With Propositions 1 and 2 getting most of the attention on the November 2 ballot, City Controller Annise Parker worries that voters might not know about a third ballot proposition that could have just as big an impact on local government. Each proposition must be voted on separately.

Proposition 3 would broaden the city controller’s audit authority to include not only the financial audits it already does, but also performance and operational reviews of all city departments, agencies and programs.

Performance reviews focus on whether defined goals and objectives are being met and whether services are being delivered as efficiently and effectively as possible. New York, Los Angeles, St. Louis, Philadelphia and Pittsburgh are already reaping savings from performance reviews. In fact, Houston is the only major city with an elected controller who does not already have this authority.

“In Houston’s strong mayor form of government there must be checks and balances,” said Controller Parker. “There must be someone keeping watch over how your tax dollars are performing. The independently elected city controller is the only person who can perform this vital watchdog function.”

In anticipation of Proposition 3's passage, the Controller’s Office is already planning performance reviews of 311 and the Fire Department's Life Safety Division.

City Controller Annise Parker is concerned that passage of Propositions 1 and 2 on the November 2 ballot may negatively impact the city's bond ratings. In January 1997, Houston voters rejected a referendum similar to Proposition 2.

"Prior to that election, both Standard and Poor’s and Moody’s Investment Services warned that passage of Tax Vote ’97 would hurt the city’s credit rating," Parker noted. "Standard and Poor’s went so far as to indicate it would place the city’s water and sewer ratings on Credit Watch with negative implications if the measure passed."

Passage of any sort of cap by no means indicates an automatic or immediate downgrade of our bond ratings, she acknowledged. "But I believe it would definitely be viewed negatively by the rating agencies. A lower bond rating would increase the city’s cost of borrowing, which in turn would mean higher project costs," Parker said.
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    "...it would definitely be viewed negatively
     by the rating agencies. A lower bond rating
     would increase the city’s cost of borrowing."
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Proposition 1 is more commonly known as Mayor Bill White’s Tax Cap. It would apply solely to property taxes and water and sewer rates, mandating that a simple majority of voters would have to give their approval before the city could increase these revenues by more than the combined rates of inflation and population growth or 4.5%, whichever is less. If Proposition 1 had been enacted in 1999, the city would have had $290 million less to spend over the past six years.

Proposition 2 is a competing measure known as Rev Cap, which was placed on the ballot by citizen petition drive. It takes a much broader approach, limiting growth of all city revenues, including enterprise funds (Aviation, Convention and Entertainment, and water and sewer) to the combined rates of inflation and population. Rev Cap could be overridden by a 60% majority of voters.  If Rev Cap had passed in 1999, the city would have had $337 million less to spend over the past six years.

To put the revenue caps into perspective, $290 million would not quite cover the Fire Department's current budget.

"Your decision to award HMEPS Executive Director David Long a $25,000 bonus has left me shocked and angry. As the city’s chief financial officer and a contributing member of the pension system, I call on Mr. Long to do the right thing and refund the money.

"According to the news release announcing the 'performance-based pay,'  Mr. Long 'led the charge that identified a significant unfunded liability for HMEPS' and provided outstanding leadership to the fund. Surely, you must be joking?

"With Mr. Long at the helm, the pension system pushed for improved benefits that the city could not afford. With Mr. Long at the helm, the release of a devastating report on the fund’s failing financial health was delayed nine months. With Mr. Long at the helm, the pension system became the subject of a criminal investigation by Harris County District Attorney Chuck Rosenthal. With Mr. Long at the helm, the unfunded liability doubled to $2 billion. Mr. Long even arrogantly refused repeated requests to appear before City Council to discuss the ongoing pension problems.

"To describe this as leadership is a slap in the face to the city employees and retirees who depend on HMEPS to use their dollars wisely. I say shame on the trustees who endorsed this. I view it as yet another indication of the need for change in the way HMEPS is governed.

"I have proposed the addition of a seat on the board of trustees for the City Controller, or his/her designee. According to research conducted by my staff, the city controller/comptroller, city auditor or treasurer have seats on the pension boards in six of the nation’s 10 largest cities.

"I also believe we need to restore City Council’s ability to appoint private citizens to the board. Most municipal pension boards are comprised of a combination of elected trustees, city representatives and private citizens. I see absolutely no reason why this should not be the case in Houston.

"It's obvious from the board’s actions this week that a complete overhaul is in order. I will be working with Mayor White’s office and City Council to make sure that happens."