$4.54 Billion Budget Proposal

May 15, 2012

Mayor Annise Parker unveiled a $4.54 billion proposed budget, including $2.08 for the General Fund (see her press release here).  The General Fund is where most of the city operations are funded.  Mayor Parker said about the budget that “Houston’s economy is doing much better than it was a year ago. Our job growth continues to be the envy of the rest of the nation, property values are improving, and consumer spending is on the rise. Challenges remain, but we will continue to meet them head on, making the right decisions even when they are tough.”

Let’s take a look at what we know so far:

Positive Aspects:

–          Over two-thirds of the General Fund will continue to be allocated to public safety.
–          Does not include a property tax increase (maintains the existing property tax rate of 63.875 cents per $100 of taxable value).
–          No fee increases.
–          No layoffs/furloughs/ service cuts.
–          Does not borrow money to pay for the pensions.
–          For the most part, it is a flat budget with “with funding levels for all departments at essentially the same levels as last year – with the exception of contractual increases for pensions and increases in health benefits, fuel, electricity, and information technology costs.”
–          The budget replenishes the Rainy Day Fund.

Negative Aspects:

–          Restoring night and weekend hours to the 311 assistance line is a waste of money.  There are so many problems associated with this department.  Calling 311 is often a nightmare for Houstonians.  You have to call several times, and you usually have to get your neighbors to call too before anything is done.  Since nothing will get done no matter what time you call, I see no need to pay for additional hours for this service until this department is more accountable to us.
–          While it is definitely positive that the budget hasn’t increased this year, how do we really know if we are spending the right amount of money in the right areas?  We need a better system to review and automatically remove wasteful spending and unnecessary programs.  Until we have this in place, passing any budget is irresponsible.  Right now it is just a guessing game.

These are just a few items that jumped out at me from reading Mayor Parker’s press release.  I am sure that there will be much more to say about this in the weeks to come as the budget is scrutinized further.  Unfortunately, I have a feeling that the “negative aspects” column will start to grow bigger and bigger… as will the budget once all the council members try to add more to it.

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Looming Pension Problems in Houston

January 12, 2012

Although some Houstonians were relieved after the last budget cycle that the city seemed to bounce back, it looks like the new budget shortfall will be worse than ever – perhaps $47 million (although with increasing sales taxes and property tax revenue, it might be slightly less).

Mayor Annise Parker has done about as much as she can do when it comes to making cuts across the board.  It is now time to dig deeper and find real places to cut and evaluate every penny in each department.  Doing so will surely find many areas to cut, do away with, and maybe even places where money has been lacking.  We just don’t know until we do a thorough analysis.

With that being said, there are problems looming around the corner that need to be addressed.  Public safety accounts for roughly 60% of the budget.  That probably will never be cut, and I’m not advocating for that.  Public safety, in my opinion, should be the number one priority of the city government.  So with the exception of probably much needed reevaluation and reallocation of the public safety budget, it’s not going anywhere and for a good reason.  

This leads to the next problem.  If public safety accounts for 60% of the budget, that means that we only have 40% of the budget to do EVERYTHING else.  This includes the huge, looming fiasco called the city pension.  Houston’s pension is broken up into three areas: Police, Fire, and all other municipal employees.  Year after year, the city does not put as much money into the pensions as they are supposed to because they don’t have the money.  If this is the case, clearly some changes need to be made to the system as a whole.

Politicians don’t usually like touching the pensions because it is such a heated topic among just about everyone, and both political parties have strong opinions and even differ within the party on how to solve the problem.  Right now the pension issue is just an agitation that manages to get stifled each budget cycle.  Until it becomes a real dilemma, getting anyone to try to solve the problem will be difficult to say the least.

Parker has attempted to start looking into it and making changes, but she still has a very long way to go.  State law mandates defined-benefit plans as well as many other requirements.  Although the city usually has autonomy on many cases, this is one where Parker is going to have to work with the state to have more leeway because this system will become unsupportable very quickly.

One solution that needs serious consideration is completely changing the system for all NEW employees.  To be very clear, anyone who is a current employee or retiree should get exactly what they were promised.  To guarantee something and then take it away is unquestionably dishonest.  While there are surely changes that can be made to the current plan, anything promised needs to remain.  However, anyone new coming in to the system needs a completely different plan that is comparable to the private sector.  Otherwise we are just being dishonest with the next generation.  We can’t continue to make promises we know we can’t keep.


Where do Your Tax Dollars Go? There’s an App for that!

October 11, 2011

The city of Houston recently unveiled a new feature on its website that allows you to track where your money is spent on the city level.  Thank you to Mayor Parker and Council Member Noriega for putting this online app together.  We pay taxes, and we deserve to know where that money goes.

Now the program isn’t perfect of course, but it will give you a general idea.  You might be surprised by what you see.  Some people are aware that long-term debt constitutes roughly 12% (12.57% to be exact) of the budget, but it really hits home when you look at how much you actually pay towards that area.  If your home is appraised at $100,000 a year with a homestead exemption, you pay $64.21 to debt services and only $10.49 to Public Works.

Although this program is really interesting (and surely appreciated by many taxpayers), I think it also illustrates what I’ve said before in this blog and when I ran for City Council: we need to do a better job with the budget.  Although council members do get a better breakdown of the budget than this app shows, it is not nearly as extensive as it should be.  Put yourself in the place of a council member for a minute.  Look at the programs and the percentages of each category.  Where do you cut?  Where do you add?  You might be able to make a good guess, but really, how would you know for sure?  Houston’s government isn’t so big that they can’t break down each agency into small components to really analyze how money is being spent.

Regular readers of this blog know that my other solution to this is to have all major programs that are expendable (not police, fire, etc.) undergo a review.  Some would be yearly; some would be every other year (depending on the nature of the program).  It is based somewhat on the state’s sunset review program.  Too often items are voted on and then forgotten about until someone points out a problem.  For example, it was pointed out last year that the city’s take home vehicle program for city employees cost millions of dollars ($4 million in maintenance alone), and the vehicles were only being used for work purposes only 54% of the time.  Who knows how many years this was going on?  No one knows for sure, but if this was something analyzed yearly or even every few years, they could have put an end to it much faster.

Although it would cost some money initially to perform these audits, I believe it will save money in the long run – and if it doesn’t, it could be cut too.


It’s $3 Million…Can you Hear Me Now?

July 24, 2011

In a city where we’ve had to look for new ways to collect taxes, increase fees, and decrease services, we have been told that every penny counts.  Then shouldn’t $3 million count considerably?? 

Mayor Parker recently barely secured enough votes to approve a new wireless contract that would save $3 million.  AT&T is the current provider for city cell phones and emergency communications.  Parker has been trying for a while now to switch the contract over to Sprint to save $3 million.

Sure, there are a few detriments to consider: Sprint is not a Texas company like AT&T, Sprint might not have the  infrastructure and personnel support needed during disasters like hurricanes as AT&T does, and Parker’s former campaign treasurer is a registered lobbyist for Sprint.

So with all of these items to think about before approving the new contract, what was the main concern with Sprint?  They are not a union like AT&T!  $3 million is on the table here, and that is what council members are concerned with?  Council members approve contracts for the city all the time, and I can’t remember a time where members tried to go with another company based only on whether or not they are a union.  It is time for them to wake up and hear from their constituents that we need to take a serious look at our finances and cut every place we can.

How the council members voted:
FOR (approving the change from AT&T to Sprint):
Anne Clutterbuck, Stephen Costello, Sue Lovell, Oliver Pennington, James Rodriguez, Brenda Stardig, and Mike Sullivan

AGAINST (voted to keep the AT&T contract):
Ed Gonzalez, Melissa Noriega, Wanda Adams, C.O. Bradford, Jarvis Johnson, and Jolanda Jones


Mayor Parker’s Role in Red Light Cameras

July 7, 2011

Mayor Parker announced on Wednesday that the red light cameras will be turned back on in Houston, resulting in outrage from the thousands of people who voted against the cameras in November.  I understand the anger.  Since I’m against the red light cameras, I’m angry too.  Much of this anger has been directed at Mayor Parker.  I can understand why people are mad at her.  After all, she did turn the cameras back on after they were voted down; however, I think that she is getting a lot more blame than she deserves.  Everything isn’t always political, and sometimes we have to look past differences in ideology and look at the hard facts.  Let’s look at the case logically for a minute:

–          Mayor Parker was not in a decision-making capacity when the red light cameras were first voted on in 2005.  She was the controller and could not vote on the cameras. 
–          Mayor Parker is in favor of the cameras, but she agrees to put the measure up for a vote in the election because there were enough signatures. (Note: not all council members even agreed with her decision on this).
–          Houstonians vote against the cameras, so Mayor Parker shuts them off. 
–          American Traffic Solutions (ATS), the red light camera company, says that this violates their contract, and the cameras must either come back up, or they need to be paid. 
–          The city takes this to federal court, and the judge (United States District Judge Lynn Hughes) says that the vote is invalid.
–          June 20 – ATS hand delivers a letter to the City of Houston that they have until August 1 to either turn the cameras back on or to pay damages of as much as $20 million.
–          Mayor Parker turns the lights back on to comply with the court ruling but promises to file an appeal based on the will of the voters.

Much of the criticism against Mayor Parker lately has been that she is going against the voters by turning the cameras back on.  I agree that she is, but does she really have a choice?  Put yourself in her position for a second.  The court tells you that the votes are invalid.  ATS says turn the lights on or pay $20 million that we don’t have.  I really think that she had no choice but to turn the lights on until the appeal.  The fact that she is in favor of the cameras and is still willing to file the appeal shows that she is actually trying to apply the will of the voters.
 
Another criticism is that Mayor Parker didn’t want to win the first lawsuit and doesn’t really want to win the appeal.  I just don’t agree with this at all.  She had to know that losing the first case would either mean political suicide or result in paying millions we don’t have to a company.  Losing the appeal will mean the same thing.  She is up for re-election right now, and she has to know that she will lose votes maybe even from her own base.
 
I’m not saying that Mayor Parker has done everything right.  Surely there are items in this scenario I would have done differently, but I’m in favor of giving her the benefit of the doubt until we see if she does indeed file the appeal.   

So what are the solutions to this problem?  Mayor Parker should work on an ordinance now to end red light cameras after the ATS contract is done (unless something changes in the appeal).  This will show that she is actually concerned with the will of the voters.  The other thing she should do (as I mentioned in the blog before) is to make sure that any future city contract has a clause that says the contract can be terminated if there are changes to the Charter.  It wouldn’t help in this situation, but it will be prudent for future problems like this.


Houston’s $4 Billion Budget

June 23, 2011

Houston City Council voted on the budget for the next fiscal year.  The general funds budget ended up being about $1.8 billion, and the overall budget is $4 billion ($2.2 billion is for the enterprise funds like airport and water utilities that usually generate their own revenues through user fees).  All members voted in favor of it except Mike Sullivan and Anne Clutterbuck.  Here are the highlights :
 
Items Cut:
–  Total of about $100 million less than the current fiscal year.
– Largest cuts were to HPD and HFD (Note: I’m sure no one wanted to do this, but most of the budget is allocated to these departments, so there was no way to significantly reduce the budget without touching these two departments.   No officers or firefighters were laid off).
– Mayor Parker cut eight pools and seven community centers, but private donations of $350,000 are keeping the pools open.
– Layoffs of 747 city workers.
– Reduction of library hours.
 
Amendments that Failed:
– Council Member Wanda Adams introduced an amendment to increase each council member’s office budget.  The current office yearly budget is $382,432, and CM Adams wanted to increase it to $392,222.  She said she is getting 67,000 more constituents after redistricting.  Council Member Jolanda Jones said that they are elected to be responsive to their constituents.  I agree, but many (not all) council offices seem to just push you to call 3-1-1 instead of their office.  Or if you do call their office, they just give your information to 3-1-1 to “handle” your concern.  My thought is start doing actual constituent casework, and then we’ll talk about budget increases.  Council Members Adams, Jarvis Johnson, and Jones voted in favor of the amendment, but it failed. 
– Council Member Stephen Costello introduced an amendment to look into the lack of grocery stores in poor communities.  The amendment called for an establishment of guidelines for loans or grants, giving priority to projects in underserved communities.  While this certainly is an important issue, especially for those living in these areas, there are bus stops by many grocery stores in Houston, so it’s not like there is absolutely no access.  Mayor Parker pointed out that state law covers development deals; however the city has been known for approving development deals with grocery stores before.  This usually happens with tax incentives and not loans.  I’m ok with tax incentives in some regards but not with giving loans to companies.  Do we want to become the federal government?  This amendment ended up being pulled by CM Costello.
 
Problems for the Future:
– The budget defers tens of millions of dollars.  A deal with the police pension board allows the city to put off $17 million in pension contributions for three years.  A deal with the firefighters union allows the city to put off about $10 million in lump-sum payments for firefighters who leave the department.  This will be paid over four years instead.
– The red light camera issue has not been resolved.  If the red light camera company sues to recoup their money, or even if they make a deal with the city, we are taking about millions and millions of dollars here.
 
The budget also calls for a Long-Range Financial Management Task Force to recommend how to address the unfunded liabilities, pensions, debt, and other obligations.  The task force will include two council members, an appointee by the mayor, and representatives from the finance department, labor unions, pension boards, and controller’s office.  I’m ok with this idea, but shouldn’t the council members, pension board, and controller’s office have already been working on how to address these problems??  I guess they haven’t, but at least they are now.  Also, the budget includes no property tax increases.  It also doesn’t tap into the reserve account nor does it borrow money to pay for pensions (like Bill White’s budget did).


Proposed Houston Budget

May 19, 2011

Mayor Parker said the current economic times are the hardest the City of Houston has faced since the oil bust of the mid-1980s.  Given her proposed budget, she is probably right.
 
Under her proposed $1.8 billion budget that City Council still has to approve, there will be layoffs of 747 employees, closures of 8 swimming pools (Alief, Cloverland, Finnigan, Independence Heights, Landsdale, Love, Robinson, and Taylor) and 7 community centers, and the consolidation of 7 health centers down to 4.  It also calls for closing all city-funded youth sports leagues, except for baseball (this is funded by the Astros). Youth tennis, summer food, and enrichment program will remain.  Libraries are staying open, but there will be an adjustment in hours.
 
Her plan does not include any tax increases and will spend overall $100 million less than the current fiscal year.  The proposal also dedicates about two-thirds of the budget to public safety.  Under a tentative deal with the police officer and firefighter unions, her plan will not layoff any firefighters/police officers. 
 
I have to say that I am impressed with her budget for the most part.  She said she wouldn’t raise taxes, and she didn’t.  Where others might have not worked so hard to actually balance the budget, she made the tough choices.  Mayor Parker probably angered her base by all the closures of the pools and community centers, but she knew it had to be done.  These are luxuries that we can’t afford right now.  I am curious as to what they will do with the pools and community centers.  I hope they don’t let them sit and become run down.  Hopefully they can sell them to non-profit groups who want to continue allowing the public to use the facilities for free.
 
The real priority should be public safety, and based on the numbers in the budget, Mayor Parker’s priority is public safety too.  The plan will surely change at least a little after City Council makes changes/deals before they vote, but it really looks like Mayor Parker made the tough choices and hard decisions that she said she would.