2026 budget and fiscal affairs committee.

My name is Sally Alcorn.

I'm the chair of this committee.

And I call this committee to order and would like to welcome all council members in attendance.

We are joined by Councilmember Joaquin Martinez, Vice Mayor Pro Tem Amy Peck, Councilmember Joe Panzarella, and staff from Councilmember Flicking's Huffman's Ramirez's Thomas.

Mayor Pro Tem Castex Tatum's and Carters.

And my Vice Chair Councilmember Mario Castillas staff is here as well.

And Selena.

Sorry, I you were kind of over in the Carter character.

He's gone.

Oh, Salinas is back there.

Oh, okay.

Okay.

We are ready to go.

We are we have a full agenda and I know everyone's interested in the overtime presentation, so we will jump right in and I will yield to the controller's office, Will Jones, and Melissa Dubaski, Finance Director.

All right, can we lower just a little bit?

Can we lower it down just a little bit?

The party.

That's good.

Okay, thank you.

All right.

Good afternoon, Madam Chair, members of council and staff.

I am pleased to present the quarterly financial report for the period ending June 30, 2026.

As a reminder, although this is the final report for FY26, actuals will continue to be accrued through August 31st.

The numbers will not be final until the completion of the year-end audit and the release of the FY26 ACFER.

So moving on to the general fund, the controller's office projects an ending fund balance of $319.2 million or $12.1% of expenditures excluding debt service and paygo.

This is $5.7 million lower than the Finance Department's projection, primarily due to a more conservative revenue forecast in the controller's office.

Based on current projections, the ending fund balance will remain approximately $121.1 million above the city's policy target of holding 7.5% of expenditures, excluding debt service and paygo.

We have increased our revenue projection by $26.6 million from last month's report with the following key changes.

Property tax decreased $18.7 million due to higher than anticipated hearing loss.

Sales tax increased $17 million as collections continue to exceed expectations.

That brings our current projection to thirty nine hundred and thirty-seven million up from the $920 million we reported last month.

We anticipate receiving the June sales tax receipts this week, which will be the final sales tax receipt for FY26 for FY26.

And those final receipts will include the impact of the World Cup starting in June.

So the number reported today could be higher when it's all said and done.

For intergovernmental revenue, it increased by $15.4 million following a reassessment of the TERS to better align with the increasing cost of service.

As a reminder, finance reflected this change a couple of months ago, and after several healthy discussions with finance, we are in alignment and therefore reflecting the change this month.

For industrial assessments, we increased $5.4 million due to higher than anticipated taxable valuations.

Charges for services increased $2.2 million, primarily from stronger than expected ambulance fee collections.

For miscellaneous and other revenue, we increased $1.4 million, primarily due to firefighter deployment reimbursements.

Sales of capital assets increased $1.4 million from uh higher than anticipated land and easement sales.

Our expenditure projection decreased by $16 million from last month's report due to year-in savings in various categories, including personnel supplies and services.

So moving on to key changes in the enterprise funds.

For the Aviation OP Aviation Operating Fund, operating revenues increased by 16.9 million, primarily due to higher than anticipated terminal space and ground rental fees.

Operating expenses decreased by $2.5 million due to lower service costs offset by higher personnel services.

Non-operating revenues increased by $6.9 million, primarily due to higher interest income.

As a result, operating transfers to the airport improvement fund increased by $26.2 million.

For the convention and entertainment facilities operating fund, operating revenues increased by $1 million, driven by higher garage parking revenues.7 million due to higher than anticipated arbitrage expense.

Non-operating revenues increase by $5.8 million, primarily due to higher than anticipated hot collections and interest income.

Operating transfers increase by $3.5 million due to higher transfers to Houston First Corporation.

For the combined utility system fund, operating revenues decreased by $25.2 million due to a decrease in water and sewer revenues.

Operating expenses decreased by $123.7 million due to lower spending in personnel supplies and services.

Non-operating revenues increase by $19.8 million due to higher land sales and interest income.

Operating transfers decrease by $62.6 million due to lower than anticipated capital equipment purchases, transfers to capital projects, and to the stormwater fund.

For the dedicated drainage treats renewal fund for Avalurum, revenues increase by $0.3 million due to higher interest income.

Expenditures decreased by $65.2 million, primarily due to lower transfer to capital projects, delays in contract spending and capital vehicle purchases.

For the DDSRF drainage fund, revenues increase by $1.5 million to reflect higher drainage revenue and higher interest income, while expenditures decrease by $39.2 million due to lower transfer to capital projects and personnel and other service savings.

For the DDSRF Metro, revenues decrease by $10.1 million due to lower metro reimbursement.

Expenditures decrease by $9.1 million due to savings and personnel and lower infrastructure and maintenance spending.

And the Stormwater Fund, revenues decrease by $19.2 million due to lower transfer from the combined utility system, while the expenditures decrease by $25.7 million due to savings and personnel, delayed vehicle purchases and lower demolition services and infrastructure maintenance spending.