I'm Sally Alcorn, and I am chair of the budget and fiscal affairs committee for the City of Houston.

And my vice chair, Councilmember Mario Castillo, and I are hosting these town halls.

We had one in person town hall at Fondy Rex Center on Saturday, which was great.

And this is our online option.

So welcome to all who want to learn more about how we're spending your tax dollars and the city's 7.5 billion dollar budget.

If there are any elected officials on here, speak now.

You're welcome to introduce yourself.

I don't know that we had any sign up.

I think everybody's heard this a lot around the horseshoe already.

Um but I want to just start by um uh welcoming uh Stephen David.

He'll be giving the presentation tonight on the budget.

He is with the mayor's administration, he is chief strategy and operations officer for the city of Houston for the mayor's office.

And this is his 86th presentation of this year's budget.

He has been to numerous groups around town, knows uh this thing backwards and forwards.

My my colleagues and I have spent the last week and a half holding budget workshops, budget hearings for all 23 city departments where the director comes in, lays out their budget, we do outcome-based budget, which really aligns our functions and activities and programs with performance metrics.

We can see it that way.

How many people work in a specific division, what their goals are, what their metrics are, and that's the way we analyze the budget.

We did that for 23 departments with numerous hours and hours of questions, um, some written questions, lots of out loud questions.

All my questions and answers that I've gotten so far are on my website if you're interested in in seeing some more detail about the budget.

Uh, but I know we're just here to get into the meat of it, so I'm gonna turn it over to Stephen David.

Um, if Mario Castillo is in, I know he was going to be a couple minutes late.

If he's here, you're welcome to say something, Mario.

Um, if not, Steven, we'll just get started.

Hey Sally, I am on.

I do want to make a note.

Um, if you would like Spanish translation, there is a QR code.

Boothlingo is the person uh that's in the team's uh meeting.

You can scan it and live interpretation will be provided uh for the budget town hall today.

So that's available to you uh if you just scan that code and uh I do want to thank everyone for participating.

Um Sally and I have really tried to foster more community engagement around the budget, which is why we started hosting town halls out uh in the city and also this virtual option.

It's important for us to hear from you.

These are your tax dollars this year specifically.

There are some uh big changes being proposed, so we want your feedback on that.

Uh and so I want to appreciate everyone who's here to learn, listen, ask their questions, and share their thoughts.

Um, and Stephen, thank you for uh being here to present as well.

Yeah, so thank you, Councilmember Castillo.

And and so Stephen will go through the a high-level, you know, version of the budget, um, high level, you know, the big the big overview of the budget.

And then we want to reserve most of the time for questions and answers.

So we'll get to questions and answers afterwards.

We do ask that you kind of limit comments.

You're certainly welcome to make a comment, but really get right get to the question as quick as you can.

Um, we'll give everybody you know at least a minute to get out their comment or question.

Um, but but focus the focus will be on the question.

So um with that, Steven, let's uh let's get started.

Thank you, Councilmember Alcorn, thank you, Councilmember Castillo.

Also uh thank you to all of the staff that have helped support this.

Uh a lot of times we do work in the background and this thing runs smooth runs smoothly because of them.

So I'm excited to present tonight's budget uh or tonight's presentation.

As Councilmember Alcorn said, this is my 86th presentation.

I can absolutely give this in my sleep.

Uh, but what I'm gonna do is share my screen and I'm gonna run through it.

I'm gonna keep I'm gonna give y'all a high-level truncated version of this uh and then open it up to question and answers.

We have about I have about 30 slides that I'm prepared to show.

I'm only gonna show y'all about seven or eight, um, just to make sure that I can uh spend as much time on the QA portion.

But at a high level, um, what the expectation for this presentation you should have is um going to frame uh the context of the city of Houston.

I'm gonna orient y'all to what the structure uh of the city of Houston is.

I'm going to uh frame out uh some of the challenges that we face uh as a city compared to other cities in the state of Texas.

I'm going to talk about the situation uh the fiscal situation the city of Houston is currently in, what we will not do with this budget, what we will do with this budget, and then what the expectation for our revised budget gaps will be.

Uh, and then I'll stop the presentation and begin to answer any questions.

So, out of the gate, uh what I want to be able to walk you through is exactly what the city of Houston is as a uh at a high level, let's say a 30,000 foot view.

We are in effect three buckets.

The first bucket, which is going to be the middle one on the slide, is that we are enterprise fund airports.

So enterprise fund in our world means that it is a fee-based business and it's a lockbox, meaning we don't spend money outside of the fund.

And uh so the fee is the every time that you purchase an airline ticket, uh, whatever city you land in, that municipality gets a portion of that ticket.

Uh, and so anytime somebody lands in Houston, they are able, they give a cut over to the airport enterprise fund, and that's how we fund our airport system.

As a reminder, we have three airports.

We have Bush Hobby and Ellington Field, but our enterprise fund airports is 1,400 employees and a 740 million dollar budget.

We also have Enterprise Fund public works.

Now that is a little bit more of a complicated beast.

It is six unique funds, um, high-level funds, they break down into different components.

Uh, but in effect, it is our permitting center, and it is our code enforcement people, and it is our streets and drainage, it's our traffic, it is uh water and sewer.

There's a about six different big functions that work out of there.

Um, 4,400 employees uh operate out of that department, and then that is about a $3.5 billion budget.

And then the general fund, uh, which is everything else uh encompasses police, fire libraries, parks, health, but then also all of the internal support stuff that you don't typically think about, but is really important for running the city of Houston as a as an entity.

So finance and legal and human resources and fleet and general services, which maintains our buildings, so all of the stuff that uh it takes to make sure we can support the functions that serve y'all.

Uh, that is where the bulk of our employees sit.

Uh, it is 12,500 employees.

It is a three billion dollar budget, and the important thing is that uh the general fund is where our structurally imbalanced budget actually lives.

We do not have a structurally imbalanced budget by in the airport system or in public works uh by design because it's a fee-based endeavor, meaning the expenditures almost always have to exactly match revenue revenues.

Whereas in the general fund, we have always done what's called deficit spending.

Um, and this is a problem that the city of Houston has faced for the past 30 to 40 years.

I believe that the last time, this was something if I don't know if he's on, but I believe something that council member Flickinger educated me to uh a couple of days ago.

Uh the last time that there was a structurally balanced budget was under Lee Brown.

So the City of Houston sits at a unique disadvantage.

Uh this is a little bit of a technical slide, so I'm gonna say it, but if any of y'all have questions, make sure to write them down.

And at the end of this, I'll have I'm happy to go back and answer this.

But the city of Houston has a bucket of revenue that uh it receives and uh for the general fund.

And uh 52, 53% of that bucket is filled by uh general fund uh advalorum taxation.

So this is cons this is what we would call property taxes.

Uh anywhere between 25 to 30% of it is filled up by sales tax, uh, and that nets us about 20 to that means the additional 20 to 25% of the general fund revenue of about 1.5 billion dollars uh comes from franchise fees and other permit fees and all the fees that you would expect to see.

So the bulk of our uh the bulk of our revenue comes from property taxes.

Well, in 2004, um the city of well, before I talk about the city of Houston, in 2021, the state of Texas imposed what's called SB2, uh, but that is a uh an ad valorum revenue cap on all jurisdictions in the state of Texas.

So this is um that collect property taxes, and so this is uh Harris County's under it now, the city of Houston.

We have other agencies across the state.

Um, and what it says is that we can only connect uh collect three and a half percent more property tax revenue than last year's property tax revenue.

Um, it's a pretty simple calculation.

There's some uniqueness to it, but for the most part, that is what every other city in the state of Texas has to sit under.

Well, the city of Houston is unique because in 2004, the city of Houston residents, this is under Mayor Bill White, uh passed what's called what was called proposition one, and proposition one established a locally imposed advalorm or property tax revenue cap.

And what that says is that our property tax revenue can grow four and a half the lesser of four and a half percent or population plus population growth plus inflation.

Uh the challenge with this formula is that it is restrictive in a weird way.

So where inflation we can calculate inflation pretty much to the month, um, we have a rolling calculation for that.

Population growth is a very specific uh number that can only be calculated by one agency, and that is the Census Bureau, and they calculate that on a two-year lag.

And so what that means is that in calendar year 26, so this year, we will set a tax rate that is going to be based on the population growth of calendar year 2024.

So any people that moved into the city of Houston in 2025, anybody that moved into 2026 year to date will not be accounted for, even though the city of Houston is still serving them as residents of Houston, and so that creates what we would consider compression inside of the general fund.

You're expected to do more with old numbers or less, and so what this graphic you're looking at here can see is this first or this first green arrow is the very first year that we had to lower our tax rate because we hit our revenue cap.

Now, what you'll see is if you recall the state's revenue cap kicked in in 2021, we hit this in 2025.

So what that means is we hit the city's revenue cap.

Um so we went down from 63,8750 on our uh tax rate down to 63,1080.

And ever since then, with the exception of 2019, where there was a slight uptick, we have seen decreasing or flat tax rates.

And every single year, almost every single year since 2015, we have hit our revenue cap.

And what that means is that we because we're limited to the amount of money that we can take in, we have to lower our tax rate to account for that.

And it's created that compression that I'm talking about inside the general fund where we are expected to do more services with less general fund dollars.

Um, in 2021, you can see where SB2 was kicked in.

We have never hit the state's revenue cap.

The city's revenue cap is more restrictive.

And so when I said at the beginning of this slide that we are at a disadvantage compared to our other cities, this is what I'm talking about.

Our our local revenue cap is more restrictive than the state's revenue cap that all other cities have to compete under.

And so we are at a strict at a fiscal disadvantage comparatively to the rest of uh the state of Texas.

So what I'll do, that's a very high level.

If you can recite that back to me, you are in rarefied air.

You've got you're about half a percent of Houston can recite that stuff back.

So if you have any questions, then please feel free to ask them.

I'm happy to clarify anything there.

What I'd like to talk to you all about now is what the city of Houston, what we have done under Mayor Whitmeyer's administration and this city council since we got into office about two and a half years ago.

So January 1, Mayor Whitmeyer was sworn in.

So is city council, and uh the first thing that we had to deal with uh was um was a uh the college football playoffs that was in the city of Houston.

Uh a couple of weeks later, we had four days of sub-20 degree temperature.

So we had a big freeze uh that came through.

Uh right after that, we had our high water bill uh fiasco is the best way to describe it.

And I know that y'all remember that we started seeing 10,000, $15,000 water bills going out to single family residences.

We uh also had 264,000 uninvestigated police incident reports.

So this was uh ultimately what led to a change in administration inside HPD, but this was where police officers were closing uh cases uh that had not been investigated by saying there was a lack of evidence, and even in the instance in which a handful of quite a few of them had evidence, um, then we had uh flooding, catastrophic flooding in Kingwood, in which the east and the west fork of the San Giceno overflowed and created effectively an island out of that community.

Uh then we had the straight line wind direct show, 120 miles an hour that came from west to east uh across the city, and then we had Hurricane Barrel, and all of that was within the first seven months of the administration.

And uh I say that to say we had Mayor Whitmeyer had a big plan coming in of what we wanted to do, uh, but we were we reacted, we had to react to literally everything that happened.

But the most important thing that we did that teed us up for the next year, which was a very important one, was with city council's help, we passed uh something called the Ernst and Young assessment of the city of Houston.

So this was an efficiency analysis in which we took a look at where the city of Houston is strong, where the city of Houston is weak, what we should prioritize with regard to sort of challenges around the number of employees that we have, the shape of our organization, the performance metrics that we measure ourselves up against, how we're spending our money, what we're spending our money on, whether or not we're utilizing the best contract language or the best pricing in contracts for that.

And so all of those things allowed us to, so if year one is a year of learning and reacting, year two is a year of implementation.

So we completed the Ernst and Young assessment, and all through calendar year 2025, we were able to do very important, meaningful things like um merge functions that shouldn't have been separated in the first place.

So, for example, and this is this tends to be a very important thing to a lot of uh civic minded neighborhood-minded people, um, we have a function called residential code enforcement.

Residential code enforcement is you're you've got neighbors on the street that have uh high weeds in their front yard.

They have buckets of water that are sitting and mosquitoes are breeding in them.

Well, there are laws that are again that say that you can't have that type of stuff, and we issue citations.

Those employees sat inside of the department of neighborhoods inside of public works.

There's an organization called multifamily habitability or multi-family code enforcement, and they did the exact same work, but from multifamily structures, apartment complexes.

And so we began blending functions like that together to get more efficiency to have more people going after it.

And so where we only had about 50 in inspectors on the single family residential, we had about a hundred inspectors on the multifamily.

And so by merging them in cross-training, we've got 150 for all for both sets now.

And so it was a lot of work around that type of efficiency.

We were able, and by doing stuff like that, just basic stuff like that, we were able to reduce the cost of government itself by about 122 million dollars.

And additionally, we offered a voluntary retirement program.

Um, so we had about 3,000 employees that were eligible for retirement in the city of Houston, and uh we offered an incentive and said that if you let us know that you plan on retiring by this date, and that date was May 1st of 2025, uh, then we would offer them three months of salary and we would offer uh active employee benefits for the next five years to those employees.

About a little over a thousand, so about a third of the folks that offered that that we offered that took it.

Uh, the other two thousand are still employed by the city of Houston, and uh we were able to reduce cost by about 100 million dollars uh through all of those retirements.

And so by doing all those things and settling all of these lawsuits and getting it, we were able to sort of move the needle on reducing the cost of government with having very minimal impact to service.

And so if year one was a year of learning and year two was a year of implementation, we are now in year three, where we have to do some acting, we have to act on the fiscal structure of the city of Houston and do two big changes that we're gonna make.

So, what I want to do before I talk to you about what we're doing is I want to talk to you about the general fund outlook.

So, as you recall, I said that the only structural imbalance in the city of Houston sits inside the general fund, and this is what it looks like.

So the red line that you're seeing uh is on the y-axis.

We are talking about the amount of dollars in which we spend more money than we take in revenue, and on the X-axis is the fiscal year, so what fiscal year we would be in.

We are looking to pass fiscal year 27, so that's gonna be July 1st of this calendar year, is when fiscal year 27.

Our projected budget gap is 209 million dollars.

Our projected budget gap for FY28 is 30, 334 million, then 381, and then 446 million by fiscal year 30.

So by fiscal year 30, we're gonna have about a half a billion dollar budget deficit.

Uh if we do nothing, right?

This slide envisions us not doing anything at all.

Um, the important numbers here, uh, are down in the red, and uh I'll orient you to it.

This is what's called our our fund balance, a minimum requirement fund balance.

Fund balance in the state's language is the rainy day fund, which I'm sure y'all have heard of.

Fund balance and rainy day fund in regular people language is a savings account.

This is the city of Houston's savings account.

And we have a rule and council and ordinance in council that says we cannot dip below the 7.5%.

If we do dip below that 7.5%, we're violating an ordinance, but more importantly, we are showing the uh the creditors of the city of Houston, effectively the ratings agencies that rate rate the debt of the city, just like you have a credit score at home for yourself.

The city of Houston also has a credit score.

If we dip below that 7.5%, they downgrade our debt, and that makes it more expensive to purchase things that we have to purchase every year.

Think uh more costly ambulances, fire trucks, police cars, solid waste vehicles, park trucks, you know, improvements to the parks themselves.

So in fiscal year 27, we have a projected 209 million dollar budget gap.

If we do nothing, we will dip below the 7.5% minimum requirement, uh, which means we get a downgraded debt cost of government gets more expensive.

By fiscal year 28, if we continue to do nothing, then we will go into what's called negative cash balance.

Negative cash balance is a very important thing.

Um, this is exactly like it sounds.

We effectively run out of money to pay bills or pay salaries.

We we have a gap in a severe enough gap to where we can't make those payments.

And so that's where we have to begin talking about what does this look like, what what government do we want to have, what sort of crisis mode are we going to be in?

This is not a scenario that anybody around the horseshoe wants to be in.

Nobody on staff wants to be in this scenario.

It's the reason why it's so important this year to act.

Um, this is the worst case scenario.

Also, coincides with the most depressing slide in this presentation.

I promise it does get better from here.

Um, so what are we not going to do this fiscal year?

So this fiscal year, we are not going to be raising property taxes.

The mayor uh made a commitment to Houstonians when he was on the campaign trail, and he's continued to make that commitment to council members and Houstonians as he's been mayor.

And what he has said is that raising property taxes is going to be the last thing that I'll do.

He has said publicly multiple times that as an elected official over the past 52 years, he's probably voted more than anybody else in the state of Texas to raise taxes, but that is not what we are going to lead with.

We are going to find efficiencies within the city of Houston and how the city of Houston operates.

Additionally, we are not expanding government programs.

This is probably one of the more painful things that we have to deal with.

And it's the fact that we all came in, Mayor Mayor Whitmeyer campaign on a lot of big bold ideas, putting sidewalks and communities where there have never been sidewalks before, and different types of ideas like that.

We this is not the fiscal year in which we can expand government programming like that.

This would be considered what I would call a maintenance budget, and being able to maintain the current operations of the city of Houston as we do the two big shifts that we're going to do this fiscal year.

We are not going to be relying on one-time transfers.

So I have been a part, I was a part of Mayor Parker's administration.

I was also a part of Mayor Turner's administration, and I was part of closing budget gaps, in which we did one-off land sales, for example.

The city of Houston has quite a bit of vacant land in their portfolio, and they we would sell that land to close those budget gaps that we are not doing something like that.

We are not accounting for that to be able to close the budget gap.

And more importantly, we are not going to be deferring any infrastructure obligations.

As you all know, we have a commitment to do streets and drainage.

We also have a commitment to do um water and sewer improvements based on our CIP and looking in the out years based on criticality of assets.

So think like our East Water Purification Plant that was built in the 50s and looks like it's built in the 50s and operates like it was built in the 50s.

But more importantly, we're under consent decree with the EPA.

So the city of Houston in 2019 and then re-ratified in 2021, struck a deal with the Environmental Protection Agency and said we have not been taking care of black and brown communities in the way that we should, specifically around what's called an SSO or a sanitary sewer overflow.

City of Houston engaged in that.

That's actually what has been driving the increases in your water rates in your bill, in your bills, has been the negotiated settlement with the EPA.

None of those things are going to be deferred by doing the work that we're doing, by do taking the actions we plan on taking with this year's budget.

So then the question is what are we doing?

And I'm gonna go through this kind of quick because I know that the media has spoken about it, but I'm probably gonna take two minutes on this and then I'll hit the last slide and we can begin questions.

So we are doing, in effect, two things.

The first thing that we are doing, I would break out into one A and one B.

One A is that we are declaring solid waste a municipal utility.

This is allowable under state law.

Some cities across the state have done it, some have not.

But in effect, what it does is it plucks the solid waste department out of the general fund where we have the structural deficit and it puts it inside of the utility fund.

There are other things that we're allowed to do that with.

So for example the water and sewer can be declared a utility we have done that already.

If we controlled electricity center point controls electricity but if we controlled it we would also be able to declare electricity as a utility.

But in effect all this does is it moves 117 million dollars of expenditure from the general fund and puts it inside the utility fund.

That's one A.

One B is we are establishing an administrative fee.

So this is going to be a $5 per household per month fee that will stay flat for at least two years.

And what that fee is going to represent is the cost of administering the solid waste department itself as a function inside public works.

Now importantly to do a fee you have to do what's called a cost of service analysis.

The cost of service analysis basically says if we were to divide what you're doing into the number of customers that you serve how much would it cost?

And that cost is what we would all consider a garbage fee and that cost is about $25 per household per month.

So we are coming in under that and part there's two reasons why one is the mayor doesn't believe that households could absorb the shock of going from zero to 25.

So he wants to keep it at five for a few years.

Separately we do not believe that the department is as efficient as it can be.

And so we are actively working towards lowering the cost of that department through operational efficiencies.

I have a slide that I'm happy to show if anybody cares to see it during the QA session.

But we have in the middle of doing that cost of service analysis we were able to demonstrate that we have made the cost of garbage service cheaper in the city through operational efficiencies and I'll show you that.

So that's one A and one B.

Plucking the solid waste department by declaring it a utility and putting it out of the general fund into the utility system itself and establishing a $5 per household per month administrative fee.

The second thing that we are doing is establishing what is called a right of way rental fee.

So this can be kind of complicated so I expect a few questions about this but basically what state law says is that it is it is legal and practical for municipalities to hold public utilities accountable for occupying the right of way.

So the right of way are the sidewalks that you walk on the streets that you drive on that is considered property that is owned by the residents of Houston.

And so that is represented is represented by the general fund of the city of Houston.

And so we already have a whole bunch of utilities that pay into the general fund for occupying the right of way great one to uh walk you through is one I just mentioned Center Point.

So Center Point is considered a privately utility a private deregulated utility.

So this is in effect it's a public publicly traded company but it's been uh burdened with delivering and maintaining a couple of different things one is electricity service the other is natural gas service so they are a utility and they are required where they have their telephone poles and on the ground on public right of way as well as the roads underneath the uh where the natural gas lines are they pay the city of Houston's general fund every year about 100 million dollars to occupy that right of way and provide the service that they provide separately center point besides center point Comcast and ATT are examples of other utilities they provide telecom services so think internet and fiber and telephone lines and they occupy the city of Houston's right of way and they compensate the general fund as well.

In other cities across the state of Texas the cities require their water and sewer utilities to compensate the general fund for occupying the right of way the city of Houston is the last city in the state of Texas quite literally that has not required its water and sewer utility to compensate the general fund for occupying the right of way even though it's allowable under state law.

So we are going to begin requiring only our water and sewer utility to begin compensating the general fund for occupying that right-of-way.

And the typical way in which municipalities hold those utilities accountable is through what's called a percentage of gross revenue transfer.

So what that means is take all the money that the utility brings in.

So the city of Houston's water and sewer utility brings in about two billion dollars a year.

And we will take a percentage of that.

The percentage that we're going to uh that we are establishing is a 5% gross revenue transfer, and that will equal about 104 million dollars.

So to catch all up and to remind you center point, center point, I keep saying center point.

Solid waste as a municipal utility will free up about 116 million dollars inside the general fund.

And then we will establish a right-of-way rental fee in which the utility will pay the general fund about 104 million dollars.

So that will be about a 220 million dollar improvement inside the general fund for the purposes of the budget deficit.

And so those two things again are standard practices in all major cities across the state of Texas, as well as most of the major cities in the United States.

Um, and both of them begin to support structural balance.

So if I was to describe to you the fiscal stability of the city of Houston, the structural balance of the city of Houston as a house, this budget year we are laying the foundation.

It does not solve the problem, it does not uh this is not like a mission accomplished type of budget.

Uh we still have a ton of work to do, but what this does is it establishes dedicated consistent revenue streams that we can predict on and stop having an existential conversation every single budget year.

So, what does this do to our budget in the out years?

Most importantly, so as uh this is a little bit of an enhanced version of the original slide that I showed you.

Um the red line is again the if we do nothing budget deficit.

So again, going out to fiscal year 30, we're talking about a half a billion dollar budget deficit.

The green line is the readjusted budget deficit.

So as you can tell, it's already making huge differences.

So instead of a for fiscal year 27, which again we're passing the fiscal year 27 budget in the next few weeks, we go from a 209 million dollar budget gap to a 25 million dollar budget gap.

In FY28, we go from a $334 million budget gap to a $92 million budget gap.

In FY29, we go from $381 to $101.

In FY30, we go from half a billion dollars to $149 million budget gap.

So we are fundamentally resetting the conversation for ourselves where we're not talking about these existential challenges that we have.

More importantly, when we took when we look at the fund balance, which again is the savings account of the city of Houston, in FY27, we were projecting to go below that 7.5%, we preserve a healthy fund balance.

FY28, where we were expecting to go into negative cash territory, we continue to preserve a healthy fund balance.

Only in FY29, so about two and a half years from now, are we expecting to dip below the 7.5%?

And so what that gives us, what this budget gives us again is not a mission accomplished.

We don't get to just kick our feet up and not worry about the budget for the forever.

We're we have to work hard, and we're still working on you know anywhere from five to ten very serious ways in which we could either reduce costs for the city of Houston or increase revenues for the city of Houston.

Um, but what this does buy us is time, it gets us the opportunity to be able to uh have a cogent conversation with the public with y'all, um, to be able to say what is a meaningful way in which we can either bring in new revenues or reduce costs and preserve the type of Houston that you want, which is a more a very important conversation that we haven't been able to have.

No mayor uh since Lee Brown has been able to have, because we've been constantly under the gun of a decreasing tax rate and an increasing budget deficit.

So having said all of that, I'm gonna pause and kick it back to Councilmember Alcorn or Councilmember Castillo, and I'm happy to answer any questions.

If I'm happy to answer any questions that y'all might have.

Steven, thank you so much.

Great presentation, and we are ready to roll.

We all um if you guys see the little hand on your team's screen.

If you have a question, please raise your hand and your virtual hand and uh Russell and Jordan will call you call your name and then get your question out.

Gloria, go ahead.

Gloria, if you're talking, you're on mute.

Can y'all hear me?

Yeah, we can't hear me.

Okay, perfect.

Sorry about that.

Thank you, council members, for providing this platform, and thank you, David.

Whoo, it's complex the budget.

So thank you for putting it in a simple format.

And uh, you know, I I was a short time with a council member's office, so I understand the budget a little bit, and I understand it's just one budget, and there's so many services that are needed.

Um, so I get that I do.

I'm here to talk about the animal welfare and bark issue that's happening in the city.

And I know you touched on administrative fees for waste solution, and then not and and the mayor not increasing property taxes.

I just wonder though, if there was an opportunity uh to increase administrative fees for improving BARC or getting more funding for BARC or increasing property taxes for BART, would that be possible?

Because definitely for decades, uh animal welfare in the city of Houston has been underfunded, and uh compared to other cities in Texas like Dallas, Austin, even San Antonio, are doing a better job of that.

So how are they able to do that?

And is there any possibility that there could be an ask?

I mean, I think the public, if they knew um that they're that if we could do some kind of bee or increase in the taxes to help BARC, I feel like many people would be willing to do that, including myself.

Yeah, that's a really good question.

So the answer is a little bit the answer is yes, yes, and yes, to be quite honest.

We're considering everything.

Um, I'm not saying that this is the first year in which we are doing big financial change, and it's more of a structural change than anything.

Um you know this.

If you you were worked at the city of Houston, you know how complicated it can get, how quickly it can get complicated, and more importantly, the more that you throw at it, the less faith the public has in government itself.

And so one of the things that we're trying to balance out here is um the uh it is important for us to consider things like a fee dedicated for bark or a fee dedicated for parks or a fee dedicated for something else.

These two items are effectively freeing up or creating head space of about 220 million dollars within the general fund.

If we were to do that equivalency within property taxes, we'd have to raise property taxes by 10 cents or 11 cents.

And that's something that would compel us to go to the voters, so we wouldn't be able to account for it until November.

And we have to use examples um that are at least proximate to our situation.

And the closest uh the closest proxy for us to look at is Austin.

And Austin just tried to do the exact same thing.

They had a budget gap, they did not take the efforts that we have taken or gone through the efforts that we've gone through to um change the structure of the city and adopt more sound practices that are normal and and respectful of of the like normal business processes, and they lost big time.

Um, and so now they're doing they flipped it and now they've asked us to help them kick off an efficiency analysis, so they're actually leaning on Houston's experience a lot, and then I think they're probably gonna go back.

As I said earlier, Mayor Whitmeyer's indicated he is he's probably voted for more tax increases for than anybody in the state of Texas, and I believe him.

I think the answer is that we have to start with improving the city of Houston looking internally.

I'll tell you, we we did not uh we are expecting, I think Russell and council member on here.

We're expecting um, you know, they've been diligent partners of BARC, Council Member Castillo uh has been a diligent partner of park, so is Councilman Alcorn.

And every year he he puts in a budget amendment for $300,000 to bring in cleaning crews so we can have um our kennel attendants clean less and play with the dogs more to make them more adoptable.

And Gloria, I know you're with Barrio dogs, and this is a big passion project for you.

Um, we are not uh this year, we are is one of the first years that I've been around in city government in which we are not doing an across the board 10% cut for every single function in the city.

We've been able to preserve those budgets a little bit.

And so this is not to say that the answer is no to your your question.

We're gonna consider those things moving forward, but we've got to be able to um I would say crawl walk-run scenario.

We're starting the crawl stuff right now, and I absolutely believe that we're gonna, and you know, the mayor's super passionate about uh about bark, and we've got um we're having conversations now about what a new bark facility would look like.

That bond is still out there.

So there's a whole bunch of things that we're thinking through.

Um, and I appreciate you you doing that as a person who's married to a pet stylist and and I'm happy to talk to you about this.

But I in my former life, I'm a registered vet tech when I was 16.

I went to Lone Star College and got that, and that was my college job.

So I fully on board with everything that you're saying.

So yes, thank you to Councilmember Alcorn, thank you to Councilmember Castillo for uh supporting Bark and other council members that have done it in the past.

My ask today is that there is some kind of consideration to help fund BARC a little bit more.

And uh thank you all.

Thank you all for all your work and for this consideration.

Thank you.

Thank you, Gloria.

Thanks, Gloria.

Um, Tamika, and just as a heads up to everyone, we will be uh one minute of of questions.

So if I jump in um that your mail is hi, thank you for giving the opportunity to speak.

I had a question.

Um what would it take for um a tax uh fee put for metro to become a free fare?

Um considering that the box fare only accounts for about 4.5% of the total budget.

What would it take for Metro to become a free fare for the city?

Yeah, that's a good question.

And you know, this is something that uh in my previous life, I came from the private sector.

I was actually uh I was I rebuilt multiple transit agencies across the United States.

Um, and so the I've done a lot of work.

I've been a lot of part of the conversation for a lot of cities who want to go to fare-free models.

Um, as exactly what you just said, the um the fares bring in uh a little under five percent in any jurisdiction that you go to for revenue.

It's a choice of the board.

Um, there's been consideration.

I don't think that this is the consideration that Houston Metro has made.

I can only speak to what other cities, what the dialogue I've heard from other cities.

There is con some other cities believe that uh that the fee itself, and this is a little bit more of a prevalent argument than I've that I more of a prevalent argument on the West Coast, um, that fees are a discourager for people for the homeless individuals to get on the bus and just hang out and then they transport it around.

I'm not saying it's the right answer.

I'm not saying that that's something that I would necessarily agree with or that anybody would agree with on uh in city council, but that is historically the way that the free fair free conversations have gone.

And the the people who are for it say it doesn't bring in a meaningful source of revenue.

Let's just make it free for folks.

And the people who are opposed to it say, Well, we want to make sure that there's a little bit of a barrier so people aren't just getting free rides and taking up a s a seat for public transportation and just hanging out because they can.

Um, but that would be an act of metro of Houston Metro to do that.

So would that create avenues for because Metro is typically like a legal monopoly?

Would that create at all for another public transportation?

I would say bring more buses.

Not typically Tamika.

So Metro was actually created by the voters in 1978.

You know what?

I keep this type of stuff in my head, and I'm really grateful that you're asking me this random one because I get it out now and it makes me feel better that it's out of my head.

So in 1978, uh voters approved Metro.

A few years later, um, the uh city of Houston, so that was state law that allowed it to occur.

Uh, Metro was created, and then the vote corresponding vote with it, locked up the one penny sales tax, the one cent sales tax.

That is Metro.

So usually what you find is that regions only have one Metro.

I do agree with you that you would consider them a monopoly, but that's the norm.

That's the norm because they're almost always sales tax funded.

Thanks, Tamika.

Uh Susan Rogers.

Hi, can everybody hear me?

Yes, ma'am.

Um, so um I just want to share that, you know, it seems to me like putting uh fees on top of standard services that we all depend on, such as trash, um pickup is going to impact most those who have the least amount of resources.

And this doesn't necessarily seem to me to be the right way to look at solving a budget problem, particularly right now.

I think that you know, certainly the police budget has skyrocketed.

I think many of us question that.

But I'd also like to say I was also interested in what are the other ways that you all are looking to close the budget gap.

You know, so for example, um, through the tax abatements that are given out, you know, to people coming into the city, uh, other kind of options to close the gap.

I'd be interested to know what those are.

Yeah, so a couple of different things that I'll address.

Thank you, Susan, for that question.

Uh I would couch it in a couple of different ways.

So one sit the city of Houston, quite literally, uh, in the state of Texas, is the only jurisdiction on if you live in the city of Houston or if you own acreage in which you burn your trash.

This is the only two places in the state of Texas in which there is not a garbage fee.

It is a standard use fee.

Um, and I'll tell you that when the same argument is made about water and sewer, it's a critical service.

Why are we paying for it, right?

There's a maintenance to provide quality service that needs to occur.

Um, and it is a fee, it is a typical fee service.

I'm not saying that you're wrong for disagreeing with it, but I'm telling you I want you to hear the logic as to why it is there.

It is a very normal thing that municipalities do.

Every single state city in the state of Texas has a garbage fee.

I mean, it's really important, and then all of the unincorporated communities.

If you live in a community, you pay a garbage fee except for Houston.

One of the important things though, that Mayor Whitmeyer recognized that we all recognize city council members recognize it, um, is that as while a garbage fee is a standard practice um for receiving solid waste service, um, a garbage fee in Houston would necessarily be about 25 bucks.

And going from zero to twenty-five, that really is a non-starter for a lot of people.

It's I mean, maybe you could work your way up to it, but that's not the way that Mayor Whitmeyer wanted us to approach this, hence the five dollars.

Um I can I can tell you that of the benchmarking that we did across the city of Houston, and I'm I I will share my screen.

Susan, congratulations.

You're the first person that has made me pull my screen back up.

Um one of the things that I want to show you is a benchmark across the state of Texas.

So these are all of the cities in the state that and in our surrounding cities, uh, the major cities, in which there is a garbage fee.

And you'll see San Antonio is $19 to $35, Dallas is a flat $40, Austin is $28 to 65, 65 being the highest in the state of Texas.

Fort Worth is 14 to 26, El Paso is 36, Pasadena is as high as 34, which is the highest in our region.

Sugarland is excuse me, Leak City is the lowest at 22 bucks.

It runs the gamut, 25.

The city of Houston, if we were doing a full garbage fee, 25 would be would sort of hit the mark um around our region.

I have we also benchmarked every single discount that is provided to the residents of those municipalities that are that have a garbage fee.

And so think senior exemptions, exemptions for people with disability, for veterans uh for low to moderate income households, and none of those get anywhere below 10 bucks.

So five is quite literally the cheapest, is going to be the cheapest fee in the state.

Um, I'm not saying that that's gonna satisfy you, but I it is something that I want you to hear.

We are very conscious conscious of the burden that it's going to put on households.

It's one of the reasons why we've said for at least the next two years we're going to keep it suppressed at five.

And Mayor Whitmeyer's committed that before we increase from five to ten or from five to any number, that there's going to be a conversation with the public, a conversation with city council, and that to increase it in anything higher than five, it must be a vote of city council.

Um, so that's that's the the sort of conversation around um solid waste.

Now, with regard to what else we're looking at, we're looking at literally everything.

Um we have um a wide resource of uh partnerships with municipalities across the state of Texas and across the United States, but also we're looking into different ways of doing things.

So the city of Houston, we that this is something that maybe some people don't like to hear, uh, but we there's an exercise called managed competition.

This is where we find out, so we do a function that the private sector typically does.

So think finance, human resources, payroll, accounts receivable, accounts payable type of stuff.

Um are we doing it in a more cost effective way, or do we provide a unique service to ourselves?

Um, or is there something in the private sector that could occur um that would allow us to lower the cost uh cost burden of the city of Houston?

So we're actively going through those exercises.

We're also looking at modernizing fees.

Uh there are some fees that haven't been touched since the 1990s.

Um, we're also having conversations around what would if we were to allow ourselves to um align ourselves with other cities in the state of Texas with the Rev the Ad Valorum property tax that they sit at.

What would that look like if it impacts Houston?

I could tell you that for about every penny that uh the tax rate increases, you receive about 26 million dollars.

The city of Houston receives about 26 million dollars of revenue.

Um we couldn't go much higher than a penny or two without hitting the city of Houston's RevCap.

So we can't solve our problem by taxing people, and that's that is the most important thing about this is that we are we are trying to walk a fine line of modernizing the way in which the city of Houston operates, provide better services, feel a squeeze inside of our general fund, and recognize that taxing isn't the way to get out of this this challenge.

We have to be creative, and that's what we believe that FY27 represents.

Thank you, Susan.

Kim.

Hi there.

This is uh actually Kim's husband Clayton.

Um I had a question about the uh neighborhood traffic management program.

In particular, yes, in particular uh in Brooksmith 3.

Um we have a project that's been approved, but uh I guess fees have not been allocated.

Um I just was wondering if there was an update on uh, you know, those fees, fees for that might be available uh this year.

Um in addition, our particular area uh on our particular street, um, as a matter of fact, we've recently had low income housing built.

We've had a daycare in the last few years built at the other end.

Uh we have very few sidewalks.

Uh so I guess another question would be would there be any possibility for budget into uh you know implementing sidewalks uh in the same area as well for some Kim's husband Clayton, you are hitting on another thing that just casually lives inside of my head.

So uh you can expect uh speed humps to traffic calming devices is what the engineers call it speed humps uh to cost about $7,500, $7,500 to 10,000 bucks.

Um the city of Houston created a program.

Uh actually this was revised under a proposition A item.

Um but the city of Houston has the program in TMP as you're you're aware.

Um and what it allows for is for communities to sort of fast track the approval, but there is no funding source tied to it.

So you have one of two options.

The first one is that as a community you can fundraise and pay for it yourself, or two, council members have what's called a council district service fund, CDSF, and I might be making a lot of council members and staff mad about this.

But the CDSF is effectively a 1.1 million dollar fund that uh each council, excuse me, a one million dollar fund that each council member has available to them to flex spend on programs like that in which they're meritorious, and a lot of council members do allocate money to traffic calming devices or speed humps.

So I I don't know exactly where your neighborhood is, but you should start the conversation.

We're in councilman Castillo's.

Yeah.

Perfect.

He's on the call.

So you should speak with uh Council Member Castillo and Russell, and they can talk to you about what the NTMP program is.

Um a lot of times you'll find that the CDSF money is is allocated.

Uh there's always a long waiting list, and that you're not the first neighborhood to have concerns about speeding.

Um so that's why we also made an opportunity for folks to fund it themselves.

Um, but as of right now, there is no city of Houston dedicated funding stream for those traffic calming devices.

Um that's uh that's a good and a bad answer.

Lynn.

Oh.

Well, flood dedication.

Co-pays.

Yeah, how will flood mitigation co-pays be handled?

Did I did I hear you correctly?

Yes.

Okay.

Um, so uh without getting into to super specifics, um, we don't we're not touching drainage money.

Um water and sewer, uh, the water and sewer utility isn't the drainage dollars.

So drainage is uh DDSRF, so dedicated drainage and system relief fund.

Those are three lock boxes that were established by Mayor Parker and continued by Mayor Turner uh through the rebuild Houston program, which is now I believe the Build Houston Forward Fund.

Um those things are locked, and drainage dollars continue to stay drainage dollars.

In fact, we're putting about half a billion dollars towards that um each year now.

Um so we're not touching that money.

What is going to uh the utility right-of-way fee is the money that is allocated towards improvements of the infrastructure that deliver water and sewage.

So we're talking about the the water pipes, the the inlets, the well, not the inlets, the water pipes, the sewer pipes, the um, and then the plants themselves.

So we are not impacting those things uh by doing these actions that we're taking.

Dedication is buy you.

Yes, sir.

And that's that's not something that we're we're touching.

We bayous are technically owned by the Harris County Flood Control District, um, and we partner with them on a lot of inlet and outlet activity.

Um, so for example, in District A over off of I-10, and I want to say that it's uh like I-10 and Gessner, we have um some ditch channels that we control that dump right out into the bayous, and we're actually causing quite a bit of flooding.

That stuff is not being defunded at all.

We are continuing to put money towards that, and we continue our partnership with the Harris County Flood Control District.

Uh thank you, Steven.

Thank you, Lynn.

Guadalupe.

Hi, thank you so much for again all of this information.

It's super helpful and appreciate the council members for making this space.

Um going back to the combined utility system.

I think I have a question around like the opportunity cost of transferring the funds out of the utility system.

Right now, public works faces a lot of operational challenges when it comes to our water infrastructure.

Sewage overflows have not gone down, they've actually been hovering between 1,200 and 1600 annually, uh, depending on the weather.

We know the average water leak repair takes 41 days, and our system continues to lose as much water than the entire city of Fort Worth consumes in a year.

And so if these funds are truly excess, right, and we're not deferring anything from the consent decree and our obligations, um, why are they not being reinvested back into the system, right?

We know the city hasn't been meeting its targets for you know water line replacements, for example.

Um, we think that maybe the funds could be used for water leak repairs or one water-integrated water management or assistance programs, right?

Considering the high water bill fiasco of the last few years or private line repairs, which again continue to contribute to the high sewage overflows in our city.

Um, so just wondering why why we're not thinking of investing it back into the system.

So we are.

Uh there's a I have a very um, this is gonna be where Sally like taps on the camera and tries to make sure that I don't go too long on this, but I have a very finance broy question for you or answer for you about this.

Um, so I'm gonna share my screen.

I'm gonna walk you through two very important slides, and then I'm gonna talk you through um on the second slide, sort of what the city of Houston has done over time where we know that we are where we have the space for it.

Um and I'll give you my answer, and I don't know if it's gonna satisfy you, but I want you to hear it because it's it's a really good question that you asked.

So what you are looking at, the city of Houston has to care about two very important things when we deal with big, large debt-funded things like our operations of the city wire.

So we have to deal with the the um the money that we have to put aside for the debt that we hold, and then we have to have money aside for our operating.

So it's called uh uh debt service coverage ratio and our uh opex uh cash cash reserves.

And so the city of Houston by law, we when we issue our debt, we this isn't like um just like whenever you get your mortgage, you're signing a whole bunch of documents.

Well, that's because it's an agreement between you and a person.

Well, city of Houston does a ton of different things.

We have something called the master bond ordinance, which is in effect our standing governing document that uh the bondholders can look at and know if we're gonna if we're going to buy or purchase the debt of the city of Houston and give them cash.

These are the rules of the road that they follow.

And so one of the things that they have put in our bond covenants inside of our uh master bond ordinance is that we have to have a debt service coverage ratio of 1.25 to 1.2 to 1.35.

Or said differently, 100 120 to 135% of our debt, we need to have that much cash available.

So for every hundred bucks of debt we have, we need to keep at a maximum of 135 dollars on hand.

We are currently carrying 215%.

So for every 100 of debt, we're carrying 215 dollars.

So what what I we call that is excess liquidity.

Basically, it's it's dollars that shouldn't be encumbered for that purpose, but they are and they're not being utilized better.

Uh the second slide that I'm gonna pull up now is what's called a required cash reserves.

So this is now tied, we've dealt with debt.

Now we're talking about operational expenditures.

So by ordinance, we're required to keep what's uh 60 days of operating cash, so two months worth of operations.

By cash policy, we've brought that up to 300 days of operating reserve.

So, what that means is if every single rate payer in the city of Houston stopped paying their water and sewer bills right now, we could operate for 300 more days.

That's what the policy stipulates.

We are now carrying 550 days of opEx, and again, so that means we carry more on the debt side, more cash than we should on the debt side.

We're also carrying more cash than we should on the operations side.

And what you're looking at here with this line graph is what's called the total CUS ending balance.

So this is a linear look.

So over time, and what you see is where the the dot is for each fiscal year is the amount of money that we carried inside of our operating reserve.

So between 2016 and 2021, you'll see that we carried anywhere between about 700 to a little over 800 million dollars.

There were a whole bunch of policy and accounting decisions that led to that sort of sweet spot that the city sat at for a very long time.

And what you'll see is under Mayor Turner, there was an uptick.

It went from like 21 uh from 21 to 22, it jumped by almost 400 million dollars sitting inside that ending balance.

Well, Mayor Turner and his administration continued to do a ton of work inside the system.

There were some policy changes that that shifted the and effectively increased the amount of money, but also there was some operational changes that occurred.

So this is where the explanation gets a little dense.

So I'd like you to just stop me uh if if you want me to repeat something.

So the city of Houston has, as all cities have, uh, a pretty comprehensive knowledge of the age of our infrastructure.

We know that there are like cast iron pipes and petrified wood pipes that were created in the origination of the city of Houston that are still around and in some instances still operational.

There's also brand new sets of pipes, and so we have what's called a distribution curve.

So it's the big bell graph that you the bell chart that you always used to see all the time in high school for me.

Um, and so on the the easy, the good end, it's all of our brand new pipes in the middle is the average age, but on the tail we have our oldest pipes.

It was historically a policy of the city of Houston to do anywhere between one to three percent replacement of the pipes each year.

Uh Mayor Whitmeyer has bumped it up to 3%, so 3% annually, we replace our pipes, but it was largely driven by policy to go after the age of the pipe first.

So, what that meant is that we were going and finding perfectly fine working cast iron pipes, and we were paying exorbitant costs because all of this is exorbitant, it's not unique to that, but very expensive cost to replace those pipes instead of going after the leaky pipes, which goes to your point earlier about we we leak, so the number that you're looking for is 38 billion gallons.

Um, when we first got in, we were leaking 38 billion gallons uh each year, which is what Fort Worth consumes.

Um, so as a policy shift, what you saw in 21 to 22 is a couple of different things.

You saw an accounting policy shift where we said what they said is our projects don't last like six months, our projects last like four years, six years, eight years, and we were tying up cash in year one for the life of the project.

So we have our there are two very dependable things in our in the city of Houston.

The least dependable is sales tax, the two very dependable revenue streams are our property taxes, because we know who lives in the city of Houston, we know that largely we're growing, and we can generally rely on it and predict, we can argue in the in the like smaller percentages about it, but generally we all agree.

And our rate payers, so the water and sewer customers, and those are very predictable revenue streams.

And when you have predictability in your revenue stream, you don't have to do things like lock up cash at first because you know it's going to be replenished in the out years.

So what was happening was we were saying there's a 50 million dollar project, it's gonna take 10 years, just as an example, and we're locking up 50 million dollars in year one, and we're we're tying up this cash up at the front, and it created this like weird accounting bulge where we had cash like what you're seeing here just sitting in an account.

There's a reason why it was super static for that many years, and it's because they were locking up all the cash and they were going through a multi-year project, and they shouldn't have been doing that.

That's a bad accounting.

Well, it's not a bad accounting principle, but it is not an accounting principle you should utilize whenever you have a dedicated revenue stream, like the the ratepayers.

That's one.

Two was that they shifted under director Carol Haddock and chief operating officer Randy Mackey, who is now the director of public works, they decided to go into focusing on the replacements replacing the pipes that are inside that 2% or 3% annual replacement mode.

They focused on making those, the leaky pipes the priority.

We still are replacing old pipes for the sake of them being old, but we're doing fewer of it.

We're going after we're targeting the uh the we're targeting the pipes that are the leakiest.

And we that while that doesn't necessarily solve that creates like downstream operational efficiencies that I'll talk about in a second.

And then the third thing that they did from 21 to 22 was they did a whole bunch of technology improvements.

So you saw um better work order system for making people go out into the field, um, utilization of technology for a whole bunch of different things, performance metrics being put in place.

So people were being watched and held accountable to do you've got to fix X number of pipes per day, and that we're holding you accountable to it.

And so through all of those things, what we saw was an accounting accounting policy change, a what we attack first, the leaky thing, and by attacking the leaky things first, we improved the operations, the operational expenditures, and by holding folks more accountable, we effectively created headroom in ourselves.

We just became a more efficient department.

And so there was a buildup of cash that accumulated in 22, and you see it flatten a little bit, and then there was a legislative cycle, and then we came into office, and what you saw was another uptick.

And the legislative cycle that occurred was that um the state of Texas and the federal government under President Biden and reaffirmed under President Trump, uh, decided that they wanted to have a nationwide and statewide focus on uh water infrastructure and sewer infrastructure funding streams.

So basically saying all the jurisdictions that do work, part of the you know, part of that funding came from I can't remember what they call it, but it was the big infrastructure bill that President Biden passed, and now it's being a little bit refined by President Trump.

But in effect, what they said is we want to give very favorable borrowing rates to these municipalities and to these states, and then the state said the same thing.

They created the Texas water, well, the Texas Water Development Board was already there.

They created a new dedicated funding stream that allowed for cities like us, if we wanted to, to go and borrow more cheaply than the debt that we can issue ourselves, and so what we also decided to do, so remember I talked about how the city of Houston liked to allocate cash for itself all up front.

We also decided that there are things that are worth issuing debt for, um, and water infrastructure is a great example for that.

So, for example, we are gonna put about the the East Water Purification Plan is gonna cost about $4 billion dollars, $3 billion of which we're borrowing or getting grants for.

We're gonna pay about a billion bucks of it.

So what we did was we diversified our project funding streams.

We went and took a look at all the projects that we had in the pipe, all the future projects, and we went to the Texas Water Development Board and we went to the thing called they're called Wi-Fi alone.

So this is the water infrastructure, federal water infrastructure loans, and we began borrowing.

And the borrowing rate for those is like two to two to three percent, where the borrowing rate for us is anywhere from four to six.

So out of the gate, what we were projecting on paper, we were saying we're expecting uh a billion dollars to be at a six percent interest rate or five percent interest rate by shrinking it down to three, we've already created that savings, and so we by diversifying those revenue streams, we also freed up cash within our things.

So you see that that bump up now, and now we're closer to like 1.41.5 billion dollars sitting inside that ending fund balance.

So I get you up to the point of where I think you and I can agree that just through operational efficiency and doing different like different accounting policies establishment, we're at the point now where we have head space.

The question that I think you asked was why are you choosing to do this with that head space and not drive more money into the system?

Is that fair?

Okay.

Yeah, and I also I think also looking at I I've seen this chart a bunch of times, and I've heard this also from other folks at the mayor's office.

I think we're I think we really need to look at some of the we understand the master bond ordinance, but even within some of the specific funds, right?

There are specific legal restrictions and and cushions that that need to be had.

So I think it'd be really helpful to see kind of like that breakdown if if your office is able to provide that or public works, the breakdown on those specific funds within the combined utility system and what sort of cushion, be it by days or by financial amount that they're expected to have to add up to that number that you're saying that we have like I think we're supposed to have 150, it should be we're hovering at 300 or something like that, right?

But I think by looking at it by the fund or by the obligation can help I think council understand like really how much wiggle room do we have, because even with the consent decree, right?

As the city has made some progress on it, like we've seen that balloon from two billion dollars to nine billion dollars over the course of two years.

And so we can expect that as maintenance and and prioritization of projects, you know, moves slowly as capacity allows.

We can expect those costs to continue to balloon up, right?

And I think what what we're really worried about is, you know, we we've drained the funds so much that you know we're not compensating or not, we don't have that wiggle room to catch up with the inflation and the increased cost of construction and on projects.

Um, and then we're gonna come back to another rate study and and then we're gonna see our rates go way, way higher, right?

Because we've drained the funds so much up to that point.

Uh, it still has to be made on the consent decree.

What I'll say is that the I know you've seen that I recognize you've seen this slide before.

The net news slide that's been presented has been presented by the controller's office, the controller's office.

Um, this is not necessarily, I mean, yeah, I'll whatever I'll say it.

Uh it I came from, I'm a finance person, I work for KPMG, uh, doing audits specifically auditing.

Um, I I would have put whoever created that chart as well as the underlying uh data underneath it in timeout professionally.

Um, it is a it's uh an analysis of a bunch of assumptions that they had.

They never asked the question of what are you planning on doing to us, even though we gave them the briefing.

It is a very specious document for a lot of different reasons.

And and we do plan on, so I had a big set of meetings today after seeing that to be able to walk everybody in the public through it.

How we are not doing what they're saying we are doing.

Um, the important thing to note is that the the controller's analysis um the controller's analysis does not assume two very very important things.

One is operational efficiency within the department itself, which I wouldn't expect them to, to be quite honest.

They could ask and we could give them a number, but that's a fair thing.

The second thing that it does not do is it does not ever assume growth in the base.

So this is a really important thing.

If we were to never pass a rate study again, if we were to never, if we were like city of Houston went 10 years without increasing water rates, it is pegged to inflation, meaning you're gonna get a 2%, 3% increase in your water rate anyways, whether there's a any, whether there's an increase or not.

The consent decree was the first time in a very long time in which there was a planned increase, and that was partly because the consent decree, right?

So that that necessitated the 8%, 9%, 10% growth that you're seeing inside of that.

Um, in the middle of fulfilling the consent decree and getting to the point um getting to the point where we are now, we lowered the cost of doing business in the department itself.

And so by design, and this is not a negative thing to the department, in fact, it's a good thing, I think, um, is that because there's lowered cost on actually doing the work, we've increased the the capacity within that fund itself.

Um, because that when the consent decree was passed, they said that it costs X billions of dollars to run that department every year.

Well, it costs a little bit less.

And when you talk about a little bit in percentages and billions, it becomes a huge amount of money.

And so that's where we know that that 5% isn't going to um isn't going to impact the the city of Houston, the impact of the fund in which the way that the controller's office is trying to describe it.

I do not disagree.

Let me say this very clearly.

I don't disagree with the controller's office that there absolutely needs to be annual and consistent looks at where that fund sits.

We are not saying this is a panacea and nobody has to pay attention to it and waving our hands.

And that's I think maybe the most frustrating thing is that that's not what we're trying to do here.

Um, what we are trying to say is that there is a catastrophic scenario sitting inside the general fund, and we could argue 16 different ways to Sunday about how the city of Houston got there, but it's here.

And we are talking about if for every 1,000 employees, the cost is about a hundred million dollars.

Well, we're talking about a 400 million dollar budget gap, which if you look at it in the cost of people, is 4,000 people.

There are 4,400 people that are eligible for layoff in the general fund.

So we are by design talking about closing of all libraries, closing up all parks.

We're not talking about increasing the mowing schedule of parks from 14 days to 21 days.

We're saying we're never mowing parks again, and that's the conversation.

And so if we have head space inside of a fund where we've been decreasing the cost of that business over time, and we have better accounting principles in place, and we have uh we have more uh space to say there is excess cash and we are continuing our obligations and we are still working on the consent decree and it's meeting the deadlines that the consent decree is established.

It is neglectful of us to not consider this as an option, especially under the fact that it's allowable under state law.

Okay, we're gonna stop.

We're gonna stop right there.

I think that was a good would love to follow up with your office after.

I think I think I have a meeting with Guadalupe.

Absolutely can follow up.

Oh, Josh, perfect.

Yeah, I'll I'll jump in to somewhere else.

Go ahead, Russell.

Taylor.

Thanks, Sally.

Okay, thank you.

Um, I attended the parks budget workshop meeting.

Um, so I understand that there's not much of a proposed change to the parks budget, although um we find it extremely necessary.

But can you kind of explain the plan to keep up with the park maintenance in the neighborhood parks and if there are any plans for any extra help to go towards these efforts, such as um like any extra contractors or anything to help carry out this to ensure they're properly maintained?

Yeah, absolutely.

That's a wonderful question, Taylor.

Um, so you're right, the parks budget hasn't changed, which is better than it was last year.

Uh, last year we actually cut the park's budget, and there was a big uproar from council as there rightfully should have been.

Um, and we had a budget amendment that put the the mowing cycle back into place, and we were proposing to go from a uh, I believe a 21-day mowing cycle to a 28-day mowing cycle, and it's been brought back down.

So we are we have effectively kept the department at a maintenance flat, which means they're not going to be increasing the mowing cycle days, but to your point, and I think to your question, that's not enough.

What else are we doing?

So we are working with um a whole bunch of different organizations.

So obviously we work with the Houston Parks Board, um, who is doing the Let's Play Houston program, and so their focus is on doing capital replenishment of neighborhood parks.

We're doing 25 neighborhood parks over the next couple of years, I believe, um, and being able to replenish those uh from a maintenance and trash perspective.

We are bringing in uh not just the parks folks that are doing it, we're working with our county partners.

So we have done more work with commissioners, uh all of the commissioners um on uh handing over the maintenance of parks.

So uh Commissioner Brionis and Commissioner Garcia have really put the pedal to the metal.

Um we're in negotiations with Commissioner Ramsey, um, and uh we're also getting help from commission uh commissioner uh Ellis as well, uh, but full takeover of parks by the county.

They they have the money to be able to do the maintenance.

We have the parks that they want to maintain, and so we're passing that off.

And what that does is when I don't have to have crews inside of parks, I can shift them over to other places and begin that reducing that maintenance that maintenance cycle time additionally and I saw a question in the chat we are working towards uh bringing on more park rangers we're trying to have a conversation with HPD as well as other off-duty parks so there's park rangers there's off-duty police officers could we have a swap in swap out type of uh conversation and on top of that and this is a little bit more detailed than you asked for Taylor but it's an important one there are organizations out there that are able to do uh maintenance like mowing cycles and stuff like that at a very very cheap rate because they are a nonprofit organization that looks to focus on it so for example there's one called career recovery and resources and these are folks who are uh who are in uh like recovery for addiction um and they are able to provide services mowing services sort of like park maintenance type of stuff and we're doing pilot programs with them to see if we they can become a reliable partner to do things like our medians and and other types of things so we can again free up more resources to put them back into the parks but completely agree with you we need to put more money towards parks.

I think I know that there's a couple of existing um partnerships with Harris County um as far as um taking over the management of some of the parks I think there was about seven um are there any plans to bring on any more than the um ones that are our that have already been brought on could you say that one more time just if there if there's going to be more partnerships I think the mayor is here to to give away to not give away but to have um part uh the county take over as many as they can handle um to free up our maintenance things and there's other things going on with parks with the open space ordinance and the fee the developer pays uh fee in lieu of we're we're I I hear you Taylor and I'm we're I'm really advocating for additional park funding so we'll we'll be working on that and bringing in rural resources for parks.

Great thank you.

Council member uh we have no one else in queue for questions.

Oh my gosh wow did I bore you?

Okay guys um there I did see in the chat uh and maybe it's already been answered but there are some additional opportunities to speak of course any Tuesday uh during public session uh before we consider the budget ultimately which will be June 10th we'll be doing amendments on June 4th I have a budget fiscal affairs committee meeting June 2nd uh where the uh the your two cents budget survey if anybody if you haven't taken the budget survey uh please take the budget survey we've gotten about 800 responses and just great feedback there on what people's priorities are and where they want to see their money go and lots of great comments and the kinder I do this with the Kinder Institute at Rice they'll be coming to the budget and fiscal affairs committee meeting on June 2nd and to go over those results as well as their big survey that they've done for 50 years.

And then there'll be a hearing Jordan on June 4th third third budget hearing at 9 a.m at City Hall on June 3rd and that's another opportunity to speak.

So there's every Tuesday between now and June 10th is an opportunity the hearing on June 3rd the budget and fiscal affairs meeting on June 2nd all opportunities to come and advocate um for your position on the budget and and to also get any additional questions answered.

On my website there's a a spot to submit questions we get those submitted through our internal web to the department directors and they are working their way through that.

We want you to be as as informed as you possibly can be on the budget and that's why um you know we're taking such care so everybody really understands and we provide a lot of opportunities for people to get put their input and to to receive answers to your questions but can't thank you enough um city budgets are not the sexiest thing so the fact that all of you showed up at from six to seven eighteen on a on a um on a whatever night this is I don't even have lost track.

Wednesday night um we're so glad you're here and interested in this.

Steven, I cannot thank you enough the I can't believe you've done that 86 times.

I can't even imagine it.

A lot of work's gone into this budget um it like he said, this is a budget to buy time.

This is a budget to buy time and um there will be some serious conversations about what kind of city um we want to live in and what that's gonna take to fund.

There'll be some um activity at the state legislature, I'm sure, in in 27 to advocate for cities and the need for, you know, everybody, everybody's got under this revenue cap now that the state has imposed.

So lots of work to do, but really grateful to have your input.

And thank you to Jordan Frazier and Russell Etherton, who really did the heavy lifting on putting this together.

And I see my staff Katie's on here and Helen too.

And I don't know what other staff members are on, but thank you to all staff.

As a former staffer, I know that's where where really all the work is done.

So thanks everybody.

Good night.

Bye y'all.