Finance Department

Presentation to the City of Houston
Budget and Fiscal Affairs Committee
FY2016 Budget Overview
and
General Fund Five Year Forecast
June 1, 2015
Kelly Dowe, Director

 Table of Contents
Section

Page

Forward Looking Statements

3

Fiscal Year 2016 Budget Redline Changes
Fiscal Year 2016 Budget Overview
General Fund Budget Revenues
General Fund Budget Expenditures

5
6
9
18

General Fund Five Year Forecast
Revenues
Expenditures
Revenues & Expenditure Summary
Five Year Management Strategies
Appendix

26
28
29
30
33
34

2

 Forward Looking Statements
The statements contained in this presentation and made verbally in conjunction with the
presentation that are not purely historical are forward looking statements, including
statements regarding the City’s expectations, intentions, or strategies regarding the
future. Readers and viewers should not place undue reliance on forward looking
statements. All forward looking statements in this presentation and made verbally in
conjunction with the presentation are based on information available to the City on the
date hereof, and the City assumes no obligation to update any such forward looking
statements.
The forward looking statements herein are necessarily based on various assumptions
and estimates and are inherently subject to various risks and uncertainties, including
risks and uncertainties relating to the possible invalidity of the underlying assumptions
and estimates and possible changes or development in social, economic, business,
industry, market, legal and regulatory circumstances and conditions and actions taken
or omitted to be taken by third parties, including customers, suppliers, business partners
and competitors, and legislative, judicial and other governmental authorities and
officials. Assumptions related to the foregoing involve judgments with respect to, among
other things, future economic, competitive, and market conditions and future business
decisions, all of which are difficult or impossible to predict accurately and many of which
are beyond the control of the City. Any of such assumptions could be inaccurate and,
therefore, there can be no assurance that the forward looking statements included in
this presentation and made verbally in conjunction with the presentation would prove to
be accurate and may be materially different.
3

 Forward Looking Statements (Cont’d.)
Additionally, pension-related projections or forecasts, including projections of the amount
of the UAAL and net pension liability and the amounts of actuarially calculated
contributions by the City, constitute “forward-looking” information that reflects the
judgment of the City, the boards of the Pension Systems and the actuaries as to the
amount of assets that will be required to be accumulated for the payment of future
benefits to both active and retired employees. Such judgments are based upon a variety
of assumptions concerning future events and circumstances, any one or more of which
could prove to be inaccurate and are subject to change in the future. The assumptions
underlying the projections are material to the development of the projections, and
variations in the assumptions may produce substantially different results.

4

 Fiscal Year 2016 - Budget Redline Changes

•

•

This presentation includes revenue and expenditure changes that
occurred after the proposed budget which will be reflected in the
budget ordinance.
The redline changes include:
– General Fund
• $2.8 million increase in property tax revenue cap as a result of higher
population data recently received from U.S. Census Bureau
• $2.1 million increase in General Government expenditures for the Houston
Forensics Science LGC (HFSLGC)
• $500,000 increase in City Council expenditures for the Council District
Service Fund

5

 Fiscal Year 2016 – General Fund
Budget Overview
•

The budget includes:
– Increasing Budget Stabilization Fund to $20.5 million
– $25.5 million for HPOPS Deferred Payment
– Required additional $17 million funding increase in pension for a total
of $307.7 million
– Funding for contractual pay increases
– Additional $3.1 million funding for Maintenance Renewals &
Replacement
– $2.1 million increase in General Government for transfer to HFSLGC
– $2.5 million funding for municipal election
– Additional $31.5 million for Debt Service
– Additional $9.1 million for Pay-As-You-Go Capital Projects to DDSRF
for a total of $50 million
– Continues funding for the following programs:
• $5.5 million Council District Service Fund
• $1.5 million Summer Jobs Program
• $550,000 After School Program
– Unassigned ending fund balance ratio in General Fund at the required
7.5% ratio.
6

 Citywide Expenditures
Including Debt Service & PAYGO ($ in Thousands)

Net Change
$290,379
6.01%

Note: Expenditures budget above represents the Total Budget includes General Fund, Special and Enterprise Funds. Totals do not include
Service Chargeback and Internal Service Funds. FY2016 Total Budget including ending fund balance is $5,473,931

7

 Citywide Full-Time Equivalents

General
Enterprise Funds
Other Funds
Grand Total

FY2009 
Actual
     15,807.9
       3,859.5
       2,004.6
     21,672.0

FY2010 
Actual
     15,936.9
       3,799.0
       2,121.7
     21,857.6

FY2011 
Actual
     15,045.2
       3,674.6
       2,370.0
     21,089.8

FY2012 
Actual
     13,704.5
       3,446.6
       2,897.4
     20,048.5

FY2013 
Actual
     13,816.1
       3,363.7
       2,904.4
     20,084.2

FY2014 
Actual
     13,759.8
       3,319.4
       3,172.9
     20,252.1

FY2015     
Budget 
     14,186.9
       3,663.8
       3,704.4
     21,555.1

Note: Citywide FTEs include General Fund, Enterprise, Special, Internal Service/Service Chargeback Funds

FY2015 
Estimate
     14,116.6
       3,304.4
       3,512.3
     20,933.3

FY2016 
Proposed
     14,395.0
       3,525.8
       3,788.1
     21,708.9

8

 General Fund Revenues
Excluding Other Resources ($ in Thousands)

Net Change
$56,376
2.55%

Note: Other Resources include Sale of Capital Assets and Transfers from Other Funds

9

 General Fund Revenues
Excluding Other Resources
FY2007 - FY2016 ($ in Thousands)

FY2007
Actual

FY2008
Actual

FY2009
Actual

FY2010
Actual

FY2011
Actual

FY2012
Actual

FY2013
Actual

FY2014
Actual

FY2015
Estim ate

FY2016
Proposed

Property Tax

$

748,792

$

830,889

$

890,088

$

892,865

$

859,413

$

866,141

$

910,034

$

976,240

$

1,073,551

$

Sales Tax

$

461,417

$

495,173

$

507,103

$

468,965

$

492,824

$

546,543

$

600,256

$

629,441

$

676,666

$

1,114,029
688,837

Franchise Fees

$

189,551

$

190,196

$

190,322

$

190,869

$

190,564

$

192,760

$

195,304

$

189,989

$

188,135

$

187,791

Other Revenue

$

255,522

$

245,480

$

236,794

$

229,448

$

259,926

$

197,250

$

238,852

$

258,133

$

274,423

$

278,493

Total GF Revenues

$

1,655,281

$

1,761,737

$

1,824,306

$

1,782,147

$

1,802,727

$

1,802,694

$

1,944,446

$

2,053,802

$

2,212,775

$

2,269,151

Change YOY ($)

$

101,433

$

106,456

$

62,569

$

(42,159) $

20,580

$

(33) $

141,752

$

109,356

$

158,973

$

56,376

Change YOY (%)

6.53%

Note: Excludes Other Resources.

6.43%

3.55%

-2.31%

1.15%

0.00%

7.86%

5.62%

7.74%

2.55%

10

 FY2016 General Fund Revenue
Including Other Resources
Net Change vs. FY2015 Estimate ($ in Thousands)
Revenue Increases /(Decreases):
Property Tax

(1)

                      40,478
                      12,171
                          3,331
                          2,200
                          1,702
                          1,547
                          1,555
                             864
                            (344)
                       (5,564)
                    (22,538)
                        (1,563)

(2)

Sales Tax
Indirect Interfund Services
Industrial Assesment
Direct Interfund Services
Intergovernmental
Municipal Courts Fines & Forfeits
Other Tax
Franchise Fees
Charges for Services

(3)

Sale of Capital Assets
Others

(4)

Net Change

33,838

Note:
(1). Property Tax revenues based on limitation Prop 1 + H.
(2). Sales Tax growth of 1.8% from FY15 Estimates.
(3). Decrease mainly due to ambulance fees which includes Medicare
recoupment.
(4). Sale of Capital Assets in FY15 includes $23M one time land
sales.

11

 Property Tax Revenue
• Assumptions:
– Increase in property tax revenue of 3.8%,
$40.5 million higher than FY2015 Estimates.
– Lowering the current tax rate to comply with Prop 1+H
limitations and raising the senior/disabled exemption
from $80,000 to $160,000.
– Collection rate of 98.5%.
– Estimated taxable value of $200 billion, increase of
6.7%.
– Taxable value net of tax increment agreements is
$177.0 billion.

12

 Trends in Property Tax Revenues
FY2012 - FY2016 ($ in Thousands)

Adopted/Proposed Budget
Actual/Estimate
Variance: Over/(Under)

FY2012        
FY2013        
FY2014 
Actual
Actual
Actual
$        842,478 $        900,197 $     945,408
$        866,141 $        910,034 $     976,240
$          23,663 $            9,837 $        30,832

FY2015        
FY2016        
Estimate
Proposed
$    1,067,338 $    1,114,029
$    1,073,551 $    1,114,029
$            6,213 $                     ‐

13

 Adopted Budget vs. Charter Cap
FY2012 - FY2016 ($ in Thousands)

 Property Tax Revenue 
Adopted/Proposed Budget
Prop 1 + H Cap
Full Impact of the Cap

FY2012 
$         842,478
$         965,005
$                      ‐

FY2013 
$         900,197
$         995,117
$                       ‐

 FY2014 
$        945,408
$     1,036,069
$                      ‐

FY2015 
$      1,067,338
$      1,067,338
$            18,981

FY2016 
$      1,114,029
$      1,114,029
$            52,998

14

 Sales Tax Revenue
• Assumption:
– Growth of 1.8%, $12.2 million higher than FY2015
estimates, derived from econometric models which take
into account the sectors of the Houston economy and
estimates of income, prices, population, and Primary
Metropolitan Statistical Area (PMSA) retail sales.

15

 Trends in Sales Tax Revenues
FY2012 - FY2016 ($ in Thousands)

Adopted/Proposed Budget
Actual/Estimate
Variance: Over/(Under)

FY2012 
Actual
$        518,512
$        546,543
$          28,031

FY2013 
Actual
$        577,373
$        600,256
$          22,883

FY2014 
FY2015 
Actual
Estimate
$        629,602 $        666,968
$        629,441 $        676,666
$              (161) $            9,698

FY2016 
Proposed
$        688,837
$        688,837
$                     ‐

16

 Other Revenues and Sources of Funds
• Sale of Capital Assets of $5.5 million:
– Recurring land sales and right-of-way sales.
– No major one-time land sales budgeted.

• Pass-Through Funding of $19 million
– $19 million pass-through funding from Houston First, mainly
for contractually obligated arts funding and annual contribution
as stated in the Interlocal Agreement (Ordinance No. 2011390).

• Ongoing Transfers of $11.8 million, mainly due to:
– $1.4 million lease payment from Houston First.
– $1.5 million administrative payment from Houston Forensics
Science LGC, Inc.
– $7.0 million from Parking Management Fund.
– $1.6 million from Police Auto Dealers Fund.
17

 General Fund Expenditures
Including Debt Service & PAYGO ($ in Thousands)

Net Change
$132,660
5.87%

Public Safety:

Police, Fire, Houston Emergency Center (HEC), Municipal Courts

Development & Maint Svcs:

General Services, Planning & Development, Public Works, Solid Waste

Human & Cultural Svcs:

Health & Human Services, Housing, Library, Neighborhoods, and Parks

Administrative Svcs:

Administration and Regulatory Affairs, Controller, City Council, City Secretary, Finance, Human Resources,
Houston Information Technology Service (HITS), Legal, Mayor's Office, Office of Business Opportunity

(1). PAYGO of $41 million previously reported in General Government.

18

 FY2016 General Fund Expenditures
Net Change vs. FY2015 Current ($ in Thousands)
FY2015 Proposed Total Budget
Council Service District Project Program
Summer Jobs Program
After School Program
FY2015 Current Budget

$
$
$
$
$

2,251,544
5,000
1,500
550
2,258,594

FY2016 Proposed Budget
Incremental Increase/(Decrease)

$
$

2,391,253
132,660

$
$
$

7,000
17,600
514
25,114

$
$
$
$
$
$

3,140
2,500
17,037
25,500
31,454
9,115

$

113,860

$

13,095

Subtotal - Contractual/mandated & Transfers $

126,955

Contractual or Mandated increases:
Compensation:
Compensation Contingency
Classified Pay
Cadets
Subtotal Compensation:
Maintenance Renewals & Replacement
Election
Pension
HPOPS Deferred Payment
Debt Service
Pay-as-you-go Capital Projects to DDSRF
Subtotal
Transfers/Pass Through Increases (offset by
corresponding revenues):

Disparity Study
Enterprise Risk Assessment/Management
O&M Funding for New Facilities
Support for Body Cameras
Council Service District Project Program
Others
Subtotal :

$
$
$
$
$
$
$

1,500
1,400
1,047
585
500
673
5,705

Net Change of Expenditures

$

132,660

19

 FY2016 General Fund
Revenue/Expenditure Alignment
($ in Thousands)
Total Expenditures
Non‐Recurring Expenditures
HPOPS Deferred Pension Payment
Council Service District Service Fund
Election
Disparity Study
Enterprise Risk Assessment
Non‐Recurring Expenditures
Recurring Expenditures
Recurring Revenues
(1)
Recurring Expenditures over Recurring Revenues 

$     2,391,253 (a)
$      (25,500)
$        (5,500)
$        (2,500)
$        (1,400)
$        (1,500)
$          (36,400) (b)
$     2,354,853 (c)=(a)+(b)
$     2,305,376 (d)
$           49,477 (c)‐(d)

Notes:
(1). The following contractual and mandated increases have driven recurring expenditures 
over recurring revenues: 
‐ Debt Service of $31.5M
‐ Compensation of $25.1M
‐ Pension of $17.0M 

20

 General Fund Expenditures
FY2007 - FY2016 ($ in Thousands)

Police
Fire
Other Depts
Debt Service
 (1)

PAYGO
Total
Change YOY ($)
Change YOY (%)
Police
Fire
Other Depts
Debt Service
(1)

PAYGO 
Total

FY2007 
Actual
$        581,787
$        360,542
$        516,747
$        209,000

FY2008 
Actual
$        618,304
$        388,352
$        560,828
$        209,350

FY2009 
Actual
$        657,225
$        422,718
$        588,757
$        232,948

FY2010 
Actual
$        662,766
$        435,852
$        577,750
$        240,020

FY2011 
Actual
$        663,420
$        448,175
$        568,443
$        220,837

FY2012 
Actual
$        621,739
$        420,198
$        548,106
$        220,507

FY20013 
Actual
$        697,417
$        433,176
$        574,856
$        240,203

FY2014 
Actual
$        723,066
$        452,316
$        646,205
$        243,813

FY2015 
Budget
$        748,020
$        505,365
$        740,708
$        264,500

FY2016 
Proposed
$        806,992
$        509,590
$        728,672
$        295,954

$                     ‐ $                     ‐ $                     ‐ $                     ‐ $                     ‐ $                     ‐ $                     ‐ $                     ‐ $                     ‐ $          50,046
$    1,668,076 $    1,776,834 $    1,901,648 $    1,916,388 $    1,900,875 $    1,810,550 $    1,945,652 $    2,065,400 $    2,258,594 $    2,391,253
$        104,330 $        108,758 $        124,814 $          14,740 $        (15,513) $        (90,325) $        135,102 $        119,748 $        193,194 $        132,660
6.67%
6.52%
7.02%
0.78%
‐0.81%
‐4.75%
7.46%
6.15%
9.35%
5.87%
34.88%
21.61%
30.98%
12.53%

34.80%
21.86%
31.56%
11.78%

34.56%
22.23%
30.96%
12.25%

34.58%
22.74%
30.15%
12.52%

34.90%
23.58%
29.90%
11.62%

34.34%
23.21%
30.27%
12.18%

35.84%
22.26%
29.55%
12.35%

35.01%
21.90%
31.29%
11.80%

33.12%
22.38%
32.80%
11.71%

33.75%
21.31%
30.47%
12.38%

0.00%
100.00%

0.00%
100.00%

0.00%
100.00%

0.00%
100.00%

0.00%
100.00%

0.00%
100.00%

0.00%
100.00%

0.00%
100.00%

0.00%
100.00%

2.09%
100.00%

(1). PAYGO previously reported in General Government.

21

 General Fund Full-Time Equivalents

Civilian
Police‐Classified
Police‐Cadets
Fire‐Classified
Fire‐Cadets
Total
Change YOY (FTEs)
Change YOY (%)

FY2009 Actual
6,587.0
5,042.5
221.6
3,861.1
95.7
15,807.9

FY2010 Actual
6,572.7
5,260.7
135.0
3,940.0
28.5
15,936.9
129.0
0.82%

FY2011 Actual
6,003.4
5,072.8
70.4
3,853.5
45.1
15,045.2
(891.7)
‐5.60%

FY2012 Actual 
4,588.9
5,223.8
76.6
3,801.0
14.2
13,704.5
(1,340.7)
‐8.91%

FY2013 Actual
4,704.5
5,196.1
120.7
3,768.1
26.7
13,816.1
111.6
0.81%

FY2014 Actual
4,701.4
5,063.3
88.1
3,772.0
135.0
13,759.8
(56.3)
‐0.41%

FY2015 Budget
4,888.8
5,142.6
101.5
3,876.2
177.8
14,186.9
427.1
3.10%

FY2015 Estimate
FY2016 Proposed
4,836.3
4,948.4
5,142.6
5,181.3
101.5
136.4
3,871.7
3,996.9
164.5
132.0
14,116.6
14,395.0
(70.3)
278.4
‐0.50%
1.97%

22

 General Fund Health Benefits
City Contributions
FY2007 - FY2016 ($ in Thousands)

FY2007 
FY2008 
FY2009 
FY2010 
FY2011 
FY2012 
FY20013 
FY2014 
FY2015 
FY2016 
Actual
Actual
Actual
Actual
Actual
Actual
Actual
Actual
Estimate
Proposed 
Active Employees
$          92,917 $          96,698 $        109,780 $        118,980 $        120,426 $        123,121 $        142,713 $        143,763 $        142,076 $        141,203
Retirees
$          44,840 $          44,260 $          45,686 $          47,612 $          39,585 $          24,991 $          28,435 $          29,091 $          33,349 $          31,365
Total Health Benefits $        137,757 $        140,958 $        155,466 $        166,592 $        160,011 $        148,112 $        171,148 $        172,854 $        175,425 $        172,568
     Change YOY
7.86%
2.32%
10.29%
7.16%
‐3.95%
‐7.44%
15.55%
1.00%
1.49%
‐1.63%
Notes:  
‐ Health Expense includes only City contributions for HMO, PPO, and Medicare Advantage Health Care Plans. 
‐ This chart also includes health benefits funding for employees in Forensic Transition Special Fund, BARC, HEC, Houston Civic Events Special Revenue Fund.
‐ Increase in FY2013 includes one time funding for prior year’s deficit.

23

 General Fund Pension Contributions
FY2007 - FY2016 ($ in Thousands)

FY2007           
Actual
(1) 

FY2008           
Actual

FY2009           
Actual

FY2010           
Actual

FY2011           
Actual

FY2012          
Actual

FY20013         
Actual

     HMEPS 
$               34,324 $               35,675 $              38,418 $              40,403 $              42,382 $              39,881 $              46,779
     HFFRF
$               51,984 $               53,981 $               70,506 $               74,299 $               76,352 $               61,204 $               62,141
 (2)
     HPOPS
$               57,597 $               62,627 $               67,495 $               72,669 $               77,534 $               65,701 $               83,526
Pension Contributions $            143,905 $            152,283 $            176,419 $            187,370 $            196,268 $            166,785 $            192,446
     Change YOY ($)
$                 9,969 $                 8,378 $               24,136 $               10,951 $                 8,898 $             (29,483) $               25,661
     Change YOY (%)
7.44%
5.82%
15.85%
6.21%
4.75%
‐15.02%
15.39%
Pension as % of Payroll
21%
21%
23%
24%
24%
23%
26%
(1).  ‐ This chart also includes pension funding for employees in BARC, HEC, and Houston Civic Events Special Revenue Fund.
(2).  ‐ Beginning FY2014, HPOPS includes pension funding for Forensic Transition Special Fund which is budgeted in General Government.
        ‐ Decrease in FY2012 is mainly due to HPOPS deferral.
        ‐ FY2016 Proposed includes $25.5 million HPOPS Deferred Payment.

FY2014           
Actual

FY2015 
Estimate

FY2016 
Proposed

$              53,903
$               63,758

$              60,523
$               92,436

$              67,272
$               92,625

$            101,576
$            219,237
$               26,791
13.92%
28%

$            112,507
$            265,466
$               46,229
21.09%
33%

$            147,850
$            307,747
$               42,281
15.93%
37%

24

 General Fund Unassigned Ending
Fund Balance FY2007 - FY2016

Note: FY2015 EOY Fund Balance is above the City’s required minimum assigned fund balance 7.5% mainly due to one-time land
sales, health benefit savings, vacancy savings, increase in sales tax, increase in property taxes for higher taxable value, increase in
charges for services, and miscellaneous/other.

25

 Finance Department

 

 

General Fund Five Year Forecast
FY2016 FY2020

Overview
• Expenditures include legal mandates, staffing for
new facilities, and contractual escalators.
• The capital budget for facilities, rolling stock, and
information technology is not included.
• Includes debt service for capital projects.

27

 Key Assumptions – Revenue
FY2016
FY2017
Proposed Budget Forecast 

Revenue Category

FY2018
Forecast 

FY2019
Forecast 

FY2020
Forecast 

Property Tax Revenues Growth %

3.8%

3.0%

3.0%

3.0%

3.1%

Sales Tax Growth %

1.8%

2.5%

4.4%

3.7%

2.5%

Franchise Revenue Growth %

‐0.2%

‐0.1%

‐0.1%

0.0%

0.0%

(1)

1.5%

4.0%

4.4%

4.7%

5.1%

‐

‐

‐

‐

‐

Other Revenues Growth % 

One Time ‐ Sale of Capital Assets ($mm)

Comments
FY2017‐2020 estimate is based on the 
maximum allowed revenue by 2004 
Proposition 1 and modified by 2006 
Proposition H.
FY2017‐2020 estimate derived from 
econometric models which take into account 
the sectors of the Houston economy and 
estimates of income, prices, populations, and 
Primary Metropolitan Statistical Area (PMSA) 
retail sales.
FY2017‐2020 estimate based on historical 
growth. 
FY2017‐2020 estimate based on historical 
growth. 

(1). Other Revenue Category includes items such as Industrial Assessment, Licenses and Permits, Charges for Services, Interfund Services, Fines and Forfeits.
28

 Key Assumptions – Expenditure Changes

Expenditure Category
Personnel:
Civilian ‐ Base Pay
Classified ‐ Police Base Pay 
Classified ‐ Fire Base Pay

FY2016
FY2017
Proposed Forecast 

FY2018
Forecast 

FY2019
Forecast 

FY2020
Forecast 

Comments

0.00%
4.00%
0.00%

0.00%
$15.0M 
0.00%

0.00%
$17.0M
0.00%

0.00%
$12.0M
0.00%

0.00%
$0.0
0.00%

Based on HOPE Meet & Confer
Based on HPOU Meet & Confer
Based on HPFFA

HMEPS

27.4%

27.2%

27.6%

27.6%

27.7%

FY2017‐FY2020 based on Actuarial Required Contribution (ARC)

HFRRF

33.2%

33.2%

33.2%

33.2%

33.2%

Based on Actuarial Required Contribution (ARC)

HPOPS Annual $ Increase ($M)

$10.0

$10.0

$10.0

$10.0

$10.0

Based on HPOPS Meet & Confer. 

HPOPS Deferral Payment ($M)

$25.5

($25.5)

$0.0

$0.0

$0.0

HPOPS Deferral Payment

HPOPS Pension adjustment ($M)

$0.0

$50.0

$0.0

($50.0)

$0.0

Estimated additional contribution to maintain a minimum 80% 
funded ratio in accordance with the Meet & Confer Agreement

Growth %

‐1.6%

3.9%

3.9%

3.9%

3.9%

Assumes reserved fund balance in Health Benefits Fund is 
maintained and average expenditure growth rate.

Total Debt Service ($M)

$296.0

$314.4

$320.6

$309.5

$321.0

Total Pay‐As‐You‐Go (PAYGO) Transfer ($M)

$50.0

$47.6

$59.4

$85.5

$90.0

Pension Contribution Rate:

Health Benefits:

PAYGO previously reported in General Government

29

 Revenue & Expenditure Summary
($ in Thousands)
Property Tax (1)
Sales Tax
Franchise Revenue
Other Revenues 
Transfers from Other Funds ‐ Ongoing
Sale of Land ‐ Ongoing
Sale of Land ‐ One Time
Total Revenues and Other Sources
Growth %

FY2015
Estimate
1,073,552
676,666
188,135
274,425
30,343
4,919
23,500
2,271,540
9%

FY2016
Proposed
1,114,029
688,837
187,792
278,492
30,725
5,500
0
2,305,374
1%

FY2017
Forecast
1,147,811
706,265
187,551
289,724
30,725
2,500
0
2,364,576
3%

FY2018
Forecast
1,182,707
736,987
187,409
302,545
30,725
2,500
0
2,442,873
3%

FY2019
Forecast
1,218,755
764,108
187,363
316,895
30,725
2,500
0
2,520,346
3%

FY2020
Forecast
1,255,991
783,364
187,411
332,902
30,725
2,500
0
2,592,892
3%

Total Operating Expenditures
Total Operating Expenditures 

1,989,934
1,989,934

2,045,253
2,045,253

2,128,496
2,128,496

2,211,480
2,211,480

2,228,426
2,228,426

2,288,894
2,288,894

Transfers for Debt Service
Pay‐As‐You Go (PAYGO) Capital Projects
Total Expenditures Including Debt and PAYGO
Growth %

264,500
0
2,254,434
9%

295,954
50,046
2,391,253
6%

314,383
47,617
2,490,496
4%

320,563
59,437
2,591,480
4%

309,466
85,534
2,623,426
1%

321,000
90,000
2,699,894
3%

17,105

(85,879)

(125,920)

(148,607)

(103,080)

(107,002)

0
(17,105)
(17,105)

0
85,879
85,879

Five Year Forecast 

Net Revenues Less Expenditures
Change in Inventory/Prepaid Items
Use of Fund Balance 
Other Sources and Uses
Net Surplus/(Deficit) ‐ the Gap

0

0

Beginning Fund Balance
Ending Fund Balance 

222,622
239,727

Assigned Fund Balance for Stabilization Fund (2)

0
239,727

Ending Unrestricted Fund Balance (3)
Budget Stabilization Fund (2)

Budget Stabilization Fund Percent of Expenditure
Fund Balance Percent of Expenditures (less debt) (4)

20,000
1.0%
12.0%

0
0
0

0
0
0

0
0
0

0
0
0

(125,920)

(148,607)

(103,080)

(107,002)

239,727
153,848

153,395
153,395

152,563
152,563

151,733
151,733

151,563
151,563

453
153,395

832
152,563

830
151,733

169
151,563

605
150,959

20,453
1.0%
7.5%

21,285
1.0%
7.5%

Notes:
(1) Property Tax Estimate for FY2016 – 2020 is based on the maximum allowed by charter cap. 
(2) Budget Stabilization Fund of the greater of 1% of total expenditures less debt service payment and transfers 
for pay‐as‐you‐go (PAYGO) capital expenditures or $20 million in any given year. 
(3) Assumes gap is eliminated in each fiscal year.
(4) Ending Unrestricted Fund Balance figure is set at 7.5 percent of total expenditures less debt and PAYGO. 

22,115
1.0%
7.5%

22,284
1.0%
7.5%

22,889
1.0%
7.5%

30

 31

 

 

Millions

250
200
50
100
50


300

350

 

 

 

 

 

 

 

I Debt Incurred Before 2010

(weighted avg. maturity 11.613. years)

(weighted avg. maturity

I Debt Incurred 2010 and After

9.798 years 

 

 

 

 

 

debt



erVIce

General Fund Pension Expenditures
($ in Thousands)

Pension
Police - Classified
Fire - Classified
Municipal - Civilian
Total
% Growth

FY1991
$17,857
$14,738
$11,093
$43,688

FY1992
$19,090
$16,086
$11,499
$46,675
6.84%

FY1993
$20,859
$16,345
$11,460
$48,664
4.26%

FY1994
$29,999
$17,357
$10,871
$58,227
19.65%

FY1995
$30,218
$17,992
$18,031
$66,241
13.76%

FY1996
$30,645
$18,904
$17,485
$67,034
1.20%

FY1997
$29,731
$20,175
$18,660
$68,566
2.29%

FY1998
$30,645
$21,884
$19,610
$72,139
5.21%

FY1999
$30,538
$23,220
$20,317
$74,075
2.68%

FY2000
$30,551
$24,093
$23,675
$78,319
5.73%

FY2001
$30,615
$24,076
$25,253
$79,944
2.07%

FY2002
$32,551
$27,979
$24,812
$85,342
6.75%

FY2003
$34,532
$27,772
$23,524
$85,828
0.57%

FY2004
$36,523
$28,325
$29,317
$94,165
9.71%

FY2005
$36,502
$32,699
$34,437
$103,638
10.06%

FY2006
$52,697
$48,738
$32,501
$133,936
29.23%

FY2007
$57,597
$51,984
$34,324
$143,905
7.44%

FY2008
$62,627
$53,981
$35,675
$152,283
5.82%

FY2009
$67,495
$70,506
$38,418
$176,419
15.85%

FY2010
$72,669
$74,299
$40,403
$187,370
6.21%

FY2011
$77,534
$76,352
$42,382
$196,268
4.75%

FY2012 FY2013
$65,701 $83,526
$61,204 $62,141
$39,881 $46,779
$166,785 $192,446
-15.02%
15.39%

FY2014
$101,576
$63,758
$53,903
$219,237
13.92%

FY2015
FY2016
Estimate
Proposed
$112,507
$147,850
$92,436
$92,625
$60,523
$67,272
$265,466
$307,747
21.09%
15.93%

32

 Five Year Management Strategies
•

Limitations
–
–
–
–
–

•

Property tax cap in City Charter
Existing debt service increases
No excess fund balance
Pensions controlled by the State
Personnel costs make up majority of General Fund spend

Plan
– Performance improvement
– Cost containment
– Re-evaluate service delivery models

•

Additional Options
–
–
–
–

Reduction in services
Petition voters to remove or modify revenue limitation
New revenue sources
Pension reform
33

  

Appendix

1?

Senior and Disabled Property Tax
Exemption

 

 

- Exemption (5) Change

160,000

 

140,000 

 

120,000

100,000

80,000

 

60,000

 

40,000

   

      

 

 

20,000 -- - - -  - -- v,     
1 2002 2007 2008 1 2009 2010 1 2011 1 2012 2013 1 2014

1Exemption (751i 34,006 40,000 44,000 48,400 53,240 58,564 64,420 1 70,862 70,862 70,862; 70,862 30,862 80,000 80,000 160,000
1% Change 100% 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property Tax Revenue & Tax Rate
($ in Thousands)

(1). Property Tax Rate per $100 of taxable value.
(2). Property Tax Rate reduction to be determined.

36

 Propositions 1 & H
• Proposition 1 (Tax Cap)
– Election held in 2004, it limits the growth of City’s
property tax revenue to the lesser of population and
inflation growth or 4.5% growth
– Proposition 1 is in effect and calculation is done each
budget year

• Proposition H
– Election held in November 2006, it allowed City officials
to raise an additional $90 million of revenues above the
limit level for public safety issues

37

 Tax Increment Reinvestment Zones
(TIRZ)
•
•
•

City of Houston’s Property Tax revenue is net of TIRZ
Currently there are 25 TIRZ
Local jurisdictions typically participate in TIRZ:
– City, County, ISD

•
•

Taxable Base Value remains in City of Houston
The increment taxable value from properties within the
zone goes to TIRZ for the development of the zones
– As a result, TIRZ typically has a higher growth rate than City
of Houston.

•
•

Limit of total value amount included in TIRZ is 25% of COH
property taxable value
City funding received from TIRZ:
(a) Admin Fees (5%), (b) Municipal Service Fees, (c) Affordable
Housing and (d) Source of funding for CIP.
38

 FY2016 General Fund Expenditures
Personnel vs. Non Personnel
($ in Thousands)

Proposed Budget
$2,391,253

(1) Includes Items such as Salary, FICA, Pension, Health Benefits, Overtime, Workers Comp, Other Pays, Temporary Personnel Services, etc.

39

 Health Benefits Fund

Annual Aggregate Contribution Ratio
in Thousands)

  

120%

 

ICity Subscriber

100%

 

 

80%

 

60%

40%

77% 74FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY20013 FY2014 FY2015 FY2016
Actual Actual Actual Actual Actual Actual Actual Actual Estimate Proposed
Subscriber $52,494 $63,648 i $69,206 $75,160 $79,135 $69,881 $75,726 $74,475 $73,566 $78,745
City I $175,358 $185,566 $204,703 $214,747 $210,334 $219,900 $214,029 $217,262 $226,134 $235,223 

 

 

 

 

 

 

 

 

 

 

 

 

Actuarial City Contribution as a Percent of Payroll
Increased Dramatically from FY2002 to FY2005

41

 Impact of Proposed Amendment on
City Reserves
($ in Thousands)
Proposed FY16 Budget
Total GF Expenditures and Other Uses 
(Proposed Budget page II‐3)
Less debt service
Less PAYGO
Total GF Expenditures Other than 
Debt/PAYGO 
(Proposed Budget page II‐3)
7.5 percent for GF fund balance
1 percent for Budget Stabilization Fund
Total required reserve per policy 
(8.5 percent of Total GF Expenditures 
other than Debt/PAYGO)

Current 
policy

Policy as 
proposed

$2,391,253 $2,391,253
$295,954
N/A

Variance
$0

$295,954
$50,046

$0
$50,046

$2,095,299 $2,045,253

$50,046

$157,147
$20,953

$153,394
$20,453

$3,753
$500

$178,100

$173,847

$4,254

42