FY06 yields record surplus, reserves
FY06 went out with the biggest bang in city history — a $35.4 million annual surplus and $121 million in cash reserves.
"A lot of the improvement in the city's financial situation over the past year can be attributed to extremely positive growth in sales tax activity spurred by the area's robust economy," noted City Controller Annise Parker. "Sales tax is often volatile, but, surprisingly, new construction also expanded at a rate the Harris County Appraisal District (HCAD) could barely track."
She also praised
"the fiscal restraint exercised by the administration and Council. It would have been tempting to just spend all that extra money."
The city controller delivered the good news during the monthly financial and operating report (MFOR) which included data for June 2006, the last month of the fiscal year.
Sales tax projection is up another $5 million from last month to $420 million. This is $25 million more than the budgeted amount for FY06. Property taxes are projected to come in about $14 million above budget. .
Tasers, 911 kick off FY07 audits
Tasers, the Fire Department fleet, drainage and a followup audit of the Houston Emergency Center — nowhere else but the FY07 City Controller's Audit Plan. 
The new fiscal year promises to be extremely productive with four new comprehensive performance audits planned.
"Our Audit Division continues to set a brisk pace," said City Controller Annise Parker. "While we can't meet Council's goal of annual audits of all departments, we continue to target troublespots or areas where we feel we can maximize returns."
In response to requests from one City Council member, auditors will soon conduct a performance audit of the Police Department's taser program. In addition to examining taser acquisition and distribution, auditors will review the number of incidents involving tasers and compare usage to other police agencies. 
At the same time, auditors will conduct a followup audit of the troubled 911 emergency center, which received a scathing review last year, to see if the first audit's recommendations have been implemented.
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Mayor names Solid Waste Task Force
A new Solid Waste Task Force will examine the department's long-term financing needs as dense townhome development creates smaller, sometimes private streets..
Since Solid Waste Managment Department trucks do not pick up trash on private streets and can't maneuver some of the narrower townhome streets, is it fair to use everyone's general fund tax dollars for a service that more and more townhome dwellers can't use? Should the department become an enterprise fund?
The mayor has named City Controller Annise Parker and businessman Lorne Bain to co-chair the diverse task force, which also includes two members of the Planning Commission, developers, townhome residents and others.
Solid Waste audit cites progress
According to a city performance review, the Solid Waste Management Department has made significant progress since TV reports earlier this year revealed that Republic Waste billed the city for collection and disposal of tons of garbage collected in other cities that also paid for the same services.
After an outside review, the city settled with Republic for $2 million. Republic provides trash pick-up for 86,000 Houston households.
A compliance audit of both the Republic Waste and BFI contracts followed. That audit produced major changes, such as assigning more city personnel to monitor the contracts and implementation of a Landfill Audit System to verify Republic Waste and BFI disposal invoices.
Jefferson Wells conducted the audit for the City Controller's Office. The audit determined that the department is now doing an "adequate" job of administering the contracts but identified several "opportunities for improvement":
- Ensure that only the necessary SWM employees have access to the Landfill Audit System.
- Require BFI and Republic to provide more reports documenting non-City of Houston solid waste processed by transfer stations.
- Enhance functionality of the Landfill Audit System to capture and retain history of all changes to vehicle tare, or empty, weights.
- Ensure that BFI and Republic provide copies of all scale calibrations.
Although Republic's contract was extended for a year in mid-investigation — at a loss to Republic — many of these issues became moot when Council decided to bring solid waste collection back "in house" for the next fiscal year after determining that the city could beat the private sector's price.
City investments yield 4.23% return
The city's $1.8 billion General Pool investment portfolio yielded an average 4.23% return for the final quarter of FY06, up more than 1% from FY05's final quarter. That amounts to just over $15 million in interest for the quarter.
The General Pool, comprised largely of operating funds, accounts for about 98% of the total investment portfolio. About 82% of the portfolio is in U.S. government securities, such as the Federal Home Loan Bank, Fannie Mae and Freddie Mac. The remaining funds are in various instruments, including U.S. Treasury obligations, municipal securities, high-grade commercial paper, repurchase agreements and money market accounts.
Investment Portfolio Summary - General Pool (960) |
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Quarter Ending 6/30/06 |
|||||||||
6/30/2006 |
3/31/2006 |
Net Change from Last Quarter |
6/30/2005 |
Net Change from Last Yr. |
|||||
Book Value |
$1,813,402,975 |
$2,025,330,194 |
-211,927,219 |
$1,661,476,040 |
151,926,935 |
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Accrued Interest |
$15,045,544 |
$18,301,403 |
-3,255,860 |
$10,511,095 |
4,534,448 |
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All investments are governed by state law and the city's investment policy, which dictates four investment objectives: 1) safety, 2) liquidity, 3) return on investments and 4) legal requirements. The weighted average maturity has historically ranged from one to two years. Investment maturities are arranged to coincide with needed expenditures or to meet short-term obligations, such as payroll and debt service payments.
Standard & Poor's has assigned its highest credit rating, AAAf, to the General Pool, reflecting the extremely strong protection the pool's portfolio provides against losses.
For a closer look at how the City Controller's Treasury Division invests city funds, see www.houstontx.gov/controller/investment.html .
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Bayland Street in The Heights.
TV show explores "City of Trees"
City Controller Annise Parker welcomes guests Victor Cordova, the city's forester; Ann Lents, president/ CEO of the Center for Houston's Future; and Matt Weaver, an urban forester with Trees for Houston.
Money Matters airs at 2 and 8 a.m. and 2 and 8 p.m. Mondays on the Municipal Channel (Warner Cable 16, Kingwood 14, TCI 16, Phonoscope 2 and TvMax 20).
SAP conversion going fairly smoothly
Fireworks lit up the park not city computers July 4 as the city quietly converted to a new SAP financial management system which officially went online July 5. The system impacts all financial transactions and every city department.
"So far, everything is progressing fairly smoothly," explained City Controller Annise Parker. "Things are better than we feared but going more slowly than we hoped. A steep learning curve as departmental users become comfortable with the system has produced a noticeable slowdown in processing of financial transactions, but that is to be expected."The next phase will be conversion of all human resources capabilities in January. Implementation will be complete by July 2007.