Okay, we're gonna move to our ARA budget workshop.

We have Director Paez and Valerie Barry here to present, and I'll turn the floor over to you.

All right, thank you.

Good afternoon.

We're here to present the ARA FY27 proposed budget.

With me is Valerie Berry, our chief financial officer, and our entire executive team.

Let's begin on slide number three.

So ARA is organized around three eight unique programs that align with the strategic objectives of this administration.

Slide four, please.

So I showed you the previous slide because it matches what you see in the budget book.

But actually, ARA's programs span multiple city priorities, and the reason that I inserted this slide was so that so that you'd see that, for example, animal service is both a quality of life issue and a public safety issue.

The main takeaway here is that our programs are not just in one specific priority.

Next slide, please.

All city departments were directed to submit reductions of up to 10% of our adjusted general fund budget, and to explain what that reduction would mean.

ARA's reduction for FY27 is 7.31% of our budget or about $833,173.

This reduction includes the elimination of seven positions as well as all of ARA's travel, training, and education budget.

All seven positions were vacant, so we do not need to do layoffs to meet our target.

Next slide, please.

And this slide summarizes the expenditures for all of the funds that are administered by ARA.

The general fund is in green at the very top.

As I said, our budget reduction is $833,000, which is 7% of our budget.

But although our budget was cut, you do see a small increase here.

That's the net increase in general fund expenditures because remember, this year all of the departments got the FY27 hope across the board raises, which I'm sure you've all heard about, as well as restricted accounts increases.

And for ARA, we also had an increase in the transfer to bark, which comes in which comes into the general fund as an expenditure.

So you do see a small increase for that for that offset against the $833,000 decrease.

In the Park Houston special revenue fund, you see a net decrease in expenditures, and that again is the net decrease resulting from mandatory personnel and restricted account increases against the transfer to the general fund, the payment for debt service for parking meters, and their allocation allocation for indirect cost recovery.

Similarly, the increases that you see in the BARC special revenue fund are the mandatory increases in personnel and restricted accounts.

In the property and casualty fund, you have a 2.9 net decrease.

So this decrease is the total of all of those mandatory increases for personnel and restricted accounts against significant reductions in our premium for property and casualty insurance.

And finally, the increase that you see in Central Services Revolving Fund is attributable to the ARA 311 HPW water customer service merger.

The increase in the fund looks large because historically ARA only budgeted things like postage and employee parking and metro passes in the Central Services Revolving Fund, and now we have 183.5 employees that are budgeted here.

Next slide, please.

And this chart shows you our expenditures for fiscal years FY25 through 27.

General fund expenditures are in green at the bottom.

Special funds, Bark and Park Houston are in red, and the revolving funds are at the top in blue.

The detail behind this chart is on the next two slides.

Next slide, please.

This is the detail behind the bar charts on the previous page.

The top block is the general fund with a budget of 29.6 million dollars.

Interestingly, the biggest chunk of our general fund budget is the transfer to BARC, which is 50% of our general fund budget or 14.8 million dollars this year.

Personnel is 35% of our general fund budget, and the other 15% is our contractual obligations and restricted accounts.

In the second section, you see BARC's budget for FY27, it's $16.9 million dollars.

The majority of that comes from the 14.8 million dollar transfer to BARC.

This year, the mayor did approve a $1.3 million dollar increase in the transfer to BARC.

And in the BARK budget, $72% is allocated for personnel.

And finally, the breakdown for Park Houston reflects that personnel is $41% of their budget, 20% is the transfer to the general fund, and the remainder is their contractual services.

Next slide, please.

Next are our two revolving funds, risk management and central services.

At the top is the breakdown for ARA's portion of the property and casualty fund.

The total budget for this fund is almost $39 million, almost $30 million.

It's $29.96, but only 3% of that fund's budget is for personnel.

The other 96% is for commercial insurance premiums for flood and property insurance.

Below that is the Central Services Revolving Fund with a total budget of $24 million.

As I mentioned earlier, there used to be no employees in this fund, but this is where the consolidated call center was moved to, and now you have 183 employees to budget here.

So for FY27, 70% of this fund is now in personnel.

Next slide, please.

ARA is experiencing increases and decreases across our eight program areas, as you can see here.

We overall have a very, very small increase of 0.2% across all of our funds.

That nominal increase is similar to what I'm sure you've seen for other departments because they received the increases for HOPE and the restricted accounts.

The numbers you see here are net of those increases.

I'll go through them individually.

Starting with the 3.3% reduction that you see in administrative services, that's the very top.

That's mainly due to the mandated budget reduction.

Six of the seven vacancies that we eliminated are in administrative services.

Next is BARC, and you see a 5.6% increase in that budget.

That's the net result of being fully staffed and having a very, very good shelter director this year.

You know, BARC used to have double digit vacancy rates, and because we had double-digit vacancy rates, we could always budget for that vacancy, which resulted in us having a positive fund balance for all of these years.

This year, for the first time, our fund balance was going to go negative.

Why?

We only have three vacancies in all of BARC.

People are staying, we have a shelter director that they like and that they trust.

It's been a very, very good turnaround story.

Next you have 311.

You see an almost 12% increase in 311, and that represents the hiring of critical positions that originally took the retirement incentive, and we were given permission to backfill them because obviously they're call center agents, and we need to have them.

For FY26, the restricted accounts had not been included, so you don't see them in this year's budget.

You do see them in the FY27 budget, which is why you have this sort of exaggerated increase of 12%.

The 3% net increase that you see for on-street parking management reflects the mandatory personnel and restricted accounts increases that you see across all of the programs.

Then finally, the 9% decrease in risk management is again that premium for our insurance that I told you about at the beginning of the presentation.

Next slide, please.

And now we'll get into the details of our eight program areas and the associated performance measures for those areas.

The first of these areas is called administrative services.

This is where we had the majority of our vacancies taken and the budget reduction.

This captures the administrative services that ARA provides to all other city departments, citywide policy management, citywide mailroom services, asset disposition for end-of-life assets, policy administration.

This also houses all of the employees and franchise administration, which collect $150 million a year for the general fund.

There are 45.7 FTEs total that are budgeted in this program with a proposed budget of 11.9 million dollars against collections of almost 170 million dollars.

On this and each of the following slides, you're going to see new KPIs.

Because there's limited space on these slides, we've tried not to include the ones that we will no longer be tracking beginning in FY27.

We're trying to include most of the new ones that you'll see.

We have 80 that we're tracking internally, so you don't see all 80 here.

You see the most of the department level ones and the really high level program ones.

Next year, when we return, you may even see changes in some of the program names and more detail for the program names, as well as more of those 80 internal KPIs that we're tracking.

Next slide, please.

The second program in ARA is animal services.

Funding and KPIs for the BARK Animal Shelter are in this program.

For FY27, BARC's proposed budget is $16.9 million dollars.

Of that $16.9 million, $14.8 million is the transfer from the general fund.

Next slide, please.

Our third program is $311.

This fiscal year, as I mentioned, the Public Works Water Customer Service Call Center was merged with the 311 call center, and that funding was moved into the Central Services Revolving Fund.

For FY27, we are budgeting 183.5 FTEs for that call center at a budget of 18.3 million dollars.

Next slide, please.

The fourth ARA program is executive oversight, and this houses the director's office.

There are 6.9 FTEs here.

The $3 million budget for this is not for $6.9 FTEs, obviously.

$1.3 million of that amount is for the restricted accounts for all of the general fund programs.

We do budget all of them in the executive oversight program rather than allocating them across all of the other programs.

It's just easier to budget them in one place.

Next slide, please.

The City of Houston's On Street Parking Management Program, which is better known as Park Houston, is our fifth ARA program.

Park Houston is funded in the special in the Park Houston Special Revenue Fund.

Park Houston has a proposed FY27 expenditure budget of $20.6 million.

The $15.4 million that you see on this slide is net of a debt and capital transfer of $1 million for the meters and a transfer to the general fund of $4.1 million for FY27.

Next slide, please.

ARA, as you know, is responsible for issuing permits and licenses and performing enforcement on those for more than 60 types of businesses.

Our sixth program area is called regulatory permitting.

The proposed FY27 program for this area is 16 million dollars for 31.8 FTEs against a cost to run this program of only five million dollars.

Next slide, please.

Our seventh program area is risk management, and that's funded in the city's property and casualty fund.

This team is only five employees, but they're responsible for buying our commercial insurance to mitigate all of the city's losses for everything from property damage to employee theft.

Comparing last year's budgeted property insurance premium to this year's premium, there's a decrease of 11%.

Our premium went from $27.2 million to $24.1 million.

Since this is a revolving fund, those expenditures do get allocated to other city departments.

20% of that goes back to the general fund.

Next slide, please.

Our eighth and final program is called debt service and interfund transfers.

This isn't really an operational program.

There's no FTEs that are budgeted here.

This is simply an area where we have the transfers in our between funds in our own department.

For example, the BARC transfer from the general fund and the Park Houston transfer to the general fund.

Next slide, please.

And I've spent the last several slides talking about our expenditures.

Let's pivot now and go to our revenues.

This chart shows you ARA's revenues by fund with general funds again in green, special funds in red, and revolving funds in blue.

As you can see from these bar charts, for FY27, ARA is projected to bring in almost $170 million for the general fund.

Next slide, please.

And this chart summarizes all of the funds that are administered by ARA and the revenues for those funds.

For example, in FY26, as I said, ARA collected almost $170 million.

For FY27, we will as well, but our collections will be down by about $1.8 million.

The majority of that decrease is in telephone franchise fees.

$1.7 million will be going down, and again, that's because people keep cutting the cord and going to cell phone usage instead of using landlines.

Moving on to Park Houston, you'll see FY26's revenue estimate is over $21 million.

This is the highest revenue that we've seen for Park Houston since before the pandemic.

You do see a small dip for FY27 compared to FY26.

Despite the feeful revenues, we are seeing lower meter revenues across downtown, and that's reflected in our estimate for FY27.

Next is BARC with the $1.4 million increase in revenues for FY27.

As I said before, this isn't a real increase in revenues.

The transfer from the general fund comes out of the general fund as an expenditure to the general fund and as a revenue to BARC.

So $1.3 million of this $1.4 million dollar revenue increase is really the transfer from the general fund.

And then the property and casualty fund and the central services fund are both revolving funds.

They're both chargeback funds, which means that the expenditures are always going to equal the revenues because any any money that's expended will be charged back to all of the other departments.

The $3.3 million dollar increase in the property and casualty fund is in comparison to the FY26 estimate.

So if you go back to slides six and ten and try to compare those, those are budget-to-budget comparisons, whereas this is a budget to estimate comparison, so those numbers will not compare if you try to make them match.

Similarly, the with the central services revolving fund, the increase of 2.7 million here is also a budget to estimate comparison, so we can't compare the budget to budget to get this.

But again, that 2.7 million dollar increase is coming in from the other departments.

Next slide, please.

This slide and the next two are gonna provide detail for those increases and decreases in revenue we were talking about.

Since we collect almost 170 million dollars a year for the for the general fund, this slide and the next one tell you how our biggest fees are calculated and how they're changing from year to year, as well as some of the historical trends.

Again, like cable, because we're going to streaming services, that's consistently going down.

Telephone, because we're cutting landlines, that's consistently going down.

I'm not going to read these slides to you, but I did want you to have the revenue detail since our franchise fees and permit fees are the third largest source of revenue to the general fund every year.

Next slide, please.

And again, this is the continuation of the changes that we're seeing for our fees.

Next slide.

This is a continuation of that revenue discussion.

Before we leave the revenue discussion, I do want to point out the last category are audits and recovery.

They have a gold star next to them.

As revenues continue to decrease because the state has preempted so many of the fees that we can collect.

ARA is trying to offset this revenue by aggressively auditing and going out and doing field enforcement to get people to comply with their permit fees.

As a result, this year we will be collecting nine hundred thousand dollars in delinquent fees due to those efforts.

Next slide, please.

And these are revenues by program.

You've probably noticed that we've covered these when we had the fund discussion earlier.

So I'm not going to repeat that here, but I do want you to have the detail for the programs.

Next slide.

And that concludes our presentation.

Our demographics and other materials are included as appendices to this presentation if you need them.

I'll be happy to take your questions.

Thank you very much, Director, for the presentation.

We do have a couple of questions.

Before we start, I do want to recognize the council members and staff that were present for the workshop.

We have Vice Mayor Pro Tem Amy Peck, Councilmember Mary Nan Huffman, Councilmember Martinez is online, Councilmember Alcorn's staff is here, Councilmember Carter has staff present, as well as Councilmember Kamen, Councilmember Flickinger, Councilmember Jackson, Councilmember Thomas, and also um councilmember Martinez has staff as well.

So with that, um on slide eight, you talk about um or maybe it wasn't slide eight.

It was slide twelve that highlights BARC.

Um so the per capita funding, seven dollars and eight cents for fiscal year twenty-seven.

How does that compare to the other large cities in Texas?

Do you have that slide?

We included it as one of your appendix slides.

The slide that we included um as in the appendance is for FY25.

We don't have the comparison yet for 27.

Um a lot of cities are just now doing their budgets, so we don't have a comparison of our 7.8 to their for FY27.

But we do have it for FY25.

Right, FY25 is slide 48.

And you'll notice there at 6.88, that's what it was before.

Now we've gone up a little to 708.

Gotcha.

So we're still, you know, lagging behind uh in terms of other large cities per capita funding.

Um you mentioned that BARC was fully staffed.

Are there um any vacancies?

We have three vacancies right now out of more than 100 employees at BARC.

We we've literally never had numbers like this before.

And then the increase, the 1.4 million uh coming from the general fund.

Do you do you know what that is gonna go to support uh BARC?

That's actually gonna pay our expenses.

Because now we have no vacancies, we have to fully pay for all of the personnel that we have.

And and the mayor agreed to make up that difference so that we wouldn't go negative on our fund balance.

So that'll actually be supporting the current operations that we have.

The other thing that they allowed us to keep last year there was a budget amendment that added two enforcement officers.

We we got to keep those enforcement officers.

So this year has actually also been the best enforcement year we've ever had.

We are able to answer 66% of our calls, 98% of all the priority one through three calls, which are really the ones where you have people who are in danger.

Um it's uh it's the first time in BARC's history that they've ever broken 60 percent.

Good to know.

Um we'll move on to Vice Mayor Pro Tem Peck.

Thank you.

Thank you for the presentation.

Um in the mayor's um press conference about the budget, he mentioned something about a new intake center for BARC.

Can you talk more about that and the costs associated with that?

So that's the new adoption center.

There was a 40 plus million dollar bond that was approved by the voters in 22, and bark has been looking for a place to relocate.

The mayor wanted us to be close to a park, he wants it to be an adoption facility that most people will feel free to come and visit and feel safe in coming to visit.

Um, it will be opening, we hope in 29.

We've we've identified a space, and at this point, BARC is negotiating with public works, legal, and the parks department to get that space, acquire the land, and then figure out how it's going to be built.

By the end of the year, there should be a formal announcement by the mayor and a breaking uh a groundbreaking, and then immediately uh GSD will start design and construction.

So this is all through that that bond initiative.

Okay, and will the current bark location remain as well?

Okay, yeah.

We have to keep all of the medical facilities.

Thank you.

Thank you.

And seeing no other questions, we'll move on to public comment.

When you get the information on confarables as far as per capita, could you send that to me, please?

Because I had that as something I wanted to talk about as well.

Uh and uh they list all of the very well, they list electric electric franchise gas franchise, and we were told that there's gonna be a hundred million dollars transferred uh from CUS for the uh water utility franchise.

That doesn't show up here.

Where is the will that money eventually come through this department?

Do you know?

I don't believe that will come through ARA.

Okay, but we can find out where that will show up.

So uh are you talking about the right-of-way charge back?

Yeah, we'll we'll get that to you.

Okay, and then the last thing I have because a lot of my questions were answered in the presentation, which is good.

Uh they talk about the fact that they did 9,500.

Well, that's well, they did in in 26, and the uh estimates the same 9,500 SVA neuter surgeries uh in-house as well as contract services.

Could I get a breakdown of what was done in-house and what contract services were used and how many were done through the contract services and how much if anything that costs to have that done?

And the reason I asked that question is because we in A Leaf have run programs and through the super neighborhood and done spay and neutering for over 2,000 animals, and I think that if they could get if uh ARA could get involved with neighborhoods uh and and do some more.

There, there's a lot of opportunity to expand their services and uh really deal with a very severe problem.

So I just want to bring that up.

So that's a good question, and yes, we can get the breakdown to you.

Thanks.

Thank you, Doug.

Anybody else?

Okay.

That will conclude our workshop for ARA.

Thank you all very much.