TAPPING INTO THE FUND BALANCE BECAUSE OF WHERE WE ARE WITH THE FEMA PROCESS. SO TYPICALLY LIKE THAT 12 MILLION WE ADDED IN FISCAL YEAR 26, THAT'S A TRANSFER COMING FROM, WE HAVE A SEPARATE DISASTER FUND SET ASIDE FROM THAT DISASTER FUND INTO THE BUDGET STABILIZATION FUND BECAUSE WE FEEL THAT WE'LL HAVE THOSE REIMBURSEMENTS FROM FEMA AT THAT TIME. UM, SO THE OTHER THING I DID WANNA MENTION THAT'S, UM, NOT ON THE SLIDE, BUT IT DOES PERTAIN TO TAPPING INTO THE FUND BALANCE OF THE GENERAL FUND IS COUNCIL MEMBER PECK'S, UH, BUDGET AMENDMENT 6.01, UM, THAT SHE PROPOSED AND THAT THE ADMINISTRATION SUPPORTED THAT STATED THAT IF THE ACTUAL FUND BALANCE IS HIGHER THAN THE EXPECTED, UM, FUND BALANCE AS OF THE PROPOSED BUDGET, THEN UM, 1% OF THAT DIFFERENCE WILL BE MOVED TO THE BUDGET STABILIZATION BUDGET STABILIZATION FUND. SO THAT'S ONE WHERE WE'RE GONNA BE ALREADY MONITORING THE FUND BALANCE. HOPEFULLY WE HAVE STRONG SALES TAX PERFORMANCE AND REVENUE PERFORMANCE THROUGHOUT THE YEAR, UM, TO CONTINUE TO, YOU KNOW, BUILD UP THAT FUND BALANCE AND BE ABLE TO TRANSFER SOME ADDITIONAL FUNDING TO THE BUDGET STABILIZATION FUND. SO AS FAR AS NEXT STEPS, UM, WE'RE GONNA CONTINUE TO REVIEW OTHER FINANCIAL POLICIES. THERE MAY BE SOME OTHER, UM, RECOMMENDATIONS THAT WE NEED TO MOVE FORWARD RELATED TO FINANCIAL REPORTING. UM, WE'RE GONNA BE, UM, WORKING IN CONSULTATION WITH THE CONTROLLER'S OFFICE ON THOSE AS THEY AFFECT THE ANNUAL COMPREHENSIVE FINANCIAL REPORT. AND THEN, UM, ULTIMATELY WE'LL COME BACK TO CITY COUNCIL TO PASS AN UPDATED ORDINANCE ON THE FINANCIAL POLICIES. AND THAT CONCLUDES MY PRESENTATION. THANK YOU VERY MUCH, DIRECTOR COUNCILMEMBER CAYMAN. THANK YOU. AND I'D ASK FOR A LITTLE ADDITIONAL TIME SINCE WE'RE DISCUSSING SURE. UH, THE PROPOSED BUDGET AMENDMENT DIRECTOR. THANK YOU. UM, WE'VE BEEN EAGERLY AWAITING THIS CONVERSATION SINCE, UH, WE TOOK UP THE BUDGET. AND ONE OF THE THINGS, IF I CAN LAY OUT MADAM CHAIR, THE REASON I BELIEVE IT'S SO IMPORTANT TO HAVE OF INCREASING THE AMOUNT AS WELL AS HOW FREQUENTLY WE ARE REIMBURSING IT, AND I APPRECIATE THE COMMITMENT TO THE INCREASE IT TO 25 MILLION AND, UH, AS I ASKED THE CONTROLLER'S OFFICE, RIGHT, IT COMPARED TO OTHER CITIES, IT LIKELY NEEDS TO BE MORE. AND WE'RE TRYING TO BE SENSITIVE TO THE CONSTRAINTS THAT WE ARE FACED WITH OUR OWN BUDGET RIGHT NOW. BUT WITH THAT, WHEN WE TALK ABOUT, UH, FEDERAL REIMBURSEMENTS, WE ARE CONTINUING TO RELY ON REIMBURSEMENTS TO REPLENISH, UM, THE FUND. AND ONE, AS I SAID BEFORE, WE CANNOT NECESSARILY RELY ON FEMA FOR REIMBURSEMENT RIGHT NOW. TWO, IT TAKES A REALLY LONG TIME, BUT WE KNOW FROM THE TIMELINE OF HOUSTON'S DISASTERS, A DISASTER DOESN'T WAIT TWO YEARS NECESSARILY. IT DOESN'T EVEN WAIT SIX MONTHS NECESSARILY. SO THE IMPORTANCE OF HAVING THOSE DOLLARS SET ASIDE, PROTECTED AND READY TO GO IS ALL THE MORE CRITICAL, ESPECIALLY WHEN IT'S SUCH A LOW AMOUNT. LET'S SAY WE WERE AT 50 MILLION, OKAY, MAYBE THERE'S SOME WIGGLE ROOM. SO MY CONCERN REMAINS THAT WITH SUCH A LOW AMOUNT THAT BARELY SKIMS THE SURFACE OF WHAT IS NEEDED FOR DISASTER RECOVERY, AND THEN OUR RELIANCE CONTINUOUSLY ON FEDERAL REIMBURSEMENT TO GET US THROUGH THE NEXT ONE. THAT'S WHAT GIVES ME PAUSE RIGHT NOW. UM, SO I'M SURE THERE'S MORE TO DISCUSS, BUT I, I WANNA BE VERY OPEN AND CLEAR THAT I'M GONNA CONTINUE TO PUSH FOR AN ANNUAL REPLENISHMENT, OR IF WE WANNA COME TO THE TABLE AND SAY, OKAY, MAYBE WE CAN DO A LITTLE BIT MORE, NO PROBLEM. BUT AGAIN, WE'RE RELYING ON SUCH A LOW AMOUNT AND WE CANNOT RELY ON FEMA TO NECESSARILY ALWAYS GET THAT MONEY BACK. UM, ADDITIONALLY, DIRECTOR, UH, THE ONE THING YOU SAID, I JUST WANNA BE CLEAR, UM, ON SLIDE 12 WITH THE, UH, SECOND BULLET POINT BASED ON ANALYSIS PERFORMED, FINANCE DEPARTMENT IS UNABLE TO REPLENISH THE BUDGET STABILIZATION FUND UP TO 25 MILLION IN FY 26 WITHOUT TAPPING INTO THE FUND BALANCE. MM-HMM . UM, WHICH WE UNDERSTAND, RIGHT? I DO WANNA POINT TO, DURING THE BUDGET COMMITTEE PROCESS, I HAD SAID WE WILL HAVE AT LEAST 10 [00:55:01] POINT I I WAS MAKING SURE WE WERE CONFIRMING THIS, UH, AND WE HAD AN UNDERSTANDING WE'LL HAVE AT LEAST 10.8 MILLION INCLUDED IN THIS YEAR'S BUDGET. WHILE WE ARE NOT PASSING THIS RIGHT NOW, WE WILL SAFEGUARD THAT AMOUNT FROM THE GENERAL FRONT FOR WHEN WE TAKE UP THE FINANCIAL POLICY SO THAT IT WILL AT LEAST BE 25 MILLION FOR THIS FISCAL YEAR. AND THEN THE MAYOR SAID, WE WILL. SO DOES THAT MEAN THAT Y'ALL HAVE SAFEGUARDED THOSE DOLLARS THAT WE HAD ALIGNED ON TO BRING IT UP TO 25 MILLION? SO THE ADDITIONAL MONEY TO BRING IT UP TO 25 MILLION WILL HAVE TO COME FROM THE FUND BALANCE IF THAT'S THE, UH, BECAUSE, BECAUSE OF WHERE WE ARE WITH THE FEMA REIMBURSEMENT PROCESS. NOW, IT COULD BE THAT, YOU KNOW, WE GO THROUGH THE PROCESS AND BY THE END OF FISCAL YEAR 26, WE'LL HAVE MORE FUNDING REALIZED FROM FEMA. BUT AT THIS POINT, IT WOULD HAVE TO COME FROM THE FUND BALANCE. AND I MEAN, I KNOW THAT THE FUND BALANCE IS SOMETHING I TRY TO, I TRY TO GUARD WITH MY LIFE, I FEEL . UM, THE, THE WAY IT'S LOOKING NOW FOR FISCAL YEAR 25 ENDING FUND BALANCE, IT'S ABOUT 16.7%, UM, WHICH IS OF COURSE IN EXCESS OF OUR 7.5%. THAT'S FOR FISCAL YEAR 25. AND THEN WE'RE PLANNING TO USE ABOUT, YOU KNOW, 75 MILLION OF THAT TO DRAW TO CLOSE THE BUDGETARY GAP IN FISCAL YEAR 26. AND THAT WOULD BRING IT DOWN TO ABOUT 13.6%. UM, SO THOSE ARE THE OVERALL, YOU KNOW, THE OVERALL NUMBERS OF WHERE THE FUND BALANCE IS, WHERE IT WOULD HAVE TO COME FROM AT THE END OF THE DAY WHEN A DISASTER HAPPENS, LIKE, UH, IF WE TAKE THE WINTER STORM THAT WE HAD, UM, LAST SEASON FOR EXAMPLE, THAT WAS NOT A DECLARED DISASTER. WE DID INCUR COSTS RELATED TO WARMING CENTERS OVER TIME. AND SINCE THERE WAS NO DECLARED DISASTER, THE DEPARTMENTS STILL PERFORM THE FUNCTION THAT THEY NEED TO RIGHT? FOR DISASTER RECOVERY. AND THEY FUNDED IT OUTSIDE, INSIDE THEIR DEPARTMENT BUDGETS, RIGHT? SO THAT MEANT THEY HAD TO EITHER, YOU KNOW, DELAY FILLING OTHER POSITIONS OR KIND OF STILL ATTEMPT TO STAY WITHIN THEIR OVERALL BUDGET, UM, WHEN THERE'S NO REIMBURSEMENT BACK. WE HAVE TO LIVE WITHIN THE BUDGET THAT WE HAVE. UM, AT THE END OF THE DAY, IF THERE'S TOO MUCH IN EXPENDITURES THAT YOU CAN'T MAKE OTHER REDUCTIONS, IT REALLY, YOU KNOW, COMES AT A FUND BALANCE OR WOULD RESULT IN FEWER DOLLARS THAT GOT SENT TO FUND BALANCE AT THE END OF THE YEAR IF THERE WERE OTHER VACANCY SAVINGS. SO, TO ME, THE MONEY IS EITHER SITTING IN THE FUND BALANCE, SITTING IN THE BUDGET STABILIZATION FUND. IT'S KIND OF, YOU KNOW, MOVING FROM ONE ONE POT TO THE OTHER. RIGHT. I GET IT. AND, BUT AGAIN, WHEN WE DO HAVE SUCH SIGNIFICANT BUDGETARY CONSTRAINTS, WHAT YOU'RE SAYING IS WHEN IT'S NOT A DECLARED DISASTER, WHEN WE CAN'T RELY ON REIMBURSEMENT, DEPARTMENTS ARE LEFT TO EAT THAT COST AT THE SACRIFICE OF OTHER SERVICES POTENTIALLY. AND AS THE FOURTH LARGEST CITY RANKED NUMBER ONE BY FEMA NOW FOR NATURAL DISASTER RISK, WE HAVE TO BE PLANNING MORE, UM, AND SETTING ASIDE THOSE DOLLARS AND SAFEGUARDING THOSE DOLLARS AS A COUNCIL. SO, UM, I APPRECIATE THIS. I I, I'LL GO BACK IN QUEUE, BUT SURE. THAT WAS A BONUS. TWO MINUTES, MAN. THANK YOU VERY MUCH. , COUNCIL VICE, VICE MAYOR PRO TEM PECK. THANK YOU CHAIR, AND THANK YOU DIRECTOR FOR THE PRESENTATION. UM, AFTER WE DO GET THE REIMBURSEMENT, UM, FROM FEMA, HOW LONG DOES IT TAKE THEN, AT THAT POINT FOR IT TO GO BACK TO THE BUDGET STABILIZATION FUND? IS THAT AUTOMATIC OR ARE THERE OTHER PROCESSES IN PLACE THAT TAKE SOME TIME? UM, I DON'T, I DON'T THINK IT'S REALLY PROCESSES THAT TAKE TIME. UM, IT'S A MATTER OF MAKING THE ENTRY AND SAPI KNOW I'M TALKING DETAIL NOW, BUT, UM, NO. SO WHAT WE TYPICALLY DO IS, UM, WE WILL LOOK AT, OKAY, HOW MUCH DID WE DRAW, UH, WHAT DISASTER WAS IT FOR? UM, THE REVENUE COMES IN. THE KEY PIECE FOR US IS MAKING SURE THAT THE PROJECT WORKSHEET IS NOT JUST OBLIGATED, BUT WE LOOK AT CLOSEOUT A LOT OF TIMES BECAUSE UNTIL A PROJECT WORKSHEET IS CLOSED OUT, FEMA COULD SAY, WELL, I'M GONNA DELIGATE FROM THAT. MAYBE YOUR TIME CARDS AREN'T, YOU KNOW, YOU SAID YOU HAD 5 MILLION OF TIME CARDS. WE ONLY SEE 4 MILLION, SO WE'RE GONNA TAKE AWAY A MILLION. SO UNTIL WE REALLY CLOSE OUT THAT PROJECT WORKSHEET, THAT'S THE TIME THAT WE LIKE TO WAIT TO REIMBURSE THAT, YOU KNOW, SEND THAT MONEY BACK FROM THE DISASTER FUND INTO THE BUDGET STABILIZATION FUND. OKAY. SO WE'RE NOT TALKING MONTHS AND MONTHS AFTER IT'S CLOSED OUT? NO. OKAY. NO. UM, WHEN WE SPEND MORE THAN THE BUDGET STABILIZATION FUND, FOR EXAMPLE, IN HARVEY, WHEN WE WERE, YOU KNOW, TAKING MONEY FROM OTHER AREAS, UM, TO PAY FOR THINGS WHEN WE GET REIMBURSED ARE, IS THAT MONEY GETTING PAID BACK JUST BASED ON WHICH FUND IT CAME FROM? OR IS THERE A PRIORITY FOR IT TO GO TO THE BUDGET STABILIZATION FUND BEFORE IT GOES TO LIKE THE GENERAL FUND OR SOME OTHER FUND? SO IT, FOR HARVEY, FOR EXAMPLE, WE'RE LOOKING AT THE FUNDING GOING BACK TO THE FUNDING SOURCE THAT IT CAME FROM. SO LET'S SAY FOR EXAMPLE, UM, UH, THE COURTS PROJECT, OKAY, SO WE'RE STILL IN THE PROCESS OF BUILDING OUT THE COURT. WHEN FEMA REIMBURSES US FOR THEIR SHARE OF THAT COURT, [01:00:01] THAT FUNDING IS BASICALLY GONNA GO TO OFFSET. 'CAUSE WE ARE GONNA HAVE TO, UM, DEBT FINANCE THAT PROJECT GO TO OFFSET THE DEBT PAYMENT FOR THE COURT. UM, JUST AS AN EXAMPLE. UM, BUT IN THE CASE, LIKE, UM, LET'S SAY THE WATER UTILITY HAD A PROJECT WORKSHEET FOR HARVEY, THE FUNDING COMES IN, IT WOULD GO BACK TO THE WATER UTILITY BECAUSE THEY FRONTED THE MONEY FOR IT. SO INSTEAD OF MAYBE SAYING THAT IT HAS TO GET RE REIMBURSED OR, OR PAID, UM, FULLY WITHIN TWO YEARS, WHAT WOULD BE THE RAMIFICATIONS OF US INSTEAD SAYING WHEN WE GET REIMBURSED FROM FEMA, THAT THAT HAS TO BE A PRIORITY TO GO BACK TO THE BUDGET STABILIZATION FUND UP TO THAT 20 OR $25 MILLION BEFORE ANYTHING ELSE GETS PAID BACK. THERE ARE CASES WHERE I'D HAVE TO GO BACK AND SEE WHICH DISASTER IT WAS, BUT THERE ARE CASES WHERE THE FEMA DOESN'T REIMBURSE US THE FULL AMOUNT OF WHATEVER THE DISASTER WAS. AND LET'S TAKE FOR EXAMPLE, THE LOCAL SHARE. UM, WE HAVE LOCAL SHARE ON PROJECTS. TYPICALLY IT'S 75% FEDERAL SHARE, 25% LOCAL SHARE. IF THE DISASTER FUND PAID THE INVOICES, FEMA REIMBURSED US BACK TO 75%. SOME MONEY IS GONNA COME BACK TO THE BUDGET STABILIZATION FUND FROM THE DISASTER FUND. BUT, BUT THE GENERAL FUND IN THAT CASE MAY HAVE TO SUPPLEMENT AND TAKE FROM GENERAL FUND FUND BALANCE TO REPLENISH BUDGET STABILIZATION. SO IT'S NOT ALWAYS THAT YOU'RE GONNA GET EVERY DOLLAR BACK FROM FEMA THAT YOU SPENT. OKAY. AND CHAIR, I THINK THAT THERE, YOU KNOW, AS WE'RE LOOKING AT THE FINANCIAL POLICIES, THAT MIGHT BE SOME AVENUE TO KIND OF TAKE A DEEPER DIVE INTO LOOKING AT, UM, TO SEE IF MAYBE THERE'S A WAY TO JUST PRIORITIZE THAT MONEY TO GO BACK TO THAT FUND RATHER THAN OTHER PLACES. BUT I, I HEAR WHAT YOU'RE SAYING TOO ABOUT THERE COULD BE ISSUES WITH THAT AS WELL. THANK YOU. THANK YOU, MAYOR PARTTIME, CASTEX TATUM. THANK YOU, CHAIR. I, I WANNA JUST KIND OF GET A, A BETTER UNDERSTANDING OF HOW LONG, UH, THOSE REIMBURSEMENTS TAKE, BECAUSE WE ARE JUST TALKING ABOUT, UM, MOVING THIS MONEY FROM FUND BALANCE AND THEN MAKING OUR DEFICIT BIGGER. AND THEN THE PREVIOUS CONVERSATION WE JUST HAD IS MAKING SURE WE HAVE MORE MONEY IN THE FUND BALANCE. SO THE BOTTOM LINE IS WE JUST NEED MORE MONEY. YES, . UM, BUT I MEAN, I FEEL LIKE WE'RE JUST MOVING MONEY TO MOVE MONEY. UM, WHAT'S, WHAT'S THE, I GUESS, MOST PRUDENT PLACE FOR US TO HOLD THE MONEY? BECAUSE IF WE MOVE MORE MONEY HERE, BUT WE REALLY ARE SAYING WE WANT MORE MONEY IN OUR FUND BALANCE, WHY WOULD WE WANNA MOVE THIS MONEY FROM OUR FUND BALANCE TO THE, TO THE RESERVE? I, IT, IT, IT'S COMPLICATED. IT IS. I, I AGREE WITH YOU THAT AT THE END OF THE DAY, IT'S NOT, IT'S NOT GENERATING MORE MONEY. IT'S THE SAME MONEY. IT'S IN THIS POCKET OR IT'S IN THIS POCKET. WHICH POCKET IS IT IN? UM, I THINK THAT WHEN, WHEN THE RATING AGENCIES LOOK AT IT, WHAT, AT LEAST WHAT I SPEND A LOT OF TIME TALKING TO THEM ABOUT IS OUR FUND BALANCE. THEY DO, THEY WANNA MAKE SURE WE HAVE A BUDGET STABILIZATION FUND. YES. BUT I DON'T BELIEVE I'VE EVER GOTTEN THE QUESTION FROM THEM, HAVE YOU REFILLED IT BY THIS DAY? OR HOW MUCH, WHAT IS YOUR PERCENTAGE? THEY REALLY FOCUS ON THE FUND BALANCE, UM, THE GENERAL FUND FUND BALANCE SEPARATE FROM THE BUDGET STABILIZATION FUND, FUND BALANCE. UM, AND SO TO ME, LEAVING IT IN THE GENERAL FUND FUND BALANCE, THE FUNDING IS STILL THERE. IT'S STILL GOING TO BE AVAILABLE. LIKE I MENTIONED, AT THE END OF THE DAY, THE FIRST RESPONDERS ARE GONNA GO OUT, THE DEBRIS IS, YOU KNOW, THE SOLID WASTE ARE GONNA GO OUT. THEY'RE GONNA PICK UP THE DEBRIS AND THE FUNDING. IF IT'S NOT AVAILABLE IN THE BUDGET STABILIZATION FUND, AND WE'RE STILL WAITING ON FEMA, IT'S GONNA ULTIMATELY COME FROM THE FUND BALANCE. SO WHETHER YOU TRANSFER IT FROM THE GENERAL FUND FUND BALANCE TODAY INTO BUDGET STABILIZATION FUND, OR TOMORROW IT'S THE SAME DOLLAR. UM, I THINK THAT PART OF WHAT COUNCIL MEMBER KAMAN MENTIONED ABOUT THEN IT IMPACTS OTHER SERVICES. YOU KNOW, THAT'S WHY WE WENT THROUGH THE ERNST AND YOUNG STUDY. THAT'S WHY WHEN WE, UH, UH, PROPOSED THE, THE BUDGET AND IT GOT ADOPTED, IT'S A DECREASE OF EXPENDITURES FROM ONE YEAR TO THE NEXT. TRYING TO FIND THE EFFICIENCIES, FIND THE SAVINGS AS MUCH AS WE CAN SO THAT WE CAN PRESERVE THE FUND BALANCE, UM, IF NEEDED. YOU KNOW, THE OTHER PART OF IT, LIKE, UM, UH, DEPUTY CONTROLLER JONES MENTIONED IS THE MOST OF OUR GENERAL FUND IS SPENT ON PUBLIC SAFETY. PUBLIC SAFETY IS IMPORTANT. THAT'S A READINESS COST, RIGHT? I MEAN, IF YOU HAVE ALL YOUR MONEY SQUIRRELED AWAY INTO A SAVINGS ACCOUNT AND YOU DIDN'T USE IT TO HAVE A CONTRACT TO RECRUIT AND RETAIN PUBLIC SAFETY, WHO ARE THE PEOPLE THAT ARE GONNA BE PERFORMING THE SERVICES IN THE CASE OF THE DISASTER? I MEAN, YOU KIND OF HAVE TO HAVE A BALANCE BETWEEN BEING ABLE TO RECRUIT AND RETAIN A STRONG WORKFORCE TO PROVIDE THOSE SERVICES VERSUS HAVING THE MONEY SAFE DECIDE. SO I THINK IT IS A BALANCE AND, UM, I, I APPRECIATE COUNCIL MEMBER CAYMAN, UM, MAKING SURE THAT WE HAVE THAT READINESS. UM, BECAUSE AS SHE MENTIONED, IT DOES TAKE A WHILE TO GET FEMALE REIMBURSEMENT. RIGHT. [01:05:01] BUT IT IS A BALANCE. I, I, I LIKE THE IDEA OF US GOING TO THE 25 MILLION, BUT I ALSO LIKE THE FLEXIBILITY AND WOULD PREFER TO SEE THAT MONEY STAY IN OUR, OUR, UM, FUND BALANCE. JUST FY COUNCIL MEMBER DAVIS. THANK YOU MADAM CHAIR. UM, MY MADAM DIRECTOR, I WAS, I RECALL, UH, WAS LAST YEAR, YOU REMEMBER I ASKED ABOUT THE 100 MILLION I THINK THAT FEMA OWED FROM THE PREVIOUS DISASTER, RIGHT? THAT, UH, WE HAD THE CONVERSATION ABOUT THE A HUNDRED MILLION DOLLARS, WHICH IS THE CONCERN. AND I THINK WHAT COUNCIL MEMBER CAME AND THEN WHAT MAYOR PRO TIM WAS JUST ASKING THE STABILIZATION FROM THE BALANCE FROM THE FUND. UM, I SHOULDN'T WE BE CONCERNED ABOUT THE TIMEFRAME? I MEAN, I KNOW WHAT, WHAT IS THE NORM OF THE REIMBURSEMENT? MM-HMM . WE, YOU KNOW, 'CAUSE THAT'S SURE. UH, REIMBURSEMENTS ARE, UM, FASTER FOR WHAT WE CALL NON-PERMANENT WORK. SO YOU GET REIMBURSEMENT FASTER FOR DEBRIS REMOVAL. AND THEN WHAT FEMA CALLS CATEGORY B EMERGENCY PROTECTIVE MEASURES, WHICH IS LIKE OVERTIME, UM, IT TAKES LONGER TO GET REIMBURSEMENT FOR A PERMANENT WORK TYPE OF PROJECT. SO FOR EXAMPLE, LIKE THE COURTS, THEY'RE ONLY GONNA REIMBURSE US BACK AFTER WE SPEND THE MONEY. UM, AND IT TAKES YEARS TO, TO SPEND A CAPITAL PROJECT. SO IT REALLY DEPENDS ON THE TYPE OF WORK AND THE DISASTER TYPE THAT'S NEEDED. SO, UM, I WOULD SAY DEBRIS REMOVAL, THEY REIMBURSE MOST QUICKLY. AND FEMA HAS ALSO, I HATE TO USE HISTORY TO PREDICT THE FUTURE, BUT ALL I CAN SPEAK OF IS HISTORY, HISTORICAL. THEY HAVE WORKED WITH US ON ADVANCING FUNDS. MM-HMM . UM, AND THEN WITH THE, UH, THE DIRECT DIRETO AND HURRICANE BARREL LAST YEAR, WE ALSO PARTNERED WITH THE STATE TO TAP INTO THE, UH, TCEQ. THEY HAVE A SOLID WASTE FUND THAT ALLOWED US TO COVER THE LOCAL SHARE OF THOSE DISASTERS FOR THE DEBRIS REMOVAL, WHICH WAS CRITICAL. SO, BACK TO YOUR QUESTION, THE TIMING OF THE REIMBURSEMENT REALLY DOES DEPEND ON THE TYPE OF WORK. OKAY. MM-HMM . OKAY. SO WHEN COUNCILMAN PEC ASKED A QUESTION ABOUT THE, THE DIFFERENT DEPARTMENT, WHEN THE RE REIMBURSEMENT COMES BACK, THEN, DOES THAT COME TO US DECIDE WHERE THAT REIMBURSEMENT GOES IN REGARDS TO WHAT WAS, WE TYPICALLY WOULD SEND IT TO THE FUND THAT ADVANCED THE MONEY. THAT WHAT? ADVANCED THE MONEY. SO LET'S SAY, UM, UM, A PUBLIC PUBLIC WORKS FUND ADVANCED THE MONEY MM-HMM . TO REPAIR ONE OF THEIR FACILITIES. WHEN THE FEMA SENDS THE MONEY FOR THAT PROJECT WORKSHEET, IT WOULD GO BACK TO THAT DEPARTMENT FOR THAT FUND. UM, IN THIS CASE, THE, WHAT WE'RE TALKING ABOUT REPLENISHING THE BUDGET STABILIZATION FUND, THIS DRAW WAS, UM, MADE REALLY TO COVER THE DERECHO AND HURRICANE BARREL COSTS, UM, FOR DEBRIS REMOVAL. AND OVER TIME WAS REALLY THE PRIMARY FOCUS OF THAT DISASTER. OKAY. ALRIGHT. THANK YOU. COUNCIL MEMBER RAMIREZ. THANK YOU, MADAM CHAIR. CURIOUS DIRECTOR. UM, WE PAY A LOT OF MONEY FOR INSURANCE. DO THE INSURANCE COMPANIES LOOK AT OUR BUDGET STABILIZATION FUND AT ALL? I, I DON'T KNOW. I MEAN, I COULD, I COULD DEFINITELY REACH OUT TO A RA AND ASK IF THEY HAVE HAD THOSE CONVERSATIONS. UH, THE A RA DEPARTMENT IS THE ONE THAT REALLY WORKS WITH THE, WITH THE INSURANCE PROVIDERS, UM, ON AN ANNUAL BASIS. BUT I HAVEN'T, NOT THAT I'M AWARE OF. IT WOULD SEEM LIKE THAT MIGHT POTENTIALLY RESULT IN SOME LOWER PREMIUM COST IF THEY SAW WE WERE BEING RESPONSIBLE AND, AND, UM, PREPARING FOR THE NEXT DISASTER. WE, WE ALL KNOW WE'RE GONNA HAVE ANOTHER DISASTER. IT'S JUST A MATTER OF TIME. MM-HMM . AND WE'LL HAVE TO DI DIP INTO THIS FUND. UH, I DON'T THINK ANYBODY WOULD DISPUTE THAT. SO IT SEEMS TO ME THE, THE DIFFERENCES IN HOW LONG IT TAKES TO GET REIMBURSEMENT. MM-HMM . I DO KNOW THAT A RA HAS A LOT OF ROBUST CONVERSATION WITH THE INSURANCE PROVIDERS ABOUT MITIGATION MEASURES WE'VE DONE IN THE PAST, THINGS WE DO TO PROTECT OUR FACILITIES. UM, I'M JUST NOT CERTAIN IF THAT, IF THAT, UH, TOPIC IS ONE OF THEM, BUT MM-HMM . I'LL BE GLAD TO FOLLOW UP WITH THEM. SO, SO THE REIMBURSEMENTS CAN TAKE LONGER THAN 365 DAYS IS, IS WHAT YOU'VE SAID? YES. UP TO TWO YEARS AND POTENTIALLY MORE. YES. SO, FOR EXAMPLE, NOW ON, UM, THE DIRETO AND THE BARREL ON THE PROJECT WORKSHEETS FOR THE OVERTIME FOR HPD AND HFD, WE STILL HAVEN'T RECEIVED ALL THE REIMBURSEMENT FROM FEMA ON THOSE. THEY'RE GOING THROUGH THE PROCESS. I DON'T BELIEVE THAT IT'S STALLED, BUT THEY'RE IN THE PROCESS OF REVIEWING THE TIME CARDS RIGHT NOW. AND IT'S BEEN MORE THAN 365 DAYS FROM THAT DISASTER. I, I MEAN, IF THE REIMBURSEMENT, UH, DELAY CAUSED US TO GET INTO A FINANCIAL BIND, I MEAN, THERE ARE OTHER MEASURES WE COULD TAKE. ARE THERE NOT, UH, [01:10:01] THERE ARE CERTAIN EMERGENCY BORROWINGS THAT THE CITY CAN DO, UM, THAT WE LOOKED INTO AFTER HURRICANE HARVEY. OTHER WAYS TO ACCESS ADDITIONAL FUNDING? UM, IT WOULD MEAN ISSU, YOU KNOW, ISSUING DEBT, BASICALLY LIKE AN EMERGENCY NOTE IS WHAT IT'S CALLED UNDER STATE LAW. UH, THERE ARE OTHER OPTIONS, OF COURSE, UM, TO EXPLORE. AND THEN, AS I MENTIONED, UH, IF IT'S SOMETHING THAT WE FEEL WE CAN SUSTAIN AS FAR AS PULLING FROM FUND BALANCE, THAT'S SOMETHING THAT HAPPENED. LIKE, FOR EXAMPLE, WITH THE WINTER STORM, RIGHT? AND STATE LAW DOES ALLOW US IN, IN THE FISCAL YEAR FOLLOWING, UH, A NATURAL DISASTER TO A RAISE ADDITIONAL REVENUE. I THINK THE COUNTY DID THAT, ISN'T THAT RIGHT? THEY DO. AND OUR LOCAL CAP ALSO ALLOWS US TO BRING IN ADDITIONAL REVENUE IF NEEDED IN THE CASE OF A DISASTER. RIGHT. SO, I MEAN, I, I THINK A BUDGET STABILIZATION FUND IS, IS A REALLY GOOD IDEA. AND HAVING IT, UM, WHERE IT NEEDS TO BE IS, IS A REALLY GOOD IDEA AS WELL. SO I'M SYMPATHETIC TO, UM, COUNCIL MEMBER CAYMAN'S AMENDMENT. THANK YOU. COUNCIL MEMBER MARTINEZ. THANK YOU. YOU CHAIR, UH, DIRECTOR, UH, HAVE, HAVE Y'ALL LOOKED AT, UH, THE RECENT DR UH, FUNDING THAT, UH, TAKES INTO CONSIDERATION MITIGATION, THE, UM, DEPO DEBRIS REPOSITORY ACQUISITION, UH, DEVELOPMENT PROGRAM, AND THEN THE VEGETATION MANAGEMENT. WE USUALLY SPEND A LOT OF MONEY, UM, ON THE TAIL END. WELL, ONCE A DISASTER HAPPENS. BUT WHAT DOES THAT, HOW DOES THAT IMPACT WHAT WE WOULD NORMALLY BE PUTTING OUT, UH, DURING A DISASTER? MM-HMM . UM, I HAVE TO GET WITH THE, WITH THE TEAM ON EXACTLY THE DETAILS OF THAT. 'CAUSE OF COURSE, WE HAVE TO STAY WITHIN THE, THE GUIDELINES LAID OUT BY HUD. UM, BUT WHAT I CAN SAY IS THAT TO ME, PART OF READINESS IS MAKING SURE THAT YOU HAVE THE STAFF AND THE VEHICLES AND THE EQUIPMENT NECESSARY. ESPECIALLY, UM, LIKE ON THE DEBRIS REMOVAL, LIKE YOU MENTIONED. UM, YOU KNOW, IF YOU DON'T HAVE THE STAFF AND THE EQUIPMENT PURCHASED AHEAD OF TIME, OR A CONTRACTUAL VEHICLE IN PLACE THAT WE PROCURE AHEAD OF TIME, UM, TO HAVE SOMETHING IN PLACE, THEN IT'S DIFFICULT TO RESPOND TO A DISASTER AT THE TIME. IS IT FAIR TO SAY THAT, UM, IF WE DID NOT HAVE THESE DOLLARS, THAT WE WOULD HAVE TO EVENTUALLY LOOK FOR A REIMBURSEMENT IN THE FUTURE, UH, FROM, FROM HUD? OH, SURE. UM, SO, OR, OR FEMA IN THE CASE, OR FEMA. RIGHT. AND SO WE WOULD, WE ESSENTIALLY ARE HELPING OURSELVES OUT BY MAKING SURE THAT WE'RE HAVING THESE DOLLARS AHEAD OF TIME. UM, 'CAUSE I, I AGREE. I THINK THAT, YOU KNOW, WE DEFINITELY NEED THE RAINY DAY FUND FOR THE RAINY DAY FUND, UH, THAT WE ALREADY HAVE. UM, AND I AM SYMPATHETIC TO MAKING SURE THAT WE HAVE THOSE DOLLARS AVAILABLE. BUT I THINK AS MUCH AS POSSIBLE THAT WE CAN CONTINUE TO BE, UH, FORWARD THINKING AND ADDRESSING THESE, THESE ISSUES, UH, UM, IT'S DEFINITELY HELPFUL AS WELL. UM, BUT I'D, I'D LIKE TO SEE MORE, UM, DETAIL AS TO HOW THIS IS GONNA BE HELPFUL. UM, YOU KNOW, ENSURING THAT WE END UP SPENDING A LOT OF THE DOLLARS, UH, WHEN A DISASTER HAPPENS, DIRECTOR ON THE INSURANCE. UH, THIS PAST MARCH WE, WE SPENT ABOUT $24 MILLION ON PREMIUM FOR ALL OUR BUILDINGS, NOT INCLUDING THE HOUSTON FIRST PROPERTIES, BUT FOR OUR OTHER $12 BILLION WORTH OF BUILDINGS AND PROPERTIES THAT WE HAVE. YES, THAT'S RIGHT. HOW DOES INSURANCE PLAY INTO ALL THIS? SO WE HAVE A DAMAGED BUILDING AND IT'S INSURED BECAUSE WE PAID THIS $24 MILLION PREMIUM MM-HMM . AND WE, HOW SOON DO THOSE COME IN? IS, DOES THAT COVER OUR 25% MATCH? HOW, HOW DOES THAT WORK WITH THE PROJECT WORKSHEETS AND WHAT WE GET FROM FEMA? HOW DOES INSURANCE PLAY INTO THIS? SO THE LAST TIME WE HAD A MAJOR DRAW ON OUR POLICY, UM, THAT I CAN RECALL WAS DURING HARVEY. UM, AND THEY BASICALLY, THE INSURANCE PROVIDER WANTS TO VERIFY THAT YOU KIND OF, YOU KNOW, MET YOUR DAMAGE REQUIREMENT, THERE'S A DEDUCTIBLE. UM, AND THEN SHORTLY THEREAFTER, THEY SENT US, UM, BASICALLY THE A HUNDRED MILLION DOLLARS AND SAID, OKAY, YOU DECIDE HOW YOU'RE GONNA SPLIT IT UP. UM, AS FAR AS, BECAUSE WE, OUR DAMAGE THRESHOLD WAS SO FAR IN EXCESS OF THAT A HUNDRED MILLION DOLLARS. RIGHT. UM, THAT WAS AN EXCEPTIONAL EVENT. UM, FROM FEMA STANDPOINT THOUGH, FEMA DOESN'T ACTUALLY SEE THAT INSURANCE, UM, MONEY AS PART OF THE LOCAL SHARE. THEY MAKE YOU TAKE AN INSURANCE DEDUCTION AS PART OF THE FEDERAL SHARE, AND THEN YOU STILL HAVE TO COVER THE LOCAL SHARE COST, HOWEVER FEMA SAYS. SO THAT, SO IT GOES INTO THE 75%? IT DOES. LIKE, IT'S LIKE WHATEVER WE GET FROM INSURANCE IS DEDUCTED FROM THE 75% WE'LL GET FROM FEMA. IT DOES. YES. AND THEN WE HAVE TO USE OUR OWN SOME OTHER FUNDS FOR THE 25% MATCH. CORRECT. OKAY. HOWEVER, UM, FEMA ALSO SAYS THAT YOU HAVE TO, YOU HAVE TO MAINTAIN INSURANCE. AND IF IT'S A FACILITY THAT FLOODED IN THE PAST THAT FEMA PAID TO, [01:15:01] UH, HELP REPAIR IN THE PAST AND YOU DON'T MAINTAIN INSURANCE ON IT, THEN THAT PROPERTY IS NO LONGER ELIGIBLE FOR FEMA REIMBURSEMENT IN THE FUTURE. AH, OKAY. AND YOU, YOU GAVE AN EXAMPLE. YOU SAID WE USED BUSINESS INTERRUPTION INSURANCE. MM-HMM . FOR WHAT, WHAT WAS THE EXAMPLE? UM, DURING HARVEY, UM, THE THEATER DISTRICT GARAGES THAT WERE FLOODED, THE HOUSTON FIRST COLLECTS PARKING REVENUE. SO THAT BUSINESS INTERRUPTION WENT TOWARDS THAT. AND IT ALSO WENT TOWARDS, UM, LOST REVENUES AT THE AIRPORT DURING HARVEY. OKAY. THANK YOU. COUNCIL MEMBER CAYMAN. THANK YOU. UM, AND I REALLY APPRECIATE THE ENTIRE DISCUSSION, RIGHT. THAT WE ARE TALKING ABOUT HOW TO BEST FINANCIALLY PREPARE AND SAFEGUARD THE CITY AGAINST FUTURE DISASTERS. DIRECTOR. YOU AND I HAVE TALKED A LOT ABOUT GENERAL FUND VERSUS BUDGET STABILIZATION FUND. AND MY UNDERSTANDING IS GENERAL FUND GIVES YOU A LOT MORE FLEXIBILITY DAY TO DAY, CORRECT? YES. SO, FOR EXAMPLE, UH, AN ADMINISTRATION IN THE STRONGEST FORM OF MERRILL GOVERNMENT COULD, UM, USE THOSE DOLLARS FOR SOMETHING OTHER THAN DISASTER RESPONSE WITH THE GENERAL FUND, CORRECT? YES. AND IT DOESN'T NECESSARILY, DEPENDING ON THE AMOUNT HAVE TO COME TO COUNCIL. A SIGNIFICANT AMOUNT WOULD COME TO COUNCIL FOR APPROVAL. THERE WOULD BE A COMPETITIVE PROCESS, A CONTRACT, IT WOULD COME TO COUNCIL, MOST OF THE CONTRACTS. BUT THERE'S ALSO PRETTY LARGE CONTRACTS THAT AREN'T COMING TO COUNCIL AS WELL. UM, WITH THE BUDGET STABILIZATION FUND, MAYOR PRO TEM, IT'S A, FOR, IN MY OPINION, IT IT'S A CLEARLY DEFINED USE AND PURPOSE. AND IT REQUIRES FOR THOSE FUNDS TO BE EXPENDED IT, TO COME TO COUNCIL FOR A VOTE FOR THAT SPECIFIC PURPOSE. SO, FOR EXAMPLE, WE'VE HAD SO MANY CONVERSATIONS ABOUT OVERTIME, RIGHT? MM-HMM . AND OUTSIDE OF A DISASTER, REGARDLESS OF THE ISSUE FOR WHICH OVERTIME IS NEEDED, THAT THOSE ADDITIONAL OVERTIME FUNDS FOR DEPARTMENT CAN COME FROM THE GENERAL FUND. SO WE WILL CONTINUE TO POTENTIALLY EAT AWAY, I, I DON'T WANNA SAY EAT AWAY, UTILIZE GENERAL FUND DOLLARS POTENTIALLY THROUGHOUT THE YEAR. SO THERE'S NO SAFEGUARD IN PLACE TO SAY, NOPE, THIS MONEY IS FOR EMERGENCY RESPONSE AS IT PERTAINS TO DISASTERS OR WITH OUR BUDGET STABILIZATION FUND, ECONOMIC DOES FALLOUT AS WELL. MM-HMM . SO THE, THAT'S WHY, IN MY OPINION, THE BUDGET STABILIZATION FUND IS SO IMPORTANT. AND I GO BACK TO, AGAIN, THIS WAS, I APPRECIATE THE TIMING. I WANT MORE INFORMATION FROM DIRECTOR YOU AND ALSO THE CONTROLLER AS IT PERTAINS TO WHAT OTHER CITIES ARE DOING. BECAUSE AGAIN, THEY MAY HAVE A REPLENISHMENT THAT'S LONGER, BUT THEY HAVE A LOT MORE IN THEIR FUND. SO I THINK IT'S THE DISTINCTION OF WE'RE PUTTING OUR MONEY FOR A NATURAL DISASTER, WHICH WE KNOW IS COMING AND WE'RE ON BORROWED TIME FOR IN WITH EVERYTHING ELSE THAT THE CITY CAN BE SPENDING MONEY ON, VERSUS NOPE, WE ARE PROTECTING THIS IN CASE AND FOR WHEN A DISASTER COMES AND THOSE DOLLARS HAVE TO COME TO COUNCIL FOR AUTHORIZATION AND APPROVAL SO THAT WE'RE AWARE OF HOW THIS MONEY IS BEING SPENT. THAT, THAT'S REALLY WHY I THINK IT'S IMPORTANT, ESPECIALLY IN LIGHT OF HOW HOUSTON OUR, OUR NATURAL DISASTERS ARE. SORRY, ONE FINAL QUESTION, DIRECTOR. NOT RELATED TO THIS, BUT JUST WITH THE TIMING, I'M GONNA KEEP ASKING, UH, 'CAUSE I THINK IT'S SO IMPORTANT AS WE LOOK AT THE FINANCIAL POLICIES, ARE Y'ALL STILL CONSIDERING LOOKING AT WHEN OUR FISCAL YEAR STARTS AND THE TIMING OF ALL OF THAT? WE'RE, WE'RE LOOKING AT IT, BUT I DON'T THINK IT'S GONNA BE RECOMMENDED IN THIS ROUND. OKAY. BASED ON WHERE WE ARE TODAY. THANK YOU. THANK YOU. AND ON THE OTHER FINANCIAL POLICIES THAT YOU'RE REVIEWING, I, UM, YOU KNOW, WE, WE'VE HEARD A LOT LATELY ABOUT OUR, THE CONDITION OF OUR FACILITIES, UM, AND FINANCIAL POLICY. G EIGHT, UM, TALKS ABOUT THE, UH, OPERATING MAINTENANCE FUNDING, UM, WILL BE PRIORITIZED EACH YEAR TO ENSURE CAPITAL FACILITIES AND EQUIPMENT ARE SUFFICIENTLY MAINTAINED. AND MAINTENANCE IS NOT DEFERRED TO FUTURE YEARS TO IMPLEMENT THIS POLICY. FUNDING FOR OPERATING MAINTENANCE OF GENERAL FUND FACILITIES SHALL BE INCREASED BY AT LEAST 0.25% BI-ANNUALLY, BEGINNING FY 2020. AND UNTIL FUNDING REACHES AT LEAST 2% OF CURRENT REPLACEMENT VALUE, UH, YOU KNOW, I KNOW MONEY'S TIGHT AND, YOU KNOW, IT'S NOT LIKE WE HAVE A LOT OF EXTRA MONEY TO BE PUTTING INTO THAT FUND, BUT I WOULD ASK THAT WE DO LOOK AT IF THERE'S A WAY TO KIND OF POTENTIALLY INCREASE THAT AMOUNT TO GO TOWARDS THE, UM, GO TOWARDS DEFERRED MAINTENANCE AND OUR, OUR MRR FUND MM-HMM . SO WE HAVE BEEN, UM, AS YOU MENTIONED WITH THE POLICY, IT INCREASES AT AT LEAST 0.25% EVERY OTHER YEAR. SO I BELIEVE IN FISCAL YEAR 26 IS THE FIRST YEAR WE HIT THE 2%. SO WE'RE AT 2%. WE'RE AT THE 2%, OKAY. THAT'S IT THIS YEAR. AND IS THAT A-G-F-O-A KIND OF THING? LIKE HAVE 2% OF YOUR TOTAL PROPERTY VALUE, EVEN IF IT'S ALL COMPLETELY, UM, [01:20:01] IN A BAD, IN A BAD WAY? WELL, I THINK IT'S, THIS IS THE, THE AMOUNT THAT THE STANDARD, UM, WHEN YOU LOOK INDUSTRY STANDARD, WHAT THEY SAY IS AT LEAST 2% OF YOUR CURRENT REPLACEMENT VALUE. SO AS NOT TO BASICALLY FURTHER INCREASE YOUR DEFERRED MAINTENANCE AMOUNT, IT'S BASICALLY AMOUNT TO KIND OF KEEP YOUR DEFERRED MAINTENANCE STEADY. OKAY. SO WE'RE DOING THIS 2% THAT GETS TRANSFERRED THROUGH THE MRR FUND, BUT WE'RE ALSO, UM, IF YOU LOOK IN THE CAPITAL MANAGEMENT POLICIES, THERE'S ANOTHER POLICY POLICY H FIVE, UM, THAT TALKS ABOUT AN ADDITIONAL 2% BEING ALLOCATED IN THE CIP TO FOCUS ON CAPITAL MAINTENANCE. SO IN OTHER WORDS, YOU KNOW, NOT USING, NOT USING CIP DOLLARS TO ADD, UM, SQUARE FOOTAGE OR ADD FOOTPRINT, BUT IT SHOULD EITHER BE REPLACING AN OLD BUILDING OR MAINTAINING THE BUILDINGS THAT WE HAVE. OKAY. SO YOU THINK THOSE TWO POLICIES ON THE OPERATING SIDE, NOW THAT WE'RE AT 2%, SO WE DON'T KEEP INCREASING IT, WE'RE JUST, WE'RE AT, WE ARE WHERE WE ARE. WE'LL INCREASE IT AS OUR BUILDING ASSET VALUE INCREASES BECAUSE THERE'S STILL, THAT'LL ALWAYS NATURAL GROWTH US YOU'LL ALWAYS BE GOING UP A LITTLE BIT. YES. SO BETWEEN THAT POLICY AND THE ONE IN THE CAPITAL POLICIES, YOU THINK THAT WERE IN A GOOD SPOT THERE? I MEAN, I THINK WE HAD A ROBUST CONVERSATION YEAH. LAST WEEK ABOUT THE DEFERRED MAINTENANCE AT THE CITY. I THINK, UM, WE REALLY NEED TO LOOK AT, UM, THAT CITYWIDE FACILITIES MASTER PLAN, RIGHT? AND REALLY DO AN ASSESSMENT OF WHAT BUILDINGS DO WE NEED, HOW CAN WE BEST UTILIZE THE DOLLARS THAT WE DO HAVE? AND I THINK THAT WILL HELP US, UM, YOU KNOW, BE ABLE TO ALSO DRIVE DOWN THAT DEFERRED MAINTENANCE BY JUST FIGURING OUT WHAT OF THIS BUILDING STOCK DO WE NEED TO MAINTAIN? IS IT EVEN BEING USED? RIGHT? UM, AND, AND I'LL DEFER TO MY, THE VICE MAYOR PRO TEM, UM, IF, IF YOU WOULD, YOU, YOU BROUGHT IT UP BRIEFLY, THE BUDGET AMENDMENT, AND I'M, I APOLOGIZE, WE SHOULD HAVE PROBABLY INCLUDED THAT IN THIS DISCUSSION ABOUT YOUR BUDGET STABILIZATION FUND. PUTTING 1% OF WHAT IS IN, IS IT 1% OF WHAT'S IN EXCESS OF OUR PROJECTED FUND BALANCE GETS 1% OF THE DIFFERENCE BETWEEN, YOU KNOW, IF THE ACTUAL FUND BALANCE CAME IN MORE THAN THEY EXPECTED? OKAY. AND THAT WE'RE PLANNING TO DO. YES. OKAY. YEAH. SO WHAT I CAN SAY, REGARDLESS OF A, WE'RE ALREADY A 25 MILLION OR WHATEVER, RIGHT? SO IT WON'T, I GUESS THE ISSUE WITH THE TIMING THERE IS THAT WE WON'T NECESSARILY KNOW UNTIL FISCAL YEAR 26 IS OVER BECAUSE, YOU KNOW, IT'S KIND OF GONNA KIND OF BE THE FINAL ENDING FUND BALANCE COMPARED TO WHAT WE THOUGHT IT WAS GONNA BE AND THEN DOING THAT CALCULATION. SO IT WILL, YES, WE ARE DOING IT, THE AMENDMENT PASSED, THE ADMINISTRATION SUPPORTS, BUT IT WILL BE, YOU KNOW, AFTER THE END OF FISCAL YEAR 26, THAT WE'LL FOR SURE KNOW THAT DOLLAR AMOUNT. OKAY. UM, ANYONE ELSE? GREAT DISCUSSION, EVERYBODY MORE TO COME ON THIS, I'M SURE. UM, APPRECIATE EVERYBODY'S DILIGENCE, UM, COUNCIL MEMBER CAYMAN, UM, YOUR ADVOCACY, BUT WE ALL, UH, THERE'S NO DOUBT WE NEED MONEY FOR DISASTERS. AND I APPRECIATE THIS DEEP DIVE INTO IT. THANK YOU VERY MUCH. WE WILL NOW DEEP DIVE INTO THE DEDICATED DRAINAGE AND STREET RENEWAL FUND FUND BALANCE, AND, UM, WE WILL BE JOINED BY SAMIR SLANKY, CHIEF FINANCIAL OFFICERS FOR PUBLIC WORKS AND DAVID WARDLOW, SENIOR ASSISTANT DIRECTOR OF PUBLIC WORKS. AND THE, WE WILL DISCUSS VICE MAYOR PRO TEM PCIP AMENDMENT 6.02, WHICH, UH, IS RELATED TO THE UNSPENT FUNDS OF THE FUND, THE D-D-S-R-F FUND BALANCE. SO WITH THAT, THE FLOOR IS YOURS. ALRIGHT, CHECK. AWESOME. GOOD MORNING. MY NAME IS SAMIR SOLANKI. THANK YOU FOR YOUR REPRESENT REPRESENTATION. TODAY I'M JOINED BY MY COLLEAGUE DAVID WARDLOW, AND WE WILL BE COVERING THE DEDICATED DRAINAGE AND STREET RENEWAL FUND. WE CALL IT FUND BALANCES, BUT AS WE WALK THROUGH, WE WANT TO HELP YOU UNDERSTAND THE, THE MECHANICS OF HOW THIS FUND WORKS. AND, UH, LATER ON WE'LL ANSWER ANY QUESTIONS THAT YOU MAY HAVE. NEXT SLIDE, PLEASE. AND, YOU KNOW, WE'VE COVERED THIS BEFORE, BUT I JUST WANNA DO A QUICK, UH, OVERVIEW. AGAIN, THE D-D-S-R-F FOR THE DEDICATED DRAINAGE STREET RENEWAL FUND WAS APPROVED IN NOVEMBER, 2010. YOU CREATED A DEDICATED FUNDING SOURCE, IMPROVED STREET AND DRAINAGE INFRASTRUCTURE. THE THREE COMPONENTS TO IT, IT IS A PAY AS YOU GO FUND. IT IS PRIORITIZED, PRIORITIZED BY THE NEEDS DATA AND THREE THINGS HAPPEN WITH IT. WE USE THE FUNDING FOR TO REPAIR, UH, UH, A LOT OF THAT. IT'S, UH, FOR O AND M PURPOSES, BUT ALSO REHABILITATE AND RECONSTRUCT ON THE CIP SIDE. NEXT SLIDE PLEASE. NEXT SLIDE PLEASE. LET'S TALK ABOUT THE FUNDING. THIS MIGHT LOOK A LITTLE BIT FAMILIAR TO YOU. WE'VE COVERED THIS BEFORE, IT'S BEEN A COUPLE OF YEARS, BUT, UH, THERE ARE FOUR DIFFERENT FUNDING SOURCES. THE FIRST ONE IS THROUGH AD VALOREM TAXES, WHICH IS THE PROPERTY TAXES. THERE IS FUNDING THAT'S USED TO PAY OFF THE OLD DEBT. FIRST, THE PUBLIC PUBLIC IMPROVEMENT BONDS [01:25:01] PREVIOUSLY. AND THEN, UM, UH, AND THEN IT COMES TO US FOR THE STREET AND DRAINAGE PROJECT FOR TRAFFIC SIGNALS, SIDEWALK PROJECTS, OPERATIONS AND MAINTENANCE. AGAIN, THIS IS AFTER PAYING OFF THE PREBUILT HOUSTON. UH, UH, BUILT HOUSTON FORWARD DEBT. THE SECOND SOURCE OF FUNDING ARE THE THIRD PARTY FUNDING, WHICH IS METRO AND TXDOT, WHICH PAYS FOR STREET AND DRAINAGE PROJECTS, TRAFFIC SIGNALS, PEDESTRIAN BIKE PROJECTS, AND THEN OTHER OPERATIONS AND MAINTENANCE. THE THIRD FUNDING SOURCE IS THE DRAINAGE UTILITY CHARGE, WHICH WE SEE ON THE WATER BILLS. AND THAT PAYS FOR STREET AND DRAINAGE PROJECTS, INCLUDING PROPERTY ACQUISITION PLANNING, DESIGN, SURVEY AND CONSTRUCTION, AND ALSO OPERATIONS AND MAINTENANCE, INCLUDING PERSONNEL, EQUIPMENT AND FACILITIES. THEN THE FOURTH ONE IS THE DEVELOPER IMPACT FEE, WHICH GOES THROUGH THE PERMIT, UH, PERMITTING PROCESS. AND THIS FUNDS, UM, OUR STREET AND DRAINAGE FOR FUTURE DEVELOPMENT. THIS IS FOR ESSENTIALLY NEW BUILDINGS THAT COME, UH, THAT ARE CONSTRUCTED. AND THEN ANY IMPACT TO THE WATER AND SUICIDE. THIS IS THE FEE THAT'S COLLECTED FOR THOSE PURPOSES AS WELL. NEXT SLIDE, PLEASE. AND YOU'VE SEEN THIS, UH, GRAPH BEFORE. WE HAVE MADE SOME SIGNIFICANT PROGRESS TOWARDS PAYING ALL THE PRE REBUILD DEBT. UM, SO FAR, INCLUDING PRINCIPAL AND INTEREST. WE'VE PAID OFF ABOUT $2 BILLION IN DEBT AND THE AMOUNT THAT'S OWED IS 449 MILLION. AS I RECALL, A COUPLE OF YEARS AGO WHEN WE DID THIS PRESENTATION, WE STILL HAD A LITTLE OVER A BILLION DOLLARS IN DEBT, UH, LEFT TO PAY, INCLUDING PRINCIPAL INTEREST. AND WE MADE SOME SIGNIFICANT PRO, UH, SIGNIFICANT PROGRESS TOWARDS PAYING THIS OFF. THAT'S A GREAT SLIDE, MAN. LOOK AT THAT SLIDE, EVERYBODY. MM-HMM . LOOK AT THAT SLIDE. $2 BILLION OF DEBT PAID. THANK YOU FOREFATHERS OF THE REBUILD HOUSTON PROGRAM. IF YOU'RE LISTENING, STEVE COSTELLO, WE'RE MAKING GOOD PROGRESS. AND THIS GRAPH GIVES US AN OVERVIEW OF WHAT THE REVENUE FORECAST IS GOING TO LOOK LIKE FROM 2026 THROUGH 2024, AND IS BROKEN UP INTO THE DIFFERENT COMPONENTS THAT WE HAD TALKED ABOUT. YOU'VE GOT YOUR DRAINAGE CHARGE, THIRD PARTY, UH, THIRD PARTY FUNDS AT OME TAX AND THE DEVELOPER IMPACT FEES. LET'S JUMP TO THE NEXT SLIDE. I WILL HAND IT OVER TO DAVID. ALRIGHT, THANK YOU SAMIR. UM, WE THOUGHT IT WOULD BE USEFUL AGAIN, JUST AS A REMINDER, WE'VE BEEN HERE A COUPLE OF TIMES WHEN WE, WE TALKED ABOUT SPLITTING UP THE OLD SPECIAL REVENUE FUND INTO DIFFERENT PARTS, UH, WHERE WE'VE TALKED ABOUT THE MECHANICS, BUT IT'S USEFUL AS A REFRESHER JUST TO MAKE SURE EVERYBODY'S ON THE SAME PAGE ABOUT HOW THIS WORKS AND HOW IT'S A LITTLE DIFFERENT THAN SOME OF THE OTHER FUNDING SOURCES YOU SEE COMING THROUGH THE BUDGET. OKAY? SO THE PRINCIPAL PURPOSE FOR THE A FORUM AND THE DRAINAGE CHARGE REVENUES THAT ARE BEING COLLECTED IS TO PAY FOR CAPITAL PROJECTS GOING OUT THE DOOR. SO THAT TRANSFER TO CAPITAL LINE YOU SEE IN THE BUDGET, OKAY? BUT HOW DOES THAT WORK? WE DON'T APPROPRIATE, WHEN WE COME TO YOU TO APPROVE A CONSTRUCTION CONTRACT OR A DESIGN CONTRACT, WE'RE NOT ALLOCATING DIRECTLY AGAINST THE FUNDS IN THAT SPECIAL REVENUE FUND, RIGHT? WE HAVE THE SEPARATE CAPITAL FUNDS, AND THE BEST ANALOGY I CAN GIVE, IT'S NOT PERFECT. UM, IS AN AMEX CARD, AN OLD SCHOOL AMEX CARD? SO NOT A CREDIT CARD, BUT THIS IS ESSENTIALLY A, UM, MARSHALL PAPER LINE THAT WE APPROPRIATE AGAINST. SO IT'S THAT PROMISE TO PAY. SO WE HONOR OUR CONSTITUTIONAL COMMITMENTS, UH, WE HONOR OUR CHARTER COMMITMENTS. UM, BUT WHEN BILLS COME DUE, RIGHT THEN INVOICES TURNED IN, THE PAY ESTIMATE COMES THROUGH, CASH IS THEN PULLED FROM THE SPECIAL REVENUE FUNDS AT THAT POINT. OKAY? SO CASH IS SITTING IN THE SPECIAL REVENUE FUNDS. WHAT YOU SEE OVER THERE IS NUMBER TWO, RIGHT? BUT WE'VE ACTUALLY APPROPRIATED ALL THE CAPITAL WORK ON THE CAPITAL SIDE, RIGHT? SO THERE'S THAT SEGREGATION WHERE YOU'RE NOT SEEING THE FULL, AS WE MIGHT CALL LIABILITY OR COMMITMENT TO THE CAPITAL PROGRAMS SHOWING UP IN THAT WHAT'S PRESENTED AS FUND BALANCE ON THE MOER, UH, REPORTS EVERY MONTH. OKAY? UM, SO AGAIN, AS WE SPEND, UM, YOU KNOW, AND CASH COMES BACK IN, WE FREE UP THAT CAPACITY SO WE CAN APPROPRIATE NEW CONTRACTS AS WE GO FORWARD. WE WILL EXPECT TO COME TO YOU PRETTY SOON AS REVENUES ARE INCREASING AND THE PROGRAM SIZE IS INCREASING. THAT CASE SERIES LINE ALSO NEEDS TO BE INCREASED. SO LOOK FORWARD TO THAT COMING SOON. UH, NEXT SLIDE PLEASE. ALRIGHT, AND THIS IS JUST A QUICK SNAPSHOT TO GIVE YOU A PICTURE OF WHAT DO WE HAVE ON THE CAPITAL STACK, UH, ON THE CAPITAL APPROPRIATION SIDE, RIGHT? IN THOSE FUNDS? 40 42 AND 40 46 VERSUS WHAT'S SITTING IN THE SPECIAL REVENUE FUNDS. OKAY? AND THIS IS ONLY LOOKING AT BEGINNING OF THE YEAR BEGINNING FUND BALANCE COMPARED TO WHAT PROMISES YOU HAVE ALREADY MADE. CONTRACTS WE'VE ALREADY AWARDED AND ARE NOT YET SPENT. THAT'S THE BOTTOM, THAT'S THE FY 25 CARRY FORWARD, WHAT YOU'VE ALREADY APPROVED YET THIS FISCAL YEAR, WHAT IS IN PROCESS. SO CONTRACTS COMING TO YOU SOON, RIGHT? UM, AND WHAT'S ALREADY APPROVED IN THE CIP AS PLANNED WORK, OKAY? SO THIS IS THE WORK WE ANTICIPATE [01:30:01] BEGINNING AND START SPENDING ON THIS YEAR COMPARED TO THE BALANCE THAT'S SITTING BASICALLY IN THE SPECIAL REVENUE FUND TODAY. SO WHEN WE TALK ABOUT THERE BEING AVAILABLE FUND BALANCE, WE, WE WOULDN'T USE THE THAT TERMINOLOGY ALL BECAUSE THE COMMITMENTS FOR THE PROGRAM ON THE CAPITAL SIDE STILL EXCEED SIGNIFICANTLY. SO WHAT'S SITTING THERE? SO THEN IT COMES BACK TO PRIORITIES QUESTION, RIGHT? WHICH IS WE CAN ONLY SPEND THE MONEY ONCE. SO IF WE WANT TO REDIRECT THAT PLANNED WORK SOMEWHERE ELSE, THAT'S WHEN WE HAVE THOSE CONVERSATIONS ABOUT AMENDMENTS OF, WELL, IF YOU WANT TO DO THIS THING OVER HERE, WE'RE GONNA HAVE TO CHOOSE NOT TO DO SOMETHING ELSE. OKAY? AND THAT'S REALLY THE, THE GENERAL OVERVIEW THAT WE HAVE FOR YOU TO KIND OF GET THROUGH THIS. UM, WE'RE HAPPY TO ANSWER QUESTIONS. I KNOW THERE'LL BE A LIVELY DISCUSSION. SO, UM, WITH THAT, I THINK VICE MAYOR PRO TE PECK. YEAH. THANK YOU SO MUCH FOR THE PRESENTATION AND SURE. THANK YOU FOR, UM, HAVING THIS OR TODAY. OKAY, SO GOING BACK TO THE BUDGET THAT WE PASS, UM, FOR D-D-S-R-F WHEN IT SHOWS THAT THERE'S FOR FY TWENTY SIX, A HUNDRED AND EIGHTY $7 MILLION, UM, RESTRICTED BUT NOT COMMITTED IN THAT BALANCE. AND I GET THAT IT WORKS A LITTLE BIT DIFFERENTLY BECAUSE WE'RE, YOU KNOW, DOING ALL OF THIS WORK AND THEN PAYING BACK, BUT THERE'S STILL A BUDGET SOMEWHERE WHERE WE KNOW HOW MUCH IN A FISCAL YEAR WE EXPECT TO SPEND AND IN EVERY OTHER BUDGET THAT IS, UM, COMMITTED BECAUSE WE'RE COMMITTING THAT MONEY. SO HELP ME UNDERSTAND THE DIFFERENCE, BECAUSE I'VE ADDED UP ALL OF THE NUMBERS OF ALL OF THE, YOU KNOW, PROJECTS PLANNED FOR ALL DDS RF PROJECTS AND THERE'S STILL A BALANCE THERE. YEAH. AND I GET THAT THERE'S OTHER THINGS THAT HAPPENED IN PREVIOUS FISCAL YEARS THAT WE'RE PAYING DOWN, BUT HELP ME UNDERSTAND THAT. $187 MILLION. SURE. CAN YOU GO BACK TO THE PREVIOUS SLIDE? UM, AGAIN, IT REALLY COMES DOWN TO THE DIFFERENCE BETWEEN WHERE WE ARE MAKING THAT CONTRACTUAL COMMITMENT AND THEN WHERE YOU SEE THE ACCOUNTING REPORTED. THAT'S HOW I WOULD EXPLAIN IT, RIGHT? SO THAT IN THE BUDGET, UH, THAT YOU ADOPT AS THE ANNUAL O AND M BUDGET FOR FUNDS 2310 AND 2311, YOU'RE SEEING A FORECAST OF HOW MUCH THOSE CAPITAL PROJECTS WILL SPEND OUT THAT YEAR. AND THAT'S WHAT'S BEING PRESENTED AS THE LIABILITY AGAINST THE FUND. THAT DOESN'T MEAN WE HAVEN'T MADE OTHER PROMISES AND OTHER CONTRACTS THAT WILL STILL SPEND THAT MONEY IN THE FUND BALANCE. IT JUST MEANS THAT THAT FISCAL YEAR, THE THE BILLS MIGHT NOT HAVE COME DUE YET. DOES THAT HELP? SO BASICALLY WE'RE SAYING THERE'S UNSPENT APPROPRIATIONS OR PROJECTS IN THE PLAN TO USE THAT FUND BALANCE THAT HAVEN'T COME THROUGH YET, HASN'T BEEN SPENT, BUT THAT DOESN'T MEAN THAT THERE ISN'T A EITHER A CONTRACTUAL COMMITMENT OR A PLANNED USE WHICH, OR COMMITMENT IT, DEPENDING ON HOW YOU VIEW THE CIP, RIGHT? HOW COMMITTED IS A PROJECT IN THE CIP THAT THAT'S REALLY THE DIFFERENCE THERE, RIGHT? SO IF, AGAIN, WE WANNA USE THAT FUND BALANCE FOR SOMETHING ELSE, THAT MEANS THERE ARE PROJECTS IN THE CIP THAT WILL NOT GET COMMITTED AND WILL NOT BE DELIVERED BECAUSE WE'RE CHOOSING TO DO SOMETHING ELSE. AND THAT'S A CHOICE. THAT, THAT'S A, THAT'S A POLICY PERFECTLY VALID PRIORITIZATION QUESTION. SO FOR FY 26, IT IS $151.4 MILLION IN M AND O AND OPERATING, OPERATING TRANSFERS. SO YOU'RE SAYING THAT'S JUST FOR FY 26, BUT THE $187 MILLION COULD BE FROM PREVIOUS FISCAL YEARS? WELL, IT'S, UH, SO THIS YEAR, RIGHT? WE GO TO CONSTRUCTION ON A PROJECT IN, WELL, BARELY ANY CONSTRUCTION PROJECT IS GONNA BE COMPLETED IN A ONE FISCAL YEAR, RIGHT? SO WHAT'S NOT EXPENDED YET WILL CARRY OVER INTO THE NEXT FISCAL YEAR. SO IN THIS, UH, IF YOU GO TO THE NEXT SLIDE, THAT FY 25 CARRY FORWARD, THOSE ARE CONTRACTS, COMMITMENTS, APPROPRIATIONS THAT HAVE JUST NOT BEEN SPENT YET. RIGHT? SO THE BIGGEST PART OF IT IS GONNA BE THAT, RIGHT? THE COMMITMENTS WE HAVE MADE AROUND THIS TABLE TO DELIVER WORK AND THE, THOSE PROJECTS IN THE CIP PLAN THAT WE EXPECT TO COME BEFORE YOU FOR VOTES, BUT HAVE NOT COME YET, RIGHT? SO AGAIN, IF, IF THAT 186 MILLION, IF WE CHOOSE TO USE IT FOR SOMETHING ELSE APPROPRIATE FOR SOME OTHER PROJECT, WHICH TAKES TIME TO DEVELOP, THAT MEANS WE'RE NOT GONNA USE IT FOR THOSE PROJECTS THAT WE'RE PLANNING TO COME TO. OKAY. I MEAN, I, I UNDERSTAND WHAT YOU'RE SAYING AND I, I THINK IT WOULD BE HELPFUL MAYBE TO SEE IT BROKEN DOWN A LITTLE BIT MORE WITH THAT $187 MILLION AS FAR AS WHAT THE EXPECTATIONS ARE FROM PREVIOUS, YOU KNOW, PROJECTS THAT WE STILL HAVE TO PAY BECAUSE IN ANY OTHER BUDGET THAT WE LOOK AT, AT THE CITY, IT DOESN'T WORK THAT WAY WHERE IT'S JUST, YOU KNOW, THINGS THAT WE STILL HAVE OBLIGATIONS FOR. IT'S, YOU KNOW, HERE'S HOW MUCH MONEY IN THIS FISCAL YEAR WE EXPECT TO SPEND VERSUS HOW MUCH, YOU KNOW, THE BUDGET IS FOR. SO WHEN THERE'S A PROJECT THAT'S SCHEDULED FOR A TO BEGIN IN A FISCAL YEAR, AND THEN IT GETS PUSHED BACK TO ANOTHER FISCAL YEAR, WHAT HAPPENS TO THAT MONEY THAT WE EXPECTED TO SPEND IN THAT FISCAL YEAR, FOR EXAMPLE, SPRING SHADOWS THAT YOU AND I TALK ABOUT ALL THE TIME? YEAH, YEP. YOU KNOW, UNDERSTOOD. YOU KNOW, WE'RE GOING TO START IN A FISCAL YEAR AND NOW WE'RE NOT. SO WHAT HAPPENS [01:35:01] TWO THOU, IS IT, IS THAT PART OF THAT $187 MILLION OR ARE WE SUPPLEMENTING IT WITH ANOTHER SHOVEL READY PROJECT AND SHIFTING IT AROUND? IN AN IDEAL WORLD, YEAH, YOU WOULD HAVE ANOTHER PROJECT THAT COULD BE ACCELERATED AND USE THAT SAME CAPACITY. IN PRACTICE, WE SEE THAT THAT DOESN'T WORK OUT ALL THE TIME, RIGHT? SO YOU SEE A FUND BALANCE GROW BECAUSE YOU STILL HAVE A PLANNED PROGRAM OF PROJECTS TO GO DO THAT IS STILL A COMMITTED PLAN OF PROJECTS TO GO DO, AND THE RESOURCES JUST HAVEN'T BEEN APPROPRIATED AND SPENT YET. SO AGAIN, IT'S A, YEAH, YOU'RE SEEING THAT, UH, THE BALANCES GROW IN THAT SPECIAL REVENUE FUND BECAUSE WE HAVE PROJECTS IN THE QUEUE, PROJECTS THAT HAVE NOT SPENT SPENT YET. BUT UM, YOU KNOW, IF WE CHOOSE TO DO SOMETHING ELSE, THEN, THEN, UM, YOU KNOW, WHEN THAT PROJECT COMES AND IS READY, THEN THE RESOURCE TO APPROPRIATE MIGHT NOT BE THERE. OKAY. I DO THINK THAT, UM, WE NEED TO START LOOKING AT THAT AS FAR AS, YOU KNOW, IF PROJECT DOESN'T HAPPEN AND THERE'S ALWAYS, YOU KNOW, FACTORS OF WHY THAT DOESN'T HAPPEN TO HAVE ANOTHER PROJECT SHOVEL READY TO PUT IN ITS PLACE AND SPEND THAT MONEY DOWN. BECAUSE THEN WHEN THE OTHER PROJECT DOES, YOU KNOW, IS READY THEORETICALLY, THAT OTHER PROJECT THAT WE MOVED IT FOR, YOU KNOW, THE FUNDS SHOULD BE AVAILABLE AT THAT TIME. YEAH. SO, UM, YOU KNOW, WHETHER THAT'S WITHIN EACH COUNCIL DISTRICT TO HAVE ANOTHER PROJECT JUST READY TO GO AROUND THE SAME, YOU KNOW, PRI THAT MIGHT GET COMPLICATED, BUT JUST ANY PROJECT REALLY, YOU KNOW, JUST TO MAKE SURE WE'RE, THAT MONEY ISN'T JUST SITTING THERE, WHICH I NEVER TRY TO SAY THAT, BUT WHEN IT COMES TO DRAINAGE PROJECTS, I MEAN, WE REALLY NEED TO SPEND THE MONEY AND GET THOSE PROJECTS DONE. YEAH. CLEARLY WE, WE DEFINITELY SHARE THE CONCERN OF DELIVERY IS SUPER IMPORTANT. WE WANT IT TO BE INVESTED IN OUR COMMUNITIES AND PROVIDING INFRASTRUCTURE AND, AND BENEFITS FOR EVERYBODY TO AVOID FLOODING, BETTER TRANSPORTATION, ALL THE REST OF IT. BUT I WOULD SAY IS THAT'S PART OF WHY YOU SEE A SHIFT RIGHT? TOWARDS MORE REHABILITATION SPENDING, RIGHT? IS 'CAUSE THOSE PROGRAMS DO HAVE A LITTLE BIT MORE OF A RHYTHM AND THERE'S LESS DIS CAN BE LESS DISRUPTION TO THE, TO THE CYCLE IF SOMETHING COMES UP ON THE DESIGN SIDE, LET'S SAY. THANK YOU. SURE. THANK YOU. AND THANK YOU COUNCIL MEMBER PECK FOR BRINGING ALL OF THIS UP. THAT, YOU KNOW, YOU WERE LOOKING AT THE DRAINAGE CHARGE ENDING FUND BALANCE OF 187 MILLION. THERE'S ALSO A VALOREM OF ANOTHER 137 MILLION. I, I GUESS YOU KNOW, THE BEST WAY YOU, YOU, YOU, YOU APPROPRIATE AGAINST COMMERCIAL PAPER WHEN THEY COME DUE. AND YOU'RE, THAT THAT'S, YOU'RE JUST SAYING THAT'S ALL FOR EITHER CIP THAT EVERY BIT OF THAT MONEY IN BOTH OF THOSE ACCOUNTS ARE, ARE, ARE FOR EITHER PAST BILLS OR FUTURE OR PLANNED PROJECTS? YEAH, THERE'S NOT, THERE'S NOT ANY, I'M NOT GONNA SAY ANY BECAUSE I MEAN THERE'S, THERE'S SMALL AMOUNTS, THERE'S WIGGLE ROOM IN THAT, BUT PURCHASED VEHICLES, THERE'S A FEW THINGS HERE AND THERE, RIGHT. THERE'S A TRANSFER VICE MAYOR PRO KIM AND I HAVE BEEN LOOKING AT THIS FOR A LONG TIME AND THAT ALWAYS SEEMS LIKE A BIG AMOUNT AND IT'S A LITTLE BIT DIFFERENT THAN, THAN THE OTHER BALANCES THAT WE SEE IN OTHER DEPARTMENTS. UM, COUNCIL MEMBER RAMIREZ. THANK YOU MADAM CHAIR. JUST CLARIFICATION ON SLIDE EIGHT, RCA ROUTING IS RCA IS THAT REQUEST FOR COUNCIL? CORRECT. SORRY, APOLOGIES FOR THE ACRONYM THERE. YES. OKAY. AND, UM, TELL ME ABOUT THAT AS OPPOSED, RIGHT, SO THOSE ARE CONTRACTS THAT WE'VE BEEN THROUGH PROCUREMENT ON, UM, AND THEY'RE BEING SET UP IN OUR FINANCIAL SYSTEM AND TO BE PRESENTED TO YOU FOR AWARD. ALRIGHT, THANK YOU. OKAY, WELL THANK YOU VERY MUCH. I DON'T KNOW IF YOU WANT TO OPINE AT ALL ON THE AMENDMENT. I WOULD LIKE, I'D LIKE FOR COUNCIL MEMBER PECK TO, TO BRING IT UP AND, AND WE'LL TALK ABOUT THAT FOR FOR A MOMENT HERE. SO THE AMENDMENT WAS BASICALLY ANY ACTUAL MONEY NOT SPENT OR PLAN TO BE SPENT, UM, IN D-D-S-R-F TO MOVE OVER TO THE SPRING SHADOWS PROJECT. SO, I MEAN, CLEARLY IT'S NOT $187 MILLION PLUS THE AMOUNT IN THE VALOREM, BUT THERE MIGHT BE SOMETHING. SO HOW MUCH DO YOU EXPECT IN FY 26 FOR THERE TO ACTUALLY BE AS A TRADITIONAL FUND BALANCE WHERE WE'RE NOT SPENDING THE MONEY, WE DON'T HAVE IT COMMITTED FOR SOMETHING, WE'RE NOT PLANNING ON SPENDING IT. WELL AGAIN, THAT COMES BACK TO THE DISCUSSION WE JUST HAD ABOUT WHAT IS THAT ENDING FUND BALANCE THAT GETS REPORTED IN IN THE FINANCIAL STATEMENTS, RIGHT? RIGHT. WHICH ISN'T, IF WE WERE TO PUT EVERY DOLLAR OF, UM, CIP COMMITMENT AGAINST THAT AND RECORD AS A LIABILITY, IT WOULD LOOK VERY DIFFERENT. RIGHT. UM, THAT'S A HARD ANSWER FOR ME TO PROVIDE. I WOULD PREFER REALLY AT THIS POINT BACK TO THE BUDGET AND, AND THE PUBLISHED FIGURES THAT ARE THERE. SO THERE WILL BE AN ENDING FUND BALANCE IN BOTH OF THESE FUNDS. SO FROM THAT POINT OF VIEW, I THINK THE POLICY QUESTION IS GERMANE OF WHAT DO WE DO WITH THAT, RIGHT? IS THE, AN AMENDMENT TO REDIRECT IT, UM, WORTHWHILE. AND AGAIN, I THINK THAT'S, AGAIN, IT COMES DOWN TO A POLICY QUESTION OF WHAT IS THE COMMITTED PROGRAM OF CAPITAL PROJECTS, WHAT'S [01:40:01] MOST IMPORTANT? AND IF WE DECIDE THAT DELIVERING SPRING SHADOWS IS MORE IMPORTANT THAN THE OTHER WORK WE CAN, WE COULD PURSUE THAT PATH. WELL YES, THERE, THERE'S NO FOR SURE IS TO THE VICE MAYOR PRO TEM. YEAH. UH, SO I GUESS, I GUESS WHAT I'D LIKE TO SEE AND, AND I THINK WHAT THE VICE MAYOR PRO TEM ON THIS ACCOUNT, I MEAN YOU'RE, YOU'RE, YOU, YOU KIND OF THREW IT ALL UP AT THE END, RIGHT? UM, AND IT'S KIND OF HARD TO PROJECT AHEAD ON WHAT THAT, THAT WIGGLE ROOM MIGHT BE. BUT MAYBE AS, AS, AS WE GO ON TALKING ABOUT THIS FUND BALANCE, THERE COULD BE SOME KIND OF, UH, LINE IN THE BUDGET BOOK THAT OF, OF THINGS THAT WE'RE NOT, THAT DON'T MATCH UP WITH ANY PLANNED COMMITMENT. UH RIGHT. AND IS THERE A WAY TO DO THAT? AND DO YOU HAVE THAT NUMBER FOR FY 25? SO I MEAN, WE, WE'VE KIND OF PRESENTED HERE WHAT YOU SEE AS COMING OVER AS THE PLANNED PROGRAM, RIGHT. UM, COMPARED TO WHAT THE FUND BALANCES WERE. SO THAT, THAT'S WHERE I LOOK AT FIRST, RIGHT. UM, IN TERMS OF THE VALUE OF WHAT WE'RE EXPECTING TO DO IN DELIVERING DRAINAGE AND STREET PROJECTS ON THE CAPITAL SIDE VERSUS THE RESOURCES SITTING IN THE SPECIAL REVENUE FUNDS TODAY, . RIGHT. SO WE, WE CAN ABSOLUTELY PROVIDE THAT. UM, IN TERMS OF A A YOU DON'T TELL WHERE GOES RESOURCES, BUT YEAH, I, I, IT, IT REALLY, IT COMES DOWN TO SOUND LIKE A BROKEN RECORD. IT COMES DOWN TO A PRIORITY SETTING QUESTION OF WHAT WE, BUT IS THERE A WAY TO GIVE US A NUMBER LIKE AT THE END OF EACH YEAR BECAUSE THE BALANCE IS AGAINST FUTURE PROJECTS, IT'S HARD TO COME BACK TO ANOTHER NUMBER BESIDES WHAT YOU'RE SEEING REPORTED IN THE FINANCIAL STATEMENTS. I GUESS SAMIR, GIMME A YES. YEAH. UM, I GUESS WHAT WE'RE TRYING TO SAY IS, ESPECIALLY ON THAT CHART, I DUNNO IF WE CAN BRING THAT UP, BUT, YOU KNOW, LOOKING AT THE BREAKDOWN OF THE SPECIAL REVENUE FUND, WE CALL IT THE FUND BALANCE ON THE LEFT SIDE, WE'RE LOOKING AT WHAT THE CARRY FORWARD COMMITMENTS ARE. WE'RE LOOKING AT WHAT COUNCIL HAS ALREADY APPROVED, WE'RE LOOKING AT WHAT'S ALREADY THE RCA ROUTING PROCESS AND ALSO A BIG CHUNK OF WHAT'S ALREADY BEEN PLANNED AND COMPARING IT TO WHAT WE CALL THE BEGINNING FUND BALANCES. MM-HMM . AN OVER SUBSCRIPTION. SO THAT'S WHY DAVID KEEPS GOING BACK TO, YOU KNOW, IF A COUNCIL WANTS TO MAKE A DECISION ON REPRIORITIZING SOME OF THESE FUNDS. SO WHEN HE ASKS US FOR A NUMBER, I GUESS THE QUESTION IS, YOU KNOW, BASED ON THAT OVERSUBSCRIPTION FOR WHAT'S ALREADY BEEN PLANNED AND COMMITTED, IT'S, IT'S, IT'S A BIT OF A DIFFICULT ANSWER TO COME UP WITH. OH, OKAY. OKAY. IF THAT MAKES SENSE. VICE MAYOR PROTE. THANK YOU. SO I MEAN, THERE SHOULD BE A NUMBER THOUGH OF THE AMOUNT THAT'S IN THE, THAT WE WILL HAVE IN THAT FUND AT THE END OF THE FISCAL YEAR VERSUS HOW MUCH WE'VE SPENT IN THAT FISCAL YEAR. AND THEN ALSO HOW MUCH IS PLANNED FOR, YOU KNOW, FUTURE PAYOUTS. AND THERE SHOULD BE SOME DELTA BETWEEN, YOU KNOW, WHETHER WE'VE OVERSPENT OR UNDERSPENT ON THAT AMOUNT OF MONEY. I MEAN THERE SHOULD LOOKING AT ANY BUDGET, I MEAN THERE HAS TO BE SOME NUMBER THERE. RIGHT. GOT IT. SO AT THE END OF THE YEAR WHEN YOU'RE FIGURING ALL OF THAT OUT, SURE. I THINK, AGAIN, THE WAY I WOULD ACTUALLY EXPRESS IT IS THE CIP THAT YOU ALL HAVE ADOPTED IS THAT PLANNED USE, THAT IT CONTINUES AND IT'S NOT NECESSARILY CONTRACTS THAT HAVE BEEN AWARDED YET. IT'S NOT NECESSARILY CONTRACTS THAT HAVE BEEN AWARDED AND NOT SPENT YET. UM, THAT IS A CLAIM ON THAT RESOURCE WE'RE TALKING ABOUT. RIGHT. SO I WOULD PRESENT IT AS WHAT WE SHOW HERE IS WHAT'S COMING UP ACTUALLY EXCEEDS WHAT IS IN THE FUND BALANCE. RIGHT? THAT'S, THAT'S HOW I WOULD PREPARE WHAT YOU'RE ASKING FOR IF YOU'RE WANTING JUST TO KNOW WHAT CASH IS IN THERE, THAT'S ALREADY BEING PRESENTED THERE, THERE REALLY IS, THOSE ARE THE TWO GENERAL WAYS TO LOOK AT IT BECAUSE THERE ISN'T AN UNPLANNED USE AT THIS POINT IN TIME. RIGHT. WE'RE LOOKING FOR LIKE, IS THERE A SPARE CAPACITY TO GO DELIVER REALLY IMPORTANT CAPITAL PROJECTS? AND I TOTALLY GET THAT, THAT TO ME IS A PRIORITY SETTING QUESTION ABOUT WHAT RESOURCES WE HAVE VERSUS TRYING TO FIND SOME AMOUNT THAT QUITE FRANKLY ISN'T, ISN'T THERE, IS THAT, I DUNNO THAT, THAT HELPS. YEP. THANK YOU. WE ARE, WE ARE TRYING REALLY HARD TO FIND THAT SPARE CAPACITY AND, AND I, I WANT THIS MONEY, BUT I I, I DO UNDERSTAND WHAT YOU'RE SAYING. THAT'S, YOU KNOW, I GUESS WHEN WE'RE TALKING ABOUT THE CIP THAT IS WHEN WE ARE ORDERING THE, THE PRIORITY OF, OF THE PROJECTS AND AND THAT'S THE PLACE TO DO IT CORRECT, IS WHAT I'M HEARING SADLY. 'CAUSE WE WERE LOOKING FOR THAT SPARE CAPACITY. LIKE OTHER AREAS WE, WE NEED MORE. LIKE WE ARE, WE ARE, AND YOU ALL ARE SAYING THERE'S NO, BASED ON OUR CIP THERE'S NO SPARE CAPACITY HERE RIGHT NOW ON THE CURRENT. GOT IT. ALRIGHT, THANK YOU VERY MUCH YOU GUYS FOR HANGING IN, UM, TODAY. THIS HAS BEEN A LONG MEETING, UM, BUT A LOT OF GOOD SUBJECT MATTER AND I WILL, UH, ANNOUNCE THAT ON SEPTEMBER 15TH AT 10:00 AM OH, WE DO HAVE PUBLIC COMMENT. I DON'T WANNA FORGET ABOUT YOU, DOUG. I SEE YOU BACK THERE WAITING PATIENTLY. BUT I DO WANNA LET EVERYBODY KNOW ON SEPTEMBER 15TH AT 10, WE'LL BE HAVING A FOLLOW UP MEETING TO THE MEETING WE HAD ON THE CIP AMENDMENT. SO WE MIGHT MIGHT BE [01:45:01] TAKING UP OTHER THINGS TOO. AND I WOULD, IT IS MY GOAL TO ACTUALLY TAKE A VOTE AT COMMITTEE, UM, AS TO WHETHER TO, UH, FORWARD THAT ON AS A RECOMMENDATION, UM, TO THE, TO THE FULL COUNSEL FOR CONSIDERATION. UM, AT THE SEPTEMBER 15TH, 10:00 AM UM, WE'LL BE DEALING WITH THE, THE AMENDMENT PRIMARILY COUNCIL MEMBER RAMIREZ'S AND, AND POSSIBLY DID YOU, YOU HAD COUNCIL MEMBER PECK'S AMENDMENTS ON, ON THAT AND WE MIGHT BRING UP THE BACK UP THE PAPER BUDGET STABILIZATION FUND TOO, BUT NOT SURE ABOUT THAT YET. UM, DOUG SMITH, OH, SORRY. COUNCIL MEMBER RAMIREZ. UM, MADAM CHAIR, I JUST LOOK AT THE CALENDAR THERE, THERE IS, UM, AN EVENT THAT'S TENTATIVELY SCHEDULED AT, AT 1130, UH, IN THE LEGACY ROOM. SO JUST MAKE YOU AWARE OF THAT. MAYBE WE SHOULD VISIT A LITTLE OFFLINE ABOUT THAT. YEAH, MAYBE WE CAN MOVE UP THE TIME OR, OR DON'T WORRY, WE'RE NOT GONNA HAVE IT WHEN YOU CAN'T ATTEND. OKAY, DOUG, GOOD TO SEE YOU. OKAY. EXCUSE ME. UH, YOU JUST MENTIONED, UH, COUNCIL MEMBER PECK'S AMENDMENT THAT WAS DISCUSSED AT LAST WEEK'S MEETING AND, UH, SHE WANTS TO TRY TO ALLOCATE THE, UH, MONEY FOR, UH, A LOT OF STUFF THAT THE PUBLIC WORKS DOES BY DISTRICT. AND, UH, I DIDN'T THINK ABOUT IT AT THE TIME OF THAT MEETING, BUT I THINK WHAT WE HAVE TO CONSIDER, UH, UH, REGARDING THAT IS THAT, UH, PUBLIC WORKS, I BELIEVE SAID THAT THEY HAVE DONE A MAP OF WHERE THE PROBLEMS ARE AND, UH, I THINK A LOT OF THE PROBLEMS ARE IN THE NORTHEAST AREA OF THE CITY AND IT DOESN'T SEEM FAIR THAT THE MONEY THAT THEY SPEND GETS ALLOCATED EVENLY AROUND THE WHOLE CITY. UH, IF THERE ARE AREAS OF THE CITY THAT THEY'VE IDENTIFIED THAT REALLY NEED IT MORE THAN ANY, ANY PLACE ELSE. SO, UH, JUST I WANTED TO MENTION THAT, UH, IN REGARDS TO WHAT YOU'RE GOING TO DO WITH THAT AMENDMENT THEN, UH, REGARDING THE, THE MO FFAR, UH, THE, UH, WE JUST TALKED ABOUT D-D-S-R-F, UH, I HAD A COUPLE QUESTIONS ON PAGE, UH, PAGE SEVEN OF THE MOFA. UH, THERE'S A DISCREPANCY IN INTEREST INCOME OF TWO AND A HALF MILLION DOLLARS BETWEEN THE, UH, CONTROLLER IN THE, UH, THE, UH, UH, FINANCE DEPARTMENT. AND I'M CURIOUS AS TO WHY THERE'S SUCH A LARGE DIFFERENCE. SO WE'LL, WE'LL GET AN ANSWER FOR YOU ON THAT. YEAH. SO EARLY IN THE YEAR, UH, ON PAGE 12, UH, IN NOTE C UH, I THINK THAT THEY HAVE ABOUT A TRILLION DOLLARS MORE THAN THEY SHOULD. THEY TALK ABOUT THE CITY HAS AUTHORIZED A THOUSAND BILLION IN COMBINED UTILITY SYSTEM BONDS. UH, THAT'S A TRILLION DOLLARS. AND I THINK IT'S JUST A TYPO. I THINK IT SHOULD BE A BILLION DOLLARS. THANK YOU. THANK YOU, DOUG. AND, UH, WHAT ELSE? UH, I THINK, I THINK THAT'S IT REGARDING THE DISCUSSION THAT WE JUST HAD. I DON'T UNDERSTAND WHY THERE HAS TO BE A BALANCE IN THE D-D-S-R-F FUND AT THE END OF THE YEAR. UH, THEY SAY IT'S FOR FUTURE PROJECTS. WELL, WHY CAN'T THEY SPEND EVERYTHING AND AS THEY DO FUTURE PROJECTS, THEY CAN ISSUE COMMERCIAL PAPER TO COVER THOSE AND THAT YEAR'S D-D-S-R-F WILL PAY FOR THE COMMERCIAL PAPER. IT, IT STILL DOES NOT MAKE SENSE TO ME. YEAH. AND, AND I THINK WE'VE TRIED TO ASK IT EVERY WHICH WAY AND, BUT I, BUT I HEAR WHAT YOU'RE SAYING. VICE MAYOR PRO TIM, THANK YOU CHAIR AND THANK YOU FOR YOUR COMMENTS. AND I AGREE, I DON'T KNOW THAT AN EQUAL DISTRIBUTION OF ALL OF THE MONEY, UM, IN EACH COUNCIL DISTRICT IS NECESSARILY THE BEST WAY TO DO IT, BUT IT WAS MORE ABOUT GETTING TO SOME FAIR WAY OF DISTRIBUTING THE FUNDS OR THE NEEDS OF EACH COUNCIL DISTRICT, UM, ARE BEING MET. WHETHER THAT'S, YOU KNOW, A SMALLER PROJECT THAT FIXES A BIG FLOODING ISSUE IN THE COUNCIL DISTRICT OR A PROJECT THAT MAYBE COSTS MORE MONEY. BUT DEFINITELY USING, UM, DATA, WE ABSOLUTELY HAVE TO USE THAT YES. TO MAKE THOSE ALLOCATIONS. SO I COMPLETELY AGREE WITH YOU ON THAT. OKAY. YEAH, I JUST DIDN'T HEAR THAT IN YOUR PROPOSAL. YEP. THAT'S ALL. THANK YOU. THANK YOU SO MUCH, DOUG. IT'S ALWAYS GREAT TO SEE YOU AND APPRECIATE YOUR DUE DILIGENCE. IS DOMINIC MAZO HERE? DON'T SEE HIM. ANYBODY ELSE WANT TO SPEAK? OKAY. AND I JUST SAID THAT SEPTEMBER 15TH DATE, BUT SCRATCH THAT, FOUND OUT I HAD A, A WATER RESOURCES COMMITTEE MEETING FOR HOUSTON GALVESTON AREA COUNCIL AND THERE SOUNDS LIKE THERE'S ANOTHER, ANOTHER CONFLICT. SO STAY TUNED FOR THE DATE ON THAT MEETING. AND WITH THAT, THIS MEETING IS ADJOURNED. AN OCTOBER MEETING? YEAH, PROBABLY. * 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.