CITY OF HOUSTON Turning the CornerMeeting the City’s Budget Challenges Ronald C. Green, Controller HAR H-Town Day October 20, 2011
City Controller• Houston is one of the few cities that elects a controller – our Chief Financial Officer.• In recession, it has become a very visible office. Citizens Mayor Controller Council• The Controller is independent of City Council and the Mayor and, thus, serves as a “financial watchdog” over the City’s finances. That’s good for the City—and good for taxpayers!
The Office of the Houston City Controller superintends the fiscal affairs of the City:• conducts audits;• manages investments and debt;• prepares accurate and timely financial statements;• provides leadership on policy issues pertaining to the City’s financial health;• has the independent authority to conduct performance reviews of the City bureaucracy;• Forecasts City’s future financial condition and area’s economic outlook.
Divisions of the Controller’s Office Executive/ Administrative Financial Treasury Reporting IT/ Operations Audit
Recent Bond Issues Historically low municipal rates:• August 17, 2010: $212 million Combined Utility bond sale = $30 million in savings.• November 16, 2010: General Obligation Debt Refunding = $20 million in savings.• Aug 23, 2011: $167 M bond sale (utility system) = $30.5 million in savings.• June 28, 2011: >$500 M refinancing airport debt = $30 M savings.• July 19, 2011: Refund debt for Convention & Facilities = $10 million savings.
Audits• FY 2011, the Audit Division engaged in 17 Audits and Special Projects focusing on compliance, performance, process reviews, ongoing monitoring, and quality assurance, which resulted in $2.0 million dollars in direct cost-savings realized or identified.• Audit continues to develop a specific IT Audit Function and focus on technologies that are integrated with the City’s ERP System (SAP) . Direct Access to this data (23 million line items) allows review of entire population of data for purposes of sampling, testing and consideration of fraud, waste and/or abuse.
Houston’s General Fund FY 2012: $1.9 Billion in Available Funds Taxes = 71% of Funds --$845.9 M property taxes (CTR: $845.3 M); $518 M sales taxes (CTR: $509 M). Other Sources (Franchise Fees, Fines, Charges for Services, Beginning Fund Balance, Licenses and Permits, other) = 29% of Funds. - Continued -
Revenues from other sources— Enterprises (FY 2012)•Airport System, $431 M;•Convention & Entertainment Facilities, $97 M;•Police Special Services, $48 M;•Storm Water, $50 M;•Building Inspection, $47 M;•Parking Management, $20 M;•Water and Sewer, $1.3 B. Total Available Resources: $4 Billion
General Fund Expenditures/Other Uses FY2012 Budget Administrative Services (City Secretary,Council, HR) - $99 M 6% Debt Service - $198 M 12% 9% Development & Maintenance60% 6% Services (Public Works, Solid 7% Waste) - $156 M General Government - $99 M Human & Cultural Services (Library, Parks, Health) - $133 M Personnel = 68% of Budget Expenditures Public Safety (Police, Fire, Courts) - $1.1 B
What we are doing to meet the City’s budget challenge.• Pension negotiations.• Consolidation of services (fleet, fuel, payroll, HR, IT).• Management initiatives (for ex.: Dept. budgets 4-27% less than FY2011; 4 Health Centers now managed by Fed. Qual. Heal. Cent.).• Employee furloughs and layoffs (745).• Restructuring debt.• Self-insured health plan.• Increased collection efforts.• Increased 300 fees. Importantly, Houston has turned the corner…..
Revenue streams on the rise• Job growth at 2.5%• Population growth mirrors job growth• Taxes starting to recoup from past investments• Sales tax up for year 6%• UH Inst. for Regional Forecasting: 44,000 new households per year through 2020 (28,000 single family; 16,000 multi-family)
City’s Property and Sales Tax Revenue 2010 Unaudited 2011 2012 Property Taxes $892.8 M $850.1 M $845.3 M Sales Taxes $498.9 M $493.1 M $509.2 M
Hot Topics• Red Light Cameras – once and for all, off• Drainage Fee• Pension Negotiations• OPEB (Other Post-employment Benefits)• Projected FY 2012 budget deficit, and beyond• Redistricting—two new City Council seats
Fraud HotlineCity Controller is committed to eliminating fraud and waste in City government.Fraudulent activities being committed by government employees or officials, citizens, or business entities defrauding the City of Houston, can be reported at: – www.controller/audit/fraud.html
Questions? * Hundreds of pages of information at www.houstontx.gov/controllerAudit Reports, Monthly Financial Statements, Annual Financial Report, Press Releases, Investment Policy, Glossary of Financial Terms, Photo Gallery, Links to Government, University and Financial Institutions.