Closed Caption Log, Council Worksession
Wednesday, January 16, 2002

Note: Since these log files are derived from the Closed Captions created during the Channel 6 live cablecasts, there are occasional spelling and grammatical errors. These Closed Caption logs are not official records of Council Meetings and cannot be relied on for official purposes. For official records or transcripts, please contact the City Clerk at (512) 974-2210.

MAYOR GARCIA: [INAUDIBLE].

HERE WE ARE.

THERE THEY ARE.

MAYOR GARCIA: IT'S WEDNESDAY, JANUARY THE 16TH, THE YEAR 2002. AND MY NAME IS GUS GARCIA, WE HAVE COUNCILMEMBER SLUSHER,.

ALVAREZ:, WYNN, THOMAS HERE. AND THE CITY MANAGER JESUS US GARZA, THE CITY COUNCIL IS MEETING AT -- AT ONE TEXAS CENTER, WORK SESSION, 505 BARTON SPRINGS ROAD, THIRD FLOOR TRAINING ROOM. WE HAVE A COUPLE OF ITEMS ON THE AGENDA. WE ARE GOING TO DO THE BRIEFING FIRST, IS THAT RIGHT?

GARZA: MAYOR, IT YOUR CALL. THE 13TH FLOOR, THEY HAVE THE CONFERENCE ROOM UPSTAIRS RESERVED FOR THE COUNCIL FOR THE EXECUTIVE SESSION. IF YOU WANTED TO START THAT FIRST.

MAYOR GARCIA: MR. STEVENS IS HERE, I THINK I SEE MS. BETTY, MR. NEWMAN.

GARZA: WE COULD GET THAT DONE.

MAYOR GARCIA: HOW LONG IS THAT GOING TO TAKE?

FIVE MINUTES?

IT WILL PROBABLY TAKE ABOUT -- ABOUT 30 TO 40 MINUTES. MAYOR.

MAYOR GARCIA: 30 TO 40 MINUTES, PLUS QUESTIONS, SO THAT'S ABOUT AN HOUR.

I NEED TO WAIT UNTIL RUDY GARZA, THE BUDGET OFFICER GETS HERE. HE'S GOING TO HELP ME MAKE THE PRESENTATION.

MAYOR GARCIA: FOR THOSE OF YOU THAT -- THAT ARE WATCHING, THIS IS ITEM NO. 2 IN TODAY'S AGENDA. IT THE ECONOMIC AND BUDGET UPDATE AND DISCUSSION OF TAX ANTICIPATION NOTE FOR REVENUE SHORTFALLS AND INCREASED COSTS FOR PUBLIC SAFETY AND HEALTH SERVICES. MR. JOHN STEVENS, CHIEF FINANCIAL OFFICER, I THINK THAT'S WHAT WE CALL HIM, RIGHT, BETTY? AND MR. RUDY GARZA, OUR BUDGET OFFICER, ARE GOING TO BE MAKING THE PRESENTATION AND WE ALSO HAVE AN EXECUTIVE SESSION SCHEDULED FOR THIS MORNING, WE STILL HAVE TWO COUNCILMEMBERS THAT NEED TO BE HERE FOR THAT ONE. SO -- WE WILL GO AHEAD AND GET STARTED ON THIS ONE. LET ME RECOGNIZE MR. JOHN STEVENS. MR. STEVENS?

GOOD MORNING, MAYOR AND COUNCIL. WE WANTED TO -- TO GIVE YOU A BRIEFING THIS MORNING ON -- ON SOME RELATED TOPICS, GIVE YOU AN UPDATE ON OUR ECONOMIC FORECAST. WHERE WE ARE IN OUR BUDGET PROCESS THIS YEAR. AND TO ALSO GIVE YOU SOME MORE INFORMATION ABOUT THE TAX ANTICIPATION NOTE THAT WE WILL BRING BACK AS AN ACTION ITEM FOR COUNCIL ON JANUARY THE 31ST. STARTING OFF WITH THE ECONOMIC ENVIRONMENT, CURRENT ECONOMIC ENVIRONMENT, RIGHT NOW, WE DO NOT SEE ANY SIGNIFICANT CHANGES IN THE ECONOMY. IT CONTINUES TO BE SOMEWHAT WEAK WITH DECLINING TRENDS, THE MOST RECENT INFORMATION THAT WE HAVE FROM DECEMBER ON CONSUMER CONFIDENCE IS THAT THERE HAS BEEN AN 8 POINT GAIN IN CONSUMER CONFIDENCE, BUT THAT IS FOLLOWING FIVE CONSECUTIVE MONTHLY DECLINES.

MR. STEVENS, IS THIS NATIONAL DATA OR REGIONAL DATA?

THIS IS NATIONAL DATA.

MAYOR GARCIA: OKAY.

OUR UNEMPLOYMENT, THIS IS LOCAL DATA ON OUR UNEMPLOYMENT. WE SEE A CONTINUED INCREASE IN UNEMPLOYMENT, THIS IS FROM NOVEMBER OF 2000 UP TO 4.7% IN NOVEMBER. AND FROM A HIGH -- FROM A LOW OF 1.8% IN THE YEAR 2000, [SIC], SO THIS IS THE HIGHEST UNEMPLOYMENT THAT WE'VE HAD IN 10 YEARS. THEN OUR JOB GROWTH RATE FROM 2001, OUR ANNUAL GROWTH WAS 2.3%, OUR 10 YEAR AVERAGE WAS 5.6%. SO WE ARE WELL BELOW THE 1991 LEVELS FOR JOB GROWTH. LOOKING LOCALLY AT OUR CONSTRUCTION AND DEVELOPMENT INDICATORS, OUR NEW WATER RESIDENTIAL CONNECTIONS ARE DOWN 38.7% FROM THE PRIOR YEAR. THE NUMBER OF SITE PLANS REVIEWED YEAR TO DATE THROUGH NOVEMBER SHOWS SOME GROWTH. BUT THAT AGAIN IS AFTER FOUR CONSECUTIVE MONTHS OF DECLINE. FROM AUGUST TO NOVEMBER. OUR BUILDING PERMITS ARE DOWN 27% FROM THE PRIOR YEAR. AND OUR OFFICE OCCUPANCY RATES OUR DECEMBER RATE WAS 88.2%, WHICH IS THE LOWEST OCCUPANCY RATE THAT WE'VE HAD SINCE 1994. IN ADDITION, OUR HOTEL/MOTEL BED TAX FOR FISCAL YEAR 2001 WAS NEGATIVE, 1.1% NEGATIVE. AND THAT IS FOLLOWING THREE YEARS OF VERY, VERY LARGE REVENUE GROWTH, AN AVERAGE OF 22% FOR EACH YEAR.

PER YEAR?

PER YEAR, YES, SIR. LOOKING AT AIRPORT DATA. OUR AIRPORT PASSENGER COUNTS, YEAR TO DATE THROUGH NOVEMBER WERE DOWN 5.3%. FOR SEPTEMBER AND NOVEMBER, THAT REPRESENTS AN AVERAGE MONTHLY DECLINE OF 24%. FOR THOSE THREE MONTHS. AND OUR SALES TAX ALSO SHOWS A -- A CONTINUED DECLINE. OUR FISCAL YEAR TO DATE REVENUES, THE DECEMBER PAYMENT THAT REPRESENTED OCTOBER SALES TAX ACTIVITY WAS DOWN 6.2%. IF YOU RECALL, AND THEN THE PAYMENT THAT WE RECEIVED EARLIER THIS MONTH IN JANUARY, WHICH REPRESENTED NOVEMBER ACTIVITY FROM -- FROM NOVEMBER WAS ALSO DOWN ANOTHER 6.2%. SO AT THIS POINT, OUR YEAR TO DATE REVENUE LOSSES ARE 1.8 MILLION.

MAYOR GARCIA: THIS COMPARED TO WHAT WE BUDGETED?

YES.

COMPARED TO LAST YEAR.

YEAH, COMPARED TO LAST YEAR, IT'S --

THE PERCENTAGE IS COMPARED TO LAST YEAR. THE 1.8 MILLION IS COMPARED TO BUDGET. THE -- IN ADDITION TO THE 6.2% NEGATIVE, WHAT THAT ALSO SHOWS US IS THAT WE ARE NOT EXPERIENCING -- WE HAVE NOW EXPERIENCED THREE MONTHS OF CONSECUTIVE DECLINE. IF YOU RECALL, OUR NOVEMBER PAYMENT WAS 12.7 SPEAKERS NEGATIVE. -- 12.7 SPEAKERS NEGATIVE. IN ADDITION TO THAT -- 12.7%. IN THE LAST 12 MONTHS, SIX MONTHS OF DECLINE AND THREE MONTHS OF ONE PERCENT OR LESS. SALES TAX HAS TAKEN A SIGNIFICANT HIT. YOU CAN SEE THAT GRAPHICALLY IN FRONT OF YOU. TO MEET OUR BUDGET, BUDGETED REVENUES, WE WOULD NEED TO GROW AT ALMOST 5% FOR THE NEXT 10 MONTHS, WHICH THERE'S NO INDICATION THAT THAT WOULD HAPPEN. WE JUST DON'T SEE US BEING ABLE TO MEET OUR BUDGETED REVENUES. IN DECEMBER, WHEN WE PRESENTED TO YOU OUR ECONOMIC UPDATE AND TALKED -- AT THAT POINT ABOUT ALTERNATIVE REVENUE SOURCES, WE HAD -- BASED ON THE INFORMATION AT THAT TIME, HAD PROJECTED SALES TAX REVENUES TO BE BELOW ABOUT -- APPROXIMATELY 2.8 MILLION DOLLARS, WHICH REPRESENTED A GROWTH RATE OF SLIGHTLY UNDER 1%. TO MEET THAT NUMBER, WE WOULD HAVE TO GROW IT SLIGHTLY OVER 2% FOR THE NEXT 10 MONTHS MUCH AGAIN, THERE'S NO INDICATIONS, ESPECIALLY BASED ON THE CONSECUTIVE DECLINES THAT WE'VE HAD, THAT WOULD SHOW US THAT WE WILL CONTINUE TO GROW -- THAT WE WILL GROW AT 2% FOR THE NEXT 10 MONTHS. WHILE WE ARE NOT AT A POSITION BECAUSE IT STILL VERY EARLY IN THE YEAR TO -- TO DETERMINE WHAT OUR, YOU KNOW, PROJECTION WILL BE FOR THE FINAL YEAR END, THERE'S A -- YOU KNOW, SOME VARIOUS SCENARIOS THAT WE COULD CONSIDER. IF WE DO EXPERIENCE IN THE END SLIGHT GROWTH OF HALF A PERCENT, THAT WOULD EQUATE TO A LOSS IN OUR BUDGETED REVENUES, ABOUT 3.2 MILLION. SOMEWHERE IN THE RANGE OF HALF A PERCENT TO A NEGATIVE ONE PERCENT GROWTH OR DECLINE IN THE REVENUE WOULD BE A LOSS IN BUDGETED REVENUES OF $5 MILLION. THE WORST CASE WOULD BE IS IF WE CONTINUE THIS TREND OF 6% LOSSES AS WE HAVE EXPERIENCED IN OUR FIRST TWO MONTHS. WE DON'T AGAIN SEE ANY INDICATIONS THAT THAT WOULD HAPPEN. BUT THE WORST CASE SCENARIO THAT COULD BE AN $11 MILLION LOSS IN BUDGETED REVENUE. TO COVER SOME OF THE LOSSES IN SALES TAX, YOU KNOW, WE HAD PROPOSED AT THAT TIME ALTERNATIVE REVENUE SOURCES MUCH ONE OF THOSE SOURCES COULD BE THE TAX ANTICIPATION NOTE. TO COVER THE $2.8 MILLION SHORTFALL PRESENTED TO YOU IN DECEMBER. THE REASON THAT WE ARE FIXATED ON THAT NUMBER IS BECAUSE THIS IS -- AS I DISCUSSED WITH YOU, THIS IS THE INFORMATION THAT WE PROVIDED TO THE ATTORNEY GENERAL BASED ON OUR PROJECTIONS AT THAT TIME.

FOCUS GROUP?

CORRECT. IN MENTIONING THE TAX ANTICIPATION NOTE, THE TAX ANTICIPATION NOTE PROVIDES THAT APPROXIMATELY $8 MILLION IN SHORT-TERM DEBT. IT WOULD -- ASSIST US IN FUNDING SOME OF THE SALES TAX REVENUE SHORTFALL AND ALSO PROVIDE FUNDING FOR THE HOMELAND SECURITY COSTS. ALSO THE TAX ANTICIPATION NOTE WOULD BE PAID IN FULL JANUARY OF 03. THE NOTE WOULD REQUIRE AN INCREASE IN THE DEBT SERVICE TAX RATE OF 1.66 CENTS.

LET ME MAKE ONE POINT ABOUT THE ADDITION TO THE TAX RATE. ADDING THAT 1.66 CENTS WOULD BE ADDED TO THE DEBT SERVICE TAX RATE NEXT YEAR IN FISCAL YEAR '03. THERE ARE OTHER ALTERNATIVES TO -- TO COMING UP WITH THE 8 MILLION. FOR EXAMPLE, AN INTERFUND BORROWING WHERE THE GENERAL FUND BORROWS THAT MONEY FROM ANOTHER FUND. BUT THE ADVANTAGE TO THE TAX ANTICIPATION NOTE, I THINK FOR COUNCIL, IS THAT IF THAT MONEY WERE BORROWED FROM ANOTHER FUND FOR THIS YEAR, IT WOULD HAVE TO BE REPAID NEXT YEAR FROM THE O AND M TAX RATE. IN OTHER WORDS, WE WOULD HAVE TO ADD THAT 1.66 CENTS TO THE O AND M TAX RATE. AND THAT WOULD TAKE -- THAT WOULD TAKE THE TAX RATE RIGHT UP TO JUST UNDER THE ROLLBACK RATE AND WOULD TAKE AWAY ANY FLEXIBILITY THAT COUNCIL HAD NEXT YEAR TO INCREASE THAT O AND M RATE. WE DON'T KNOW AT THIS POINT WHETHER THAT'S SOMETHING THAT WE WOULD RECOMMEND TO COUNCIL OR NOT. BUT IF -- IF WE DID IT THROUGH AN INTERFUND BORROWING RATHER THAN THROUGH THE TAX ANTICIPATION NOTE, IT WOULD REDUCE THE FLEXIBILITY THAT COUNCIL WOULD HAVE NEXT YEAR FOR THE O AND M RATE. WHEN WE DO IT THIS WAY, WE ADD IT TO THE DEBT SERVICE TAX RATE AND IT EFFECTIVELY INCREASES THE ROLLBACK RATE FOR NEXT YEAR. THE OTHER POINT THAT I WOULD MAKE ABOUT THE TAX ANTICIPATION NOTE IS THAT GIVEN THE CURRENT INTEREST RATE ENVIRONMENT AND GIVEN THE CITY'S GOOD CREDIT RATING, WE EXPECT THAT WE COULD ISSUE THIS NOTE AT A VERY LOW INTEREST RATE. OUR FINANCIAL ADVISORS ESTIMATE AT THIS POINT THAT THE INTEREST RATE WOULD BE SOMEWHERE BETWEEN 2.1% AND 2.3%. THE --

THAT INCREMENTAL INCREASE OF 1.66 CENTS EQUATES TO ABOUT $2 A MONTH FOR THE AVERAGE HOME OWNER. AVERAGE HOME BEING ABOUT 158, $159,000. THEN JUST REAL QUICKLY, AGO WE WE TALK ABOUT TAX RATES, THE CURRENT TAX RATE IS $2.44. OF THAT THE CITY MAKES UP ONLY 18% OF THAT. OBVIOUSLY THE BULK OF THE TAXES ARE GOING TO THE SCHOOL DISTRICT. ANOTHER 18% TO THE COUNTY. JUST TO -- JUST TO GIVE YOU A QUICK HISTORY REVIEW ON OUR TAX EXPERIENCE, SINCE 1990-'91, THE CITY HAS REDUCED THEIR TAX RATE BY ALMOST 11 CENTS, A REDUCTION OF 19% IN THE TAX RATE. IN THE LAST FIVE YEARS WE HAVE CONTINUED OUR TREND OF REDUCING TAX RATES, SO THE COUNCIL HAS BEEN VERY RESPONSIBLE ON OUR TAX EXPERIENCE.

MAYOR GARCIA: YOU ARE TALKING ABOUT THE RATE.

THE NOMINAL RATE, CORRECT.

RIGHT. AND IN ADDITION TO THE --

WYNN: MAYOR. MR. GARZA, I WOULD LIKE TO SEE A GRAPH OF BOTH THE RATE AND COMPARED TO THE EFFECTIVE, HOW THAT'S BEEN OVER THIS PERIOD OF TIME THAT YOU -- IF YOU COULD GET THAT TO ME, I WOULD APPRECIATE IT.

MAYOR GARCIA: YOU CAN SEND THAT TO ALL COUNCILMEMBERS.

OKAY. YES, SIR. WE HAVE GOT THAT, WE CAN SEND THAT TO YOU. IN ADDITION TO THE SALES TAX REVENUE SHORTFALL THE TAX ANTICIPATION NOTE ALSO COVERED SOME OF THE COSTS FOR THE HOMELAND SECURITY STRATEGIES THAT YOU HAVE BEEN BRIEFED ON. ALSO AS YOU WERE BRIEFED SOME OF THE COSTS WERE FUNDED THROUGH JUST REALLOCATION OF RESOURCES WITHIN EACH OF THE DEPARTMENTS. THIS PIECE THAT WE ARE PRESENTING TODAY IS THE PIECE THAT -- THAT THERE IS NO FUNDS TO REALLOCATE AND I'M JUST GOING THROUGH THOSE REAL QUICKLY BY DEPARTMENT. IN THE HEALTH AND HUMAN SERVICES DEPARTMENT, WE WOULD BE FUNDING A 24 HOUR, SEVEN DAY A WEEK DISEASE SURVEILLANCE UNIT AT A COST OF APPROXIMATELY $211,000. IN THE POLICE DEPARTMENT, OVERTIME REQUIREMENTS, ARE GOING TO ADD ABOUT ANOTHER 1.4 MILLION DOLLARS DUE TO THE INCREASE IN STAFFING FOR AN ALERT SITUATION. ALSO RELATED TO THAT WAS THE LOSS OF A COPS GRANT WHICH THE FUNDING THAT WAS BUDGETED AND APPROPRIATED BY CONGRESS WAS REALLOCATED BY -- BY CONGRESS FOR THE FEDERAL HOMELAND SECURITY RESPONSE. THAT WAS MONEYS THAT WE WERE INCLUDING IN OUR BUDGET TO FUND ADDITIONAL OFFICERS. FINALLY, THE -- ANOTHER COST WOULD BE THE COST TO GET THE OFFICERS ON THE STREETS QUICKER, WOULD COST US ABOUT $363,000 FOR A TOTAL IMPACT IN A.P.D. OF ABOUT 3.2 MILLION DOLLARS. IN E.M.S., THERE'S A COMBINATION OF EQUIPMENT AND STAFFING. YOU SEE THERE TWO MASS CASUALTY TRAILERS, $80,000. INCREASED EQUIPMENT FOR HAZMAT AND OTHER -- AND OTHER EMERGENCY EQUIPMENT FOR 80,000. ALSO THEIR INCREASED OVERTIME AND TRAINING COSTS FOR A TOTAL E.M.S. IMPACT OF ABOUT $239,000.

NEW HAZMAT, WEAPON OF MASS DESTRUCT UNIT, COVER THEIR COSTS FOR RESPONSE TIME, OVERTIME, BACK PHIL FOR THE -- BACKFILL FOR THE TOTAL FIRE DEPARTMENT IMPACT OF ABOUT HALF A MILLION DOLLARS. IN ADDITION TO THAT, THE FINAL ITEM IS A JOINT EXPENDITURE BETWEEN THE FIRE AND E.M.S. DEPARTMENT FOR HEAVY RESCUE UNIT. THAT INCLUDES ADDITIONAL PERSONNEL, APPROXIMATELY 360,000, THE ACTUAL EQUIPMENT, ABOUT 500,000, WE WILL SHOW YOU A GRAPHIC, A PICTURE ACTUALLY OF WHAT THE UNIT WOULD LIKE LOOK -- WOULD LOOK LIKE. THE TOTAL IMPACT THERE IS ABOUT A MILLION DOLLARS. THEN THE NEXT SLIDE IS JUST A PICTURE OF WHAT THE ACTUAL RESCUE UNIT WOULD LOOK -- LOOKS LIKE.

WYNN: MAYOR?

MAYOR GARCIA: COUNCILMEMBER WYNN?

WYNN: MR. GARZA, IT SEEMS TO ME THAT IT WOULD HELP ME, I GUESS EVERYBODY, IF WE COULD ALSO TRY TO BREAK THESE DOWN INTO WHAT I WOULD CALL ONE-TIME EXPENSES AND ONGOING EXPENSES. THAT IS I JUST PERSONALLY I'M JUST MORE COMFORTABLE -- COMFORTABLE THINKING ABOUT BORROWING MONEY IF YOU TALK ABOUT THE CONCEPT OF A ONE-TIME EXPENSE. A BIG PIECE OF EQUIPMENT, YOU KNOW, THE FACT THAT THIS ONE TIME WE ARE -- YOU KNOW, SPEEDING UP THE CADET CLASS SO IT'S GOING TO BE A -- PERHAPS NOT BE A POLICY CHANGE, JUST BE AN ISSUE TO GET MORE POLICE ON THE STREETS EARLIER THIS YEAR. BUT THE -- THE ISSUES WITH OVERFINAL, THE ISSUES WITH -- OVERTIME, THE ISSUES WITH F.T.E.S FOR MORE SUBSTANTIAL DISEASE SURVEILLANCE UNIT, THOSE SORTS OF THINGS, SEEMS TO ME THOSE ARE ONGOING. I WOULD LIKE TO SEE A BREAKDOWN AS TO HOW YOU ALL WOULD CHARACTERIZE ONE-TIME EXPENSES VERSUS ONGOING.

WE WILL GET THAT FOR YOU.

THANK YOU.

WE ARE GOING TO PROCEED WITH --

MAYOR?

THOMAS: MAYOR?

MAYOR GARCIA: COUNCILMEMBER THOMAS?

THOMAS: ALSO ON THE EQUIPMENT THAT WE ARE PURCHASING, CAN YOU GIVE ME A BREAKDOWN OF EXACTLY WHAT IT DOES. ON THE EQUIPMENT THAT YOU HAVE, THE HEAVY DUTY RESCUE UNIT. THANK YOU.

YES, SIR. THAT TAKES US THROUGH THE ECONOMIC UPDATE, SOME OF THE DETAIL BEHIND THE TAX ANSWER GO OPERATION NOTE -- ANTICIPATION NOTE AND WE ARE GOING TO PROCEED WITH TALKING MORE SPECIFICALLY ABOUT OUR BUDGET.

GRIFFITH: MAYOR?

MAYOR GARCIA: COUNCILMEMBER GRIFFITH?

GRIFFITH: YES. BEFORE WE LEAVE THAT, THERE ARE A COUPLE OF THINGS THAT I THINK WE NEED TO LOOK AT TOGETHER BEFORE THAT DECISION IS FINALLY MADE. THANK YOU VERY MUCH FOR THE MEMO THAT YOU SENT. IT WAS VERY HELPFUL. ABOUT WHAT HAPPENED THE LAST THREE MONTHS. IT'S VERY DISTURBING. I WONDER IF YOU SAW THE COMMERCE DEPARTMENT REPORT ON CONSUMER CONFIDENCE THAT CAME OUT YESTERDAY?

I HAVE NOT SEEN THAT.

GRIFFITH: WELL, IT SAYS THAT CONSUMER CONFIDENCE, AS MEASURED BY THE CONFERENCE BOARD, WHICH IS PART OF THE REBOUNDED STRONGLY IN DECEMBER AFTER THREE MONTHS OF A STEEP DECLINE. AND I HOPE WE CAN LOOK AT THAT REPORT TOGETHER BEFORE WE MAKE A FINAL DECISION AND ALSO HAVE THE DECEMBER ACTUAL. BECAUSE I THINK IT MIGHT LOOK DIFFERENT THEN. THE COMMERCE DEPARTMENT REPORT THAT CAME OUT YESTERDAY SAID THAT SALES AT THE NATION'S RETAILERS, DIPPED BY .1% IN DECEMBER, WHICH IS NOT A BIG THING, FROM THE PREVIOUS MONTH. A MUCH BETTER SHOWING THAN THE 1.4% DECLINE MANY ECONOMISTS HAD PREDICTED. IN NOVEMBER, OF COURSE THIS IS NATIONALLY, SALES FELL ABOUT A STEEP 3%. SO I THINK THAT REPORT COULD HELP US BEFORE WE MAKE A FINAL DECISION. AND THE DECEMBER ACTUALS.

WE CAN DO THAT.

CERTAINLY WE WILL LOOK AT THAT INFORMATION. WE -- WE DID HAVE A MEETING THIS MORNING WITH -- WITH JOHN HAWKINYOSE WHO HAS ADVISED NEWS THE PAST ON SOME OF OUR SALES TAX ISSUES. GIVEN SOME OF THE DATA THAT HE HAS EVALUATED AND RE-EVALUATED AGAINST FOR US, WE DO BELIEVE THAT THERE IS A POSSIBILITY WE WILL END UP WITH A VERY SLIGHT GROWTH IN SALES TAX FOR THIS YEAR. BUT HIS BEST FORECAST AT THIS POINT IS THAT IT WOULD BE ABOUT A .7% INCREASE, WHICH WOULD EQUATE, I THINK, JUST ALMOST EXACTLY TO THE $2.8 MILLION SHORTFALL THAT WE HAD PREDICTED BACK IN DECEMBER. SO I THINK HE IS EXPECTED THINGS TO TURN UP AS WELL. BUT, AGAIN, THE PROBLEM THAT WE HAVE GOT NOW IS WE HAVE GOT -- WE HAVE TWO MONTHS OF 2.6% NEGATIVE GROWTH. SO EVEN IF GROWTH TURNS POSITIVE, IT'S GOING TO HAVE TO -- IT HAS TO MAKE UP A FAIRLY SIGNIFICANT DEFICIT THAT WE HAVE STARTED THE YEAR OFF WITH.

MAYOR?

MAYOR GARCIA: COUNCILMEMBER WYNN?

WYNN: ONE QUICK COMMENT AND QUESTION ON THE GLOBAL ECONOMIC REPORT BEFORE WE GET INTO THE BUDGET. WE SEE AND SAW THAT OVER THE LAST 12 MONTHS THE AUSTIN AREA'S UNEMPLOYMENT HAS ESSENTIALLY TRIPLED FROM BELOW 2% TO OVER -- ALMOST 5%. YET THE -- AT THE SAME TIME WE ARE STILL CREATING JOBS. THERE'S A LITTLE BIT OF A MISCONCEPTION OUT THERE THAT WE WILL ACTUALLY HAVE NEGATIVE JOB GROWTH. INTERESTINGLY ENOUGH, IT'S -- I HAVE HEARD A PROPER CORRECTION THAT OVER THE LAST 12 -- PROJECTION OVER THE LAST TWO MONTHS, AUSTIN IS CREATING ABOUT 7500 JOBS, WHICH IS BELOW, YOU KNOW, THE LAST FEW YEARS WE HAVE BEEN CREATING 25, 30,000 JOBS, SO ACTUALLY INCREASING NET -- INCREASING EMPLOYMENT IN THE AUSTIN AREA, BUT OUR UNEMPLOYMENT HAS TRIPLED IN THE LAST 12 MONTHS AND THE DYNAMIC, YOU THINK THROUGH IT, OF COURSE, IS WE ARE STILL EXPERIENCING SIGNIFICANT END MY GRAYING. THAT IS THE -- MY INAUGURATION. THE CITY OF AUSTIN -- MIGRATION. WHILE THE ECONOMY IS STILL CREATING JOBS, GRANTED AT A MUCH SLOWER CLIP THAN THE PREVIOUS YEAR, WE STILL ARE A VERY ATTRACTIVE CITY AND FOLKS ARE MOVING HERE WITH OR WITHOUT JOBS, FRANKLY. SO THE NET END MIGRATION IS SOMETHING TO KEEP IN MIND, BECAUSE THAT END UP ULTIMATELY HAVING THE BIGGEST IMPACT ON OUR UNEMPLOYMENT RATE. THAT'S A COMMENT.

YES.

WYNN: QUESTION. UNDER BED TAX WE SHOW NEGATIVE 1.1%. OBVIOUSLY SEPTEMBER 11TH HAD A PRETTY DRAMATIC IMPACT ON HOTELIERS IN OUR COUNTRY. I GUESS IN AUSTIN, TOO. WHAT MONTHS CONSTITUTE FISCAL YEAR 2001, ARE THOSE OUR -- IS THAT OUR FISCAL YEAR?

OUR FISCAL YEAR.

YES.

WYNN: SO I GUESS JUST THE LAST MONTH OF OUR FISCAL YEAR PERHAPS HAD AN IMPACT BY SEPTEMBER 11TH.

IT DID HAVE AN IMPACT. WE CAN PROVIDE YOU MORE INFORMATION, BUT THERE WAS ALREADY A DECLINING TREND. ACTUALLY WE HAD THAT GRAPHIC FOR THE LAST PRESENTATION. WE CAN SEND THAT OVER SO YOU CAN LOOK AT THAT.

WYNN: MY COMMENT MIGHT BE A SLIGHT WARNING IN THAT IF IT WAS ALREADY NEGATIVE FOR A CALENDAR YEAR THAT BARELY INCLUDED SEPTEMBER 11TH, THEY ARE PROBABLY STARTING OUT THIS FISCAL YEAR EVEN WORSE. ON -- AT LEAST ON THE BED TAX ISSUE. I HAVE TO BELIEVE OUR HOTELIERS ARE STILL EXPERIENCING A SIGNIFICANT DECLINE IN OCCUPANCY SINCE SEPTEMBER 11TH.

MAYOR GARCIA: ONE OTHER ISSUE ON THE UNEMPLOYMENT, MR. GARZA, MR. STEVENS. WE HAVE HAD JOB GROWTH AND OF COURSE WE HAVE HAD LAYOFFS. BUT -- I DON'T KNOW WHETHER WE CAN GET THIS DATA OR NOT. MANY OF THE PEOPLE THAT WERE LAID OFF HAD JOBS THAT PAID SIGNIFICANTLY MORE THAN THE JOBS THAT ARE BEING CREATED.

RIGHT.

MAYOR GARCIA: IN THE HIGH TECH SECTOR, SOME OF THOSE JOBS AVERAGED ABOUT 60 TO 70,000, PLUS I THINK THE AVERAGE OF THE JOBS IN THE CITY IS BETWEEN 35 AND 38, SOMEWHERE IN THAT RANGE. SO THAT IS ALSO GOING TO HAVE AN ECONOMIC IMPACT. I DON'T KNOW HOW TO MEASURE THAT. I DON'T KNOW WHETHER MR. HAWKINOSE CAN COME UP WITH SOME DATA ON THAT.

HE ACTUALLY SHOWED US SOME DATA THIS MORNING THAT I THINK MAY BE RELATED TO THE PHENOMENON THAT YOU ARE -- THAT YOU ARE TALKING ABOUT, WHICH IS THE SALES TAX PER CAPITA. IT HAS DECLINED FROM, I BELIEVE, 266 DOLLARS TO $255. BUT WE WILL GET THAT INFORMATION TO YOU AND SHARE IT WITH YOU.

MAYOR GARCIA: OKAY. COUNCILMEMBER GRIFFITH, YOU HAD YOUR HAND UP?

GRIFFITH: YES. TO BUILD ON WHAT COUNCILMEMBER WYNN SAID, OUR UNEMPLOYMENT IS BETTER THAN THE NATION AND BETTER THAN THE STATE. HE'S RIGHT ABOUT ALL OF THE POSITIVE THINGS THAT HE POINTED OUT. ALSO WE CAN ADD TO THAT THAT OUR NUMBER OF PATENTS THAT WE ARE REGISTERING, COMING FROM THIS AREA, IS STILL STELLAR, SO OUR HAIR IS STILL CURLING, OUR EYES ARE STILL BLUE. WE HAVE STILL GOT IT, BASICALLY. I THINK AS THE NEXT FEW WEEKS WILL SHOW, WE STILL HAVE A PRETTY SOLID BASE. IN TERM OF WE GOT THE IN MIGRATION, AS COUNCILMEMBER WYNN POINTED OUT, WE HAVE NET JOB GROWTH. THERE'S SOME POSITIVE THINGS, TOO.

I THINK ONE OF THE THINGS THAT WE WOULD WANT TO EMPHASIZE AS PART OF THE REASON FOR THE PROPOSAL FOR THE TAX ANTICIPATION NOTE WAS TO DEAL WITH THESE -- AND COUNCILMEMBER WYNN TALKED -- ASKED US, WE WILL GET THAT IN TERMS OF THE ONE-TIME EXPENDITURES SO YOU CAN SEE HOW THAT MAPS OUT, BUT IT WOULD BE IN EFFECT TO HELP US FUND SOME THINGS THIS YEAR THAT WE OTHERWISE WOULD NOT HAVE TO CUT BUDGETS SO THAT IN EFFECT WHAT WE ENDED UP DOING IS CARVING INTO SOME OF THE SERVICES THAT WE PROVIDE FROM THOSE DEPARTMENTS THAT ARE NOT -- NOT -- NON-EMERGENCY OR CRITICAL TO THE -- FROM A PUBLIC SAFETY STANDPOINT. AND I THINK THAT'S THE KIND OF -- I THINK WHAT WE DID BACK IN THE LATE '80'S, IN THE EARLY '90'S, WHEN WE WERE GOING THROUGH OUR OWN, I GUESS, ECONOMIC DOWNTURN, IS IS THAT -- IS THAT WE SHORTED SOME OF THOSE SERVICES AND I KNOW WHEN I WAS FIRST APPOINTED CITY MANAGER IN '94, IT TOOK US SEVERAL BUDGETS TO GET THOSE SERVICES BACK UP TO SOME PAR LEVEL BECAUSE THAT'S WHERE THE CUTS HAD TO COME FROM. I THINK THAT WE ARE TRYING TO TRY TO FIGURE A WAY TO SOFTEN THAT. THERE'S A WAY TO DO IT SO THAT IT'S AFFORDABLE AND NOT CUTTING INTO THE MEAT OF SOME VERY BASIC PROGRAMS THAT WE PROVIDE AS A CITY. I THINK THAT'S THE KIND OF DISCUSSION AND DIALOGUE THAT WE WOULD LIKE TO HAVE THIS MORNING AS HE GETS INTO THE BUDGET. BECAUSE I THINK THERE'S SOME STARTLING NUMBERS WHEN YOU BEGIN TO SEE WHAT MIGHT HAPPEN TO OUR BUDGET.

GRIFFITH: THAT'S RIGHT. MAYOR? MAYOR WATSON COUNCILMEMBER GRIFFITH?

GRIFFITH: YES. WE TALKED DURING OUR -- FOR OUR NEXT MEETING ABOUT THE NEXT BUDGET, WHAT WE MIGHT BE ABLE TO GET IN TERMS OF GIVENS PLANNING TOWARDS THAT, WHAT THE MANAGER TALKED ABOUT PUTTING TOGETHER WAS A LIST OF THE HAVE-TOES. A LIST OF WHAT WE -- HAVE-TOS. WHAT WE FOR THE NEXT BUDGET CYCLE ARE OBLIGATED TO IN TERMS OF THE CONTRACTS. THAT'S DONE. THOSE DECISIONS ARE MADE. AND WHAT WE ARE OBLIGATED FOR IN TERMS OF THE NEW FACILITIES THAT WE HAVE COMMITTED TO, YOU HAVE TO HAVE THE PEOPLE, YOU HAVE TO HAVE THE MAINTENANCE. AND SO I'M LOOKING FORWARD TO THAT LIST THAT WE TALKED ABOUT AND THEN LOOKING AT THOSE THREE BEST CASE MIDDLE CASE AND WORST CASE. I THINK THAT'S GOING TO BE VERY HELPFUL.

WE ARE GOING TO GET INTO SOME OF THOSE NUMBERS AS MR. STEVENS AND MR. GARZA GO THROUGH PART OF THEIR BUDGET PRESENTATION HERE IN A COUPLE OF MINUTES.

GRIFFITH: THAT'S GOOD.

MAYOR GARCIA: BACK TO YOU, MR. GARZA, MAYOR STEVENS.

THANK YOU, MAYOR. TO CONTINUE ON WITH THE BUDGET UPDATE, I THINK THE POINTS THAT COUNCILMEMBERS HAVE MADE ARE VERY GOOD POINTS. THE AUSTIN ECONOMY IS GOING TO PROSPER AGAIN AND IT IS CERTAINLY RELATIVELY STRONG WHEN YOU COMPARE US TO OTHER PARTS OF THE COUNTRY OR EVEN OTHER PARTS OF THE STATE. THE BUDGET ISSUES THAT WE SEE FACING US AT THIS POINT ARE SHORT TERM AND LONG TEMPERATURE. THE SHORT TERM ISSUES ARE THE ONES THAT WE HAVE PRESENTED HERE, THE LOSS OF SALES TAX REVENUE AND THE UNANTICIPATED HOMELAND SECURITY COSTS THAT WE ARE HAVING TO INCUR THIS YEAR. OUR LONG-TERM PROBLEM IS THAT AS WE PRESENTED TO YOU, I BELIEVE FOR THE FIRST TIME ON DECEMBER THE 6TH, OUR FORECAST EXPENDITURES EXCEED OUR FORECAST REVENUES OVER THE NEXT FIVE YEAR PERIOD. WE -- I BELIEVE WE SHOWED YOU THIS GRAPH FOR THE FIRST TIME ON DECEMBER THE 6TH. THIS IS WHAT WE CALL OUR GATOR GRAPH. WHERE OUR --

GARZA: GATOR.

OUR GATOR GRAPH. [ LAUGHTER ]. WITH THE GAPE THERE WHERE OUR ESTIMATED EXPENDITURES OVER THE NEXT FIVE YEARS EXCEED OUR ESTIMATED REVENUES. THE PROBLEM THAT WE HAVE GOT IS THAT WE ARE ESSENTIALLY STRUCTURALLY OUT OF BALANCE WITH THAT. EVEN BEGINNING THIS YEAR. YOU SEE IN THIS YEAR IN 2002 WE HAVE A GAP WHICH REPRESENTS THE 22.4 MILLION DOLLAR BEGINNING BALANCE THAT WE STARTED OFF WITH THIS YEAR. NOW, THAT BALANCE DID HELP US FUND OUR APPROPRIATIONS FOR THE CURRENT YEAR. BUT IT'S NOT AN ONGOING SOURCE OF REVENUE UNLESS WE ARE ABLE TO DUPLICATE THAT BALANCE BEGINNING BALANCE FOR NEXT YEAR. SO WHEN WE LOOK OUT OVER THE -- THAT FIVE YEAR PERIOD, ALTHOUGH OUR NUMBERS ARE VERY ROUGH AT THIS POINT, WE ARE TRY -- WE HAVE TRIED TO ESTIMATE WHAT WE THINK IS THE MOST REALISTIC ESTIMATE FOR REVENUE GROWTH HERE IN AUSTIN AND ALSO REALISTIC ESTIMATE FOR OUR EXPENDITURE GROWTH. LOOKING AT THE REVENUE SIDE FIRST, WE HAVE PROJECTED FOR NEXT FISCAL YEAR FOR '02, -- FOR '03, SALES TAX GROWTH OF 2%, I THINK THE FACT THAT WE WOULD PROJECT POSITIVE GROWTH IN AUSTIN IS INDICATIVE OF REALLY HOW STRONG THE ECONOMY IS. WHEN YOU LOOK BACK OVER THE LAST FIVE YEARS AND YOU SEE HOW MUCH SALES TAX HAS INCREASED, I THINK WE WILL CONTINUE TO EXPAND OUR SALES TAX BASE NEXT FISCAL YEAR IN '03. BUT WE WILL NOT EXPAND IT AS THE -- AT THE RATE THAT WE HAVE IN THE LAST FIVE YEARS. I DON'T THINK IT'S REALISTIC TO EXPECT THAT THOSE HIGH RATES OF GROWTH, 14.7%, FOR EXAMPLE, IN OUR BEST FISCAL YEAR DURING THAT PERIOD OF TIME CAN BE DUPLICATED AGAIN. WE ALSO EXPECT THAT WE WILL HAVE SOME GROWTH FROM PROPERTY TAX. WE ARE ESTIMATING A 3.8% INCREASE IN ASSESSED VALUE. WHICH I THINK AGAIN IS GOOD NEWS. BUT IT IS NOT AS SIGNIFICANT A GROWTH IN VALUE AS WE HAVE SEEN IN PREVIOUS YEARS. THEN WE ARE ESTIMATING SOME SMALL GROWTH IN OUR OTHER REVENUE SOURCES. LOOKING ON THE EXPENDITURE SIDE, AGAIN WHEN WE LOOK FORWARD TO '03, WE NEED TO MAKE UP FOR THE 22.4 MILLION DOLLAR BEGINNING BALANCE THAT WE CARRIED OVER FROM LAST YEAR TO HELP WITH THIS YEAR. IN ADDITION, WE HAVE SOME SIGNIFICANT PUBLIC SAFETY COMMITMENTS COMING ONLINE TO THE TUNE OF ABOUT 28.5 MILLION. THIS IS MADE UP OF A NUMBER OF THINGS. OUR THIRD YEAR POLICE MEET AND CONFER CONTRACT, TAKING, MAINTAINING THE 1.9 PER THOUSAND RATIO OF OFFICERS TO POPULATION AND NEXT YEAR WE WILL BE IN THE SECOND YEAR OF OUR FIVE YEAR TRANSITION PLAN TO 2.0 OFFICERS PER THOUSAND. IN ADDITION, WE EXPECT THAT SOME OF THE GRANTS THAT WE HAVE FOR PUBLIC SAFETY WILL DECREASE OR EXPIRE. WE HAVE STEP AND LONGEVITY INCREASES BUILT IN, INCREASES FOR TASK FORCE STAFFING AND SO ON. WE ARE PROJECTING AT THIS POINT THAT WE WOULD HAVE NEXT YEAR IN FISCAL YEAR '03 AN EMPLOYEE PAY FOR PERFORMANCE PACKAGE SIMILAR TO THE ONE THAT WE HAD THIS YEAR. AN AVERAGE OF ABOUT 3.8%. AND IN ADDITION, WE ARE PROJECTING AT LEAST $3 MILLION OF INCREASE IN OUR HEALTH INSURANCE FOR EMPLOYEES. AND THEN WE HAVE ALSO ESTIMATED APPROXIMATELY A $20 MILLION INCREASE FOR JUST BASIC OPERATING REQUIREMENTS, AN INCREASE IN FUEL, AN INCREASE IN SUPPLIES AND SO ON.

GARZA: LET ME ADD, ALSO, I DON'T KNOW -- COUNCIL, THE -- WE WILL BEGIN OUR DISCUSSIONS WITH THE -- WITH THE AUSTIN FIREFIGHTERS ASSOCIATION THIS SPRING. AND THAT -- THAT USUALLY CULMINATES AT THE END -- IT WILL BE ROLLED INTO PART OF THIS BUDGET. WHATEVER THAT PACKAGE IS THAT WE WOULD AGREE WITH THE FIRE ASSOCIATION ON, THEIR MEMBERSHIP COULD APPROVE AND THAT WE WOULD RECOMMEND TO COUNCIL. AND THAT NUMBER IS NOT LOADED IN HERE. IF THERE IS ANY NUMBER AT ALL.

WE OWE THERE IS A -- WE PUT SOME GENERAL NUMBERS IN THERE, OBVIOUSLY IN THAT -- NOT ANYTHING THAT WE --

ALL RIGHT. TO LAND FOR NEXT YEAR, WE WOULD RECOMMEND THAT WE ESTABLISH A FUND BALANCE, TRY TO END THIS YEAR WITH A FUND BALANCE THAT WOULD CARRY OVER FOR NEXT YEAR AND THEN TRY TO REDUCE IN THAT YEAR, IN NEXT YEAR, OUR RELIANCE ON A BEGINNING FUND BALANCE DOING THAT BY BUDGETING AN ENDING BALANCE IN '03. THEN WE ALSO NEED TO DEVELOP A MIXED STRATEGY TO CLOSE THE GAP FOR NEXT YEAR. OUR FUND BALANCE ACTIONS FOR THIS YEAR WE HAVE IN WORKING WITH THE DEPARTMENTS AND LOOKING AT THE SAVINGS INITIATIVES THAT THEY HAVE PRESENTED TO US, WE THINK THAT WE CAN SAVE APPROXIMATELY 13.5 MILLION IN EXPENDITURE REDUCTIONS THIS YEAR. WE WILL TRY TO FINALIZE THESE PROJECTIONS AND GET THEM TO YOU BY THE END OF THE MONTH. IN ADDITION, WE HAVE DEFERRED OUR NON-CRITICAL CASH CIP THIS YEAR, WHICH HAS SAVED US $5.5 MILLION. WE HAVE PUT A HOLD ON CAPITAL OUTLAY IN THE OPERATING DEPARTMENT'S GENERAL FUND OPERATING DEPARTMENTS FOR A MILLION-TWO. FORTUNATELY WE DID END LAST YEAR WITH AN EVEN HIGHER BALANCE THAN WE HAD BUDGETED. WE BUDGETED TO HAVE A 22.4 MILLION DOLLARS ENDING BALANCE AND BECAUSE OF ADDITIONAL SAVINGS THAT WE HAD IN SOME ADDITIONAL REVENUE, PRIMARILY E.M.S. REVENUE, WE ACTUALLY WILL END THE YEAR 3.7 MILLION BETTER THAN WE HAD PROJECTED.

MAYOR GARCIA: TOTAL OF THAT IS HOW MUCH?

THE TOTAL OF WHAT WE ARE SHOWING HERE ON THE SLIDE? IT'S ABOUT 34 MILLION. 34.1 MILLION.

MAYOR GARCIA: THAT'S HOW YOU PLAN TO ADDRESS THE 22.4?

YES, SIR.

MAYOR GARCIA: OKAY.

WE WOULD LIKE TO TRY TO END THIS FISCAL YEAR WITH A BALANCE SOMEWHERE IN THE RANGE OF THIS. THE LAST ITEM THAT'S SHOWN UP THERE IS IN EXCESS FUND BALANCE THAT WE HAVE --

MAYOR GARCIA: EXCUSE ME, IN RANGE OF WHAT?

OF 34 MILLION. OUR RECOMMENDATION WOULD BE TO TRY TO END THIS FISCAL YEAR WITH A $34 MILLION ENDING BALANCE, SOME OF WHICH COULD BE USED TO FUND NEXT YEAR AND THEN ACTUALLY BUDGET NEXT YEAR TO HAVE AN ENDING BALANCE THAT WE WOULD CARRY OVER FOR 04, A SMALLER ENDING BALANCE THAT WE WOULD --

MAYOR GARCIA: I DON'T FOLLOW YOU ON THAT BECAUSE ARE YOU SAYING THAT THE 22.4 DOESN'T HAVE AN EFFECT ON 34 MILLION?

THE 22.4 WOULD BE A COMPONENT OF THE 34 MILLION. IN OTHER WORDS, WE WOULD REPLACE -- WE WOULD HAVE THE SAME ENDING BALANCE THIS YEAR THAT WE HAD LAST YEAR AND AN EVEN LARGER ENDING BALANCE THAT WOULD CARRY US ON BEYOND '03 AND INTO 04 TO HELP US GET AWAY FROM OUR RELIANCE ON A LARGE ENDING BALANCE. WE WOULD USE SOME OF THAT UP. SOME OF THE 34.1 MILLION UP NEXT YEAR. AND THEN THE REMAINDER IN 04. AND --

MAYOR GARCIA: I STILL CAN'T FOLLOW YOU, JOHN. THE BEGINNING BALANCE AT OCTOBER 1, 2001, WAS THAT -- THAT WAS INCREASED BY 3.7 MILLION, RIGHT.

YES, SIR.

MAYOR GARCIA: THIS YEAR'S BUDGET HAS A SHORTFALL OF 22.4 MILLION. WHICH REDUCES OUR FUND BALANCE, CORRECT?

THAT'S CORRECT, OUR DEFICIT IS --

THIS YEAR HAS A SHORTFALL WHEN YOU COMPARE REVENUES TO EXPENDITURES.

WHAT YOU ARE SAYING IS THAT BUDGET ACTIONS FOR THIS YEAR, THE 13.5 MILLION, THE 5.5 MILLION, THE 1.2 AND THE 10, WHICH IS ABOUT 31, 30 MILLION, THAT WOULD OFFSET THE 22.4, THAT WOULD LEAVE US ABOUT 7 AND A HALF TO 8 MILLION. CORRECT?

WE WOULD CARRY THAT -- THAT 7 OR 8 MILLION, THAT'S CORRECT. WE WOULD CARRY THAT 7 OR 8 MILLION OVER TO ACTUALLY BE USED. IN OTHER WORDS, WE WOULD BUDGET TO HAVE THAT ENDING BALANCE AT THE END OF 03.

TELL ME IF THIS ASSUMPTION IS CORRECT. WE HAD AN ENDING FUND BALANCE AT SEPTEMBER 30TH OF 2001, THE BUDGET WAS GOING TO REDUCE THAT FUND BALANCE BY 22.4 MILLION, BUT WE STILL DON'T KNOW WHAT IT'S GOING TO DO. BUT TO COMPENSATE FOR THAT, WE ARE DOING ALL THIS BUDGET ACTIONS, THAT'S ABOUT 31. SO IN ESSENCE, 31 MINE NEWS 22, LET'S SAY 8.5 MILLION DOLLARS, THAT WE COULD ADD TO OUR BEGINNING BALANCE AT SEPTEMBER 30TH OF 2002.

THAT'S CORRECT.

MAYOR GARCIA: THAT WOULD BE ADDED ON TOP OF THE 3.7 THAT WAS IDENTIFIED AFTER WE DID THE AUDIT, I SUSPECT, CORRECT?

THAT'S CORRECT.

MAYOR GARCIA: BETTY IS NODDING HER HEAD.

THAT'S CORRECT.

MAYOR GARCIA: SO I THINK WE ARE -- WE CAN -- IF WE KEEP GOING LIKE THIS AND THE ASSUMPTIONS THAT WERE MADE AS REGARD TO REVENUE AND EXPENSES ARE CORRECT, WE COULD BE ADDING 3.7 PLUS ABOUT ANOTHER 8, LET'S SAY 11 OR 12 MILLION DOLLARS TO OUR FUND DOLLARS, IS THAT CORRECT?

YES, SIR.

MAYOR GARCIA: OKAY.

THE LAST ITEM ON THIS PAGE IS 10.2 MILLION DOLLARS THAT WE HAVE IN EXCESS FUND BALANCE IN OUR DEBT SERVICE FUND. DUE TO ARE R REFUNDINGS AND LOWER INTEREST RATES. WE HAD A REFUNDING LAST SUMMER THAT FREED UP SOME MONEY IN DEBT SERVICE FOR US, THEN OUR BOND SALE THIS FALL, WE HAD A CASH PREMIUM THAT WE RECEIVED ON OUR BOND SALE BECAUSE WE SOLD OUR GO BONDS AND OUR CERTIFICATES OF OBLIGATION AT A LOWER INTEREST RATE THAN WE HAD EVEN PROJECTED. SO WE HAD SOME SAVINGS IN THE DEBT SERVICE FUND DUE TO THAT. LOOKING AT STRATEGIES THAT WE WOULD PROPOSE TO CLOSE THE GAP FOR NEXT YEAR, STARTING OFF, I BELIEVE THIS IS WHAT COUNCILMEMBER GRIFFITH WHAT'S REFERRING TO, WE WILL DEFINE OUR CORE SERVICE LEVELS AND DETERMINE THE COST OF THOSE SERVICES, WHAT WE ARE COMMITTED TO PROVIDING, THINGS THAT DEFINE ESSENTIAL CITY SERVICES THAT WE PROVIDE. IN ADDITION WE HAVE IN PROCESS THIS YEAR AN ADMINISTRATIVE COST REVIEW TO TRY TO STREAMLINE AND STANDARDIZE OUR ADMINISTRATIVE PROCEDURES AND SAVE MONEY THROUGH THOSE INITIATIVES. WE ALSO HAVE A REVENUE OPPORTUNITY AND A FEE ASSESSMENT INITIATIVE GOING ON THAT PUBLIC FINANCIAL MANAGEMENT, OUR FINANCIAL ADVISORS WERE ASSISTING US WITH TO LOOK AT UPDATING SOME OF OUR FEES. AND THEN WE WOULD HAVE A CONTINUED FOCUS ON KEY PERFORMANCE MEASURES FOR NEXT YEAR, ESPECIALLY RELATED TO OUR CORE SERVICES. TO SUMMARIZE THE PRESENTATION, I WOULD SAY THAT THE ECONOMY HAS NOT YET RECOVERED. IT MAY IN FACT BE IN THE STAGES OF RECOVERY. BUT THERE'S STILL SOME ECONOMIC UNCERTAINTY OUT THERE. OUR SALES TAX REVENUES HAVE NOT YET STABILIZED AT THIS POINT. THE MOST RECENT SALES TAX RECEIPT WAS AGAIN 6.2 MILLION -- 6.2% DOWN FROM THE PRIOR YEAR. OUR LONG-TERM PROBLEM IS THAT OUR FORECASTED REVENUES AND EXPENSETURES ARE OUT OF -- EXPENDITURES ARE OUT OF BALANCE. SO OUR RECOMMENDATION ON THE TAX ANTICIPATION NOTE IS REALLY BASED ON OUR LONG-TERM PROBLEM, WE THINK THAT THE BEST WAY TO SOLVE OUR SHORT-TERM PROBLEM WOULD BE TO ISSUE THAT TAX ANTICIPATION NOTE AND CONTINUE AGAIN NEXT YEAR FOCUSING ON OUR CORE SERVICES, WHICH WE THINK WOULD BE A RESPONSIBLE APPROACH TO OUR BUDGET STRATEGIES. WE NEED TO TAKE A BALANCED APPROACH THAT WOULD INCLUDE TRYING TO GROW OUR REVENUES TO THE EXTENT THAT WE CAN, TRYING TO REDUCE OUR EXPENSETURES TO THE EXTENT THAT WE CAN -- EXPENDITURES TO THE EXTENT THAT WE CAN AND LOOKING AT ALL POSSIBLE SOURCES. THAT CONCLUDES OUR PRESENTATION.

THANK YOU, JOHN. LET ME ASK YOU ONE QUICK QUESTION. A COUPLE OF QUICK QUESTIONS, THEN I THINK COUNCILMEMBER GRIFFITH, I SEE HER HAND GOING UP. I DON'T KNOW WHETHER SLOWLY OR -- NOT SO SLOWLY. ON THE FIRST PAGE, WHEN YOU TALK ABOUT JOB GROWTH, YOU SAID THAT CONTINUED AVERAGE WAS 5.6. IS THERE ANY LITERATURE OUT THERE THAT TALKS ABOUT WHAT IS SUSTAINABLE? BECAUSE AS WE GO INTO THIS, YOU KNOW, AS WE HAVE ENTERED INTO THIS RECESSIONARY PERIOD, PEOPLE SAY WELL THAT WAS TOO HIGH. YOU COULD NOT MAINTAIN THAT. THE QUESTION IS WHAT IS SUSTAINABLE? I THINK THE COUNCIL NEEDS TO KNOW THAT AND PARTICULARLY AS IN REGARDS, NUMBERS, AS IN REGARDS SALARY LEVELS. YOU KNOW, WE HAVEN'T REVISITED THE WAGE AND EQUITY REPORT WHICH I'M SURE WE NEED TO DO SOMETIME SOON. BUT THAT INFORMATION, I THINK, WOULD BE HELPFUL. I THINK PROBABLY FALLS IN YOUR AREA, MR. GARZA. ALSO, IN THE NEXT PAGE WHERE YOU TALK ABOUT ECONOMIC ENVIRONMENT AND CONTINUED IN THE CONSTRUCTION, DEVELOPMENT INDICATORS, BUILDING PERMIT DOWN 27% FROM PRIOR YEARS. THAT IS THE -- IS THAT THE NUMBER OF PERMITS OR IS THAT THE DOLLAR AMOUNT OF PERMITS OR BOTH?

THE 20%, 7%, WE ARE TALKING ABOUT THE NUMBER OF PERMITS. 2500 LESS PERMITS WERE ISSUED GAWRTION I UNDERSTAND. BUT --

MAYOR GARCIA: I UNDERSTAND. BUT WHAT'S THE DOLLAR VALUE?

THE DOLLAR VALUE. I DON'T HAVE THAT, BUT WE CAN GET THAT FOR YOU.

MAYOR GARCIA: OKAY, COUNCILMEMBER GRIFFITH?

GRIFFITH: YES. WHEN ARE WE GOING TO GET THE DECEMBER SALES TAX RECEIPTS?

IT WILL BE FIRST OR SECOND WEEK IN FEBRUARY.

GRIFFITH: THANKS.

MAYOR GARCIA: ONE OTHER QUESTION, JOHN. WHERE YOU TALK ABOUT CURRENT YEAR DEPARTMENT EXPENSE REDUCTIONS, I THINK THAT WE NEED TO KNOW IF -- IF THOSE KINDS OF REDUCTIONS ARE GOING TO HAVE ANY EFFECT, I'M SURE THEY WILL, BUT WHAT KIND OF EFFECT DO THEY HAVE ON THE DELIVERY OF SERVICES? AND PARTICULARLY TO THE DEPARTMENTS THAT ARE MOST AT RISK ON THIS ONE, PARKS, LIBRARIES, HEALTH, THOSE KINDS OF DEPARTMENTS THAT USUALLY TAKE THE BRUNT OF THE REDUCTIONS.

YES, SIR. WE WILL PROVIDE YOU WITH THAT INFORMATION. WE WILL GET YOU AN UPDATE ON THAT WITHIN THE NEXT COUPLE OF WEEKS. I THINK THE GOOD NEWS AT THIS POINT IS THAT WE WILL NOT HAVE AN EFFECT ON ANY OF THE ESSENTIAL SERVICES. THIS REDUCTION WILL NOT HAVE AN EFFECT ON ANY OF THE ESSENTIAL SERVICES THAT THE CITY PROVIDES AND IT WILL ALSO NOT REQUIRE ANY -- ANY LAYOFFS OF EMPLOYEES.

MAYOR GARCIA: OKAY. QUESTIONS ANYBODY?

ALVAREZ: MAYOR?

MAYOR GARCIA: COUNCILMEMBER ALVAREZ?

ALVAREZ: I JUST HAD A GENERAL QUESTION ABOUT THIS APPROACH. BECAUSE ESSENTIALLY UNDER THIS TAX ANTICIPATION NOTE, WE ARE BASICALLY -- IF WE WERE TO GO THIS ROUTE, WE ARE ALREADY AGREEING FOR NEXT BUDGET CYCLE THAT THE TAX RATE WOULD GO UP AND THAT THE INCREASED REVENUES FROM THAT TAX INCREASE ARE ALREADY GOING TO BE USED UP. SO I GUESS WHAT I AM WONDERING, IF THAT'S ALREADY USED UP, THEN WHATEVER PART OF THIS INCREASED 8 MILLION THAT WE ARE TALKING ABOUT, CARRIES OVER INTO THE NEXT FISCAL YEAR, THEN HOW WOULD THAT BE COVERED IF -- IF THE ADDITIONAL REVENUE FROM THAT INCREASED TAX RATE IS ALREADY GOING TO BE USED UP TO PAY FOR -- YOU KNOW, FOR EXPENSES FOR THIS FISCAL YEAR.

WE WOULD -- IF THERE ARE ONGOING EXPENSES THAT CARRY OVER INTO NEXT YEAR, THEN WE WOULD HAVE TO PREPARE AS A PART OF THE BUDGET PROCESS A -- A RECOMMENDATION FOR FUNDING THOSE FOR NEXT YEAR. BUT IT WOULD BE INCLUDED WITH THE DEPARTMENTAL EXPENDITURES AT THIS POINT.

ALVAREZ: SO WE WOULD ESSENTIALLY GO IN, ALREADY KNOWING THAT -- THAT THE TAX RATE WOULD INCREASE, BUT ALSO KNOWING THAT WHICHEVER OF THESE CARRY OVER TO NEXT YEAR, WE ARE GOING TO HAVE TO FIND SOME REVENUE ELSEWHERE TO FUND THOSE, ESSENTIALLY IS WHAT WE WOULD BE SAYING.

THAT'S CORRECT. THEY ARE PART OF THAT -- THEY ARE PART OF THAT GAP. WE HAVE AN ESTIMATE FOR SOME OF THOSE ONGOING EXPENDITURES NEXT YEAR AS A PART OF THAT GAP.

ALVAREZ: SO I THINK IT SEEMS LIKE WE WOULD BE DEFERRING OUR DECISION TO CUT, YOU KNOW, A CERTAIN AMOUNT NOW AND DO IT DURING THE BUDGET PROCESS NEXT TIME. SO I THINK EITHER WAY, I MEAN, THERE'S GOING TO HAVE TO BE SOME CUTS IT SEEMS LIKE. SO I THINK THAT'S ONE OF THE ISSUES THAT WE ARE GOING TO HAVE TO DISCUSS AS A COUNCIL AND FIGURE OUT WHAT IS THE BEST THING TO DO. BECAUSE MAYBE IF WE DO TAKE THIS ACTION NOW, AND WE DO -- THERE IS A RECOVERY BETWEEN NOW AND SEPTEMBER, THEN MAYBE THOSE CUTS WON'T HAVE TO BE AS SIGNIFICANT. I CAN SEE WHY -- WHY, THERE MIGHT BE A BENEFIT TO DOING THIS. BUT I'M ALSO TRYING TO FIGURE OUT IN TERMS OF SUSTAINABILITY, HOW, IF -- IF WE DO HAVE THESE INCREASED EXPENSES AND HOW ARE WE GOING TO COVER THEM OVER THE LONGER PERIOD OF TIME?

I THINK ONE OF THE THINGS THAT MR. STEVENS AND MR. GARZA HAVE BEEN TRYING TO DO WITH THIS PROPOSAL IS TO -- ONE -- YOU ARE EXACTLY RIGHT. AVOID THIS YEAR HAVING TO -- TO GO IN AND FIND REDUCTIONS SO THAT YOU CAN PAY FOR SOME OF THESE THING. I THINK THE SECOND THING THAT THEY ARE DOING, I THINK OUR RECOMMENDATION IS, IS THAT WHILE FOR '03 WE STILL SEE THAT AS A FAIRLY DIFFICULT BUDGET YEAR, THAT REALLY WHAT THIS DOES IS SETS YOU IN A POSITION FOR 04 TO HAVE A BETTER YEAR. IN FACT, TO GIVE YOU THE ABILITY TO COME OUT OF THE RECOVERY WITH SOME ABILITY TO FUND SOME THINGS THAT YOU OTHERWISE WOULDN'T. I THINK I ALSO WOULD SAY -- WE STRUGGLED WITH THIS OURSELVES IN TERMS OF HOW TO MAKE THINGS WORK. I THINK WHAT REALLY IS -- WE ARE FEARFUL OF, FEARFUL BECAUSE OF THE FIRST TWO MONTHS ARE SO NEGATIVE FOR THE -- WITH RESPECT TO SALES TACK. IF THERE ISN'T SOME KIND OF RECOVERY AND THOSE TRENDS CONTINUE, THE RED INK WILL GET WORSE FOR US. I THINK THOSE ARE THINGS THAT WE ALL HAVE TO BE PREPARED TO FIGURE OUT HOW WE ARE GOING TO DEAL WITH.

MAYOR GARCIA: I THINK THE POINT THAT COUNCILMEMBER ALVAREZ MAKES IS ONE THAT'S IMPORTANT. THAT PERTAINS TO THE TIMING OF THE DECISION, THE TAX ANTICIPATION NOTES, YOU KNOW, BECAUSE THAT IS A BUDGETARY DECISION THAT WE ARE MAKING IF WE -- WHEN ARE WE GOING TO DO IT AND HOW DOES THAT FIT IN WITH OUR TIME FRAME FOR MAKING DECISIONS ON THE BUDGET. IT'S A VERY GOOD POINT. COUNCILMEMBER GRIFFITH?

GRIFFITH: YES. MAYOR, A CONCERN THAT I AM HEARING IN THE COMMUNITY, SIMILAR SO WHAT COUNCILMEMBER ALVAREZ IS SAYING IS THAT WE HAVE A LEAN YEAR, THEN WE ARE GOING TO HAVE A LEANER YEAR. THE CONCERN IS THAT WE WILL BE TAKING FROM THE LEANER YEAR AND SPENDING IT IN THE LEAN YEAR AND THERE'S -- THERE'S SOME CONCERN ABOUT THE JUDGMENT THERE.

MAYOR GARCIA: OF COURSE, SOME OF THOSE EXPENSES WERE NETTED BY THINGS -- NECESSITATED BY THINGS THAT HAPPENED --

GRIFFITH: OH, RIGHT. IT JUST A QUESTION DO YOU MAKE THE LEANER YEAR WORSE BY SPENDING SOME OF WHAT YOU MIGHT GET THEN AHEAD OF TIME IN THE LEAN YEAR.

MAYOR GARCIA: SURE. BUT GIVEN THE STRATEGIES THAT ARE -- LET'S SEE. GIVEN THE STRATEGIES TO CLOSE THE GAP, THAT MAY CHANGE AS THE YEAR GOES -- YOU KNOW, GOES BY, WE WILL BE REVISITING HOW THIS STRATEGY -- THESE STRATEGIES -- LET'S SEE. IT'S NOT THAT -- NOT THAT ONE. THE FUND BALANCE BUDGET ACTIONS, THIS ONE. BECAUSE THAT WILL GIVE US A LITTLE BIT BETTER BEGINNING FUND BALANCE FOR '03 BUDGET PLANNING. SO WE WILL HAVE TO -- TO REVISIT THAT AS WE MOVE ALONG. COUNCILMEMBER SLUSHER?

SLUSHER: THANK YOU, -- COUNCILMEMBER WYNN?

WYNN: A TWO-PART QUESTION. OBVIOUSLY THE STAFF HAS DONE A VERY THOROUGH JOB, VERY COMPREHENSIVE ANALYSIS ABOUT THIS. IF YOUR ANALYSIS IS SO COMPLETE AS TO KNOW THAT THE TAX ANTICIPATION NOTE CARRIES A 1.66 CENTS RATE INTO THE NEXT YEAR, I GUESS THAT YOU HAVE MADE SOME ASSUMPTIONS ABOUT ASSESSED VALUE.

YES, WE HAVE.

WYNN: BASED ON THAT, I GUESS, ONE, WHAT'S THE SUSPICION ABOUT ASSESSED -- ASSUMPTION ABOUT ASSESSED VALUE. TWO, SEEMS THAT ASSESSED VALUE CAN BE BROKEN DOWN INTO EXISTING REAL ESTATE AND THEN NEW REAL ESTATE ADDED TO THE TAX ROLES. SO WHAT -- WHAT'S YOUR ASSUMPTIONS ABOUT THE ASSESSED VALUE?

OUR ASSUMPTION ABOUT ASSESSED VALUE FOR NEXT YEAR FOR THE FISCAL YEAR, '03, IS 3.8% INCREASE OVERALL IN ASSESSED VALUE. AND THE NUMBER THAT WE SHOWED ARE YOU FROM ADDITIONAL PROPERTY TAX, I BELIEVE IT WAS 8.4 MILLION THAT WE WOULD EXPECT, MOST OF THAT WOULD COME FROM NEW GROWTH, BUT I WOULD HAVE TO GO BACK AND DIG INTO THE DETAILS TO -- DETAILS TO MAKE SURE THAT WE WOULD GET YOU THE EXACT DETAILS, BUT MOST OF THAT WOULD COME FROM NEW GROWTH ADDED TO THE TAX ROLES. WE ARE NOT ASSUMING AN INCREASE IN THE O AND M TAX RATE FOR NEXT YEAR.

YOU ARE NOT ASSUMING THAT EXISTING HOME VALUATION BY TCAD INCREASE, MUCH IF ANY. YOU ARE ANTICIPATING THAT NEW TAX BASE IS ADDED TO THE ROLES.

THAT THERE IS SOME NEW TAX BASE ADDED TO THE ROLES, THAT'S CORRECT.

LET ME FOLLOW UP JUST REAL QUICK. THE NUMBER THAT WE ARE USING IS BASED ON SOME INFORMATION THAT WE REVIEWED AND DISCUSSED WITH A TAX APPRAISER. THERE WILL BE -- THE GROWTH THAT WE ARE INCLUDING FOR RESIDENTIAL IS BECAUSE OF THE 10% CAP THAT YOU ARE AWARE, THERE'S GROWTH WE DON'T RECOGNIZE EVERY YEAR. SOME OF THE GROWTH WILL BE A CATCHUP ON SOME OF THE PRIOR ASSESSMENTS.

MAYOR GARCIA: FURTHER QUESTIONS, COUNCILMEMBERS?

GOODMAN: YES, MAYOR.

MAYOR GARCIA: MAYOR PRO TEM?

GOODMAN: I HAVE A COUPLE OF SPECIFICS RELATIVE TO SOME OF THE THINGS THAT WERE WRITTEN IN HERE. I WILL JUST, THERE ARE ABOUT THREE OF THEM, LET ME JUST SAY THEM ALL AND THEN YOU CAN ANSWER OR WHOEVER CAN ANSWER. BACK ON THE -- THESE PAGES AREN'T NUMBERED, BUT THE -- BUT THE PAGE WHERE WE [INAUDIBLE] COPS GRANT, THEN A HIGHER COST FOR SHORTENED CADET CLASSES. WHEN THE FEDERAL LEVEL --

MAYOR GARCIA: EXCUSE ME JUST A MINUTE, MAYOR, CAN YOU THROW THAT ON THE SCREEN.

PAGE 12.

MAYOR GARCIA: PAGE 12. AND IF WE COULD GET THE LIGHTS.

GOODMAN: WHEN THE FEDS DECIDE WHAT HOMELAND SECURITY MEASURES WILL BE RELEVANT TO ALL OF US OUT HERE, IS THERE OPPORTUNITY, DO WE KNOW, OR DO WE ANTICIPATE, FOR US TO BE ABLE TO RECOOP THAT KIND OF MONEY SINCE OBVIOUSLY THAT TIES DIRECTLY INTO OUR HOMELAND SECURITY MEASURES AS WELL. THE OTHER IS ON THE COST TO SHORTEN CADET CLASSES, I AM ASSUMING THAT THAT ADDED COST IS BECAUSE WE HAVE TO QUIP AND PAY NEW OFFICERS MORE QUICKLY RATHER THAN CADETS. THEN MY LAST SPECIFIC QUESTION LIKE THAT, IS IN ORDER TO BE AT THE LEVEL WHICH I ALSO ASSUME IS THE SUSTAINABILITY LEVEL THAT THE MAYOR WAS TALKING ABOUT ON SALES TAX ACTIVITY, WHAT POINT ON THIS GRAPH WOULD WE HAVE TO REACH IN ORDER FOR THAT TO BE A SUSTAINABLE LEVEL? YOU HAVE PERCENTS AND MILLIONS AND SO ON NEGATIVE AND POSITIVE, BUT I DON'T KNOW HOW TO TRANSFER THAT ON TO THIS CHART. REAL MONEY.

WHICH DHART ARE -- WHICH CHART ARE YOU LOOKING AT?

SALES TAX ACTIVITY.

THE FORECAST FOR NEXT YEAR OR --

WELL, LET ME ASK, MAYOR PRO TEM, IF I COULD -- IS YOUR QUESTION AT WHAT GROWTH IN SALES TAX, WHAT PERCENTAGE GROWTH IN SALES TAX DO WE NEED SO THAT WE CAN SUSTAIN SOME OF THE BUDGET -- ONGOING BUDGET EXPENDITURES WITHIN THE GENERAL FUND BUDGET, WHICH SALES TAX RIGHT NOW REPRESENTS A LITTLE UNDER 30% OF OUR BUDGET. THE QUESTION IS WHAT GROWTH RATE DO YOU NEED TO KEEP UP WITH OUR RATE OF GROWTH IN TERMS OF EXPENDITURES?

RIGHT. TO TRANSLATE THINGS LIKE 4.86% GROWTH AND GROWTH RATE FROM 3.2 TO .9, WHERE WOULD THAT BE ON THIS CHART, IF YOU WERE GRAPHING IT? WHERE WOULD THOSE POINTS BE?

IF WE WERE GRAPHING THE --

MAYOR GARCIA: EXCUSE ME JUST A SECOND, JOHN.

SALES TAX CHART.

SALES TAX CHART. THAT'S PAGE -- COUNCILMEMBER WYNN HELP ME ON THIS ONE. YOU ARE THE ONE TO KNOW ALL OF THESE PAGES. 6? THANK YOU. AGAIN, MAYOR PRO TEM, IF YOU COULD STATE WHAT IT IS THAT YOU WANT IN THIS CHART, SO THAT I CAN KNOW OR --

GOODMAN: WELL, ON PAGE NUMBER 7, I WAS LOOKING AT THOSE NUMBERS AND THEY ARE IN PERCENT, TWO DIFFERENT PHOTOGRAPHS -- TWO DIFFERENT PARAGRAPHS, ONE SAY MUST ACHIEVE 4.86% GROWTH FOR EACH OF THE NEXT 10 MONTHS TO MEET BUDGET. AND THEN THE REVISED REVENUE PROJECTION PRESENTED IN DECEMBER ASSUMED A REDUCTION IN GROWTH RATE FROM 3 TONIGHT 2% TO -- 3.2% TO .9. REDUCED REVENUES WOULD BE $2.8 MILLION. REQUIRES A GROWTH OF 2.15% FOR EACH OF THE NEXT 10 MONTHS. I'M ASSUMING THAT THAT IS WHAT WE ARE SAYING IS SUSTAINABLY. SO -- SUSTAINABLE. SO I AM TRYING TO FIND OUT IF WE WERE TO REACH THE LEVELS THAT YOU ARE SAYING WE NEED TO REACH, HOW WOULD WE GRAPH THEM ON THE CHART ON PAGE 6?

OKAY. GRAPH IT ON THAT CHART?

MAYOR GARCIA: YEAH.

GOODMAN: RELATIVE TO ALL OF THE REST OF THE POINTS, WHERE DO WE NEED TO GET UP TO? FOR THE NUMBERS THAT YOU REFER TO.

WHAT WE ARE SAYING IS THAT IN ORDER TO REACH -- IN ORDER TO REACH WHAT WE HAVE ACTUALLY BUDGETED FOR SALES TAX --

RIGHT UNDER 5%.

WE WOULD HAVE TO HAVE 4.86% GROWTH IN EACH MONTH OF THE REMAINDER OF THE FISCAL YEARS.

THAT'S HOW MUCH YOU HAVE GOT TO JUMP UP.

APPROXIMATELY UP TO HERE.

AND STAY THERE.

IN ORDER TO STAY WITHIN -- IN ORDER TO LOSE ONLY 2.8 MILLION IN SALES TAX, THEN OUR GROWTH WOULD -- WOULD HAVE TO BE 2.15% OVER THE NEXT -- OVER EACH OF THE NEXT TWO MONTHS, WHICH WOULD BE APPROXIMATELY [INAUDIBLE].

GARZA: MINOR, I THINK ONE OF THE THINGS THAT -- MAYOR PRO TEM, I THINK ONE OF THE THINGS THAT TO ADD TO YOUR QUESTION, FOR YOU JUST TO THINK ABOUT, I THINK RUDY AND JOHN WOULD AGREE WITH ME ON IT. ONE OF THE OBJECTIVES OUGHT TO BE HOW TO MAKE SALES TAX NOT -- TO HAVE PROPERTY TAX ASSUME A LARGER BURDEN, BECAUSE THAT IS A FIXED INCOME BASE FOR THE GENERAL FUND AS OPPOSED TO SOMETHING THAT IS VOLATILE LIKE THIS. AND WHILE -- AND TO USE THE -- THE OVERAGES IN SALES TAX OFF A REASONABLE GROWTH RATE OF 3 TO 4%, THAT YOU PLUG INTO A RAINY DAY FUND TO DEEM WITH CAPITAL ONE TIME EXPENDITURES SO YOU DON'T GET CAUGHT IN THE FLUX OF THE BUSINESS CYCLE FROM A BUDGETARY STANDPOINT. THAT MEANS THAT WE HAVE WORK TO DO FROM A PROPERTY TAX SIDE TO GET THAT TO ASSUME A LARGER BURDEN OF THE GENERAL FUND EXPENDITURE. THAT'S A LONG-TERM ISSUE, NOT FROM ONE BUDGET TO THE NEXT. BUT THAT'S THE OVERALL OBJECTIVE OF WHERE WE PROBABLY NEED TO GO.

JUST TO FOLLOW UP ON WHAT THE CITY MANAGER WAS SAYING VERY QUICKLY. IF YOU LOOK OVER THE LAST FIVE YEARS, FOR EXAMPLE, COMPARING 1998, ACTUAL 1998, TO 2002 BUDGET, OUR REVENUES HAVE INCREASED SINCE 1998 BY 108 MILLION DOLLARS. 32% INCREASE. THAT'S A VERY SIZABLE INCREASE IN REVENUE OVER THAT FIVE YEAR PERIOD OF TIME. WE DID DEDICATE A FAIRLY SIGNIFICANT PORTION OF THAT INCREASE IN REVENUES TO -- TO C.I.P. AND TO ONE-TIME EXPENDITURES, BUT WE ALSO FILLED UP A SIGNIFICANT PORTION OF THAT WITH INCREASED ONGOING EXPENDITURE, PRIMARILY PUBLIC SAFETY OVER THAT SAME PERIOD OF TIME WE INCREASED OUR PUBLIC SAFETY EXPENDITURES BY 79 MILLION DOLLARS. AND SO THE PROBLEM IS WE -- WE NO LONGER SEE THAT CONTINUING TREND OF REVENUE GROWTH RIGHT NOW. BUT THE EXPENSETURES, THE ONGOING EXPENDITURES THAT WE HAVE ADDED TO OUR BUDGET HAVE -- HAVE INCREASES BUILT INTO THEM THEMSELVES THROUGH THE MEET AND CONFER CONTRACTS AND THE ADDITION -- ADDITIONAL OFFICERS PER YEAR, SO ON. IT'S THAT EXPENDITURE INCREASE WHICH IS CONTINUING WITHOUT A RESULTING OR WITHOUT -- WITHOUT THE INCREASE IN REVENUES THAT WE HAVE SEEN OVER THE LAST FIVE YEARS.

[ONE MOMENT PLEASE FOR CHANGE IN CAPTIONERS]

THAT OUR SALES TAX REVENUE PER JOB IS DROPPING. WE DON'T HAVE THAT SPECIFIC INFORMATION. WE CAN LOOK TO SEE WHAT WE CAN GET.

GOODMAN: THE OTHER TWO QUESTIONS -- WE CAN COME BACK IN A SECOND, BUT LET ME ASK MY OTHER TWO AND GET THEM ON THE TABLE. IF WE'RE LOOKING AT A REIMBURSEMENT TYPE OF CONCEPT, HAVE WE LOOKED AT EVERY OTHER OPTION. AND I'M THINKING AT THIS MOMENT AT CIP. IS THERE ANY CIP THAT COULD BE PROJECTED THAT WE COULD PUT BEFORE THE VOTERS -- I FORGET WHAT YOU CALL IT, BUT IS THERE ANYTHING LIKE THAT THAT COULD BE PUT IN THE CONTEXT OF ANOTHER REVENUE SOURCE RATHER THAN TAX.

AT THIS POINT I DON'T THINK WE HAVE CIP MONEY AVAILABLE THAT WE COULD SKEW FOR THESE EXPENDITURES. WE HAVE DEFERRED -- WE COULD USE FOR THESE EXPENDITURES. WE HAVE DEFERRED A LARGE AMOUNT OF OUR CIP, AND THAT WAS LEAVE THE CIP FUNDED BY BONDS TO BE RESTRICTED TO THE USES FOR WHICH THE BONDS WERE ISSUED. SO I DON'T THINK CIP IS A GOOD ALTERNATIVE AT THIS POINT.

GOODMAN: MAYBE I'M NOT UNDERSTANDING THE CONCEPT HERE BECAUSE I THOUGHT WE WERE DOING SOME SORT OF REIMBURSE KIND OF MECHANISM BASED ON CASH WE DO NOT HAVE AT THIS MOMENT.

SHE MAY BE TALKING ABOUT A REIMBURSEMENT RESOLUTION WHERE YOU WOULD TAKE ON AN OBLIGATION TODAY ON THE BET THAT NEXT SEPTEMBER OR THIS SEPTEMBER YOU WOULD DO A CERTIFICATE OF OBLIGATION OR SOMETHING LIKE THAT. THOSE ARE THE INSTRUMENTS WE'VE USED BEFORE. I THINK THERE HAVE BEEN OTHERS THAT WE'VE USED.

RIGHT. WELL, WE MIGHT ACTUALLY BRING TO COUNCIL A REIMBURSEMENT RESOLUTION AS PART OF THIS ITEM BECAUSE WHEN WE BRING THE TAX ANTICIPATION NOTE BACK ON JANUARY THE 31ST, WE WOULD ALSO BRING BACK AN ITEM TO AMEND THE BUDGET. AND SINCE WE HAVE NOT ISSUED THAT TAX REIMBURSEMENT NOTE, WE WOULD PROBABLY BRING THAT BACK, WHICH IS BACK UP THE BUDGET AMENDMENT, WHICH WOULD ADD THESE TO THE DEPARTMENTS. HOWEVER THAT REIMBURSEMENT RESOLUTION WOULD BE PAID BACK BY THE SHORT-TERM TAX ANTICIPATION NOTE THAT WE WOULD ISSUE AS SOON AS POSSIBLE THEREAFTER.

GOODMAN: WELL, I KNOW THAT WHAT YOU'RE SAYING, BUT I'M WONDERING WHETHER WE CAN CUT ANY OF THESE COSTS THAT WE'RE COUNTING ON THE TAX OF NEXT YEAR TO PAY FOR THROUGH ANOTHER SAME CONCEPT REIMBURSEMENT, BUT THROUGH ANOTHER METHOD, ANOTHER SOURCE OF REVENUE, OR AT LEAST A PROCESS WHEREBY THE VOTERS WILL SAY YES. AND I THINK THAT WE HAVE IN THE PAST PAID FOR SOME THINGS COUNTING ON VOTER APPROVAL OF A BOND IN THE FUTURE TO ACTUALLY PAY FOR IT. AND NOTHING IS COMING TO MIND RIGHT NOW, BUT I FEEL LIKE WE'VE DONE THAT BEFORE.

MAYOR GARCIA: WHAT WE HAVE DONE ALREADY IS WHEN WE HAVE APPROVED BONDS ALREADY THAT WE HAVEN'T SOLD -- AND I THINK THE LETTER THAT WE SENT TO TXDOT IS ONE OF THEM. WE HAVE THAT AUTHORIZATION ALREADY FROM THE VOTERS, BUT WE CANNOT SELL THOSE BONDS BECAUSE OF THE SEQUENCE WE USE FOR SELLING, THEN WE DO A REIMBURSEMENT RESOLUTION. AND THEN WHEN WE SELL THE BONDS, WE REIMBURSE WHATEVER FUNDS PROVIDED THE MONEY TO DO OR WE NEEDED TO DO. BUT THAT'S NOT IN ANTICIPATION OF SOMETHING GETTING APPROVED LATER, THAT IS IN ANTICIPATION OF US SELLING BONDS THAT HAVE BEEN APPROVED BY THE VOTERS.

GOODMAN: WHAT I WAS THINKING OF IS SOMETHING LIKE A PURCHASE OR MAYBE ROADS THAT WE BUILT AND THEN THE CIP WAS APPROVED BY THE VOTERS LATER AND WE WOULD HAVE HAD TO PAY FOR IT SOME OR WAY HAD THE VOTERS NOT APPROVED. I WILL HAVE TO GO BACK IN MY MEMORY.

AS THE MAYOR SAID, WE HAVE TYPICALLY DONE REIMBURSEMENT RESOLUTIONS WHERE WE ALREADY HAVE AUTHORIZATION FROM THE VOTERS TO ISSUE GENERAL OBLIGATION BONDS. IN THIS CASE WE HAVE NO SUCH AUTHORIZATION FROM THE VOTERS THAT WE CAN TIE IT TO.

GOODMAN: I KNOW. THAT'S NOT WHAT I'M TALKING ABOUT. I DON'T THINK YOU UNDERSTAND WHAT I'M TALKING ABOUT.

THERE MAY HAVE BEEN A PROJECT OR SOMETHING WHERE WE COMMITTED TO IT AND THEN AGREED TO PUT SOMETHING BEFORE THE VOTERS AND HAVE THEM APPROVE IT SO WE COULD THEN ACTUALLY ISSUE DEBT. I DON'T REMEMBER SPECIFICALLY, BUT I REMEMBER THE DISCUSSION, WE HAD A DISCUSSION ABOUT THAT.

GOODMAN: ANYWAY, MY QUESTION REALLY IS UNLESS THERE'S SOME CONCLUSION OF REIMBURSEMENT METHODOLOGY WHERE IN OUR PROPOSED SOURCE OF REVENUE IS NOT NECESSARILY TO TAX IF WE CAN FIND ANOTHER WAY. SO WE COULD PLAN FOR CIP ITEMS FOR SOME OF THESE OR NOT.

WE WOULD HAVE TO FUND THAT CIP ITEM IN THE FUTURE EITHER THROUGH CASH, THROUGH GENERAL FUND CASH OR FROM BONDS THAT VOTERS WOULD APPROVE IN THE FUTURE. AND OBVIOUSLY IF THE VOTERS DID NOT APPROVE THAT, THEN WE WOULD SIMPLY HAVE TO FALL BACK ON FUNDING IT WITH CASH.

YOU COULD DO CO'S FOR SOME OF THIS AND CHOOSE NOT TO ISSUE THE DEBT THAT YOU HAVE SCHEDULED TO ISSUE THIS FALL FOR THINGS THAT -- YOU HAVEN'T DONE REIMBURSEMENT RESOLUTIONS ON. BUT YOU CAN'T SAY I'M GOING TO DEFER THE '98 PROGRAM, I'M NOT GOING DO THOSE THINGS, YOU COULD DO THAT. BUT YOU HAVE TO IDENTIFY THE PROJECTS THAT WE HAVEN'T DONE REIMBURSEMENT RESOLUTIONS FOR ALREADY BECAUSE YOU'RE OBLIGATED TO SELL THAT DEBT FOR EXPENDITURES THAT YOU'VE ALREADY COMMITTED. AND I CAN'T REMEMBER WHAT PERCENTAGE OF -- HOW THAT WORKS OUT.

BUT I WILL HAVE TO ALSO CONFIRM WITH OUR BOND COUNCIL BECAUSE I'M NOT SURE THAT WE COULD USE CERTIFICATES OF OBLIGATION TO FUND SOME OF THESE EXPENDITURES.

ALVAREZ: LET ME FOLLOW UP ON THAT.

MAYOR GARCIA: LET ME SEE IF THE MAYOR PRO TEM IS FINISHED.

GOODMAN: NO, I'M NOT FINISHED.

MAYOR GARCIA: OKAY. YOU WERE FOLLOWING UP ON THE LAST QUESTION?

ALVAREZ: I WANTED TO MAKE SURE I KNEW WHAT YOU WERE ASKING. ON PAGE 23 IT SAYS DEFER NON-CRITICAL CASH CIP FOR 5.5 MILLION. SO PRESUMABLY THAT WOULD HAVE TO BE PAID OUT OF CASH IN THE NEXT FISCAL YEAR, BUT I THINK THE SUGGESTION IS FOR THOSE NON-CRITICAL CASH CIP'S, CAN'T WE PUT SOMETHING ON THE MAY ELECTION AND PAY FOR THOSE WITH BOND MONEY AND OPPOSED TO GENERAL FUND MONEY? AND SO I THINK THAT'S WHAT SHE'S SAYING.

LET ME MAKE SURE I'M CLEAR. HYPOTHETICALLY IF THAT WAS THE CASE, THE ITEM TO THE VOTERS WOULD BE APPROVAL OF THE PROJECT OR APPROVAL OF THE FUNDING? AND IF THEY BOTH TURNED OUT -- DID NOT APPROVE IT, I GUESS THAT WOULD HAVE TO BE CLEAR UP FRONT. WOULD THEY BE WILLING TO SAY THAT THESE PROJECTS ARE JUST NOT EVER GOING TO BE DONE IF THE VOTERS DENY THIS?

MAYOR GARCIA: AND THE DECISION BY THE COUNCIL WHEN THEY APPROVE THIS, THE BUDGET FOR THIS, IS THAT WE WERE GOING TO DO THOSE PROJECTS AND I'M SURE PEOPLE ARE EXPECTING US TO DO IT. SO WE HAVE A SITUATION THAT -- WHERE THE COUNCIL HAS OBLIGATED THEMSELVES BY THEIR PROCESS TO DO THE CASH CIP PROJECTS. AND IF WE SAY NO, WE'RE NOT GOING TO DO THAT, WE'RE GOING TO TAKE THAT CASH AND PUT IT BACK INTO NORMAL EXPENSES, THEN WE'RE GOING TO FUND THIS WITH BONDS AND THEN THE BONDS DON'T PASS, THEN WE'RE HAVING TO GO BACK AND FIND OUT WHERE WE'RE GOING TO HAVE REVENUE TO PAY FOR THOSE PROJECTS IN THE FUTURE.

ALVAREZ: I YIELD THE FLOOR.

GOODMAN: A CLARIFICATION -- ACTUALLY, I'M LOOKING AT PAGE 16 FOR THE FIRE HEAVY RESCUE UNIT. FOR INSTANCE, THERE'S A HALF MILLION DOLLARS' WORTH OF APPARATUS AND 100,000 FOR APPARATUS, VARIOUS OTHER NECESSARY EQUIPMENT. SO PERSONNEL AND MAINTENANCE FOR THE APPARATUS SIDE, THERE'S 625,000 RIGHT THERE THAT COULD CONCEIVABLY BE A CIP ITEM AND BOND THEN. AND I THINK THE VOTERS KNOW THAT SEPTEMBER 11TH HAPPENED AND THEY KNOW THAT THERE ARE EXPENDITURES FOR US THAT HAVE GONE WAY BEYOND THE NORMAL IN A TIME WHEN OUR ECONOMY IS NOT NORMAL. SO I WOULD REALLY BE SURPRISED IF VOTERS WERE TO SAY NO, WE'RE NOT GOING TO VOTE TO BUY THOSE THINGS THAT WE KNOW AT THIS PARTICULAR IN HISTORY WE NEED, UNLIKE OTHERS. NOW, I COULD BE WRONG, BUT THE QUESTION WE WOULD BE PUTTING BEFORE THE VOTERS IS CAN WE PAY FOR IT LIKE THIS OR DO WE NEED TO GO TO PROPERTY TAX, WHICH I THINK IS A LEGITIMATE QUESTION. AND ABOUT THE BEST WE CAN DO, PERHAPS, TO PUT PROCESS INTO THIS PLAN FOR EXPENDITURES SO THAT THERE IS VOTER PARTICIPATION. WHEN WE GO TO THE REGULAR BUDGETARY DISCUSSIONS IN SEPTEMBER, PEOPLE HAVE BEEN WITH US ALL ALONG THE WAY. THIS IS EXTRAORDINARY, BUT THERE IS NOT A PROCESS IN PLACE FOR US RIGHT NOW SO THAT EVERYBODY CAN REALLY KNOW WHAT IT IS WE'RE DOING AND WHY. AND SOME OF THIS OF COURSE YOU CAN'T DO ON THE CIP, BUT SOME OF IT LOOKS LIKE YOU CAN. SO I THOUGHT AT THE VERY LEAST MAYBE WE CAN PROPOSE DIFFERENT REVENUE SOURCES FOR THESE SO THAT IF PUSH COMES TO SHOVE AND A TAX INCREASE IS THE ONLY WAY TO DO IT, THEN NOT ALL OF IT WOULD COME OUT OF ONE BITE OR AT LEAST VOTERS ALSO KNOW HOW WE'RE DOING IT.

MAYOR GARCIA: LET ME SAY THAT SOME OF THOSE TRANSACTIONS THE CITY HAS -- SIMILAR TRANSACTIONS THE CITY HAS GONE THROUGH IN THE PAST. WHEN WE BOUGHT THE NORTHERN ONE-HALF OF BLOCK 21, WE OWNED THE SOUTHERN PART. WE DID NOT OWN THE OTHER PART. WE BOUGHT IT WITH THAT ASSUMPTION THAT WE WOULD PAY FOR THAT LOT OUT OF CIP INTEREST AND THEN WE WOULD GO TO THE VOTERS AND GET APPROVAL FOR THAT -- FOR THAT PURCHASE PRICE. THE VOTERS REJECTED IT. WE ALREADY HAD BOUGHT THE LAND, SO WE CHARGED CIP INTEREST AND ADJUSTED THE PROCESS ACCORDINGLY. SO THERE'S DIFFERENT MECHANISMS FOR US TO DO IT, IT JUST REQUIRES THAT THE COUNCILE DECIDE FROM A POLICY PERSPECTIVE WHAT IT IS THAT WE'RE GOING TO DO.

AND COUNCILMEMBER, WE WILL TRY TO MORE CLEANLY HAD LAY OUT THE PROS AND CONS OF THE APPROACH THAT WE'RE RECOMMENDING VERSUS THE APPROACH THAT YOU'RE RECOMMENDING BEFORE THE ITEM COMES BACK TO COUNCIL.

GOODMAN: I WOULD JUST LIKE TO SEE ANY OTHER OPTIONS THAT ARE POSSIBLE AT ALL. AND THE LAST QUESTION IS HOW MUCH NEWEKYOU MENTIONEDo?wossssOULD HAVE NEW TAXES, SO HOW, WHAT?

WE'RE ESTIMATED A 3.8 -- .

MAYOR GARCIA: 8.4 MILLION. IN REVENUE GROWTH.

YES, OPERATIONS AND MAINTENANCE.

MAYOR GARCIA: THAT'S IN FISCAL YEAR 03.

YES.

MAYOR GARCIA: MAYOR PRO TEM, ARE YOU ARE READY TO YIELD THE FLOOR. COUNCILMEMBER GRIFFITH WANTS TO ASK A QUICK QUESTION OR TWO. COUNCILMEMBER GRIFFITH?

.

GRIFFITH: THANK YOU. A COUPLE OF THINGS. THE UNBUDGETED -- WE'RE ON 18, THE UNBUDGETED HOMELAND SECURITY COSTS. I KNOW THEY ARE VERY REAL THINGS THAT WE'RE GOING TO HAVE TO DO. DO YOU HAVE A BREAKDOWN ON WHAT EXACT LINE ITEM THOSE ARE AND ESTIMATES OF WHAT THEY MIGHT BE.

YES, WE CAN GET THAT TO YOU.

MAYOR GARCIA: AND WHEN YOU GIVE THAT SCHEDULE TO THE COUNCILMEMBERS, ALSO ADD THE EXPENDITURES THAT WERE MACE FAISED BY THE ENTERPRISE FUNDS BECAUSE THERE WERE SOME HOMELAND ISSUES THAT WERE PAID OUT OF THE ENTERPRISE FUNDS.

GRIFFITH: ABSOLUTELY. AND ON 23, DEFER NON-CRITICAL CASH CIP. I THINK THE MAYOR PRO TEM IS ON TO SOMETHING REAL BECAUSE I WAS SKEPTICAL ABOUT CASH CIP WHEN WE DID THIS. AND FOR FEAR THAT WHAT HAS HAPPENED WOULD HAPPEN AND THOSE THINGS WOULD JUST -- THAT MONEY WOULD BE SPENT FOR SOMETHING ELSE AND THOSE DEFERRED NON-CRITICAL THINGS, WHICH WE HAD PROMISED PEOPLE, WOULD NEVER HAPPEN. SO I THINK WHAT THE MAYOR PRO TEM IS SUGGESTING MAY BE A THING WE NEED TO TAKE SERIOUSLY. IF HE EVER WANT THOSE SO-CALLED NON-CRITICAL DEFERRED PROJECTS DONE.

MAYOR GARCIA: LET ME JUST SAY ALSO THAT THE CASH CIP'S WERE PUT IN THERE FOLLOWING A COUNCIL POLICY THAT WE WOULD TRY TO IMPROVE OUR DEBT TO EQUITY RATIO ACROSS THE BOARD. AND THAT -- YOU KNOW, THAT GOES TO HOW WE -- HOW OUR BOND GET RATE AND ALL THOSE THINGS. COUNCIL MADE THAT DECISION WHEN I WAS ON THE COUNCIL. NOT JUST FOR THE GENERAL FUND, BUT FOR THE FACILITY. SO IT IS A POLICY THAT WE HAVE HAD IN THE PAST TO ALLOCATE SOME OF OUR CURRENT REVENUE IN THROUGH CIP. IF THE COUNCIL WANTS TO CHANGE THAT, WE NEED TO VOTE FOR THE PROCESS OF CHANGING THAT PARTICULAR POLICY. AND I THINK, BETTIE, CORRECT ME IF I'M WRONG, BUT THAT'S A POLICY ALREADY, CORRECT?

AND MAYOR, THE OTHER THING THAT I WOULD ADD TO THAT IS WHEN WE MADE THE DECISIONS FOR THE '98 PROGRAM, IT WAS TRY TO PUT A PROGRAM BEFORE THE VOTERS THAT COULD REASONABLY BE DONE WITHIN A SIX-YEAR TIME FRAME AND THERE WERE DEMAND THAT WERE WAY ABOVE THAT, THAT EXCEEDED OUR ABILITY TO ISSUE DEBT TO DO SO. SO WHAT WE CHOSE INSTEAD TO FUND TO THE DEGREE WE COULD AND AFFORD IT TO FUND THESE THINGS IN CASH BECAUSE OTHERWISE WE WOULD NOT HAVE BEEN ABLE TO SELL THE DEBT TO DO THOSE PROJECTS. SO I THINK THAT WAS REALLY OUR INTENT, SO BALANCE THAT REAL NEED TO GET THOSE PROJECTS DONE AND YET BE ABLE TO ISSUE THE DEBT. SO WE TRY TO KEEP THOSE THINGS IN LINE WITH ONE OTHER.

MAYOR GARCIA: DO YOU WANT TO DO IT THAT WAY?

GRIFFITH: I THINK WHAT WE TOLD FOLKS IN ALL SINCERITY WAS THAT THE SAULD CASH CIP ITEMS WERE IN JUST AS GOOD STANDINGS AS THE ONES THAT WERE ON THE BALLOT AND NOW I'M NOT SURE THAT'S TRUE.

MAYOR GARCIA: THANK THEY'RE USING THE TERM NON-CRITICAL IN A DIFFERENT CON IT CONTEXT. AND STIRP, TEP HE ON THIS -- CITY MANAGER, HELP ME ON THIS ONE. I DON'T THINK THEY'RE CALLING IS NON-CRITICAL IN TERMS OF COMPARING IT TO BOND AND PROJECTS. BUT WHAT THEY'RE THEY'RE SAYING IS WE CAN GET ALONG WITHOUT THEM.

YES, SIR. AND I'LL GIVE YOU AN EXAMPLE. WE DID IT JUST HERE RECENTLY. WE COMMITTED TO ENCLOSE THE DITTMAR BUILDING. CLOSE IT AND PROVIDE AIR KENNER AND BATEDS ROOM. AND WE STARTED LOOKING AT OUR BOND ISSUES, HAVING GROWTH UP IN CORPUS CHRISTI AND PLAYED ON PLAY SLABS THAT WEREN'T COVERED AND DID QUITE WELL AT THE AGE OF 12 AND 13, I SAID IT'S ALREADY COVERED, WHY DO WE NEED TO AIR CONDITION IT? THEY'LL ARE ALL RIGHT. WE CAN ENCLOSE IT WHEN WE CAN AFFORD IT, BUT WE CAN'T AFFORD IT RIGHT NOW. AS SOON AS THE ECONOMY GETS BACK, THE COUNCIL I SUSPECT WILL CONTINUE TO FUND A CASH CIP THAT DOES IMPROVE THE DEBT TO EQUITY RATIO. IT DOESN'T MEAN WE'RE NOT GOING TO DO IT, BUT IT MEANS WE DON'T HAVE MUST NOT TO DO IT RIGHT NOW.

AT ZAPATA WE DIDN'T EVEN HAVE PLAY SLABS.

I KNOW. WE PLAYED ON CALICHE AND WE DID QUITE WELL! [LAUGHTER].

GRIFFITH: NOBODY IS QUESTIONING THAT AND THE COMMITMENT WAS MADE ON THE DEFERRED ONES AND THEY WERE SUPPOSED TO BE EQUAL TO THE ONES THAT WENT ON THE BALLOTS.

MAYOR GARCIA: GOOD POINT, COUNCILMEMBER. ANYBODY ELSE. MAYOR PRO TEM?

GOODMAN: IF I COULD POLICY UP ON THAT. THAT'S WHAT I MEAN ABOUT GIVING SOME KIND OF PROCESS FOR PEOPLE TO REALLY UNDERSTAND WHAT'S BEING PROPOSED AND WHY AND THE DIFFERENT TRADE-OFFS. AND I ASSUME THAT THE COMMITTEE WILL GET ME THE ANSWERS TO THESE QUESTIONS THAT I HAVE.

MAYOR GARCIA: SURE. THANK YOU. DO YOU HAVE SOMETHING IN WRITING THAT YOU WANT TO GIVE TO THEM OR DO YOU IDEA WHAT SHE WANTS?

YES, WE'LL GET YOU THAT.

MAYOR GARCIA: FURTHER QUESTIONS?

GOODMAN: AND THE HIGHER COSTS OF SHORTER ....

THOMAS: COUNCILMEMBER THOMAS?

THOMAS: CAN YOU, MAYOR. ON PAGE 3, COUNCILMEMBER WYNN WAS TALKING ABOUT THE BED TAX. 2001 NEGATIVE 1.1 PERCENTAGE IN THE FIRST PART OF THE YEAR. ARE WE ANTICIPATING THAT IT WILL COME BACK UP? I CAN UNDERSTAND HOW THE ECONOMICS IS AND WHAT HAPPENED SINCE SEPTEMBER 11TH. MY QUESTION IS -- AND ANOTHER IS AND YOU CAN GIVE THAT TO ME LATER, WHAT PERCENTAGE OF THIS GOES INTO THE OPERATION AL FUND? BECAUSE MY UNDERSTANDING OF THE BED TAX IS FROM HOTELS AND ALL THAT. AND I JUST WONDER ARE WE PUTTING ANY OTHER EMPHASIS ON SEEING THAT AFTER SEPTEMBER 11TH I KNOW A LOT OF PEOPLE -- THE FLIGHTS AND ALL THAT WERE CANCELLED AND ALL THAT, BUT SEEING THAT AUSTIN IS THE GREAT CITY AND THE CAPITAL OF ENTERTAINMENT AND MUSIC AND ARTS, ARE WE PUTTING EMPHASIS ON THAT TO ADVERTISE A BIT MORE SO BRING THAT PERCENTAGE UP? THOSE WERE SOME OF MY QUESTIONS.

WE WILL GET YOU THOSE SPECIFIC ANSWERS.

MAYOR GARCIA: WHAT YOU MIGHT DO IS ASK MR. HODGE TO GIVE YOU A PICTURE, PAINT A PICTURE OF WHERE HE IS AND, YOU KNOW, WE'RE FINISHING THE CONVENTION CENTER AND, YOU KNOW, THOSE KIND OF THINGS. BUT THE THING ABOUT THE CONVENTION CENTER IS THE BED TAX IS THAT TO BE ABLE INCREASE IT YOU HAVE TO TAKE SOME TIME BECAUSE YOU DON'T BOOK CONVENTIONS AND EXPECT THEM TO SHOW UP NEXT MONTH. SO I THINK MR. HODGE -- IT WOULD PROBABLY BE A GOOD IDEA, COUNCILMEMBER, IF IF MR. HODGE GIVES YOU AND EVERYBODY A LOOK AT THE FINANCIAL PICTURE.

MAYOR, WOULD YOU LIKE US TO SCHEDULE MR. HODGE FOR FUTURE WORK SESSIONS AND GIVE YOU AN UPDATE ON THE PROJECTS, WHICH IS THE COMMUNITY EVENTS CENTER, THE CONVENTION CENTER AND YOU CAN HAVE A PICTURE OF HIS FINANCIAL CONDITION?

MAYOR GARCIA: SURE. FURTHER QUESTIONS? THANK YOU VERY MUCH. VERY GOOD REPORTS. AND WE'LL -- THAT'S ALL THE BRIEFINGS THAT WE HAVE, SO I WILL ANNOUNCE NOW THAT THE COUNCIL WILL GO INTO CLOSED SESSION UNDER CHAPTER 551 OF THE TEXAS GOVERNMENT CODE TO RECEIVE ADVICE FROM COUNCIL, ACTUALLY ALL THE THINGS WE DO UNDER 551, BUT THE ITEM WE HAVE IS UNDER SECTION 551.074, PERSONNEL MATTERS, DISCUSS THE SEPARATION AND TRANSITION OF CITY MANAGER JESUS GARZA AND THE APPOINTMENT AND EMPLOYMENT OF AN ACTING CITY MANAGER. AND THE COUNCIL IS NOW GOING INTO EXECUTIVE SESSION. WE'LL BE MEETING ON THE 13 THE FLOOR, THE CONFERENCE ROOM.

MAYOR GARCIA: LET ME ANNOUNCE, IF YOU WILL GIVE ME YOUR ATTENTION TO JUST A MINUTE, LET ME ANNOUNCE THAT THERE'S A CHANGE. AND WE'LL ANNOUNCE IT TOMORROW AGAIN. THERE'S A CHANGE IN TOMORROW'S COUNCIL AGENDA AS FAR AS TIME. THE BRIEFING ON BRACKENRIDGE HOSPITAL WILL BE DONE AT SIX P.M.. AND THAT'S THE TIME THAT WE ALSO HAVE IT SCHEDULED FOR THE PUBLIC HEARING. SO WE'LL DO BOTH AT THE SAME TIME.

THANK YOU.

GOODMAN: DO WE NEED A QUORUM TO ADJOURN? OKAY, THERE'S A QUORUM OF THE COUNCIL PRESENT. WE HAVE COME OUT OF EXECUTIVE SESSION. WE WERE ON THE 13TH FLOOR, SO WHENEVER THAT WAS, IT TOOK US THIS LONG TO COME TO THE THIRD FLOOR AND WE ARE NOW ADJOURNING OUR WORK SESSION OF WEDNESDAY, JANUARY 16TH, 2002. IS THERE A MOTION.

THOMAS: SO MOVE.

GRIFFITH: SECOND.

GOODMAN: ALL THOSE IN FAVOR PLEASE SAY AYE.

AYE.

End of Council Worksession Closed Caption Log