City Controller Annise Parker told the Fiscal Affairrs Committee recently she stands by her earlier projection that the city could have at least $18.2 million less to spend in FY05 than the administration projects.

Responding to a rare invitation to formally comment on the budget, Parker expanded on the controller's annual Trends Report, which provides five year’s of data on revenues and expenditures. The report is prepared to assist City Council as it moves through the budget process.

"Although the city controller is the city's fiscal watchdog, I don't believe a city controller has been invited to discuss the new budget since Lance Lalor in the 1980s," she commented later.

People always ask why the Controller's Office projections are different than the Finance and Administration Department or the mayor’s, Parker noted. "There’s no magic about either set of numbers. All are educated guesses. The Controller's Office, however, takes a slightly different approach to crunching the numbers: Our goal is to be conservative, but reasonable."
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Excellent detective work by the Controller’s Office staff has netted the city $1.5 million in extra cash.

Just prior to annexation in the mid-1990s, several Kingwood area MUDs (municipal utility districts) issued bonds for capital projects and set up administrative escrow agreements. Upon annexation, the MUDs were dissolved and Houston became responsible for the outstanding debt. When the escrow agreements expired three years ago Houston inherited the money.

Apparently no one knew it was there until two Controller's Office staff members, Sue Bailey and Melanie West, started poking around. As a result of the sleuthing, the city gained $1.5 million. 

"We believe sloppy paperwork at the time of the annexation and personnel turnover at the bank and the city caused this money to fall through the cracks," said Controller Annise D. Parker.

The money has been transferred to the debt service fund, thus reducing the amount of cash that must be taken from the general fund to cover debt payments.

City Council could vote Wednesday on a budget amendment  that would place a charter amendment proposition on the November ballot affirming the ability of the city controller to conduct audits, including performance audits.

Budget amendment 9.5 was introduced by Council Member Ada Edwards.

"We believe Houston’s City Charter already grants the city controller the right to conduct performance/operational reviews," said Controller Annise D. Parker. "Previous mayors have not always shared this position. As a result, some controllers have been able to conduct independent performance audits; others have not. A charter amendment would settle the issue once and for all."

According to research done by the controller's staff, Houston is the only major city with an elected controller who does not have a charter-defined right to conduct performance/operational audits. New York, Los Angeles, Philadelphia, Pittsburgh and St. Louis have elected city controllers, all of whom conduct performance audits.

Opponents have argued that granting the city controller the right to conduct independent performance reviews creates a greater potential for the politicization of the controller’s audit function.

"Obviously, other cities have felt otherwise," Parker noted. "Surely the city’s responsibility to ensure the prudent use of taxpayer dollars far outweighs any concern that a future controller might reap some political benefit from conducting performance audits."
____________________________________________________

    Houston is the only major city
    with an elected controller who
    does not have a charter-defined right
    to conduct performance/operational audits. ____________________________________________________

Some people are also concerned about the cost. These reviews often identify savings that, if implemented, far exceed the cost of conducting audits. Past performance reviews have identified more than $100 million in cost-savings and efficiencies.

"Sadly, many of these recommendations were never implemented," Parker said.

The Controller’s Office has the only truly independent audit staff in city government. The staff is trained in accordance with the International Standards for the Professional Practice of Internal Auditing as specified by the Institute of Internal Auditing Standards Board. In addition, the Audit Division has a track record of strong cooperation with outside consultants who have been hired to assist with past performance audits.

In 1999, a City Council committee recommended a charter amendment ballot proposition that would grant the controller the right to conduct performance audits. After adamant opposition from former Mayor Brown, the proposal was killed by an 8-6 Council vote.

Controller Annise D. Parker strongly supports a budget amendment requiring City Council to place a charter amendment proposition on the November ballot requiring a two-thirds supermajority City Council vote to spend funds in the Rainy Day Fund.

Budget amendment 9.4 was submitted by Council Member Ada Edwards.

Council adopted the supermajority policy unanimously and approved drafting a similar ballot proposition during the FY04 budget process but it has not been brought back to the agenda. 

The Controller's Office has been advised by the Legal Department that the previously approved amendment (introduced by then Couincil Member Parker) will expire at the end of FY04.  A charter amendment would codify the provision so it would not have to be renewed each year.