The H-Town Day presentation on Fiscal Affairs of the City by The Honorable Houston Controller Ronald C. Green

1. CITY OF HOUSTON
Turning the Corner
Meeting the City’s Budget Challenges
Ronald C. Green, Controller
HAR H-Town Day
October 20, 2011

2. 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!

3. 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.

4. Divisions of the Controller’s Office
Executive/
Administrative
Financial
Treasury
Reporting
IT/ Operations Audit

5. 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.

6. 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.

7. 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 -

8. 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

9. General Fund Expenditures/Other Uses FY2012 Budget
Administrative Services (City
Secretary,Council, HR) - $99 M
6% Debt Service - $198 M
12%
9%
Development & Maintenance
60% 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

10. 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…..

11. 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)

12. Property Taxes, Harris County
A major decline, 2009-2010; slow recovery 2011
FY 08 FY 09 FY10 FY 11 FY 12
Res. $53.9B $57.9B $58.3B $57.8B $58.2B
Comm. $39.1B $46.5B $45.6B $41.9B $44.3B
Total, including multi-family, industrial and retail:
$135.4B $140.6B $150.0B $142.9B $144.4B
% change from previous year:
+ 12.% + 10.5% + .3% -4.9% + 1.0%
-Harris County Appraisal District

13. 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

14. 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

15. Fraud Hotline
City 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

16. Questions?
*
Hundreds of pages of information at
www.houstontx.gov/controller
Audit Reports, Monthly Financial Statements, Annual Financial Report,
Press Releases, Investment Policy, Glossary of Financial Terms, Photo
Gallery, Links to Government, University and Financial Institutions.