Quick, we just have uh the monthly financial report on the agenda.

So that's new and different.

But don't don't get used to that.

We're gonna stack them up in the future.

So I will have um Will Jones um from the controller's office and Melissa Debaski, please join me.

And in around the horseshoe, we have my vice chair, Mario Castillo, staff from Council Member Twilight Carter's office, staff from Councilmember Alejandro Salinas' office, Vice Mayor Pro Tem, Amy Peck's office, Mayor Pro Tem, Martha Castax Tatum's office, uh Councilmember Julian Ramirez is here, staff from Councilmember Mary Nan Huffman and Joe Panzarella's offices are here.

So welcome everyone, and we will get right to it.

Let's deal with that a little bit.

Okay.

Well, good morning.

Uh Madam Chair, thank you.

That helps.

Uh, members of the committee, thank you for the opportunity to provide the monthly financial report for the period ending May 31st, 2026.

And the general fund, the controller's office is projecting an ending fund balance of 276.5 million or 10.4% of expenditures less debt service and pay as you go for FY26.

This is 23.5 million lower than the projection of the finance department.

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

Based on our current projections, the fund balance will be approximately 77.3 million above the city's target of holding 7.5% of total expenditures, excluding debt service and paygo.

There are no changes uh to our revenue and expenditure projections from last month's report.

We are gearing up for our final MOFAR next month, where you'll see a lot of the changes.

I will note in sales tax, we are seeing improvements there.

So in for the the receipts for May was up 7.1%.

Uh so we would definitely be going up on our uh sales tax projection next month.

But for this month, no changes.

Um, on the enterprise funds for convention and entertainment, uh, the operating revenues increased by 0.5 million due to higher parking revenue.

Non-operating revenues increased by 4.5 million, primarily due to hot.

As a result, our operating transfers also increase by 6.9 million.

We're projecting no changes uh from the previous month's amounts in the remaining enterprise funds for the commercial paper and bonds.

The city's practice has been to maintain no more than 20 percent of the total outstanding debt for each type of debt in a variable rate structure.

As of May 31st, 2026, all outstanding debt is within that threshold.

Um, and before I conclude my report, I do want to recognize our controller interns that we have here.

If y'all can please stay in.

So very rambunctious bunch.

Um I've been talking to them a lot about structurally balanced budget, the monthly financial report, the BFA committee.

Uh so that very sharp.

Um happy to have them here.

Um, so we know once they leave here, they'll be ready for anything because we we're covering it all.

So glad to have them.

Thank you.

Great to have you.

Welcome.

I also want to recognize that count we've been joined by council member Fred Flicken.

Good morning.

This is the 11 plus one financial report for the period ending May 31st, 2026.

Fiscal year 26 projections are based on 11 months of actual results and one month of projections.

For the general fund, the revenue projection is 12.3 million higher than the adopted budget and remains unchanged from the prior month.

Uh, for sales tax receipts, um the receipts for the month of April were um 4.87% higher than the same period last year and about 9% higher than budgeted.

Um, and since that time, we also received the May sales tax receipts, um, as Mr.

Jones mentioned, uh, which were also above budget um and higher than the same period last year.

So probably in next month's report, we'll make a revision to our um estimate once we see how um how June uh comes out.

On the expenditure side, the projection is 117.2 million higher than the adopted budget, but remains unchanged from the prior month.

Um and so um since we're not making any changes from the prior month, the projected ending fund balance is about $300 million, uh which represents 11.3 percent of estimated expenditures, not including debt service and pay as you go.

Uh in the enterprise special revenue and other funds, um, these are the following changes for the convention entertainment.

Operating revenues increased by 537,000 due to the higher than anticipated garage parking revenues, non-operating revenues increased by 4.5 million due to the higher than anticipated hotel occupancy tax and delinquent hotel occupancy tax collections, and as a result, uh the operating transfers increased by 6.9 million.

And the asset forfeiture fund revenue increase by 700,000 due to higher than anticipated confiscations.

And that includes the concludes the um the financial part um of the talking points.

So the finance working group has been meeting and talking with our credit rating agencies, and so SP had their annual review of the general obligation credit, where the committee met and um made the decision to revise our outlook on our general obligation credit from negative to stable.

The stable outlook signals that uh SNP uh being the rating agency, they're an independent third party that examines the city's credit worthiness.

Um it shows that they have greater confidence in our financial direction and our ability to maintain fiscal stability.

So, as we all know, when we went through the budget process, um they felt that our budget um takes steps to address the structural financial challenges that we have in our future, demonstrating our financial strategies and creating a more uh sustainable foundation for the future.

Um, of course, they continue to look at our credit and monitor our financials, they follow the monthly financial reports.

Um, as I mentioned, it was our annual surveillance, so they will be you know reviewing our credit on an annual basis, in addition to any time we do any bond transactions.

So it'll continue to be an ongoing conversation with the rating agencies, but I just wanted to read a little snippet from from their report where they say that our outlook uh reflects our expectations that the city by making substantial changes to both revenues and expenditures will make significant progress to address the budgetary gap in fiscal year 27.

Houston's debt and liabilities burden is moderate with elevated fixed costs, but has reduced considerably in the past decade following the major pension reform initiative.

So a lot of things that we're continuing to build on that um you know we've been working on for um even you know the past 10 years with the pension reform.

So um good news coming out of SP in the last couple weeks.

So that concludes my report.

Thank you.

Good news indeed.

Okay, any questions from my colleagues?

This month's report was pretty straightforward, as they noted.

Um, most of the changes will be reflected next month.

But um, we have council member's first from the queue.

Thank you, madam chair, and thank you both for the presentations, and I agree that's great news on the credit outlook director, and so kudos to the folks in the administration responsible for that.

So um I noticed that uh there is a variance on in the report on page nine, intergovernmental um 16 million.

Is that related to the timing of the tourist transfers or what what is that?

Yeah, that's the the difference between our projections on the municipal service fee.

So a couple of months ago, finance increased that projection.

Uh we're still working with them behind the scenes to get a better understanding of what went into that projection and most likely will come up next month.

So you believe your your projections will come up to meet the information.

Gotcha.

Um Director Debowski and and uh Will, you both talked about uh increase in sales tax uh revenue uh at some point I suppose we we will get a report on um how we fared uh revenue-wise uh related to World Cup events, and so do any expectation of when that will be.

So we received a sales tax um receipts two months in arrears.

So it will be until about two months after the conclusion of the event.

Uh mixed beverage tax, we used to get a report quarterly.

Now we get it monthly.

So again, that's kind of along the same timing as the sales tax.

Okay, great.

All right, thank you.

Like to welcome staff from Councilmember Willie Davis's office and Tarsha Jackson's office.

Uh Council Member Flickinger.

Thank you, Chair.

Yeah, it was great news on the outlook.

Does that translate into lower borrowing costs?

Really, what it means is that our borrowing costs are hopefully going to kind of stay around where we expected them to be.

Borrowing costs are kind of a function of how the market is and our credit rating together.

It definitely gives us more certainty, but for sure in the long run, you know, with the with the credit being more stable, it will definitely help us to keep our borrowing costs, you know, as low as possible.

Okay, thanks.

Uh also the uh the asset forfeiture.

It's up by 714,000.

Do you know if there was anything significant in there that I would have to get the details on exactly what it is?

I mean, we continue to to monitor the projections and we'll have a more complete number in in the next month's report as well.

Okay, thank you.

Okay, seeing no more questions from colleagues, we will go to public comments.

We had one person sign up, Dominic Mazoc.

I don't see him here, but anybody else is welcome to address.

Any of you interns want to come ask a question?

Now's your time.

Make a comment.

Come on, there's got to be a brave one out there.

Nope.

All right, I don't blame you.

Next month, everyone will be a quarterly meeting.

Uh this will be the end of our, we'll kind of sum up the FY26 uh fiscal year.

So we will have the overtime, you know, like we've been doing every quarter.

We'll have an analysis of overtime, and then starting in subsequent quarters, Councilmember Ramirez, we will be taking up the all the expenses in the quarterly reports.

And what I mainly want to focus on in those quarterly reports is as overtime tracks higher than what's budgeted.

I want to see what the offset is, is basically what we're going to be looking at.

Um, what the offset is and any other um abnormalities within um departmental budgets, kind of what the offsets will be.

So we'll be taking a look at that on the quarterly reports.

But seeing no other questions or comments, I am happy to report we are adjourned at 10 13 a.m.

So everybody go get to work on Monday.

Bye.