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COH budget breakdown

FY2011 Budget - Visually

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This segment is an attempt to give our readers a simplified overview of the over $4 billion budget for the City of Houston (COH) in FY2011. It will not cover everything included in the budget, as we hope to only clarify where the money in the budget originates, how it’s all organized, and how it is ultimately spent, in an easy-to-read and highly visual format.

A Basic Introduction: How is the City organized?

Please refer to the City of Houston’s Organizational Chart, shown below, for a visual guide of COH’s twenty-five departments.

These departments are then subdivided into five groupings by their functions, shown below.

In building the budget together, the Mayor, the Finance Department and the heads of each department developed the budget, given certain parameters they had to work around, like contractual agreements that require, by contract and by law, that X amount of money must be used to pay for a particular thing.

The Finance Department helps the Mayor determine the departmental budget parameters mentioned above by balancing the beginning fund balances and current revenues/sources with expenditures/expenses and the planned ending fund balance.

Each department then presents its budget to the City Council and to the Mayor during the workshop sessions, prior to budgetary approval. After the budget workshops, members of the council submit budgetary amendments to be discussed and voted on along with the proposed budget.

Below is a helpful flow chart, followed by a time line of the Operating Budget Process from the FY2011 City Budget (I - 21).

     

So where does all the money come from?

Simply put: a lot of places. COH receives revenue via several veins of operation—it collects taxes and fees, it gains revenue from services, it gets funding from federal and state grants, and more. The money that the City of Houston gets is then organized into over thirty different funds. Think of these funds as separate pots of money. There are different forms of pots and each pot directs funding into specified COH operations.

According to the FY2011 Budget (page I - 7):

The City of Houston’s financial management and accounting structure encompasses the ongoing operations and capital programs of twenty-four General Fund departments plus General Government and General Fund Debt Service, approximately thirty-nine separate funds, and numerous independent entities or operations for which the City acts as trustee.

The General Fund

According the the budget document:

General revenues (i.e., property taxes, sales taxes, franchise fees, Municipal Courts fines, etc.) are budgeted and received in the General Fund for the support of most basic city services. Operations and services for public safety, financial services, libraries, solid waste management, health, most parks and recreation services, street traffic control, esplanade mowing and citywide administration are included in the General Fund.

Typically, the pot of most concern is the General Fund. It is where your tax dollars go, as well as the money earned from fees and fines charged by the City. It is considered the main fund for the COH. Below is a diagram of the financial resources that go into the General Fund (COH budget, page II – 5). For a more thorough description of these General Fund resources and what they contain, please refer to pages II - 7 through II - 21.


(pdf)

According to page II – 4 of the budget, “Approximately 67% of the total resources in the General Fund are from property and sales taxes.” More importantly, the General Fund is the pot of money that the City Council and Mayor have the highest level of discretion over.  Any given year they could, theoretically, completely change any use of these funds, whereas all the expenditures of other funds cannot be changed with such discretion.

The graphic shown below is a proportional representation of all departments, grouped by functions, that receive General Fund money in the FY2011 budget.


(pdf)

Non-‘General Fund’ Funds

When the COH earns revenue from a specific function or service, that money often remains separated out from other revenue gains, as it is required to go into a particular pot of money that, in turn, puts its funds toward a specified department or function. The remaining pots of money, that are separate from the General Fund and from one another, come in a variety of forms, which are listed and explained below (shown along side the General Fund, surrounded by its financial resources).


(pdf)

Enterprise Funds

A couple of the City’s departments operate like private enterprises. According to the budget report (page I - 7), “their operations and long-term debt are covered entirely by user fees or dedicated revenue sources.”

Special Revenue Funds

These are, according to the budget report (page I - 7), established to account for the proceeds of specific revenue sources, which are restricted to expenditures for specified purposes.” In FY2011, the Special Revenue Funds include the following:

More detailed descriptions of all funds used in the budget process can be found in the COH budget on pages I - 7 through I - 12.

Internal Service Funds

This type of fund provides services to the City departments on a cost-reimbursement basis. There are two Internal Service Funds—the Health Benefits Fund and the Long Term Disability Fund.

Revolving Funds

According to page I - 10, “Revolving Funds are established to provide services to other City departments on a cost-reimbursement basis.”

The next few funds are a bit confusing, so for the most part, I have taken language directly from the budget itself. I find that this allows the exact definitions to remain clear and intact.

Equipment Acquisition Consolidated Fund

This fund supports “the acquisition of durable capital assets for all General Fund departments and selected Special Revenue Funds…Funding [comes] from the issuance of Commercial Paper and other sources such as capital lease financing.”

Debt Service Funds

According to the proposed budget,

The City of Houston General Debt Service Fund accumulates resources for the principal and interest payments on tax supported debt consisting of: general obligation bonds/refunding bonds, claims and judgment bonds, annexed districts’ bonds, pension obligation bonds, certificates of obligation, and general obligation commercial paper notes (the “Obligations”). Payments for arbitrage rebate and administrative fees to administer the debt program are also accounted for in this fund.

Trust and Agency Funds

It is written in the budget proposal that these funds “account for assets held by a government unit as trustee, or agent for the individuals, private organizations, other governmental units, and/or other funds.”
It continues,

The City has created twenty-two trust and agency funds for Tax Increment Reinvestment Zones (TIRZ) since FY1991. As development occurs in each zone, taxes generated by the increase in value attributable to those improvements, or “tax increment”, are captured in separate funds set up for each TIRZ. TIRZ Funds are then used to pay for approved project costs. Examples of typical costs include: infrastructure improvements in water, sanitary sewer, and storm water systems, lighting, paving on public right-of-way, streetscaping, impact fees, and debt service on bonds sold for the same purpose. Contributions from other taxing jurisdictions participating in the TIRZ are collected by each respective jurisdiction and sent to the City for deposit in the TIRZ funds (I - 11).

Capital Project Funds

Funding for major capital improvement projects, regardless of funding source, is presented in the five year Capital Improvement Plan (CIP) and is budgeted in the first year of that plan. Debt service requirements are budgeted in the General Debt Service Fund or Enterprise Funds where applicable. Funding for each capital project, including site acquisition, engineering and design, construction and initial equipment purchases (including environmental and civic art) required to make a facility operational, are included in the CIP. Primary funding sources for the CIP are as follows:
-Commercial paper notes and Public Improvement Bond proceeds,
-Revenue Bond proceeds (e.g., bonds supported by Combined Utility System fees, Airport System revenues, Convention & Entertainment Facilities revenue/hotel occupancy tax),
-Operating funds or capital reserve funds (e.g., operating budget funds), and
-Contributions from private or other public sources (e.g., local private developers, other local governments and authorities, and state or federal agencies) participating in City-sponsored projects.
-Grants such as Community Development Block Grant (CDBG), and
-Tax Increment Reinvestment Zones (TIRZ).

This section of the budget proposal concludes with a discussion on Other Financial Funds as follows.

Comprehensive budgets for certain entities are not included in the City’s budget or the CIP due to City Council’s limited authority to program expenditures. They are included in the City’s Comprehensive Annual Financial Report.

-Federal and state grants are accepted by the City and accounted for based upon each grant’s respective fiscal period, which usually differs from that of the City (July 1 - June 30). If a grant requires a local match or fund payroll costs in whole or in part, the budget includes expenditures and revenues that pertain to these aspects of the grant in the receiving department or fund. These grants and contracts are approved by Council action at the time of the grant award.

-The City’s three pension funds are governed by independent boards and are maintained separately from the operating, debt service, and capital funds. Contributions from both the employees and employer (City) are also maintained separately in the case of Deferred Compensation and Long-Term Disability programs.

- Other funds established by City Council or the City Controller to account for Contributions from private individuals (i.e., Library Gift Endowment Fund; Houston Parks Board Trust Fund; WATER Fund; Houston Economic Development; and the Battaglia Trust Fund) are dedicated to a specific unbudgeted but public purposes (I -12).


Where does ALL of the money go?

This is a link to a cross reference guide of the City’s departments and funds. Most of the City’s departments receive some amount of funds from the General Fund. And many of the non-‘General Fund’ funds contribute to one or more departments, depending on their official designation.

The graphic shown above (pdf) is a proportional representation of how much money each department receives (in order to spend, as their budgetary expenditures) from all of the pots of COH funding combined.

As you can see, the General Fund is definitely a large contributor to the City of Houston’s many daily operations. But when we view the combined budget, including the General Fund and the City’s many other funds, united as a single unit, we see big changes. The proportional distribution of funding amounts for the City’s departments are noticeably different. When reviewing the City’s financial budget, it is important to keep in mind that the General Fund is not the City’s only financial pot. But it is, in fact, the fund that’s use is at the discretion each year of the people we elected to represent us, the residents of Houston, at City Hall, while all other funds are dedicated to certain uses.

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Comments

.(JavaScript must be enabled to view this email address) said:

City need to increase fines and penalties for illegal dumping especially tires in city by 100%.
The penalties and fines in place now are not strong nor harsh enough which is why we have this problem.
Also increase number of inspectors to increase number of citations issued. City Ordinance states the city can get as many inspectors as they need by just sending certain city employees to a certain class for inspections, dumping and waste.

Posted on May 20, 11 at 5:55 pm

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