City Now Projects Budget Problems for This Year!!!

http://www.chron.com/cs/CDA/story.hts/metropolitan/649533

Aug. 30, 2000, 11:45AM
City anticipating revenue shortfall Sale-tax take may miss projections
By MATT SCHWARTZ -- Copyright 2000 Houston Chronicle

Less than two months into the new fiscal year, city officials are already warning that they may have budgeted for more sales tax revenue than will actually come into Houston coffers. In what resembled a replay from last summer, Chief Administrative Officer Al Haines said the growth in the city's sales tax revenue may come in lower than expected, which may force them to revise the budget for the fiscal year that began July 1.

The current city budget calls for sales tax revenue to grow by 5.8 percent from fiscal year 2000, which ended June 30. But sales tax revenue has grown by an average of 3.7 percent each of the past two years, Haines said, while last year's sales tax collections grew by only 2.75 percent, the lowest amount in years.

Haines suggested the administration may need to reduce its projections after University of Houston economist Barton Smith presents to City Council's Fiscal Affairs Committee a model he is devising for forecasting sales tax revenue. At that time, Haines said, the administration would decide whether to revise its estimates.

Last May, Smith said the city may have been too conservative in its sales tax forecast for the new fiscal year. But, judging by the sentiments of City Council, there is virtually no chance the city will increase its projections. "If there is any adjustment to be made at all, it will be downward," Haines said. "I think (5.8 percent) is too aggressive."

City Controller Sylvia Garcia already is projecting sales taxes will come in $5.5 million under budget, basing her estimate on revenue during the same period last year. "I think this is going to be another year where we're going to monitor our revenues and maybe begin our spending controls earlier," Garcia said.

Sales taxes make up nearly 25 percent of this year's $1.3 billion general fund budget. City officials had predicted the city would take in $332 million in sales tax revenue this fiscal year. A sales tax growth of only 3.7 percent over last year would yield $325 million.

Haines also said the administration is keeping its eye on municipal court revenue. Municipal court revenue fell some $14 million below budget last year, a significant portion of the shortfall. The city never dipped into the red because of the revenue shortfall, but the sharp downturn in municipal court income caught officials by surprise. Houston police wrote fewer tickets in fiscal 2000 than in any year since 1992.

Administration and Police Department officials have attributed the drop-off in tickets to a variety of factors, including a racial-profiling program that required officers to record the age, race and sex of every person they stop; busy traffic court dockets that forced some officers to appear in court up to three times a week; and a temporary loss of federal grant money that paid for stepped up traffic enforcement.

As a result of last year's numbers, the Brown administration attempted to set its sights lower when it came to municipal court revenue this year, projecting the city would take in $42 million. That figure is based on police writing 2,700 tickets a day, the lowest since fiscal 1994. Haines said that current estimates through the end of this month indicate those ticket numbers will meet, but not exceed, projections. "Unless something rather dramatic happens, this may be more realistic than conservative," he said. "We will monitor it."

That, no doubt, is a disappointment to the administration. Although the mayor's office had adopted more conservative revenue projections for this year, administration officials were hoping -- if not counting on -- revenue would beat those estimates. Throughout the budget process, Mayor Lee Brown said that extra money would go toward paying down the city's debt, an employee incentive pay program and employees' health care costs during the end of the fiscal year.

Although council members on Tuesday praised the administration for raising the prospect of revised revenue projections, they continued to question the administration's oversight of the budget. "I just think it's pretty poor management on someone's part when you come out of a fiscal year with problems in that area and already announcing you may have some adjustments to make," Councilman Carroll Robinson said. "I appreciate you coming forward this early in the game to do that," Councilman Rob Todd said. "(But) given that this is only through July, it is discouraging that we already are adjusting our numbers." He was referring to the monthly financial report, which covered the period through July 31.

Haines defended the administration's forecasts from last year, saying the Department of Finance and Administration could not have anticipated all the occurrences, including the drop in traffic tickets. The administration had previously conceded that its sales tax projection for last year was too optimistic. "We're only identifying two revenue sources here," Haines said. "I'm not personally feeling like we have to jump off the cliff here. We have $69 million in fund balance." Haines also noted that property values in the city continue to rise. The city expects to take in nearly $32 million more in property taxes than last fiscal year.

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Good Grief!!! How can they make the same stupid projections in this years budget that caused so many problems with last years?!?!?

If this were any corporation, I think the people responsible for budgeting would be out the door.

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