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.

But uh what you'll see is an increase from FY26 adopted uh due to increasing staffing levels to support the arts.

We are reducing uh the vacancy factor for the mayor's office of special events with the hiring of previously vacant positions.

And uh what you see is that we are going uh to a total budget of 24.3 million dollars, uh, but sitting inside of that bucket is gonna be about 25 FTEs.

Next slide, this is debt service and interfund transfers.

Uh almost all of it uh goes exclusively to support special events, uh, but there is about 300,000 that goes to support HTV.

This is from past CapEx for HTV.

So next slide is 27 revenue highlights.

So the first is that the PEG contributions, the state franchise budget is going to be 250,000 lower than the FY27 estimate due to the decline of cable peg fees.

Again, these are subscribers to uh set top boxes for cable TV.

Um, and then within tourism promotion contributions from other budget is 708,000 higher than the FY26 estimate, primarily due to the projected increase of the revenue received from Houston First, which is based on 19.3% of the total uh hot gross receipts, uh again, which is projected to be higher.

This is going to be captured largely in part by uh the fact that uh we're seeing things like FIFA and the World Cup blend our two fiscal years.

So we're seeing FY26 is when it starts, FY27 is when it ends, and any time somebody sleeps and uh puts their head on a bed uh then we're able to capture that revenue.

When we break out revenues by fund, what you'll see is the general fund stays flat at zero percent change.

Tourism promotion goes up by three percent, again, largely allocable to uh hope mandated increases.

But again, table cable television is a uh 26% decrease, and again, that's where we are aligning, we see revenues decrease, and we are now aligning our expenditures so we don't have to have general fund reliance with that function.

Finally, the uh the slide uh and a couple more slides.

Uh so this is revenues by fund, as we see there's a downward tick, largely attributable to decreases uh within the uh cable television peg fee, but there's also some slight decreases in other areas.

Next slide, uh we have revenues by program.

Uh again, looking at it, cutting it a different way.

Um, so I'm not gonna belabor the point here, but largely we're seeing decreases in cable television.

And those concludes the slides.

Um I tried to go through that as fast as possible.

Eight minutes seems pretty quick.

Um, want to be able to offer up an opportunity to ask any questions, y'all answer any questions that y'all might have to ask.

Councilmember Ramirez.

Oh, hold on a second, and thank you for the presentation.

And I want to welcome all the council members.

I forgot to do this earlier.

Uh Vice Chair Mario Castillo, Councilmember Twila Carter, staff from Councilmember Joaquin Martinez's office, Vice Mayor Pro Cam Amy Peck, Councilmember Julian Ramirez, Councilmember Mary Nan Hefman, staff from Council Member Tarsha Jackson's office, and Councilmember Fred Flickinger's office.

Now, Councilmember Ramirez.

Thank you, Madam Chair.

Thanks for the presentation, Stephen, and for all your work on this budget.

I know you're getting around and making a lot of presentations.

So appreciate that.

Let me ask you about uh something on slide number eight, which is titled cable television.

Yes, sir.

The last uh performance measure there says increase set tops box set top box viewership, and uh the target context is measures how engaged citizens are with HTV's programming on streaming platforms.

Uh explain that a little bit for me.

How does how does the number of set top box or or the increase in set top box viewership affect HTV's programming and interest in it?

Yeah, so the idea here is that uh with PEG, we have to there channels 16, 17, and 18 are all technically part of our portfolio.

We jettisoned 17 and 18 to different organizations.

Um 16 is the one that we focus on, but to be able to view channel 16, you have to have cable.

And so one of the important things is being able to diversify the viewer streams that come into the city of Houston.

And as is with the cable television peg funding, as that decreases, effectively what that says is fewer people are watching cable, which means fewer people are watching channel 16.

So we are diversifying our way into things like YouTube as well as all of the set top box type of stuff.

We can pull those metrics and bring them in.

And so the higher viewer count, the better it is to make sure that our message is getting out.

As you know, we carry uh HTV carries things like committees just like this.

They also carry city council, but also they carry uh we we do the a service to the uh Harris County where we carry commissioner's court on Thursdays.

Um there's a lot of programming that goes into it, a bunch of nature programming, things like that that are by design by law are intended to be educational about government and how it works.

And so by diversifying those viewership streams, uh we're able to gather a bigger audience.

Got it.

So 600 represents 600,000 viewers then is your is your target.

Is that right?

I believe so, yes.

I can double check that for you.

But yeah, I don't think we're going for 600 viewers.

Okay.

Let me ask you about the next slide, slide nine, economic development.

Um, specifically the third and fourth performance measures at the bottom.

Um, number of opportunities for training and deployment for TURS board members, and that is supposed to measure interest in TURS development within human Houston communities.

Can you can you explain a little bit about that to me?

Yeah, absolutely.

These are these are the types of workshops that we would expect someone.

We we get cold called, um, and I'll say cold called not via telephone via email all the time about people just saying here's my resume, I'm interested.

We actually have a link on our boards and commissions.

This isn't just exclusive to economic development, right?

People show interest in TERS's and all the other boards that we have, and so uh what our goal is is to establish a cadence across the year of one to two different sort of big group meetings where you bring people in, kind of like a coffee with the council member, I think twilight uh council member Carter has one coming up, where it's an opportunity for people to come sit, learn about the city and see what opportunities there are.

Uh, expectation out of the economic development department is that they're going to be doing that specifically for TERS.

As you well know, and you and I've talked about this, these are complicated entities in their own.

You've got to have a level of subject matter expertise, um, to be able to meaningfully serve on them.

And if you are, if you don't have that, you have to learn it really quick because you're doing things like approving budgets, CapEx, OPEX, that type of stuff.

And so uh expectation is that we host these meetings, provide an inf information session for folks, and then be able to identify people that would be obvious candidates to sit on tourist boards.

All right, thank you.

And then the one below that number of tourist program policies developed and implemented.

I see that in FY26, zero policies have been developed and implemented, whereas the target was was five, and that for FY27, the target is again five.

Do you know what's going on there?

Why no uh policies have been developed and implemented?

Yeah, it's gonna be a little bit of me.

Um so what I'll say is that the uh the goal here was to be able to take the uh TURS analysis as conducted by Ernst and Young and to be able to take all of the work that they did uh and be able to fashion it into the next set of fiscal policies that we expect to see.

Um we just talked about this, but I'll I'm happy to say it in front of the microphone.

We had to go through sort of a rigorous attempt to be able to understand the difference that we saw within the analysis that the Ernst Young folks did, as well as with um what the auditors were showing, and what we found was not a uh um compromising of the analysis done by the third party that we hired, but more importantly, there is a big gulf between the raw data that is fed by the zones and what the auditors are doing.

The audits are sound and they're getting a good analysis, but they're having to go through a lot of extra work.

And so a lot of the financial policies that the economic development office has been envisioning and working on is setting the same sort of standards that we set for ourselves as you recall uh with the and I'm not I promise I'm not filibustering here, as you recall with the spend analysis that we did for ourselves during the Ernst and Young session uh Ernst and Young assessment, we were able to identify things where we in inside of our general ledger structure itself, we found inefficiency.

So for example, um, if anybody had gone to our open finance dashboard um to look at how much money uh we spend on management consulting.

We look for the general ledger code of management consulting and it goes out.

You would have found that all of the TERS uh the the transfer of TERS increment was categorized as management consulting.

So they would have gotten a false number.

They would have seen hundreds of millions of dollars spent on management consultants, which wasn't true.

And so the TERS is have that exact same challenge, but what we're seeing is a little less of how all TERS is create the have the same challenge.

It's that each one does each thing differently.

And so what the expectation that we've put on economic development that the mayor's put on economic development is we need to align their fiscal policies and their processes with what we do as setting a standard and be able to bring that forward.

And so that's been a little bit me because we've been going through that, it's been a lot of it me of us going through the exercise of rationalizing the analysis and then developing those policies themselves.

All right, thank you.

I'll go back in the queue.

You can continue.

Okay.

You're the only one in the queue.

So so in as far as developing standards, I mean I I am totally on on board with that, uh, especially with regard to transparency.

Some of the TERSs have really good transparency.

Uh others I think do uh an inadequate job of it.

And I've been beating this drum for quite a while, as I have about uh the the Ernst and Young study that we still haven't seen, although it was completed uh months ago.

Uh so you know, and and and I've shared my frustration with you about that, but I I hope in short order, you know, we we will have some some better policies that that align across the board for all of our TURS is because uh a lot of people don't understand them, and I think a lot the the reason a lot of people don't understand them is because uh the transparency is not good and and the policies and procedures they follow are are not the best.

So I'll just leave you with that.

Thank you.

Thank you.

And and well, this might be for you.

I submitted some questions in writing, but I was wondering, uh and I'm all about us doing everything we can in Austin, but when I looked at through the the budget data, the raw data on the intergovernment re intergovernmental relations, where is the travel budget?

There's not really a I mean, do they get the set amount I'm sure to go to Austin?

How does that work?

They uh so we actually book their uh their travel to general gov, and the reason why is because they're serving on behalf of the departments themselves.

Okay, so it becomes a citywide expenditure as opposed to a mayor's office.

All right, I was looking for that line item.

Thank you, Stephen.

And um on the on the um arts deal, I did notice a decrease in number of from thirty to five.

Can you and I might need to ask Michelle about that, but what um that that's our hot money that comes in right, and then we're the performance measure takes us from 30 uh some businesses engaged or receiving civic art programs to five.

Let me get that back for you.

I've got that question.

Let me get back to it.

And and I put that down in writing.

Also um about the the two point six million dollars in revenue on the digital kiosks.

Um I know in the past we uh we used some of that for um the heritage park and same Sam Houston Park, and we used some I think to help with mowing last year, but yeah, it gets booked to general fund.

It just gets booked in general fund and spent, however, there's not really a designated spot for it.

Correct.

Okay, thank you.

Anyone else?

Okay.

Seeing no more questions, great job.

Oh, I do you want to welcome Justice with the Mayor Pro Tem Castax Tatum's office.

And we do have a public speaker.

And it's Rain Eatman.

Thank you very much.

Awesome.

Okay.

Good morning, Council members.

I'm excited to participate in this uh experience.

Um I did have one question, I had to, but uh one question with regards to the mayor's economic um oversight committee.

Um I did notice in the presentation that they mentioned their uh responsibility to debt management as well as providing opportunities of economic growth.

However, I didn't really see a lot of uh language in the presentation regarding their oversight over tax abatements, but I do remember that Miss Jennifer Curley did a presentation last year about their commitment to oversight with those tax abatements, especially because a lot of them are actually going to be um sunset by August 26th of this year.

And so I just wanted to get some more clarification on is that still a responsibility of the mayor's economic oversight or is has that been transitioned to OBO or somebody like that?

No, that that's still a responsibility, and and and that's a good idea for a performance measure on tracking um jobs and everything else that was that was uh kind of promised when we gave the abatement.

So I appreciate that comment and we'll make sure that gets passed along.

Absolutely.

Am I able to make one more within my other one is that are there um any tangible penalties that the city incurs if uh the council chooses to deny an abatement that is presented by the state?

I know that um due to certain tax codes, um tax code 313 on the state level.

Uh the state can provide um recommendations on which abatements the city should um approve of, but ultimately council has to vote on those individually.

And so we do always talk about you know making sure we keep uh relationships alive, making sure we're being good uh partners and keeping the city up to date.

But are there any actual tangible penalties if council sees that a partner does request an abatement and it just doesn't make sense for them to to receive that and and it doesn't benefit the council or the city at large.

Right, and and we've got that down.

I don't have an answer for that, but we will track one down for you.

But Stephen David, the shell answer man is coming right up.

Thank you so much.

Yeah, but you serve there.

Uh so generally, whenever there is a requirement or a request from the state to have an approval come from city council, if that approval does not occur, it effectively eliminates their opportunity to get that state that state abatement.

So, so we don't get penalized in any way.

Yeah, we don't get penalized at all.

Um now we do have to be smart about specifically um uh TEZs, so there are a finite amount of those that the that we can nominate as a municipality, and so if we nominate one and it gets declined uh by the state, then we've sort of lost that slot.

So we have to be pretty diligent.

But there are a whole bunch of other things that occur where the state might give an economic incentive and the municipality provides a letter of supporter denial, um, and those denials effectively kill it.

And just for clarification, TEZ refers to uh Texas Enterprise Zone.

Yeah.

Thank you so much.

Thank you, Rain.

Great to see you.

I see Laura Gallier out there.

Laura, do you want to come on up?

Good morning.

I just have one uh question.

It's a follow-up to a question I asked last week, um, about um monitoring the goings on in the Texas legislature and how they affect city government.

I got here a few minutes late, so I didn't hear that in this presentation, but I was told last week that we rely on the mayor's office to do all of that.

And um, so I wanted to ask where that is um in the budget, and also to ask that people like me um know how to find the information contemporaneously when the mayor or the city takes a position one way or the other on a piece of legislation so that we can decide as individuals whether we want to support or oppose the city's position on a particular legislation.

Yes, great point.

We do uh the intergovernmental relations does sit within the mayor's budget.

There it's a 767,000 spend and with travel being in in government in the general government area of the, you know, they put the travel in the I just asked about that in general government, but the rest of them salaries and everything, 767, it looks like 767,000.

And Jordan has sent you the IGR website, which they do a good job of really keeping everybody abreast of what they're she sent you that link of what they're fighting, what they're backing up, what they're doing in Austin.

Um Andy Mate, who's with that office, she knows everything backwards and forwards, and she's here in Houston the whole time, kind of tracking what's going on.

She's just a great contact to have that we can put you in touch with her.

She knows every bill and really keeps us up to date.

Um so there's lots of ways to stay plugged in and when sessions going on and even when it's not during the interim.

So we can make sure you have all those resources.

Okay, because it this morning I pulled it up, and all I saw was a PDF, but the website is updated constantly during the legislative session.

Yes, from last session.

Oh, those.

Yeah, those were PDFs from last session, but yes, they will be updating those as bills get filed and all of that.

Okay.

Excellent, thank you.

Thank you.

Next, Astrid Lang.

Um, Councilmember Halfman.

Oh, I'm sorry, Council Member Hafman had a qu had a comment for you.

I'm sorry.

I think that's a really great great question and something that we need to pay more attention to.

You know, even though we have people that are on it and that are in it and watching all the bills, you know, in Austin things are so fluid.

And so, you know, I know at least in last session, the city took a position on a bill, um, but didn't necessarily see the updates that were happening in real time in Austin.

And so it really is difficult, even for people that are here that are working on it and tracking it to stay up to date with how things are changing, and which meant meant that our position eventually ended up changing on that also.

So I think that's incredibly um smart of you to want to know those things.

Um, and we need to we need to do a better job.

So thank you for bringing that to our attention.

Okay, great points, thank you.

So we've been joined by staff from council member Abby Kamen's office, and now we'll have Astrid Lang.

Well, good morning.

Uh thank y'all for everything that you do.

Um, I'm in district C.

This is my first time like coming to see all of this.

Um, and most of my questions were answered in the very high-speed presentation.

That I'm gonna have to go back later and play in slow motion.

But I do uh there was one comment that that kind of went sliding by.

And it's a question for you about someone that was working 90 hours a week, and I know that's partly in jest but partly true.

I think we've all been there.

And my question is this in an ideal world.

What would make the FTE or the workload more sustainable for everybody?

How how different would that be from what you've already got or asking for?

I'll give you that 20 bucks later on for giving me that question.

Uh I I think that all of us around the horseshoe recognize that the work is difficult.

Um the mayor's office.

Uh in uniquely, the mayor is the strongest strong mayor form of government.

So he's both the chair of the board and the executive of the organization.

And so the work that needs to get done should be necessarily measured uh by the outcome-based budgeting performance metrics that are tied to the job itself.

So you'll see within all of those divisions.

And this is work that the previous council and mayor did.

They put together OBB for the first time.

Um, and so what we should be able to do is to say predictably, this is the number of things that we have to do.

So for Marta, it's the number of agenda items per year that she has to post, and the number of uh the number of emails and phone calls that Veronica has to respond to, and you divide that into a reasonable work week for someone, and then you take that number of FTEs.

Now, unfortunately, that's just not the way that it works.

Our squeeze is in the general fund right now.

Um, so we all just do all hands on deck.

But uh I don't have a perfect number off the top of my head, but we try as hard as we can to utilize data to drive the conversation around the number of folks that are in the city of Houston.

Okay, thank you for that clarification.

I've I've seen plenty of budget stuff go by where it's like everybody knows year after year, you need three more people.

So, well, thank you all.

Great point, thank you, and welcome.

Come on back.

Um, and I want to uh close this out just by saying a special thank you to Stephen David for helping us with the budget town halls for the 84 presentations he's given around town on the budget on a very complex budget.

Really appreciate that.

Also want to shout out Veronica Weatherspoon, who's in the audience who has been this is what your third mayor, fourth mayor to handle so much of the communications that goes out from the mayor's office.

It's an unbelievable amount of emails and other pieces of correspondence that he gets, and uh, she does everything over there and shout out to Veronica Weatherspoon.

And uh yay, mayor's office, you guys do a great job.

Thank you for everything.

And with that, we will take a short break and we'll move on to City Council.

My favorite department, City Council.