Houston's budget and fiscal affairs committee and welcome to the May 18th, 2026 budget hearings.

This is our fifth day of budget hearings, and we are starting off with the mayor's office to be followed by City Council, the Office of Business Opportunity, then we'll break, and then at 1 30, we'll have a combined Houston Public Works and Solid Waste workshop, and then at 3 30-ish, we will have Houston Fire Department.

So a full day.

So we'll get right into it.

And I'm happy to see Steven David, the street chief strategy and operations officer for the City of Houston, and Will Bryant with the finance department.

Great to see you both.

And Steven, the floor is yours.

Good morning, Chair, Vice Chair, Council Members.

It's good to see all y'all and staff as well.

Want to be able to uh blow through this as fast as possible so I can answer any questions that you have.

Uh Councilmember Alcorn, as you mentioned, to my right is Will Bryant, who's the chief of staff to Melissa Dubowski.

He also has the unceremonious job of kicking me very hard if I say something out of touch.

Um so I'll go ahead and uh skip ahead two slides.

Perfect.

Um so as is with all departments, uh we try and break out the functions that we have into the buckets of strategy uh that we have set uh for the city of Houston.

Um we have five functions at a very high level in government that works, executive oversight, tourism promotion, debt service, and interfront transfers, quality of life is uh houses cable television, and then in infrastructure we have economic development.

What I'll say is that all of this tends to be in the eye of the beholder.

I think we can make an argument for any of these things being in any of the buckets.

Uh next slide.

Expenditures uh going into the mayor's office at a high level, we've been able to reduce our expenditures by seven percent um from the the year before.

And uh we're very proud of that.

When we first came in, very first budget that we passed, we actually came in uh 10% under in expenditures uh the first year, and we held flat the next year, and then this we're seven percent under.

Um please note that we do see a slight uptick, a four percent increase inside general fund cable television expenditures are being adjusted down.

I'll go into detail of that in a little bit, but at a high level, we are making um HTV uh their expenditures align with their revenues, because as you know, they're tied to what's called PEG funding, and I'll get into that detail in a second.

And then also we're seeing a 5% decrease in tourism promotion.

Uh please note that uh while you're seeing an increase in the general fund, it's largely related to hope increases and an increase in interfund transfers from uh the general fund to tourism promotion for special events.

Councilmember, good morning.

Uh next slide, we have expenditures in the funds by thousands.

You can see again as a stacked uh histogram, uh, that we are uh trending downward within our expenditures, which we're proud of.

Uh if you go to the next slide, this is personnel versus non-personnel.

As y'all know, within the city, largely all of our costs are people costs, the overwhelming majority of our costs.

However, within the mayor's office, we do uh tend to see some of those costs skew a little bit, and it's because of where certain things uh sit.

So for example, within um within cable television, sixty-one percent of uh of the cost is personnel general fund sixty-four percent, which is a little bit in which is in line with the city, but when it comes to tourism promotion, 15% uh is personnel, largely because that's where we see a whole bunch of uh money coming in uh that we doesn't necessarily go to staffing but more goes to things that we do things with that money.

Next slide, expenditure by program.

Uh as you can see again, the big downtick is going to be in cable television at a 33% decrease.

We see marginal increases uh within debt service economic development and executive oversight, and then a five percent decrease in tourism, averaging out to that seven percent decrease in expenditures that I talked about.

Uh next slide, we get into the details of the programs themselves.

Uh so this is gonna be uh we'll start with cable television.

Uh as a reminder, cable television is the pri the primary source of revenue is through state cable franchise fees, so this is um charges to companies like Comcast and ATT specifically for people who subscribe to their cable service.

And so this is not new to the city of Houston.

We've seen decades now of uh that trending downward, largely because of streaming services that doesn't that is not captured within uh PEG funding.

So things like Netflix and Amazon Prime, those things will actively compete with uh folks like the normal cable service, which is what funds this.

Um historically, what the uh the city of Houston has done is every time PEG funding goes down, general fund contribution goes up inside of the uh of Houston television, but we've been working very closely with Ted and with that team to be able to write size expenditures to revenues, and so that's where you see the decrease is that we are aligning their expenditures to their revenue itself.

Um but in effect we're also right sizing our capital expenditure budget budget for capital spending to align with that decline in revenue.

On the next slide, uh we have economic development.

Um you can see all of the performance metrics.

I'm not gonna belabor the point of reading them to you, um, as well as the budget.

We see a marginal increase here, but those increase uh are the in the proposed budget from FY26, is almost exclusively allocable to hope contractual increases.

Next slide, uh, this executive oversight.

So this is uh everything that you see within the mayor's office of function, uh, basically executing the way the mayor's office runs.

So we have obviously the executive staff, but we also have the agenda office, the communications office, all of the stuff, all the folks that you're used to working with out of the mayor's office.

Um we see a couple of different increases.

One is uh driven by state law, this is HB 2779, and uh which you will also see reflected in y'all's budgetary increase, city council's as well.

Um, and then we are also increasing the head count uh within the agenda office by one FTE.

As y'all all know, Marta Cornejo does yeoman's work and being able to make sure she delivers the budget.

Uh we are adding an FTE to maybe make her weeks less than 90 hours.

Uh next slide.

We have tourism promotions.

So this is um money that comes in based on beds on heads.

So this is the 19.3% uh this budget uh is typically the revenue stream uh coming in from the hotel occupancy tax is set by projections from Houston First, um, and then we bring those in and then we divvy them up in the ways that we do.