OPENPUBLICA · PUBLIC MEETING RECORD
Record of Proceedings

Fiscal Affairs Committee Meeting (Joint with Government Operations) - February 3, 2026

Committees and Commissions — Tuesday, February 3, 2026
BodyHouston, Texas
SessionCommittees and Commissions
DateTuesday, February 3, 2026
StatusFILED
Video Record
0:00 / 3:15:13

Transcript — Verbatim
0:14

February Bad Fiscal Affairs Committee.

0:16

I'm Sally Alcorn, Chairman of the Committee, and we have a super long, two-long agenda.

0:22

So I am going to be asking everyone to be as brief with your comments and questions as you can.

0:29

On the first few items, we will have only one round of council member questions.

0:34

I'm sorry to do that, but we don't want to go all the way into public session today.

0:43

This is a joint meeting with the chairman of the government operations committee, Fred Flickinger.

0:48

So welcome everyone.

0:49

I want to welcome my colleagues to the horseshoe.

1:11

So with that, we will have our uh our finance director, Melissa Dubowski, and Deputy Controller Will Jones.

1:17

Um the floor is yours.

1:19

All right.

1:20

Um good morning, Madam Chair, members of the committee.

1:23

Uh thank you for the opportunity to provide the quarterly financial update for the period ending December 31st, 2025.

1:30

In the general fund fund balance, we're projecting an ending fund balance of about 336 million for FY26, or roughly 13 percent of expenditures, less debt and pay as you go.

1:40

That's about 17.5 million lower than the finance estimates, mainly due to more a more conservative revenue projection.

1:48

We remain above the city's reserve target with about 145 million above the 7.5 percent of total expenditures, excluding debt service and pay go in reserve.

1:58

With that context, revenues and expenditures remain unchanged this month.

2:02

Uh so I'll I'll move to the enterprise fund, starting with aviation, uh operating expenses increased by by about 1 million, driven by FAA related consulting services supporting the grant eligible airfield projects.

2:15

That increase was offset by a 1 million reduction in the transfer to the airport improvement fund.

2:20

And the combined utility system operating expenses declined by roughly 6.9 million due to personnel savings and operating transfers were down about 15.6 million, primarily from lower than expected uh debt payments and capital transfers.

2:35

Uh for the dedicated drainage and street renewal fund, uh supported by property tax revenues increased by three million from higher interest earnings while expenditures decreased by about 5.2 million due to delays in vehicle purchases.

2:49

And for the dedicated drainage renewal drainage fund, uh the revenues increased by approximately 4 million, and again reflecting higher interest income.

2:58

And for the dedicated drainage uh metro, uh the expenditures declined by about 3.9 million due to personnel savings.

3:06

And finally, in the stormwater fund, expenditures are down by about 12 million, largely driven by personal savings, vehicle purchase delays, and lower than anticipated transfers to the building inspection fund.

3:19

For the commercial paper and bonds, the city's practice has been to maintain no more than 20 percent of the total outstanding debt for each type of debt and a variable rate structure, which is in line with rating agency's guidance of 25 percent.

3:31

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.

3:41

And with that, I'll move on to the quarterly uh investment and swap reports.

3:45

Uh so for the quarterly report, uh as of December 31st, 2025, the city has 6.5 billion dollars invested in our journal investment pool.

3:54

The character of this pool is that of a short-time bond fund that holds investments of very high credit quality.

4:00

Fisher ratings reviewed this pool and assigned the pool as highest ratings of triple A.

4:04

Our investment strategy is to match assets and liabilities for a a time period of one year into the future and to exercise discretion for the balance of remaining funds.

4:12

Investments are one point zero six billion higher than last year, and this is primarily attributable to the new bond transaction in aviation and the new bond transaction in the combined utility system.

4:24

As of December 31st, the general investment pool was yielding four percent, which is down from the 4.05% yield in the prior quarter.

4:31

In addition, the general investment pool, we have two small investment pools that total about 15 million.

4:36

Those pools exist to comply with tax requirements of the federal government.

4:41

A detailed listing of all the securities owned by the city appears at the back of the investment swap investment report.

4:48

And for the swap report, um the written swap report that appears in the MOFAR appears as a comprehensive description of our two swap positions.

5:00

The city had a net paid for the six-month ending December 31st, 2025 from its swaps of 134.95 million.

5:06

Fair value for both swaps as of December 31st 2025 was negative at 52 million, which is approximately 17 million less than prior quarter of a negative 69 million.

5:17

The city swaps are fairly complex.

5:19

If you have questions regarding this, please contact our office with Vernon Middleton Lewis.

5:24

Our city treasurer can help you understand that better.

5:27

And with that, that concludes my report.

5:29

Thanks, Will.

5:30

Directly.

5:31

Good morning.

5:32

This is the six plus six financial report for the period ending December 31st, 2025.

5:37

Fiscal year 26 projections are based on six months of actual results and six months of projections.

5:43

For the general fund, our revenue projection is 41.9 million lower than the adopted budget, but remains unchanged from the prior month.

5:51

Monitoring sales tax receipts for the month of November were $70.8 million, which is about 0.3% lower than the same period last year.

6:01

And in order to meet the current estimate of $902 million, the remaining periods would need to come in 4% below the prior year.

6:07

So we still feel we have a pretty conservative projection on sales tax, and we'll continue to monitor that.

6:13

On the expenditure side, the projection is $9.5 million higher than the adopted budget and remains unchanged from the prior month.

6:20

So together with the revenues, we're projecting the ending fund balance to be $353.5 million, which remains unchanged from the prior month at about 13.9% of estimated expenditures, not including debt service and pay as you go.

6:33

That fund balance is $162 million above the target of holding $7.5%.

6:40

Since we have a fairly long agenda today, um, I think I'll skip over the enterprise special revenue and other funds since we're in line with the controller's office numbers.

6:50

Um move on to the Houston economy since it's a quarterly report.

6:56

According to the Bureau of Labor Statistics, the preliminary total non-form employment for the Houston Woodland Sugarland metropolitan area stood at approximately $3.5 million in November of 2025, which is up approximately 0.3% compared to the prior month.

7:12

Um and compared to the prior year, employment is up about 0.5%.

7:17

The unemployment rate for the month of November is 4.5 percent, which is uh slightly um slightly above the November 24 number of 4.4 percent.

Discussion Breakdown — Share of Meeting
Solid Waste Management█████████████████████21%
Parks and Recreation████████████████████20%
Budget█████████████████17%
Public Safety█████████████13%
Public Works███████7%
Fiscal Sustainability█████5%
Procurement████4%
Public Engagement███3%
Legal Considerations██2%
Summary of Proceedings

Fiscal Affairs Committee Meeting (Joint with Government Operations) - February 3, 2026

This joint meeting of the Fiscal Affairs Committee (chaired by Sally Alcorn) and the Government Operations Committee (chaired by Fred Flickinger) covered a wide-ranging agenda including quarterly financial updates, upcoming financial transactions, progress on the Ernst & Young efficiency studies, overtime usage reports for Police, Fire, and Solid Waste, a review of the Open Space Ordinance (Parks and Private Parks Ordinance), and a presentation on transitioning heavy trash collection to a scheduled on-demand service. The meeting included public testimony on financial concerns, park funding equity, and solid waste services.

Public Comments & Testimony

  • Jack Belinski expressed concern that the city faces a $200–$300 million shortfall next year and that overtime reduction efforts have not worked. He questioned whether buyouts actually save money and whether the city is taking too much from other departments (libraries, health, parks) to fund police and fire.
  • Ed Pett (Friends of Columbia Tap) urged changes to park sector boundaries, noting that current boundaries (based on highways built through Black and Brown neighborhoods) trap fees in areas with high development instead of allowing equitable spending. He also said the fund should prioritize land acquisition over deferred maintenance.
  • Stefania Tomaskovic (SEER) expressed support for raising the fee-in-lieu (currently $700, set in 2007) and called for an equitable distribution of funding (e.g., a 70-30 split like the sidewalk ordinance).
  • Hermani Bañas advocated for zero-based budgeting and more community participation in park decisions.
  • Adam Trevino (RACIS Collab) supported raising the fee based on appraised values, noting his own property taxes have increased significantly.
  • Beck Edwards (Rice University) introduced a student project to build a mathematical optimization model for redistricting park sectors.
  • Andy Escobar (SEER) echoed support for raising the fee and equitable distribution.
  • Kimberly Phipps Nichols (Park Sector 14 resident) suggested exempting parks spending from the revenue cap, creating a charter amendment for maintenance funds, and considering a citywide park district instead of sectors.
  • Rosanna Urban (Solid Waste driver) asked for investment in new self-contained compactors at depositories to reduce illegal dumping and improve recycling capacity.
  • Jet Velinski emphasized the need for a firm launch date for the new heavy trash program, a single phone number (311), and a dedicated funding source (trash fee) to address budget shortfalls.
  • Gabriela Hamdia (Environment Texas) advocated for a solid waste fee to improve reliability and announced a letter with petition signatures.
  • Felix Kapoor asked about illegal dumping plans and emphasized the need for equity in any proposed fee, concerned residents should not have to choose between doctor visits and trash pickup.
  • Malachi Key (Air Alliance Houston) criticized the Houston Recycling Collaboration, stating that plastic waste is going to an unpermitted facility and urged scrutiny.
  • Benjamin Broadway questioned the equity of the city budget (60-63% to police and fire) and asked about the fate of the avalorum tax and whether a trash fee would go to general revenue or solid waste.

Discussion Items

  • Quarterly Financial Update (Finance Director Melissa Dubowski & Deputy Controller Will Jones): The general fund ending fund balance is projected at $336 million for FY26 (13% of expenditures), $17.5 million lower than earlier estimates. Revenues are $41.9 million below adopted budget, expenditures $9.5 million higher. Sales tax receipts for November were $70.8 million (0.3% lower than prior year). Investment pool is $6.5 billion, yielding 4%. Swap fair value was negative $52 million. The city's commercial paper and variable rate debt exposures were reviewed.
  • Upcoming Financial Transactions (Melissa Dubowski): Presented routine renewals for GO commercial paper series E1 ($100M, expiring July 2026) and series J ($125M, expiring May 2026). Also reviewed variable rate demand bonds for the combined utility system (series 2004 B2 expiring March, series 2004 B4 expiring June). Staff will seek renewal quotes and bring items to council in spring/summer.
  • Ernst & Young Efficiency Study (Melissa Dubowski & Chief Procurement Officer Jed Greenfield): Category councils have been launched to identify overlapping contracts and renegotiation opportunities. A spend dashboard was demonstrated. Example: top fleet vendor has eight separate contracts with differing pricing. A contract for portable restrooms will be brought to council soon showing savings from consolidation. Councilmembers raised concerns about small business opportunities and alignment with climate action goals; staff confirmed reporting will continue and small business opportunities will be incorporated.
  • Overtime Usage – Police Department (Chief Harden): FY26 year-to-date overtime actuals are $13.9M against a $14.8M budget. Overtime is down 23% from last year due to operational changes. Main drivers are operations (holidays, weather events) and airport system (reimbursed). Attrition: 72 departures vs. 181 new cadets (a net gain). All sergeant and patrol spots are now filled. Response times for code one calls improved to under 6 minutes. Discussion included the cost of disaster overtime (warming centers cost ~$1M/day citywide), protests (0 to $100K per protest), and the impact of council district safety funds. Chief confirmed such funds are welcomed but must align with captains' priorities.
  • Overtime Usage – Fire Department (Chief Munoz): FY26 year-to-date overtime is $40.8M, including $3.7M in reimbursable disaster/special event costs. Head count is up 103 from last year. Staff is now able to send more firefighters to paramedic school (backfilling requires overtime). Response times improved by 20 seconds; unit availability improved 92% (from 121 units out of service to 21 in December). Recruitment and retention are strong: projected to exceed attrition. Councilmembers asked about the impact of the shift schedule (current 46.7-hour workweek) and whether changing it could reduce overtime; chief said studies could be reviewed but contractual obligations remain.
  • Overtime Usage – Solid Waste Department (Director Larryus Hassen): FY26 year-to-date overtime is $3.4-3.5M, on pace with prior years. Main causes: daily route catch-up, fleet availability, absenteeism, and transfer station wait times. New hires: 19 drivers added. Head count dropped from 447 to 385, partly due to early retirement buyout. Re: heavy trash, a new scheduled on-demand service was previewed (see below). Councilmembers noted challenges with delayed pickups and communication of routes.
  • Controller's Overtime Presentation (Deputy Controller Will Jones): Presented overtime data across all three departments. FY25 actuals exceeded adopted budget by $71.4M (95% from police and fire). FY26 projected overrun: $54.2M. For fire, the projected $81M is 40% above the five-year average, a significant shift. The top 10 overtime earners in fire can nearly triple their salary. Overtime does not count toward pension. Audits scheduled: police by May 2026, fire after. Will Jones noted that natural disasters are becoming the norm and should be better budgeted.
  • Open Space Ordinance (Parks & Private Parks Ordinance) – Planning Director Von Tran, Parks Director Kenneth Allen, Legal Section Chief Tammy Kim:
    • Background: Ordinance adopted 2007 to ensure park space as Houston grows. Developers must dedicate land or pay fee-in-lieu ($700/unit, unchanged since 2007). Fees are collected and spent within 21 park sectors. Since 2007, $100M collected; $47M spent on improvements; $36M committed; $13-14M remaining. 199 of 383 parks have been improved. Land acquisition: 65 acres acquired for $14M.
    • Need for update: State law Texas Local Government Code Chapter 212 (eff. Jan 1, 2024) imposes new requirements. Land dedication capped at 10% of development area; fee collection delayed until certificate of occupancy; calculation change. Minimum fee option likely around $1,260/unit. City must align to avoid litigation and preserve park funding.
    • Councilmembers and public raised concerns about frozen fee since 2007, inequitable sector boundaries, need for more land acquisition vs. deferred maintenance, and desire to use funds more broadly (e.g., citywide). Next steps: further analysis and proposed amendments.
  • Solid Waste – Transition to Scheduled Heavy Trash Service (Director Larryus Hassen):
    • Current system (crew driving every street) is inefficient. New program: residents call 311 to schedule pickup; collection within 5 business days; up to 4 collections per address per year. Launch target: March 2, 2026. Training of drivers on new work order system is underway. Six neighborhood depositories are promoted to reduce illegal dumping.
    • Route optimization software (previously unused) now implemented; drivers have a target of 950 cans per day. Recycling contamination reduced from 49% to 38.7%.
    • Contractor support: $2M authorized, 33% used, 6 trucks active, 3,255 tons collected.
    • Landfill capacity: McCarty 9 years, Blue Ridge 73 years, others 16-30 years.
    • Councilmembers expressed support but concerns about communication, illegal dumping, feasibility of citywide rollout, and need for sustainable funding (e.g., a trash fee). Director asked for council help in educating the public.

Key Outcomes

  • No formal votes were taken; all items were informational and for discussion.
  • The Ernst & Young efficiency study will continue, with quarterly updates and contract savings tracked.
  • HPD and HFD overtime will be monitored; departments will look for savings in other line items to offset overruns. The Controller's audits are scheduled.
  • The administration will bring forward amendments to the Open Space Ordinance to comply with state law (Chapter 212), with further committee discussion at upcoming meetings.
  • Solid Waste will proceed with the scheduled heavy trash service, with a tentative launch of March 2, 2026, pending successful training and public outreach. The director committed to sharing the Burns & McDonald cost service study with council.
  • Next Fiscal Affairs Committee meeting: Tuesday, March 3, 2026 at 10 AM. Next Government Operations Committee meeting: Wednesday, March 4, 2026 at 2 PM.

Meeting Transcript

February Bad Fiscal Affairs Committee. I'm Sally Alcorn, Chairman of the Committee, and we have a super long, two-long agenda. So I am going to be asking everyone to be as brief with your comments and questions as you can. On the first few items, we will have only one round of council member questions. I'm sorry to do that, but we don't want to go all the way into public session today. This is a joint meeting with the chairman of the government operations committee, Fred Flickinger. So welcome everyone. I want to welcome my colleagues to the horseshoe. So with that, we will have our uh our finance director, Melissa Dubowski, and Deputy Controller Will Jones. Um the floor is yours. All right. Um good morning, Madam Chair, members of the committee. Uh thank you for the opportunity to provide the quarterly financial update for the period ending December 31st, 2025. In the general fund fund balance, we're projecting an ending fund balance of about 336 million for FY26, or roughly 13 percent of expenditures, less debt and pay as you go. That's about 17.5 million lower than the finance estimates, mainly due to more a more conservative revenue projection. We remain above the city's reserve target with about 145 million above the 7.5 percent of total expenditures, excluding debt service and pay go in reserve. With that context, revenues and expenditures remain unchanged this month. Uh so I'll I'll move to the enterprise fund, starting with aviation, uh operating expenses increased by by about 1 million, driven by FAA related consulting services supporting the grant eligible airfield projects. That increase was offset by a 1 million reduction in the transfer to the airport improvement fund. And the combined utility system operating expenses declined by roughly 6.9 million due to personnel savings and operating transfers were down about 15.6 million, primarily from lower than expected uh debt payments and capital transfers. Uh for the dedicated drainage and street renewal fund, uh supported by property tax revenues increased by three million from higher interest earnings while expenditures decreased by about 5.2 million due to delays in vehicle purchases. And for the dedicated drainage renewal drainage fund, uh the revenues increased by approximately 4 million, and again reflecting higher interest income. And for the dedicated drainage uh metro, uh the expenditures declined by about 3.9 million due to personnel savings. And finally, in the stormwater fund, expenditures are down by about 12 million, largely driven by personal savings, vehicle purchase delays, and lower than anticipated transfers to the building inspection fund. For the commercial paper and bonds, the city's practice has been to maintain no more than 20 percent of the total outstanding debt for each type of debt and a variable rate structure, which is in line with rating agency's guidance of 25 percent. 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. And with that, I'll move on to the quarterly uh investment and swap reports. Uh so for the quarterly report, uh as of December 31st, 2025, the city has 6.5 billion dollars invested in our journal investment pool. The character of this pool is that of a short-time bond fund that holds investments of very high credit quality. Fisher ratings reviewed this pool and assigned the pool as highest ratings of triple A. Our investment strategy is to match assets and liabilities for a a time period of one year into the future and to exercise discretion for the balance of remaining funds. Investments are one point zero six billion higher than last year, and this is primarily attributable to the new bond transaction in aviation and the new bond transaction in the combined utility system. As of December 31st, the general investment pool was yielding four percent, which is down from the 4.05% yield in the prior quarter. In addition, the general investment pool, we have two small investment pools that total about 15 million. Those pools exist to comply with tax requirements of the federal government. A detailed listing of all the securities owned by the city appears at the back of the investment swap investment report. And for the swap report, um the written swap report that appears in the MOFAR appears as a comprehensive description of our two swap positions. The city had a net paid for the six-month ending December 31st, 2025 from its swaps of 134.95 million. Fair value for both swaps as of December 31st 2025 was negative at 52 million, which is approximately 17 million less than prior quarter of a negative 69 million. The city swaps are fairly complex. If you have questions regarding this, please contact our office with Vernon Middleton Lewis. Our city treasurer can help you understand that better. And with that, that concludes my report. Thanks, Will. Directly. Good morning. This is the six plus six financial report for the period ending December 31st, 2025. Fiscal year 26 projections are based on six months of actual results and six months of projections. For the general fund, our revenue projection is 41.9 million lower than the adopted budget, but remains unchanged from the prior month. Monitoring sales tax receipts for the month of November were $70.8 million, which is about 0.3% lower than the same period last year.

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