While the City Controller’s Office does not produce the annual budget for City Council approval, it does report on spending and income monthly and produce an annual Trends report to put the the mayor's budget into historical perspective.

"Until this year, Houston had been blessed with phenomenal job growth and large budget reserves. We are finally experiencing the negative effects of the recession" City Controller Annise Parker said.

"With declining or flat property and sales taxes and rising fixed expenses, our cash reserves barely exceed the preferred 7.5% fund balance.” Parker said the Controller's Office estimates that the city will have to draw down reserves about $87 million to balance the new FY10 $1.934 billion general fund budget approved this week. This leaves the city about a $1 million cushion over the 7.5% threshold, or about $125 million in reserves.

"I'm concerned that our FY10 projection for general fund revenue is $38.5 million less than the Administration’s FY10 proposed budget, " she said.

Declining sales tax

According to Controller's Office estimates, general fund revenues for FY09 and FY10 show an overall increase of about 2.89% and a decrease of 0.42% respectively. FY10’s projected revenues reflect modest growth in property tax and indirect interfund, which are negated by decreases in sales tax, electric franchise and the miscellaneous category.

"By the time council votes next summer on the FY11 budget, council may face difficult choices in balancing the budget and maintaining reserves above the 5% level required by city ordinance," she said.

Shrinking reserves

The need for a 5% cushion ($96.7 million of the FY10 $1.934 billion general fund budget) becomes painfully apparent every time a hurricane strikes . Tens of millions must be spent immediately for debris pickup, emergency services overtime and repairs. That temporarily drains affected departmental budgets, such as Solid Waste, and the city’s $20 million Rainy Day Fund. So far, FEMA has reimbursed the city about $20 million less than it has spent. The projected shortfall is expected to be about $11 million. The Rainy Day Fund has not been replenished.

The total $3.58 billion city budget includes the general fund (mostly property and sales tax) as well as federal, state and other grant funds.

For the complete Trends report, see TRENDS. The final amended budget is not online yet, but the proposed FY10 budget is available at:
www.houstontx.gov/budget/index.html .

The City of Houston has just secured an incredibly low interest rate of less than half of one percent on the competitive sale of $150 million in tax and revenue anticipation notes via the Internet.

The Treasury Division of the City Controller's Office conducted the sale. Eight investment firms participated in the online auction. Citigroup, JPMorgan and Wachovia Bank submitted the winning bids.

“The interest rate of .41 percent is the lowest rate anyone can remember,” said City Controller Annise Parker. “That represents real savings for Houston taxpayers. Every dime we can save during these hard economic times means more money for critical city services.”

The online auction method allows buyers to bid against each other on an electronic platform, thus introducing competition. Representatives of the city can view the bidding process, ensuring the integrity of the auction. The Internet auction speeds up selling and allows bidders to know within minutes if they've won. As a result, bidders do not need to cushion their prices to protect against adverse market changes that might occur with a more traditional sealed bid process in which bids are mailed in.

The city first sold notes via the Internet in 2000. TRANS are issued annually near the beginning of the city’s new fiscal year July 1. Proceeds from the sale will provide the city with operating revenues until property taxes begin to flow in about mid-year.

The Houston City Controller's Office and the Institute of Internal Auditors are teaming up to offer cost-effective training options for government auditors.

“Our auditors usually have to travel to other cities for the continuing education they must have to retain their various professional certifications,” said City Controller Annise Parker. “This can often be very expensive. By bringing the experts to Houston, we cut travel costs and reduce the price per attendee. During these tough economic times, we simply have to look for ways to get the job done at a lower cost.”

The seminars are open to auditors at governmental agencies throughout the greater Houston area. So far, more than 80 participants from nine area governmental organizations have signed up for summer seminars.

This is the third year the controller's office has coordinated local training seminars for area auditors. The effort is serving as a model for more cost-effective training options soon to be implemented for all city departments.

Clients seeking food from the Stone Soup food pantry operated by AIDS Foundation Houston have almost doubled, forcing cutbacks in food provided.

In the meantime, cash donations would be most helpful to offset the cost of providing each client a box of non-perishable food items from the Houston Food Bank (valued at $40) plus a $22.50 grocery voucher so they can purchase fresh food from Kroger or Fiesta. Donations may be made at www.AIDSHelp.org . Click on Giving (near top, right). All unrestricted AFH gifts go to Stone Soup unless the donor specifies otherwise.

McCann said the pantry served 1,200 clients a month last year, and 2,000 clients a month now. HIV/AIDS clients were informed April 16 they could receive food every other month instead of monthly and that enrollment would be closed to new clients or those who've already had 12 months of free food. She said AFH staff members are working with clients to register them for food stamps and other mainstream resources to help augment the food they receive from Stone Soup and other local food pantries.

"It was a tough decision, but we believe it was the fiscally responsible one to make. Clients were informed of these changes in advance, and each person was provided with information on 10 other area food banks where they could receive service," McCann said.