OPENPUBLICA · PUBLIC MEETING RECORD
Record of Proceedings

Budget and Fiscal Affairs Committee Meeting - April 28, 2026

Committees and Commissions — Tuesday, April 28, 2026
BodyHouston, Texas
SessionCommittees and Commissions
DateTuesday, April 28, 2026
StatusFILED
Video Record
0:00 / 1:20:33

Transcript — Verbatim
0:05

Good morning, everyone.

0:06

Welcome to the April 28th Budget and Fiscal Affairs Committee meeting.

0:10

I am Sally Alcorn.

0:12

I call this committee to order and would like to welcome all council members in attendance.

0:17

We have Fred Flickinger, staff from Councilmember Abbey Cayman District C, staff from District G, Mayor Nan Huffman, staff from Mayor Pro Tem Martha Castax Tatum's office, staff from the Vice Mayor Pro Tem's office, and staff from District J Ed Pollard's office.

0:35

So welcome everyone.

0:36

And I believe the Mayor Pro Tem is joining us online.

0:42

Vice My Vice Chair Mario Castillo is here and just will be in here shortly.

0:49

Okay.

0:49

So a couple things before we get started.

0:52

You know, this committee has been talking about the open space ordinance.

0:56

This week, April 30th, at the Planning Commission, there will be a presentation of the changes and a call for a public hearing on May 14th.

1:05

May 14th will be the public hearing on the proposed changes to the open space ordinance at Planning Commission.

1:14

All right.

1:14

Also, we're getting ready for budget.

1:16

The budget will be released on May 5th.

1:19

The five-year forecast by the Finance Director will be presented May 6th.

1:24

May 12th through the 19th, our budget workshops.

1:27

May 16th is the budget town hall at Fond Directs Center.

1:31

May 20th is uh is the public hearing at 9 a.m.

1:36

on the budget.

1:37

May 20th is also the 6 p.m.

1:39

virtual budget town hall.

1:41

And May 27th, Council members will submit amendments here at the horseshoe.

1:46

June 3rd, the budget vote.

1:47

So lots of exciting budget dates coming up.

1:50

We've gotten so far a great response to the your two cents budget survey.

1:55

I encourage everybody to fill it out and get it out to your constituents.

1:58

And thank you for already doing that, because we're getting lots of responses.

2:03

All right.

2:04

With that, I'll have uh the finance director and deputy controller come on up for the quarterly financial report and the investment report and the swap report and everything we do on the quarterly basis.

2:19

Welcome.

2:19

Thank you.

2:20

Sure, yes.

2:30

All right.

2:31

Okay.

2:31

Um good morning, Madam Chair and members of council.

2:35

Um thank you for the opportunity opportunity to provide the quarterly financial report for the period ending March 31st, 2026.

2:44

In the general fund, we're projecting an ending fund balance of 276.1 million or 10.4 percent of expenditures, less debt service and pay-go for FY26.

2:56

This is 23.8 million lower than the projection of the finance department and 31 million lower than what we projected last month.

3:04

The difference is due to a lower revenue projection than the finance department.

3:09

So typically the biggest difference between our office and finance comes down to sales tax.

3:14

This month, though, we are actually aligned on sales tax.

3:16

The difference instead is tied to the TERFS municipal service fee.

3:20

Over the past three years, that fee has averaged about $15.8 million annually.

3:25

This month, finance is projecting more than double that amount with an additional $16.4 million.

3:31

Uh that's a significant jump.

3:33

And before we are able to incorporate that into our projection, we need a better understanding of what's driving that increase and where those funds are or and if those funds are tied to a specific use.

3:44

We plan on meeting with finance and economic development to get more clarity on that.

3:48

So moving on, based on our current projections, the fund balance will be approximately $76.9 million above the city's target of holding 7.5 percent of total expenditures, excluding debt service and pay as you go and reserve.

4:02

And our revenues, we have increased our revenue projection by $8.8 million from last month to reflect the following.

4:09

Uh sales tax increase by $7.1 million, miscellaneous other increase by $1.2 million, and direct interfund increase by $500,000 due to higher fire airport related services.

4:23

Moving on to the expenditures, we have increased our expenditure projection by $39.6 million with significant changes as follows.

4:32

An increase of $22.2 million in the fire department, of which $11.8 million is attributable to the February 27, 2026 arbitration ruling.

4:51

The remaining 10.4 million reflects other cost increases associated with contract grievances, special pay, and minimum staffing requirements.

5:00

Just last month, we increased the fire department budget by $51 million.

5:03

Now this month we are adding another $22 million, and that brings the total increase since the budget you approved in June to $73 million.

5:12

To put that in perspective, the entire solid waste department budget is about $101 million.

5:18

The parks budget is about $88 million.

5:20

The increase to fire alone is large enough that it would rank as the fifth largest department in the general fund, greater than the total budgets for both library and health department, which are about $51 million each.

Discussion Breakdown — Share of Meeting
Budget███████████████████████████████████35%
Procurement█████████████████████████25%
Audit and Oversight██████████████████████22%
Fiscal Sustainability████4%
Procedural███3%
Water And Wastewater Management███3%
Public Transit██2%
Fleet Management██2%
Economic Development█1%
Summary of Proceedings

Budget and Fiscal Affairs Committee Meeting - April 28, 2026

The Budget and Fiscal Affairs Committee, chaired by Sally Alcorn, met on April 28, 2026, to review the quarterly financial report, progress on the EY contract management project, upcoming financial transactions, overtime usage, and the audit division's update. Key presentations were made by the Finance Director, Deputy Controller, Chief Procurement Officer, and Audit Director. Public comments addressed vehicle pooling, Metro cards, budget process timing, and concerns about financial reporting.

Public Comments & Testimony

  • Jack Valinski suggested pooled vehicles and Metro cards to reduce mileage on city vehicles, and urged respectful debate among council members. He also recommended starting the budget process earlier (February 1) to allow more time for review.
  • Doug Smith expressed shock at the manual payroll system and questioned the accuracy of the Ernst & Young savings projection. He noted discrepancies in fund balance reporting and requested a presentation from Public Works on unspent funds in the DDSRF fund.

Discussion Items

  • Quarterly Financial Report (Period Ending March 31, 2026):

    • General fund projected ending balance of $276.1 million (10.4% of expenditures, less debt service and pay-go). This is $23.8 million lower than the prior month’s projection, driven by a $16.4 million higher TERS municipal service fee estimate by Finance (which the Controller's office questioned) and $39.6 million in expenditure increases, including $22.2 million for the Fire Department (partly due to a March 2026 arbitration ruling).
    • The fire department's total increase since the adopted budget is $73 million, now larger than the entire Solid Waste ($101M) or Parks ($88M) budgets.
    • Projected deficit $204 million, with revenues down $12 million and expenditures up $117 million since adoption.
    • Controller's office reported a general fund ending balance of $299.9 million (11.3% of expenditures) based on different revenue assumptions.
    • Enterprise funds: Combined Utility System transfers decreased by $15 million due to project delays; Convention & Entertainment fund saw lower HOT collections; Stormwater fund expenditures decreased by $15 million.
    • Investment pool: $7.43 billion, yielding 4.035%, up from 4% previous quarter.
    • Swap positions: net paid $431,000; fair value negative $59 million (more negative than prior quarter).

  • EY Contract Management Update:

    • Chief Procurement Officer Jed Greenfield reported that $17.2 million in projected savings from category management have not been realized (only $0.3 million achieved). Reasons included time required to build a spend dashboard and that many existing contract prices were already competitive. Future savings are expected from multi-year contracts and rebate structures, but not yet quantified.
    • The spend dashboard was demonstrated as a tool to identify non-contract spend and consolidate purchasing.
    • Councilmember Ramirez noted the $17.5 million expectation from EY was inflated; Greenfield confirmed a more conservative approach for FY27 budget.

  • Upcoming Financial Transactions:

    • A $33 million Texas Water Development Board loan application for lead/copper rule compliance, with $17 million forgivable, $8 million zero-interest, and $7 million at ~3% interest. To be submitted May 6, closing next spring.

  • Overtime Usage:

    • HPD overtime budget trued up to ~$30 million (YTD $23M); HFD overtime ~$82.6 million (YTD $60M); Solid Waste ~$6.3 million (YTD $4.9M). HFD overtime decreased $5M from FY25 actuals due to increased headcount.
    • Councilmember Flickinger referenced a previous report of one employee earning nearly $500k in overtime; a question referred to fire department budget workshop.

  • Audit Division Update:

    • Director Jennifer Pierce presented the FY25 enterprise risk assessment (156 risks across 11 categories), the FY26 audit plan (32 risk-based engagements), and findings from a payroll system audit.
    • The payroll audit identified seven findings: heavy reliance on manual processes (e.g., manual time cards for HPD/HFD), weak access controls, and risk of errors. Management reported implementing five corrective actions.
    • Council will receive a risk survey soon.

Key Outcomes

  • No formal votes were taken; the committee received reports and asked questions.
  • Upcoming schedule: Budget released May 5; five-year forecast May 6; budget workshops May 12-19; town halls May 16 and 20; public hearing May 20; budget vote June 3.
  • The general appropriation ordinance (truing up budget to current estimates) is on council agenda for April 29.
  • Finance working group recommended proceeding with TWDB loan application; council vote scheduled May 6.
  • The committee will hold a special meeting May 6 at 2 p.m. to review the proposed FY27 budget and five-year forecast.

Meeting Transcript

Good morning, everyone. Welcome to the April 28th Budget and Fiscal Affairs Committee meeting. I am Sally Alcorn. I call this committee to order and would like to welcome all council members in attendance. We have Fred Flickinger, staff from Councilmember Abbey Cayman District C, staff from District G, Mayor Nan Huffman, staff from Mayor Pro Tem Martha Castax Tatum's office, staff from the Vice Mayor Pro Tem's office, and staff from District J Ed Pollard's office. So welcome everyone. And I believe the Mayor Pro Tem is joining us online. Vice My Vice Chair Mario Castillo is here and just will be in here shortly. Okay. So a couple things before we get started. You know, this committee has been talking about the open space ordinance. This week, April 30th, at the Planning Commission, there will be a presentation of the changes and a call for a public hearing on May 14th. May 14th will be the public hearing on the proposed changes to the open space ordinance at Planning Commission. All right. Also, we're getting ready for budget. The budget will be released on May 5th. The five-year forecast by the Finance Director will be presented May 6th. May 12th through the 19th, our budget workshops. May 16th is the budget town hall at Fond Directs Center. May 20th is uh is the public hearing at 9 a.m. on the budget. May 20th is also the 6 p.m. virtual budget town hall. And May 27th, Council members will submit amendments here at the horseshoe. June 3rd, the budget vote. So lots of exciting budget dates coming up. We've gotten so far a great response to the your two cents budget survey. I encourage everybody to fill it out and get it out to your constituents. And thank you for already doing that, because we're getting lots of responses. All right. With that, I'll have uh the finance director and deputy controller come on up for the quarterly financial report and the investment report and the swap report and everything we do on the quarterly basis. Welcome. Thank you. Sure, yes. All right. Okay. Um good morning, Madam Chair and members of council. Um thank you for the opportunity opportunity to provide the quarterly financial report for the period ending March 31st, 2026. In the general fund, we're projecting an ending fund balance of 276.1 million or 10.4 percent of expenditures, less debt service and pay-go for FY26. This is 23.8 million lower than the projection of the finance department and 31 million lower than what we projected last month. The difference is due to a lower revenue projection than the finance department. So typically the biggest difference between our office and finance comes down to sales tax. This month, though, we are actually aligned on sales tax. The difference instead is tied to the TERFS municipal service fee. Over the past three years, that fee has averaged about $15.8 million annually. This month, finance is projecting more than double that amount with an additional $16.4 million. Uh that's a significant jump. And before we are able to incorporate that into our projection, we need a better understanding of what's driving that increase and where those funds are or and if those funds are tied to a specific use. We plan on meeting with finance and economic development to get more clarity on that. So moving on, based on our current projections, the fund balance will be approximately $76.9 million above the city's target of holding 7.5 percent of total expenditures, excluding debt service and pay as you go and reserve.

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