Closed Caption Log, Council Worksession
Wednesday, April 17, 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: GOOD MORNING EVERYBODY. WE DON'T HAVE A CITY MANAGER YET. OH, THERE YOU ARE. I WANTED TO KNOW WHO IS THE CAWB OR ASSISTANT -- OR THE COUNCILMEMBER OR ASSISTANT CITY MANAGER OR CITY MANAGER WHO BOUGHT THE DODGE PICKUP?

I WANT TO KNOW THAT TOO. THE RUMOR IS THAT'S ABOUT JOE CANALES, BUT WE'RE NOT SURE. WE'LL BE CHECKING INTO THAT LATER.

MAYOR GARCIA: JOE? OKAY. BECAUSE THAT LOOKS LIKE A GAS GUZZLERS TO ME. GOOD MORNING EVERYBODY. IT'S WEDNESDAY, APRIL 17TH. WE ARE AT THE COUNCIL WORK SESSION OF THE CITY COUNCIL OF AUSTIN, TEXAS, CONVENING AT 10: -- ABOUT 10:16, 17. WE'RE -- APRIL 17TH, 2002. WE'RE AT ONE TEXAS CENTER, 505 BARTON SPRINGS ROAD. WE'RE IN THE THIRD FLOOR TRAINING ROOM. AND WE HAVE -- WE DO NOT HAVE ANY EXECUTIVE SESSION TODAY, BUT WE HAVE THREE ITEMS. THE FIRST ONE IS A PREVIEW OF ITEMS FOR NEXT COUNCIL WORK SESSION. CITY MANAGER, DO YOU HAVE ANYTHING? COUNCILMEMBERS? OKAY. THE NEXT ITEM IS LISTED AS ITEM NUMBER 1 ON THE BRIEFING. BUDGET BRIEFING ON CORE SERVICES INITIATIVE (PROCESS/CRITERIA TO CLASSIFY CITY SERVICES), REVENUE INITIATIVE (ASSESSMENT OF POTENTIAL NEW FEES AND/OR FEE INCREASES) AND SALES TAX UPDATE. AND I'LL RECOGNIZE THE CITY MANAGER ON THIS ISSUE.

WE'RE ACTUALLY GOING TO TAKE THE ITEM IN THE REVERSE ORDER. WE'RE GOING TO START WITH THE SALES TAX DISCUSSION. WE'LL MOVE INTO THE REVENUE DESCRIPTION AND THEN INTO CORE SFTIONS ANDVICES AND THEN INTO THE NEXT BUDGET. BUT THIS HAS TO DO WITH OUR SALES TAX UPDATE. I'LL TURN IT OVER TO RUDY AND HE'LL INTRODUCE OUR GUEST PRESENTER TODAY WHO IS GOING TO GIVE YOU THE DEFINITIVE ART OF SALES TAX FORECASTING.

MAYOR AND COUNCIL. THIS MORNING WE HAVE JOHN HOKENUS OF TEXAS PERSPECTIVES, WHO HAS BEEN WORKING CLOSELY WITH US. TO GIVE YOU BACKGROUND, JOHN IS A LOCAL COMMITTEIST HERE WORKING FOR -- ECONOMIST HERE WORKING ON ECONOMIC AND PUBLIC POLICY ISSUES MOST RECENTLY AND FOCUSING ON THE PUBLIC SECTOR. SOME OF HIS RECENT PUBLIC SECTOR CLIENTS INCLUDE THE STATE OF CALIFORNIA, STATE OF TEXAS, CITY OF SAN ANTONIO, EL PASO, NEW BRAUNFELS AND SEVERAL OTHER ENCOUNTERS WITH PRIVATE ORGANIZATIONS. TAKING HIM BASICALLY ALL OVER THE COUNTRY WORKING ON ECONOMIC ISSUES. HE'S WORKED RECENTLY WITH THE CITY OF AUSTIN ON THE ECONOMIC IMPACT OF THE MUSIC INDUSTRY, AND THAT REPORT WAS PROVIDED TO YOU A COUPLE OF MONTHS BACK. AND I GUESS MOST RECENTLY THE ECONOMIC IMPACT ON THE DALLAS COWBOYS TRAINING CAMP. SO WE FEEL FORTUNATE THAT JOHN IS ABLE TO PROVIDE US SOME INFORMATION AND SUPPORT, AND DEFINITELY JOHN IS REGULARLY CALLED FOR INSIGHT AND PERSPECTIVE ON LOCAL, REGIONAL AND NATIONAL ECONOMIC ISSUES. AND WITH THAT I'LL TURN IT OVER TO JOHN.

THANK YOU.

MAYOR GARCIA: IS THERE A MIC OVER THERE? USE THAT ONE.

IS THIS ON?

MAYOR GARCIA: YES.

I DON'T KNOW IF IT'S A GOOD SIGN OR A BAD SIGN THAT I WANT TO BE ON MY FEET TO DO THIS DEAL. IT'S INTERESTING THAT THE CITY MANAGER CALLS THIS THE DEFINITIVE ART BECAUSE, OF COURSE, THOSE -- THAT'S A LITTLE BIT OF AN OXYMORON. OBVIOUSLY ECONOMICS IS MORE ART THAN SCIENCE. WHAT I'M GOING TO TRY TO DO THIS MORNING IS GIVE YOU ALL A LITTLE BIT OF A CONTEXT ON WHAT'S HAPPENING AND THE FACTORS OUT THERE THAT ARE INFLUENCING THE LOCAL ECONOMY HERE IN AUSTIN, HOW THAT TRANSLATES TO SPECIFICALLY CONSUMER?c ACTIVITY IN THE AUSTIN AREA BECAUSE CLEARLY THAT'S OBVIOUSLY WHAT DRIVES SALES TAX GROWTH OR LACK THEREOF IN RECENT MONTHS. AND THEN GIVE YOU MY BEST GUESS ON WHAT'S COMING DOWN THE ROAD FOR THIS FISCAL YEAR AS SORT OF A PRECURSOR TO WHAT RUDY AND VICKY AND THE CITY MANAGER WILL BE TALKING TO YOU ALL ABOUT AS WE GO FORWARD. SO AS AN ECONOMIST, WE CERTAINLY LIKE TO START UP AT ABOUT?c 50,000 FEET. LET'S GO AHEAD AND TALK A LITTLE BIT ABOUT THE NATIONAL ECONOMY AND HOW IT'S AFFECTING US HERE. TO BEGIN WITH, IT'S CLEAR THAT THE NATIONAL ECONOMY IS BEGINNING TO EMERGE FROM WHAT HAS BEEN TECHNICALLY A MODERATE RECESSION. I ACTUALLY THINK IN SPITE OF SOME OF THE MEDIA HYPE, THE RECOVERY IS NOT GOING TO BE QUITE AS RAPID AS FOLKS WOULD LIKE. AND WE WILL TALK A LITTLE BIT ABOUT WHY I FEEL THAT WAY. I ASSUME IT'S NOT AN EXTRAORDINARY INSIGHT TO SUGGEST THAT THE AUSTIN ECONOMY HAS ALSO SUFFERED IN RECENT MONTHS. I BELIEVE THAT I CAN WRITE YOU ALL A CHAPTER AND YOU ALL CAN PROBABLY WRITE ME AN EXTENSIVE BOOK ON THAT TOPIC. MOST THE ECONOMIC INDICATORS IN AUSTIN RIGHT NOW ARE FAIRLY NEGATIVE. OVER THE LONGER TERM I CONTINUE TO BE VERY POSITIVE ABOUT THIS COMMUNITY. I THINK THE FUNDAMENTALS HERE ARE TERRIFIC, BUT FRANKLY OUR SHORT-TERM OUT LOOK, AND WHAT I SAY SHORT TERM I REALLY MEAN FOR THE BALANCE OF THIS FISCAL YEAR IS A LITTLE BIT CLOUDY. I THINK WE'RE GOING TO BE VERY FORTUNATE AS A COMMUNITY TO SEE ANY KIND OF?c GROWTH HERE OVER THE NEXT SEVERAL MONTHS, AND FOR FISCAL YEAR 2002, MOST INDICATORS MAY VERY WELL REMAIN RELATIVELY NEGATIVE. HERE ARE THE FACTORS OUT THERE THAT I SEE SHAPING THE OUTLOOK FOR THE NATION'S ECONOMY OVERALL. AND I JUST LIKE THE CATEGORIZE IT INTO THE NEGATIVE NEWS AND THE POSITIVE NEWS. CLEARLY THERE ARE NEGATIVES STILL NEGOTIATED WITH THE IMPACT OF THE -- NEGATIVES STILL ASSOCIATED WITH THE NEGATIVETIVES OF THE TERRORIST ATTACKS. YOU ARE SEEING RIGHT NOW A VERY, VERY VOLATILE STOCK MARKET. PEOPLE APPEAR TO BE GRABBING ON TO ANY POSITIVE NEWS THEY CAN. THE MARKET BOUNCES UP AND THEN SOME NEGATIVE NEWS COMES OUT, THE MARKET BOUNCES BACK DOWN. FRANKLY, I STILL THINK THE STOCK MARKET IS SLIGHTLY OVERVALUED. I THINK THERE HAS BEEN A LITTLE TOO MUCH ENTHUSIASM PREDICATED ON THE POSSIBILITY OF FUTURE GROWTH. I THINK THAT WE'RE GOING TO HAVE A PRETTY MUCH SWAYS MARKET FOR THE -- SIDEWAYS MARKET FOR THE BALANCE OF THE YEAR. CONSUMER DEBT IS AT AN ALL TIME HIGH RIGHT NOW. AND THAT'S OKAY AS LONG AS YOU CAN SERVICE IT. BUT IF AND WHEN PEOPLE STOP SPENDING MONEY, AND WE KNOW SOMETHING ABOUT THAT HERE IN AUSTIN, IT TURNS INTO A PROBLEM. THAT THIRD BULLET, WORLDWIDE DEMAND AND INVESTMENT, THAT BASICALLY REFERS TO DO PEOPLE NEED NEW THINGS OUT THERE ALL OVER THE WORLD AND ARE THEY SPENDING MONEY? ARE THEY INVESTING MONEY TO CREATE NEW PLANT, NEW CAPACITY, ETCETERA, ETCETERA? IT'S BEEN PRETTY SLOW. AND PARTICULARLY SLOW HERE IN THE UNITED STATES AND I'LL SHOW YOU SOME SPIKTS ON ALL THAT. AND THEN THE BIAS ON MONETARY POLICIES, THE FEDERAL RESERVE BANK HAS SIGNALED THAT THEY ARE NOT GOING TO CUT INTEREST RATES AGAIN ANY TOO MANY SOON. IF THEY MOVE AT ALL, THEY CAN BE INCLINED TO TIGHTEN OR RAISE INTEREST RATES RATHER THAN LOWER THEM. THAT CLEARLY IS A POTENTIAL NEGATIVE FOR THE ECONOMY. SO WHAT'S THE GOOD NEWS? FIRST OF ALL, THERE IS NO SIGN OF INFLATION OUT THERE IN THE NATIONAL ECONOMY AT ALL. INFLATION IS REALLY NO LONGER PART OF PEOPLE'S PLANNING PROCESS, UNLIKE 15 OR 20 YEARS AGO WHEN I CAN REMEMBER FOLKS SAYING I BETTER BUY THIS AND THAT NOW BECAUSE SIX MONTHS FROM NOW IT'S GOING TON 10% MORE THAN IT IS TODAY. THAT'S NO LONGER A CONSIDERATION. RIGHT NOW INTEREST RATES ARE BASICALLY AT HISTORIC LOWS, PARTICULARLY WHEN YOU LOOK AT THEM IN THE CONTEXT OF THE FACT THAT THERE IS NO INFLATION OUT THERE. AND SO THAT'S BEEN A POSITIVE. THERE'S GOING TO BE POSITIVE EFFECTS OF THE FED CUTTING INTEREST RATES 11 TIMES THAT WE HAVEN'T FELT YET. ALSO, I WANT TO EMPHASIZE THIS A LITTLE BIT TOO, GOVERNMENT SPENDING NATIONWIDE HAS ACTUALLY ACCELERATED OVER THE LAST NINE MONTHS OR SO. THAT'S HAD A VERY POSITIVE EFFECT ON THE ECONOMY. SOME OF THAT IS RELATED TO DEFENSE EXPENDITURES, SOME OF THAT IS RELATED TO HOMELAND SECURITY. I'LL SHOW YOU AN INTERESTING CHART THAT SORT OF ILLUSTRATES THAT POINT HERE IN JUST A SECOND. AND THEN FINALLY RIGHT NOW, FOLKS ARE BEGINNING TO BELIEVE, FOR BETTER OR WORSE, THAT THINGS ARE GETTING BETTER, AT LEAST ON A NATIONWIDE BASIS. AND OF COURSE, CONSUMER ATTITUDES ARE A BIG DETERMINANT FOR THE OUTLOOK OF ANY ECONOMY, CONSUMER SPENDING DOES ACCOUNT FOR ABOUT TWO-THIRDS OF ALL ECONOMIC ACTIVITY IN THE UNITED STATES. AND HOW WE FEEL ABOUT THINGS IS A BIG PREPREDICTOR OF HOW THINGS ARE GOING TO GO. SOME PICTURES TO ILLUSTRATE ALL THIS, THIS IS THE RATES ON A QUARTERLY BASIS. THE MOST RECENT DATA WE HAVE ARE THE FOURTH QUARTER OF 2001, THE TECHNICAL DEFINITION OF RECESSION IS TWO CONSECUTIVE QUARTERS OF NEGATIVE GROWTH. SO ACORDING TO THIS WE DOESN'T EXPERIENCE A RECESSION. BUT THAT'S AN ACADEMIC EXERCISE. MOST OF US FEEL THE NEGATIVE EFFECTS. IT IT WALKS LIKE A DUCK, HAS FEATHERS AND QUACKS A LOT, I WOULD BE INCLINED TO CIEWL CAUL IT A DUCK. I WOULD SAY WE'RE IN A RECESSION. THAT FOURTH QUARTER NUMBER IS INTERESTING. THAT REPRESENTS 1.7% GROWTH. OF WHICH 100% IS ATTRIBUTABLE TO IMPACT OF GOVERNMENT SPENDING IN THE FOURTH QUARTER. SO IF YOU TAKE THE GOVERNMENT OUT OF THE EQUATION, THE NATIONAL ECONOMY WAS FLAT IN THE FOURTH QUARTER OF 2001. THIS IS ALL GOVERNMENT SPENDING, STATE, LOCAL AND OF COURSE, FEDERAL ACTIVITY. THAT'S INTERESTING BECAUSE WHAT IT SAYS TO ME IS WHILE THINGS ARE NOT GETTING A WHOLE LOT WORSE, WE DON'T REALLY HAVE A LOT OF EVIDENCE THAT THINGS ARE GETTING SUBSTANTIALLY BETTER AT THE NATIONAL LEVEL. GO AHEAD. THERE IS SOME SIGN THAT AGAIN OVERALL CONSUMER SPENDING BOUNCED BACK. PERSONAL SCIEWMTION EXPENDITURES IS A TERM THAT THE FEDERAL GOVERNMENT USES AS A BROAD UMBRELLA AND IT COVERS MOST RETAIL TRADE, INCLUDING SPENDING ON NON-TAXABLE EVENTS, SERVICES, THAT KIND OF THINGS. YOU CAN SEE A LITTLE A LITTLE MORE POSITIVE IN THE FOURTH QUARTER ON THE HEELS OF A VERY, VERY NEGATIVE THIRD QUARTER. THAT'S WHEN THE TERRORIST ATTACKS OCCURRED IN THE THIRD QUARTER AND IT WAS PRETTY CLEAR FOR A PERIOD OF TIME THERE, MOST OF US SAT AROUND AND WATCHED CNN AND DIDN'T GO OUT AND SPEND MUCH MONEY. AND CONSUMER CONFIDENCE AGAIN NATIONWIDE IS A ?eITTLE MORE POSITIVE THAN IT HAS BEEN IN THE PAST. THE MOST RECENT FIGURE THERE IS FROM MARCH OF 2002. CONSUMER CONFIDENCE IS A FUNNY MEASURE BECAUSE SOME OF IT IS BASED ON REALITY. AT THE END OF THE DAY HOW YOU FEEL IS AT LEAST IN LARGE PART DETERMINED BY WHAT'S HAPPENING IN YOUR LIFE, BUT ALSO A LOT OF IT IS BASED ON WHAT YOU HEAR AND WHAT YOU READ AND WHAT YOU HOPE WILL BE THE CASE. AND I?c WOULD SUGGEST THAT PART OF THAT POSITIVE IMPROVEMENT MAY BE REALITY, BUT A BIG PART OF IT MAY BE WISHFUL THINKING. THIS IS ONE I JUST PUT IN THERE BECAUSE IT'S KIND OF INTERESTING. THIS IS GROWTH AND DISPOSABLE PERSONAL INCOME, IN OTHER WORDS, HOW MUCH MONEY DO YOU HAVE TO SPEND AFTER YOU PAY ALL YOUR BILLS. VERY, VERY HIGH IN THE THIRD QUARTER. WHY? BECAUSE NONE OF US WENT INTO THE MALL. WE ALL WATCHED CNN AROUND THE TERRORIST ATTACKS. THEN AS THE CHRISTMAS SEASON LOOMED, IT DROPPED DOWNPLY BECAUSE EVERYTHING R. EVERYBODY SAID WE BETTER GET OUT AND BUY THE THINGS WE DIDN'T BUY A COUPLE OF MONTHS AGO. IT'S INTERESTING TO SEE THE IMPACT OF ONE MAJOR EVENT ON SOME OF THESE ECONOMIC MEASURES. THIS I THINK IS A FAIRLY KEY INDICATOR. REAL PRIVATE INVESTMENT, REAL MEANING IT HAS BEEN ADJUSTED FOR INFLATION, BASICALLY SPENDING BY BUSINESSES FOR THE PURPOSES OF FURTHERING THEIR BUSINESS ACTIVITY. AND YOU CAN SEE THROUGH THE FOURTH QUARTER THAT IT'S A VERY NEGATIVE NUMBER AS COMPARED TO THE FOURTH QUARTER OF 2000. THIS INFORMATION CONCERNS ME BECAUSE UNTIL I SEE THAT TREND BEGIN TO IMPROVE A LITTLE BIT, AND I THINK IT IS IN THE PROCESS OF IMPROVING A LITTLE BIT RIGHT NOW, WHAT I THINK IS SORT OF THE UNDERLYING CORE ECONOMY OF THE COUNTRY I THINK IS STILL RELATIVELY SOFT. AND SO WE'RE OBVIOUSLY PAYING SOME CLOSE ATTENTION TO THEM. ON THE POSITIVE SIDE THAT'S GROWTH IN THE CONSUMER PRICE INDEX AGAIN THROUGH FEBRUARY. IT'S A NON-EVENT. ESSENTIALLY ZERO. WHICH MEANS WE ARE LOOKING AT VIRTUALLY NO INFLATION OUT THERE IN THE WORLD RIGHT NOW. SYMPTOM LA ACTIVE IS A MAID UP ECONOMICS WORD. IT JUST MEANS THAT IT'S LIKELY TO CREATE A POSITIVE EFFECT AS OPPOSED TO A NEGATIVE. AS YOU CAN SEE, THE FED HAS CUT INTEREST RATES 11 TIME. SOME OF THAT IMPACT HAS ALREADY BEEN FELT AND IN FACT, I'LL TELL YOU WHERE IT REALLY SHOWS UP, IT PROMPTS PEOPLE TO REFINANCE THEIR MORTGAGES, CUT DOWN THEIR HOUSING COSTS IN THE PROCESS, AND I THINK A LOT OF THAT REFINANCE-RELATED MONEY HAS BEEN PLOWED BACK INTO THE ECONOMY IN THE FORM OF CONSUMER SPENDING. WE ALL KNOW FOLKS WHO WENT OUT AND REFINANCED THEIR HOMES AT, GOSH, I CUT MY PAYMENTS A COUPLE HUNDRED BUCKS A MONTH AND I GOT SOME MONEY BACK AND AIM GOING TO TURN AROUND AND SPEND THAT MONEY ON WHATEVER. SO THAT'S A POSITIVE EFFECT. THE IMPACT YET TO COME IS IF AND WHEN BUSINESS BEGINS TO INVEST, THEY'LL BE ABLE TO BORROW MONEY AT LOWER RATES. AND THAT WILL HAVE A POSITIVE EFFECT. WE HAVEN'T REALLY BEGUN TO SEE THAT YET. AGAIN, THE FISCAL POLICIES, THAT'S GOVERNMENT SPENDING. WE THINK THERE WILL BE SOMEWHERE BETWEEN 100 AND 120 BILLION DOLLARS INJECTED INTO THE ECONOMY BY THE FEDERAL GOVERNMENT OVER THE NEXT YEAR OR SO. SOME OF THAT ALREADY IS ALREADY INCURRED. ONE OF THE NICE THINGS ABOUT THE FEDERAL LEVEL, THEY CAN AFFORD TO RUN A DEFICIT INLIKE FOLKS IN THE STATE AND LOCAL GOVERNMENT. THAT ALLOWS THEM TO PUMP UP THE ECONOMY A LITTLE BIT AT A TIME WHEN IT CAN USE A LITTLE BOLSTERING. AS I MENTIONED EARLIER, THE FEDERAL RESERVE BANK HAS SCHEDULED IF THEY'RE GOING TO MAKE ANY MOVES, THEY'LL RAISE INTEREST RATES. S AT HAS A NEGATIVE EFFECT. IF INTEREST RATES GO UP, I THINK THIS REFINANCING ACTIVITY COMES TO A SCREECHING HALT AND THAT HAS A NEGATIVE EFFECT ON CONSUMER SPENDING. SO THIS IS OUR FORECAST FOR THE NATIONAL ECONOMY. IT IS CLEARLY GOING TO BE SLOWER THAN IT HAS BEEN. THE ORANGE BARS REPRESENT 2002 AND 2003. YOU CAN SEE THAT THERE WAS A PERIOD THERE WE REALLY DID HAVE EXTRAORDINARY GROWTH. I WENT TO NERD SCHOOL A LONG TIME AGO AND BACK IN NERD SCHOOL THEY LAWSUIT TAUT US THE SPEED LIMIT FOR THE ECONOMY WAS ABOUT TWO AND A HALF PERCENT A YEAR BEFORE YOU STARTED RUNNING INTO INFLATION. RECENT HIS TRY TELLS YOU THAT'S NOT TRUE AND THAT'S A SEPARATE SPEECH, BUT I THINK IT HAS TO DO WITH THINGS LIKE INFORMATION TECHNOLOGY AND ETCETERA, MAKING US ALL MORE PRODUCTIVE. I THINK THE SPEED LIMIT IS NOW EFFECTIVELY CLOSER TO FOUR PE&%CENT. I THINK WE WILL WORK OUR WAY BACK TOWARD FOUR PERCENT GROWTH, BUT I DON'T THINK WE'LL SEE IT THIS YEAR OR THE NEXT YEAR. I WOULD JUST BE THRILLED IF I WAS DEAD WRONG ABOUT THAT. THE BEST THING IN THE WORLD IS FOR ME TO ISSUE A CONSERVATIVE PROJECTION AND THEN BE ON THE LOW SIDE. LET ME SAY INTELLECTUALLY I HOPE I'M RIGHT, BUT FOR THE GOOD OF THE WORLD I HOPE I'M WRONG ON THIS PROJECTION. SO WHAT'S THE SITUATION HERE IN AUSTIN? WHAT WE AS A COMMUNITY HAS ENJOYED EXTRAORDINARY ECONOMIC GROWTH OVER THE LAST 10 YEARS. YOU GUYS KNOW THAT PROBABLY BETTER THAN I DO. I JUST PULLED ONE MEASURE THAT I THOUGHT WAS KIND OF INTERESTING. THIS IS THE AVERAGE WAGE PAID HER JOB IN THE AUSTIN METROPOLITAN AREA VERSUS THE UNITED STATES AS A WHOLE. AND YOU CAN SEE REALLY THROUGH THE FIRST HALF OF THE LAST DECADE, WE RAN BELOW THE NATIONAL AVERAGE. WE ARE THE RED LINE AS OPPOSED TO THE BLUE LINE, WHICH IS THE UNITED STATES. AND THEN ALL OF A SUDDEN, IT SKYROCKETED SHARPLY UP UNTIL BY 2000, WHICH IS THE LAST ACTUAL DATA WE HAVE, AVERAGE WAGES PER JOB IN AUSTIN WERE 5,000 DOLLARS GREATER THAN THE NATION AS A WHOLE. THAT'S EXTRAORDINARY GROWTH. AND THAT CREATES OBVIOUSLY SUBSTANTIAL LEVELS OF INCOME WHICH PEOPLE COULD TURN AROUND AND SPEND. AND THIS IS JUST WAGES PER JOB. THIS DOESN'T INCLUDE ALL OF THE STOCK MARKET RELATED GAMES THAT WE ALL SAW HERE IN AUSTIN AS WELL. WE'LL TALK ABOUT THAT. BUT WHAT IT SAYS IS THAT THROUGH THE 90'S WE WENT FROM UNDERPERFORMING THE NATION AS A WHOLE TO SIGNIFICANTLY OUT PERFORMING THE NATION AS A WHOLE. SO WHAT ARE THE CURRENT DRIVERS OF OUR ECONOMY? AND THESE ARE SORT OF CATEGORIZATIONS THAT I'VE USED. WE CAN DEBATE WHETHER THEY'RE APPROPRIATE OR NOT. WHEN I SAY A TRADITIONAL COMPANY, I'M TALKING ABOUT THE SEMICONDUCTOR COMPANIES, LIKE DELL, MOTOROLA, AMD.%,Vy THERE ARE SOME SIGNS OF IMPROVEMENT OUT THERE, BUT THEY'RE STILL WELL OFF THEIR HIGHS AND WE DON'T EXPECT THE DEMAND FOR SEMI CONDUCTORS TO PICK UP SHARPLY UNTIL THE SECOND HALF OF THIS YEAR OR 2003. SO YOU HAVEN'T SEEN A WHOLE LOT OF IMPROVEMENT THERE. FROM MY PURPOSES, NEW TECH IS ESSENTIALLY THE INTERNET-RELATED ACTIVITIES. I DIDN'T MAKE THAT TERM UP, BUT IT IS KIND OF GOOD. THERE WAS A LOT OF EXCITEMENT. THERE ARE A FEW COMPANIES USING THE INTERNET THAT ARE DOING OKAY, BUT AS A GENERAL RULE, WE'RE EXPERIENCING THE -- THIS GENERATION'S VERSION OF THE REAL ESTATE BOOM OF THE EARLY AND MID 1980S, FRANKLY. A LOT OF ENTHUSIASM THAT DIDN'T TRANSLATE INTO A WHOLE LOT OF REAL ECONOMIC ACTIVITY. I THINK THAT LONGER TERM IN THIS COMMUNITY A LOT OF OUR FUTURE RELIES IN THE SOFTWARE AND RESEARCH AND PROFESSIONAL SERVICES, WHETHER IT'S CONSIDERED TO BE VERY HIGH VALUE ADDED, KNOWLEDGE INTENSE ACTIVE AREAS. I THINK THAT'S VERY PROMISING FOR US, PARTICULARLY OVER THE NEXT THREE TO FIVE YEARS. BUT TO SOME DEGREE THAT'S GOING TO CYCLE CAN THE NATIONAL ECONOMY, PARTICULARLY THE PROFESSIONAL SERVICES SIDE. STATE GOVERNMENT AND U.T. HAVE ALWAYS BEEN A STABILIZING FORCE HERE. THEY CONTINUE TO BE. I'M A LITTLE CONCERNED ABOUT THE STATE'S BUNGTS. I MEAN -- BUDGET. THEY'RE FACING THE SAME ISSUES THAT COUNCILS AND PUBLIC SECTOR BODIES ARE FACING EVERYWHERE. THE BEST GUESS IS STATE IS SOMEWHERE BETWEEN FIVE AND SEVEN BILLION DOLLARS SHORT FOR THE NEXT BIENNIUM. THAT COULD HAVE A NEGATIVE EFFECT ON ONE AS WELL -- ON AUSTIN AS WELL. SO WHAT ARE THE I AM PLATATION CAEUTIONS FOR ALL THAT ON CONSUMER SPENDING HERE? MY GUESS IS IN THE REGION WE'VE HAD ABOUT 27,000 LAYOFFS. THAT'S AN APPROXIMATION. I'VE SEEN A VARIETY OF STATISTICS ON THAT. I THINK THAT'S PROBABLY THE HIGH END, BUT IT GIVES YOU A SENSE IN THE ORDER?c OF MAGNITUDE. OBVIOUSLY IF YOU LOSE YOUR JOB, PARTICULARLY IF YOU LOSE YOUR WELL PAYING JOB, FIRST OF ALL YOU WILL BE NERVOUS ABOUT SPENDING A WHOLE LOT OF MONEY. AND SECOND OF ALL, IF YOU FIND ANOTHER JOB IN THIS ENVIRONMENT, MOST OF THE TIME IT'S GOING TO BE AT A LOWER LEVEL OF PAY. SO YOU WILL HAVE TO FOCUS ON MEETING YOUR OBLIGATIONS RATHER THAN HAVE A LOT OF MONEY OUT THERE TO SPEND. SO THAT IS CLEARLY A NEGATIVE EFFECT. SECOND THING IS WHAT'S CALLED THE WEALTH EFFECT. THE WEALTH EFFECT ESSENTIALLY MEANS IF YOUR STOCK MARKET PORTFOLIO IS RISING, YOU FEEL GOOD. REMEMBER THE FOLKS WE USED TO KNOW, INCLUDING SOME OF US WHO WOULD CHECK THEIR STOCK PORTFOLIO EVERYDAY TO SEE HOW MUCH WENT UP EVERYDAY? WE FELT RICH WHEN THAT HAPPENED. I DID DAYS WHEN IT BOUNCED UP A LOT AND YOU SAID I FILE LIKE HAVING DINNER TODAY TONIGHT OR GOING OUT AND BUYING SOMETHING I DON'T NEED BECAUSE I'M FEELING RICH. THAT'S ALL GONE. IT'S GONE IN THE OPPOSITE DIRECTION RIGHT NOW. LOTS AND LOTS OF PEOPLE ARE SAYING, MAN, I USED TO BE WORTH X AND NOW I'M WORTH LESS THAN 20% X. NO REAL MONEY HAS CHANGED HANDS, BUT CONSUMER FEELINGS HAVE CHANGED QUITE A BIT. AND OBVIOUSLY THAT'S A CONCERN. I THINK MYGATION INTO TOWN HAS SLOWED CONSIDERABLY. AND PART OF WHAT HELPED US GROW IS THERE WERE MORE OF US HERE. YOU GUYS HAD TO DEAL WITH THE IN MIGRATION OVER THE LAST 10 YEARS. THE TRAFFIC AND EVERYTHING ELSE. I THINK THAT'S SLOWED DOWN, SO THERE ARE FEWER FOLKS MOVING IN TO DRIVE GROWTH. THE OTHER THING THAT'S AN ISSUE IS WE'VE SEEN A LOT OF SUBURBAN EYESIZATION. WHICH IS PEOPLE SAYING I CAN'T AFFORD A HOUSE IN AUSTIN. I'VE GOT TO FLOOF MOOF TO DISARKS, I'VE GOT TO MOVE TO PFLUGERVILLE, I'VE GOT TO MOVE TO LAKE COUNTY. WHERE THE PEOPLE GO, THE RETAIL ACTIVITY FOLLOWS. NOW YOU CAN GO TO THE GROCERY STORE IN CEDAR PARK, YOU CAN GO TO THE DEPARTMENT STORE IN CEDAR PARK. YOU CAN BUY WHAT YOU NEED IN THESE COMMUNITIES. WE RAN SOME STATISTICS WHICH I HAVEN'T PUT UP HERE, BUT 20 YEARS AGO 90% OF THE TAXABLE RETAIL ACTIVITY IN THE AUSTIN METROPOLITAN AREA OCCURRED IN THE CITY OF?c AUSTIN. IN 2000, 70% OF IT DID. AND SO THAT OBVIOUSLY, WE WORRY ABOUT LOSING TAX BASE TO THE SUBURBS. IT'S NOT JUST PROPERTY?c TAXES, IT'S OBVIOUSLY ALSO SALES TAX BASE. BUSINESS SPENDING, WHICH DOES OBVIOUSLY AFFECT SALES TAX REVENUES TO SOME DEGREE AS WELL, IS ALSO DOWN BECAUSE FRANKLY THE BUSINESS SEBTER OF OUR ECONOMY IS PRETTY SLOW AND LOCAL CONSUMER CONFIDENCE I SAY HAS BEEN DAMAGED. I'M NOT SAYING EVERYBODY IS HANGING THEIR HEAD, BUT THERE'S NO QUESTION WE WERE ALL IEW FORERICK FOR A PERIOD OF TIME AND NOW THAT IS GONE. SO I THINK ALL THAT ALSO HAS AN IMPACT. AND I THINK IT'S GOING TO STAY PRETTY SLOW UNTIL WE SEE THE SIGNS OF NATIONAL RECOVERY SHOWING UP HERE IN THE AUSTIN COMMUNITY. SOME CHARTS AGAIN, YOU KNOW, THE CITY FOLKS WILL PROBABLY SHOW YOU MORE GALE DWAEUL ON THIS. THIS IS YEAR AFTER YEAR GROWTH OF SALES TAX REVENUES FOR THE LAST 12 MONTHS OR SO, ACTUALLY THE LAST TWO YEARS. YOU KNOW, GROWTH IN THE DOUBLE DIGIT RANGE IS EXTRAORDINARY. AUSTIN%ED EXTRAORDINARY SALES TAX GROWTH BACK IN 1999 AND 2000. YOU CAN SEE IT'S TRENDED DOWN FAIRLY SMARTLY HERE. IF WE RAN A LINE THROUGH THAT, IT WOULD SHOW A NICE DOWNWARD TREND. WE'LL TALK ABOUT WHY SOME OF THAT IS. ONE OF THE THINGS THAT IS OF INTEREST TO ME IS THE TREND ON CURRENT COLLECTIONS IS NOT AS NEGATIVE AS ON ACTUAL PAYMENTS. THIS IS A LITTLE BIT ARREST CONTAIN, BUT -- ARKHANE, BUT WHAT HAPPENS IS THEY GET MONEY IN AND THEY GET MONEY IN FOR THE CURRENT PERIOD, SOMETIMES THERE'S PAYMENTS MADE IN ADVANCE, SOMETIMES THERE'S PAYMENTS THAT REFLECT ACTIVITY SEVERAL MONTHS AGO. THERE'S AN AUDITING FUNCTION, A LOT OF MANIPULATION AROUND. CURRENT COLLECTIONS IS LITERALLY WHAT HAPPENED IN TERMS OF SALES IN THAT CURRENT MONTH. AND SO IF YOU LOOK AT THAT MAROON BAR THERE, IT WAS NEGATIVE 8.3% IN JANUARY. BY APRIL IT WAS NEGATIVE 6.4. NOW, THE ACTUAL PAYMENT WAS DOWN 10%, BUT I SEE A LITTLE BIT OF A POSITIVE TREND IN THAT CURRENT SELECTION OF INFORMATION. AGAIN, JUST SOMETHING TO SORT OF TAKE A LOOK AT. GO AHEAD. HOW WE FORECAST SALES TAX REVENUES. I HAVE SPENT WAY MORE TIME THAN ANY HUMAN BEING SHOULD THINKING ABOUT THIS. THIS IS PART OF THE CATEGORY OF THINGS THAT MY WIFE REFERS TO AS THE?c DON'T MAKE EYE CONTACT MOMENTS BECAUSE I MIGHT ACTUALLY TALK ABOUT IT IF SHE DOESN'T WATCH HERSELF. BUT ANYWAY, THAT'S CLEAR TO ME IS OVER TIME FOR A LOCAL ECONOMY, THE BEST PRE TICKET PREDICTOR OF WHERE SALES TAX REVENUE IS GOING TO GO IS JOB GROWTH. WHEN YOU THINK ABOUT THAT THAT MAKES A CERTAIN AMOUNT OF SENSE. ARE WE ADDING JOBS, WHICH ALSO TELLS US ARE WE ADDING PEOPLE? IF WE'RE ADDING JOBS OR CREATING INCOMES, INCOME ALLOWS PEOPLE TO GO OUT AND BUY THINGS, PRETTY STRAIGHTFORWARD. ONE OF THE THINGS THAT ALSO HAS TO HAPPEN IS NOT ONLY ARE WE ADDING JOBS, BUT HOW MUCH TAX REVENUE WITH WE EXPECT TO IMET PER JoiB BECAUSE NOT ALL JOBS ARE CREATED ACTUAL. AN 80,000 DOLLAR A YEAR JOB IS GOING TO CREATE MORE DISPOSABLE INCOME THAN A 20,000 DOLLAR A YEAR JOB. SO WHEN WE DO OUR FORECAST, IT'S?c A RELATIVELY SIMPLE CALCULATION. WHAT DO WE THINK JOB GROWTH IS GOING TO BE TIMES HOW MUCH MONEY DO WE THINK EACH JOB IS GOING TO GENERATE IN THE SALES TAX REVENUE, THAT TELLS US WHAT WE THINK SALES TAX REVENUE IS GOING TO BE. IT'S PRETTY SIMPLE. THIS IS TRAVIS COUNTY JOB GROWTH. AND ONE OF THE THINGS THAT I HAVE -- ONE OF THE THINGS I'VE LOOKED AT THIS THIS WHOLE EQUATION IS DO YOU USE THE WHOLE COUNTY, DO YOU USE THE MSA. BOTTOM LINE IS THE CORE COUNTY, TRAVIS IN THIS CASE, MAKES A LITTLE MORE SENSE. YOU CAN SEE IT?c PEAKED OUT THERE AT AROUND SIX PERCENT AT THE TAIL END OF 2000. IT IS NOW NEGATIVE IN THE LAST MONTH, I BELIEVE, .74%, BUT THERE IS WHAT APPEARS TO BE A LITTLE BIT OF AN UP TURN IN THE SENSE THAT THE DECLINE -- RATE OF DECLINE IS SLOWING DOWN. SO I THINK THAT'S A POSITIVE. I ACTUALLY BELIEVE, AND I'LL TELL YOU ABOUT THIS IN A LITTLE BIT. WE MAY GET TO A POSITIVE FIGURE ON THIS BY THE END OF THE YEAR. I THINK THINGS ARE BASICALLY BOMBING OUT AS WE?c SIT HERE AND THAT'S INDICATED -- MY INDICATORS CONFIRM THAT. JUST TO REINFORCE WHAT I SAID, THOSE ARE TWO CHARTS, THAT'S GROWTH IN SALES TAX REVENUE AND GROWTH IN TRAVIS COUNTY EMPLOYMENT. YOU KNOW, I CAN TELL YOU THAT THE CORRELATION -- I CAN GIVE YOU THE CORRELATION OF STATISTICS. YOU CAN LOOK AND SEE THEY'RE VERY TIMELY CONNECTSED. THOSE ARE ANNUAL FIGURES FROM 1991 THROUGH 2001. AND OBVIOUSLY THEY MOVE VERY CLOSELY TOGETHER, WHICH AGAIN BOLSTERS OUR VIEW OF THIS BEING THE RIGHT WAY TO DO THIS. GO AHEAD. AND THEN THIS IS THE HISTORY OF SALES TAX REVENUE FOR JOBS. IN THE EARLY 1990S IT WAS IN THE 165 TO 170 DOLLAR RANGE. IT ACTUALLY PEAKED OUT LAST YEAR FOR FISCAL YEAR 2001 AT A LITTLE OVER 260 DOLLARS' WORTH OF SALES TAX REVENUE FOR JOBS VERSUS THE MOST RECENT 12 MONTHS, WHICH GOES THROUGH THE APRIL PAYMENT, 253 DOLLARS. FOR THE SALES TAX REVENUE. I DON'T HAVE A CHART ON THIS, BUT TO GIVE YOU A FRAME OF REFERENCE, THIS IS BY FAR THE HIGHEST LEVEL OF ANY MAJOR CITY IN TEXAS. EVEN STILL TODAY. SO KIND OF WHAT OUR CONCLUSIONS AND HOW DOES THAT LEAD?c TO OUR FORECAST? I REALLY DO THINK MOST OF THE BAD NEWS IS PASSED IN AUSTIN. I JUST DON'T THINK THERE'S A LOT GOING ON RIGHT NOW THAT'S PROVIDING A LOT OF POSITIVE NEWS. WE'RE KIND OF -- I WOULDN'T SAY WE'RE DEAD IN THE WATER, BUT WE'RE KIND OF DRIFTING SWAYSS HERE A LITTLE BIT FOR THE NEXT FEW MONTHS. I HAVE HEARD OUT THERE ON THE STREET THAT SOME HIRINGING HAS RESUMED. I'VE TALKED?c TO A A COUPLE OF FOLKS RECENTLY HIRED BY DELL. BUT WE HAVEN'T HAD ANY ANNOUNCEMENTS ON ANY MAJOR EXPANSION OUTS THERE. GIVEN THE FACT THAT THE STOCK MARKET-RELATED BOOM IN THIS TOWN IS OVER, WAGES ARE MORE IMPORTANT THAN THEY HAVE BEEN IN THE RECENT PAST. WE ALL KNOW STORIES OF PEOPLE AT DELL WHO WERE WORTH A COUPLE MILLION BUCKS ON AN ANNUAL SALARY OF $45,000 A YEAR. THAT ISN'T GOING TO BE THE CASE ANY TIME SOON. WHAT YOU EARN ON YOUR JOB IS INCREASINGLY GOING TO BE, AT LEAST COMPARED TO THE RECENT PAST, DETERMINANT OF HOW WELL YOU'RE DOING. SO SORT OF TAKING THAT ALL TOGETHER, THIS IS I THINK POSSIBLY A PRETTY GOOD UP SIDE, BUT I WOULD BE CONCERNED WITH YOUR PLANNING. THAT'S WHAT YOU WILL ALL DO, BUT I WOULD THINK THAT GIVEN THE UNCERTAINTY OUT THERE, A CONSERVATIVE APPROACH MAKES THE MOST SENSE. AND I STILL AM VERY BULL LISH ON THIS COMMUNITY, HAVE BEEN FOR 10 YEARS AND CONTINUE TO BE. I THINK OUR FUNDAMENTAL ADVANTAGES IN AUSTIN ARE TREMENDOUS AND I THINK IF THIS IS AS BAD AS IT GETS IN THE CONTEXT OF SOME BAD PLACES I'VE SEEN, IT ISN'T TOO BAD. IT HURTS A LOT WHEN YOU GO FROM 15% GROWTH DOWN TO NOTHING OR SLIGHTLY NEGATIVE. SO LET MEL AT THE YOU MY PROJECTION ON WHAT I THINK IS GOING TO HAPPEN. FIRST THE RANGE OF FORECAST THAT WE'VE DONE FOR THE TRAVIS COUNTY GROWTH. I MAPPED THIS FOR THE CITY'S FISCAL YEAR THROUGH SEPTEMBER OF 2002. IT COULD BE AS LOW AS NEGATIVE TWO PERCENT. COULD BE AS POSITIVE AS SIX-10TH OF A PERCENT UP. MY?hECONOMIST OR MAXIMUM LIKELIHOOD SCENARIO IS A DECLINE OF ABOUT A HALF% FISCAL YEAR 2002 COMPARED TO FISCAL YEAR 2001. WE GO FROM A LOW OF ABOUT $248 PER JOB. THAT'S TAKING THE MOST RECENT JOBS AND EXTRAPOLATING THE TREND OUT OF THERE TO A HIGH OF ABOUT $257 PER JOB. THAT WOULD ASSUME SOME PRETTY GOOD BOUNCE UP AT THE END. MY BEST GUESS IS AROUND $250 IN A JOB IN TERMS OF SALES TAX REVENUE. SO THAT GENERATES, AGAIN, USING ALL THESE DIFFERENT SCENARIOS, A PRETTY BROAD RANGE. THINGS COULD BE AS BAD THE THE NEGATIVE .25%. MY BEST GUESS IS 118.IS MILLION DOLLARS. THAT'S A LOSS OF 3.IS MILLION COLLARS IN 2001 AND IT'S A DROP OF ABOUT 2.6%. THAT ASSUMES ESSENTIALLY THAT THE EMPLOYMENT SITUATION HAS ESSENTIALLY BOIMED OUT. AND THAT ALSO THE REVENUE, THE SALES TAX REVENUE FOR JOBS HAS BASICALLY BOTTOMED OUT, BUT THAT THERE IS NOT GOING TO BE AN ENORMOUS AMOUNT OF IMPROVEMENT BETWEEN NOW AND THE END OF THE YEAR. SO THAT'S AN EXTERNAL VIEW. THAT'S MY BEST?c GUESS IN THE CATEGORY OF DEFINITIVE ART HERE. LET'S EMPHASIZE THE ART RATHER THAN THE DEFINITIVE. AND I'D BE HAPPY TO ANSWER ANY QUESTIONS Y'ALL HAVE.

MAYOR GARCIA: THANK YOU. HAVEK YOU VERY OF. WHEN YOU WERE TALKING ABOUT THE EXCESS OF CAPITAL. IN THE PERIODS FOLLOWING THE BEGINNING OF THE DOWNTURN, PARTICULARLY IN THE NASDAQ MARKET AND UNTIL IT BOTTOMED OUT AT 1700, THEY SAID THAT THERE WERE TWO TRILLION DOLLARS LOST IN STOCK VALUES. IS THAT GOING TO AFFECT THE ABILITY OF COMPANIES TO INVEST IN NEW BUSINESS AND HOW IS THAT GOING TO APPLY?

IT DEPENDS ON THE COMPANY. THAT'S A VERY GOOD QUESTION. IF YOU ARE A VERY, VERY LARGE COMPANY YOU HAVE THE ABILITY OF COURSE TO FLOAT COMMERCIAL PAPER. A LARGE, WELL ESTABLISHED COMPANY. THAT PROBABLY DOES NOT HAVE A SIGNIFICANT AFFECT ON YOUR ABILITY TO RAISE CAPITAL. WHO IT HURTS AREu]HE MEDIUM SIZED COMPANIES, THE SMALL COMPANIES AND THE COMPANIES WHO HAVE RECENTLY GONE PUBLIC WHO NEED TO COME BACK FOR A SECOND ROUND OF FINANCING. THOSE FOLKS ARE GOING TO HAVE A HARD TIME. IT ALSO IMPLICIT IN THIS HURTS A LOT OF SMALL BUSINESSES. I'LL GIVE YOU AN EXAMPLE. I KNOW OF A RESTAURANT HERE IN TOWN THAT WAS FINANCED 25% EQUITY, 75% DEBT, BUT THE VAST MAJORITY OF THE DEBT WAS COLLATERALIZED WITH DELL STOCK. THE PRICE OF DELL STOCK IS A LITTLE BIT DIFFERENT TODAY THAN IT WAS WHEN ALL THAT HAPPENED, SO THERE HAVE BEEN SOME NEGATIVE EFFECT FOR THE GUYS WHO COLLATERALIZED IT USING THEIR STOCK PORTFOLIO, IT TAKES A WHOLE LOT MORE DELL STOCK TO COLLATERALIZE MG THAN IT DID TWO OR THREE YEARS(ou AGO. THAT'S THE REAL WORLD EFFECT THAT IS SORT OF OVER AND ABOVE THE WEALTH EFFECT THAT I'M TALKING ABOUT. I DON'T KNOW HOW MUCH ACTIVITY IN THIS TOWN WAS COLLATERALIZED WITH STOCK PORTFOLIOS, BUT I'M GUESSING IT'S A BUNCH. SO I THINK THAT THAT'S KIND OF THE HIDDEN IMPACT THAT WE DON'T TYPICALLY?c SEE.

MAYOR GARCIA: ALSO, THE REASON THAT WE HAD THE -- THE REASON THAT WE HAD THE CRAZINESS IN THE MARKET IS THAT THE BROKERAGE HOUSES DECIDED TO BECOME INVESTMENT BANKERS AND TAKE COMPANIES TO MARKET THAT HAD NO EARNINGS RECORD OF ANY KIND. IS THAT OVER?

YES. I THINK SO. I THINK IT'S -- LET ME PUT IT TO YOU THIS WAY. YOU HAVEN'T SEEN A WHOLE LOT IN THE WAY OF NEW IPO'S IN THE LAST SIX MONTHS. AT THIS POINT IF YOU INVEST IN A COMPANY THAT HAS NO TRACK RECORD, SHAME ON YOU. I MEAN, WE'VE KIND OF IN THEORY ALL LEARNED OUR LESSON THAT IN FACT PROFITS DO MATTER AND THAT LONG-TERM THE VALUE OF A COMPANY IS REALLY NOTHING MORE THAN THE PRESENT FUEL PRESENT FUEL AND FUTURE SUSTAINED PROFIT. I THINK IT'S OVER UNTIL WE GET A NEW GENERATION THAT DOESN'T REMEMBER THE LATE 20TH CENTURY.

MAYOR GARCIA: COUNCILMEMBER SLUSHER?

SLUSHER: THAT BRINGS TO MIND THE BOOM/BUST CYCLE. DO YOU HAVE ANY IDEAS ON HOW TO HAVE AUSTIN NOT GO THROUGH THAT CYCLE AGAIN?

WELL, I THINK IT IS -- IN MY EXPERIENCE IN AUSTIN, I'VE ONLY BEEN HERE ABOUT 17 YEARS. I'VE ONLY SEEN TWO BOOMS AND BUSTS. I'M SURE THERE HAVE BEEN OTHERS IN PAST AND THERE WILL BE IN THE FUTURE. I THINK THERE IS THAT WE CAN DO CERTAINLY AS A CITY, I THINK THERE'S LITTLE YOU CAN DO TO KEEP THAT FROM HAPPENING. WHAT YOU HOPE IS PEOPLE LEARN OVER TIME AND THAT PEOPLE DO SORT OF GO BACK TO THE FUNDAMENTALS AND SAY LOOK, IT REALLY IS WHAT WE WERE JUST TALKING ABOUT, PROFITS DO MATTER, ALL THAT STUFF. ONE OF THE THINGS THAT YOU CAN DO CERTAINLY IS TO SAY YOUR ECONOMIC DEVELOPMENT POLICY EXPLICITLY FOCUSES ON COMPANIES THAT HAVE TRACK RECORDS. AND THAT YOU ARE WORKING ON ALSO TO GROW COMPANIES LOCALLY THAT PRODUCE REAL THINGS. BUT I THINK IT'S GOING TO BE TOUGH -- UNFORTUNATELY SHS THIS IS A COMMUNITY WITH SO MANY NATURAL ADVANTAGES, ENTHUSIASM HERE GETS PRETTY HIGH. AND I THINK IT'S GOING TO BE DIFFICULT FOR THE CITY TO CONTROL THAT IN ANY WAY, SHAPE OR FORM, EXCEPT TO REMIND PEOPLE, HEY, BUSTS DO HAPPEN. I'M AFRAID THAT'S NOT MUCH OF AN ANSWER. I DON'T HAVE A REAL GOOD ANSWER FOR YOU ON THAT.

SLUSHER: THANK YOU, THOUGH. THAT'S INFORMATIVE.

MAYOR GARCIA: COUNCILMEMBER ALVAREZ?

ALVAREZ: YES. I JUST HAD A QUESTION BECAUSE WE'RE FOCUSED ON THE SALES TAX AS IT RELATES TO JOB GROWTH. AND THAT BEING I GUESS ONE OF THE INDICATORS THAT CLOSELY ALINES WITH THE -- ALINES WITH THE SALES TAX LEVEL. I'M WONDERING WITH TOURISM AND HOTEL AND MOTEL OCCUPANCY AND THOSE KIND OF ISSUES AND HOW DO THEY FACTOR INTO THE EQUATION?

IT IS GREAT FOR THE AUSTIN SALES TAX BASE. WHEN WE WERE WORKING ON THE MUSIC STUDY HERE, WE WERE KNOCKED OTHER BY THE IMPACT OF THINGS, FOR EXAMPLE, LIKE SOUTH BY SOUTHWEST. SO I THINK ONE OF THE REASONS, FOR EXAMPLE, WHY AUSTIN HAS A RELATIVELY HIGH SALES TAX REVENUE FOR A JOB IS BECAUSE WE HAVE A PRETTY STRONG TOURISM ECONOMY HERE. AND SO THAT KIND OF BOUNCES UP THAT NUMBER IN A WAY THAT I THINK IS REAL POSITIVE. OBVIOUSLY THE TOURISM INDUSTRY HERE HAS BEEN REALLY NEGATIVELY AFFECTED BY THE EVENTS OF SEPTEMBER 11TH. THAT WILL COME BACK. BUT FOR THIS FISCAL YEAR, IT'S PRETTY DARN TOUGH. I THINK TOURISM IS ACTUALLY SOMETHING THAT'S A RELATIVE STRENGTH FOR US IN THIS COMMUNITY. IT'S A STRENGTH IN THIS REGION. I HAVE LONG TIME THOUGHT THAT THE TOURISM OPPORTUNITY IN AUSTIN AND SAN ANTONIO COMBINED WERE JUST ABOUT AS GOOD AS ANYWHERE IN THE COUNTRY. AND I ALWAYS THOUGHT IT WOULD BE NEAT IF SOMEWHERE DOWN THE ROAD WE COULD MARKET OUR SEFDZ AS A REGION AND -- OURSELVES AS A REGION AND COME TO THE CENTRAL TEXAS CORRIDOR.

MAYOR GARCIA: FURTHER QUESTIONS?

THANKS VERY MUCH FOR YOUR TIME. APPRECIATE IT.

ALL RIGHT. NOW WE'RE GOING TO TURN IT OVER AND TRANSLATE WHAT YOU'VE JUST HEARD FROM JOHN INTO THE NEXT COMPONENT OF OUR DISCUSSION. AND TO DO THAT WE HAVE SOMETHING I THINK WE'RE ABOUT TO PASS OUT TO EVERYBODY. RUDY?

MAYOR AND COUNCIL, IT'S PRETTY CLEAR THAT MOST OF THESE UPDATES COME WITH SIDE EFFECTS AND SYMPTOMS. AND SO BEFORE WE GET STARTED, WE WANT TO GIVE YOU SOME REMEDIES FOR SOME OF THE SYMPTOMS YOU MAY BE EXPERIENCING. SO I'M GOING TO GIVE EACH OF Y'ALL SOME TYLENOL AND ICE CREAM WHILE WE TALK ABOUT OUR UPDATES. [ LAUGHTER ]

NOW, WE'RE PASSING OUT THE TYLENOL AND ICE CREAM. WE DON'T WANT YOU TO THINK THIS IS TOO BITTER A PILL. [ LAUGHTER ] WE WANT THE TO SMOOTH THE WAY FOR THIS VERY TOUGH DISCUSSION.

RUDY SAID IN KEEPING IN LINE WITH THE TIGHT BUDGET HE LOOKED FOR THE HILL COUNTRY BRAND, BUT HE COULD ONLY FIND BLUE BELL.

WE WERE TRYING TO BUY LOCALLY. I'M GETTING DOUBLE ASPIRIN AND NO ICE CREAM. [ LAUGHTER ] WHAT WE'RE GOING TO BE DOING IS RUDY IS GOING TO BE TELLING YOU NOW WHAT OUR LATEST SALES TAX NUMBER IS AND THEN WE'RE GOING TO WORK YOU THROUGH TO WHAT OUR NEW FORECAST IS FOR THE YEAR AND HOW WE INTEND TO HANDLE IT. THEN WE'RE GOING TO MOVE ON SCBOO A DISCUSSION OWE INTO A DISCUSSION OF THE BUDGET TOOLS, INCLUDING OUR REVENUE INITIATIVE AND OUR CORE SERVICE ANALYSIS. BUT FIRST, LET'S START WITH OUR MOST CRITICAL DILEMMA.

I'M GOING TO START OFF, MAYOR AND COUNCIL, WITH JUST KIND OF A RENEW OF WHERE WE STARTED THE YEAR AND WHAT KIND OF ACTIONS WE'VE TAKEN. I WANT TO START WAY BACK ON THE PROPOSED BUDGET. WHEN WE SUBMITTED THE PROPOSED BUDGET BACK IN JULY OR LATE JULY, EARLY AUGUST, AT THAT TIME?c FOR THE FIRST EIGHT MONTHS OF THE FISCAL YEAR OF '01, ACTUALLY SALES TAX GROWTH WAS AT THREE AND A HALF PERCENT. HOWEVER, KNOWING THAT THE ECONOMY WAS SOMEWHAT UNSTABLE AT THAT TIME, WE SUBMITTED A PROPOSED BUDGET WITH SALES TAX GROWTH OF TWO PERCENT. AND WHAT HAPPENED AFTER THAT WAS A SIGNIFICANT DECLINE IN THE LAST FOUR MONTHS OF THE FISCAL YEAR, ACTUALLY THE LAST FOUR MONTHS OF FISCAL YEAR?c '01 DECLINED AT A RIGHT OF 3.9%. WHAT THAT DID?c TO US, IT REQUIRED A GROWTH RATE OF 3.2% IN THE SALES TAX NUMBER TO MEET THE APPROVED BUDGETED REVENUE. AND THAT'S IMPORTANT. I THINK THERE'S BEEN SOME CONFUSION ON -- I BELIEVE MAYBE A RECENT ARTICLE STATED WE WERE OVERLY OPTIMISTIC. CLEARLY NOBODY COULD HAVE ANTICIPATED WHAT HAPPENED SEPTEMBER 11TH. IF YOU RECALL, WE APPROVED THE BUDGET SEPTEMBER 11TH. AND THOSE ARE THE FACTORS THAT LED TO OUR?c PROJECTED GROWTH OF 3.2%. HOWEVER, KNOWING AND REALIZING WHAT HAD HAPPENED TO THE ECONOMY, WE QUICKLY AND EVEN BEFORE THE FISCAL YEAR BEGAN, BEGAN TO LOOK AT HOW DO WE REVISE OUR PROJECTION, WHAT KIND OF INFORMATION IS AVAILABLE TO US? AND THE DIFFICULTY, AS YOU CAN RECALL THINKING BACK DURING THAT TIME FRAME, THERE WAS SO MUCH DISAGREEMENT NATIONWIDE AND EVEN IN THE LOCAL AREA ON WHAT'S HAPPENING TO THE ECONOMY. IS IT REALLY DROPPING? IS IT JUST A FLUKE FOR A MONTH OR TWO AND THEN WE'RE GOING TO BE RIGHT BACK? SO IT WAS DIFFICULT TO GAUGE EXACTLY AND SCIENTIFICALLY WHAT THE REVISED SALES TAX PROJECTIONS SHOULD BE. HOWEVER, AT THAT TIME BASED ON THE INFORMATION WE HAD, WE DID REDUCE OUR SALES TAX PROJECTION TO .88, SLIGHTLY UNDER ONE PERCENT. THAT RESULTED IN A REVENUE LOSS -- PROJECTED REVENUE LOSS OF 2.WILL MILLION DOLLARS. -- 2.WILL MILLION DOLLARS. IF YOU RECALL, WE FUNDED THAT SHORTFALL IN FEBRUARY THROUGH THE REVENUE AND TAX ANTICIPATION NOTE. WHAT HAS HAPPENED FOR THE FIRST FIVE MONTHS, THE FIRST FIVE MONTHS ON AN AVERAGE HAVE DECLINED 6.35%. AND YOU CAN SEE THERE WE HAVE HAD FIVE CONSECUTIVE MONTHS OF NEGATIVE GROWTH. MOST RECENTLY THE APRIL PAYMENT, A NEGATIVE 10%, VERY SIGNIFICANT. IF YOU CONSIDER THE IMPACT OF SEPTEMBER 11TH AND THE SEPTEMBER PAYMENT, WE'VE NOW EXPERIENCED SIX SCOOTD ACTIVE MONTHS OF NEGATIVE -- CONSECUTIVE MONTHS OF NEGATIVE GROWTH. WHEN WE REVISED OUR PROJECTION DOWN TO UNDER ONE PERCENT, AT THAT TIME WE HAD ESTIMATED THAT THE REVENUE LOSS WOULD BE APPROXIMATELY 2.8 MILLION FOR THE YEAR. ING AT WHERE WE ARE FOR THE FIRST FIVE MONTHS, WE HAVE ALREADY LOST -- WE'RE FORECASTED TO LOSE 4.9 MILLION ON AN ANALYZED BASIS. SO CLEARLY BASED ON THE RECENT -- BASED ON THIS FIVE-MONTH ACTIVITY AND BASED ON WHERE WE'RE AT AND WHAT WE SEE, WE MUST REVISE OUR SALES TAX ESTIMATES. AND TO DO THAT THERE'S SEVERAL FACTORS THAT WE CONSIDER. FOUR OF THOSE ARE WORK REAL CLOSELY WITH JOHN AND JUST REVIEW ALL THE INFORMATION THAT'S?c AVAILABLE TO US TO ANALYZE AND ASSESS ECONOMIC DATE CATERS, ANY UPDATED FORECAST FOR THE ECONOMY. SECONDLY, IT'S REALLY IMPORTANT THAT WE TAKE A REAL CLOSE LOOK AT THESE FIVE MONTHS. MAYBE THESE LAST SIX MONTHS OF NEGATIVE DECLINE AND BE CERTAIN ON THE FACTORS THAT ARE IMPACTING?c THAT, BECAUSE WHILE WE WANT TO PROVIDE YOU WITH A REALISTIC, OUR?c BEST REALISTIC SFIMENT ESTIMATE, WE DON'T WANT TO READ TOO MUCH INTO THE NUMBERS AND CONSIDER SOME OTHER FACTORS. FACTORS SUCH AS THE SECOND HALF OF THE LAST FISCAL YEAR. THE LAST SEVEN MONTHS OF FISCAL YEAR '01 AVERAGED A DECLINE OF NEGATIVE 1.WILL%, INCLUDING A VERY SIGNIFICANT LOSS IN SEPTEMBER OF NEGATIVE 12.7%. HOPING THAT NOTHING EXTRAORDINARY HAPPENS, WE DON'T BELIEVE THAT WE'LL BE BACK AT THAT LEVEL. WE WON'T MIRROR THAT LEVEL AT THE END OF THIS FISCAL YEAR. AND FINALLY, IT'S ALSO VERY IMPORTANT THAT WE LOOK AT OURSELVES IN COMPARISON TO THE OTHER MAJOR CITIES. ARE WE ISOLATED OR IS THE ECONOMY IMPACTING EVERYONE? YOU CAN SEE THERE ON THROUGH THE FIRST FIVE MONTHS, COMPARING THE SAME FIVE MONTHS FOR THE MAJOR CITIES IN TEXAS, CLEARLY THE ECONOMIC SLOWDOWN HAS IMPACTED EVERYONE. AND SALES TAX REVENUE IN AUSTIN HAS HAD A VERY SIGNIFICANT IMPACT. I GUESS ONLY TOPPED OFF BY THE CITY OF DALLAS, WHO IS EXPERIENCING A MORE?c SIGNIFICANT LOSS THAN WE ARE AT NEGATIVE 7.7. AND INTERESTINGLY ENOUGH, AND JOHN TALKED ABOUT IT EARLIER, DURING THE BOOM OF THE ECONOMY IN THE '90'S, ESPECIALLY IN THE HIGH-TECH AREA, THE CITY OF AUSTIN SALES TAX REVENUES WERE JUST TREMENDOUS AND WE SURPASSED BY LEAPS AND BOUNDS MOST EVERY OTHER CITY IN TEXAS. AND BASICALLY THE EXACT THING IS HAPPENING TO US ON A NEGATIVE DECLINE. WE ARE DECLINING VERY FAST. AGAIN, BASED ON THE IMPACT OF THE HIGH-TECH INDUSTRY. JUST TO KIND OF RECAP FOR YOU WHAT SOME OF THE OTHER CITIES ARE GOING DOING, IF YOU RECALL, THE CITY OF DALLAS HAS ELIMINATED SEVERAL POSITIONS, INCLUDING THE LAYOFF OF 70 ACTUAL EMPLOYEES. THE CITY OF ARLINGTON JUST ON MONDAY LAID OFF 23 EMPLOYEES. LET ME GO BACK TO DALLAS. WE TALKED TO DALLAS JUST YESTERDAY. WE ARE ABOUT TO ANNOUNCE POTENTIAL FURTHER LAYOFFS TO WHAT THEY'VE ALREADY?c DONE. AND LOOKING AT FORT WORTH AND SAN ANTONIO, THEY'RE VIRTUALLY FLAT, BUT THEY DO HAVE POSITIVE GROWTH, BUT THEY ARE BEHIND THEIR APPROVED ESTIMATES. SAN ANTONIO'S CURRENTLY AT 1.1%. THEY ESTIMATED THEY WOULD BE AT FIVE PERCENT. FORT WORTH IS CURRENTLY AT 1.3. THEY ESTIMATED THAT THEY WOULD BE AT ALMOST THREE PERCENT. SO CLEARLY THE CITY OF AUSTIN IS NOT ALONE IN HAVING TO ADDRESS THESE FINANCIAL ISSUES. THE CITY OF HOUSTON IS ACTUALLY AT THIS POINT VERY CLOSE TO THIS AND THEY ESTIMATED ABOUT FIVE PERCENT. SO THEY ARE DOING GOOD AS FAR AS COMPARED TO THEIR SALES TAX ESTIMATE. HERE, THIS LINE BASICALLY SHOWS YOU THE ACTUAL ACTIVITY FOR EACH OF THE MAJOR CITIES ON A MONTHLY BASIS. AND YOU CAN SEE HERE THAT THE NEGATIVE 10%?c EXPERIENCED FOR THE CITY OF AUSTIN WAS THE WEAKEST OF ALL THE MAJOR CITIES. HOWEVER, IT'S IMPORTANT TO KNOW THAT DALLAS, FORT WORTH AND SAN ANTONIO ALSO EXPERIENCED NEGATIVE GROWTH. AND HOUSTON, WHILE IT WAS A POSITIVE NUMBER, ITFINITELY LOWER THAN WHAT THEY HAD EXPERIENCED DURING THE PREVIOUS FOUR MONTHS. [ONE MOMENT, PLEASE, WHILE CAPTION]

I KNOW HOME DEPOT GETS A LOT OF MY MONEY. SO THEY ARE ABOUT 4%, 5% POSITIVE FOR THE FIRST FIVE MONTHS, HOWEVER IT'S BEEN REALLY UNSTABLE. THEY HAVE GONE FROM A HIGH OF ABOUT 26% POSITIVE TO A LOW OF ABOUT 25% NEGATIVE. SO IT'S BEEN REALLY UNSTABLE FOR SUNSET VALLEY. IN THE END AT THIS POINT FOR THE FIVE MONTHS THEY ARE POSITIVE. WEST LAKE HILLS, ON THE OTHER HAND, IS NEGATIVE. FOR THE FIRST FIVE MONTHS THEY ARE NEGATIVE. SO WHERE DO WE GO WITH YOUR UPDATED FORECAST? IT CLEARLY WE ARE NOT GOING TO MAKE OUR REVISED PROJECTION THAT WE PROVIDED YOU IN DECEMBER. TO DO THAT WOULD REQUIRE THAT THE LAST SEVEN MONTHS GROW AT AN AVERAGE OF 6% POSITIVE. YOU CAN SEE FROM THE INFORMATION FROM JOHN, YOU CAN SEE FROM THE INFORMATION THAT I HAVE SHOWN YOU, WE ARE NOT GOING TO MEET -- WE ARE NOT GOING TO MAKE 6% EACH MONTH FOR THE NEXT SEVEN MONTHS. WHAT WE ARE -- WHAT WE DO BELIEVE WILL HAPPEN FOR THE LAST SEVEN MONTHS OF THIS FISCAL YEAR IS THAT WE WILL AVERAGE SLIGHTLY UNDER 1% AT A NEGATIVE .6% ON AN AVERAGE. THAT AVERAGE, THOUGH, IS -- IS A NET RESULT OF -- OF CONTINUING TO PROJECT SOME NEGATIVE GROWTH FOR THE NEXT TWO TO THREE MONTHS, WILL START TO FLATTEN OUT BY NEAR THE END OF THE FISCAL YEAR AND THE BY -- BY THE END OF THE FISCAL YEAR, WE DO BELIEVE THAT WE WILL START SEEING SOME POSITIVES. SO THE AVERAGE OF THAT IS .6% NEGATIVE. WHAT DOES DOES TO US ON AN ANNUAL BASIS, IT TAKES US TO AN ANNUAL FORECAST OF A NEGATIVE 3%. WHAT DOES THAT MEAN ON A SALES TAX REVENUE BASIS? THAT MEANS COMPARED TO THE APPROVED BUDGET, WE ARE GOING TO LOSE OR PROJECT TO LOSE 7.6 MILLION DOLLARS FROM THEIR APPROVED SALES TAX REVENUE. AND IF YOU RECALL, AS PREVIOUSLY STATED, WE COVERED OR FUNDED 2.-- 2 MILLION OF THAT THROUGH THE REVENUES OF THE TAX ANTICIPATION NOTE, LEAVING US WITH ADDITIONAL SALES TAX REVENUE LOSS, WHICH WE NEED TO IDENTIFY FUNDING FOR, OF 4.8 MILLION. CLEARLY WE ARE -- WE ARE POSITIONED AT THIS POINT THAT WE HAVE TO IMPLEMENT FURTHER BUDGET REDUCTIONS TO PROVIDE THE FUNDING OR -- OR SAVINGS TO COME -- TO COVER THAT 4.8 MILLION DOLLARS LOSS. WE ARE -- WHAT WE ARE DOING, WE IMPLEMENTED AN IMMEDIATE HIRING FREEZE OF THE REMAINING 75% VACANT POSITIONS IN THE GENERAL FUND AND IN THE SUPPORT SERVICE FUND DEPOSITS. IF YOU RECALL, THIS IS IN ADDITION TO THE PREVIOUS HIRING FREEZE THAT WE HAD IDENTIFIED FOR YOU AS PART OF OUR SAVINGS PLAN AS WE POSITION OURSELVES GOING INTO FISCAL YEAR '03. EARLY ON IN THE BUDGET PROCESS, IN ADDITION TO THE HIRING FREEZE, SOME OF THE OTHER ITEMS THAT WE HAVE TALKED TO YOU BEFORE ABOUT CAPITAL SPENDING, TRAVEL RESTRICTIONS, WE'VE HAD A VERY COMPREHENSIVE HIRING REVIEW PROCESS TO ENSURE THAT WE ARE FILLING THOSE CRITICAL POSITIONS. HAS THAT HAS DONE FOR US, IT HAS PROVIDED US THIS FLEXIBILITY. THAT'S IMPORTANT TO NOTE, ESPECIALLY WHEN YOU CONSIDER WHAT SOME OF THE OTHER CITIES ARE HAVING TO DO, ACTUALLY HAVING THEIR EMPLOYEES HAVE TO GO HOME AND TELL THEIR FAMILIES THAT THEY NO LONGER HAVE A JOB WITH THE CITY. I THINK WE HAVE BEEN FORTUNATE THAT WE HAVE GOT THAT FLEXIBILITY AND WE HAVE NOT HAD -- WE HAVE DONE THAT WITH -- WITH NOT REDUCING ANY BASIC SERVICES. NOT CUTTING ANY MAJOR PROGRAMS. HOWEVER, AT THIS POINT, WE ARE EVALUATING WHAT KIND OF IMPACT THAT WILL HAVE TO SERVICE LEVELS. CLEARLY THE CITY EMPLOYEES AS HAVE ALWAYS BEEN ARE VERY DEDICATED AND COMMITTED TO THEIR WORK. BUT HAVING TO DO THE SAME SERVICES, WITH A POSSIBLY 10% LESS WORKFORCE, IS DIFFICULT. AND I -- I BELIEVE THAT IT'S IMPORTANT THAT WE ASSESS THAT IMPACT AND THAT'S WHY WE LEFT THE 25% OF THOSE POSITIONS AVAILABLE FOR THE FLEXIBILITY TO -- FOR THE CITY MANAGER TO FILL THOSE POSITIONS THAT ARE CRITICAL TO ENSURE THAT WE DON'T COMPROMISE BASIC SERVICES. THIS ACTION WILL GENERATE APPROXIMATELY $4 MILLION.

RUDY, OF THE -- DO WE HAVE A BREAKDOWN AS TO WHAT DEPARTMENTS THESE FROZEN POSITIONS ARE IN.

YES, SIR. WE CAN FOLLOW UP WITH THAT. WE CAN SEND THAT TO YOUR OFFICES.

WYNN: THANK YOU.

CLEARLY AT THIS POINT, IT'S -- IT'S EVERY DEPARTMENT IS BEING IMPACTED.

FUTRELL: I THINK THAT'S THE IMPORTANT PIECE. THERE IS, WITHOUT A DOUBT, EVERY DEPARTMENT IS BEING IMPACTED BY THIS. THERE IS SOME SMALL CLUSTERING OF SOME OF THE NUMBERS, BUT IT IS SPREAD OUT OVER ALL OF THE DEPARTMENTS.

I WILL EMPHASIZE SO THAT THERE WILL BE NO CONFUSION, THIS DOES NOT INCLUDE ANY OF THE SWORN POSITIONS IN FIRE, ANY OF THE PUBLIC SAFETY DEPARTMENTS, INCLUDING PARAMEDICS AND E.M.S.

FUTRELL: THAT'S YOUR FIRST RESPONDERS IN THOSE DEPARTMENTS. CIVILIANS IN THOSE DEPARTMENTS ARE PART OF THIS.

AND ADDITIONAL $800,000 THAT WE NEEDED TO IDENTIFY WE ARE ABLE TO IDENTIFY FUNDING AND C.I.P. PROJECT. ONE PROJECT THAT HAS BEEN PLEATED AND HAD SOME AVAILABLE FUNDING REMAINING. ANOTHER PROJECT THAT IS IN CONSTRUCTION AND HAS BEEN FULLY FUNDED. SO THAT -- THAT PROVIDES US THE 4.8 MILLION DOLLARS THAT WE WILL NEED TO SET ASIDE OR NOT -- BASICALLY BUDGET REDUCTIONS TO COVER THE 4.8 MILLION DOLLAR LOSS IN REVENUE. FORECAST LOSS. FROM LOOKING FORWARD, IT'S CLEAR THAT WE WILL HAVE TO WORK CLOSELY WITH -- WITH ALL OF OUR STAFF, WORKING WITH JOHN HAUKENOSE AND OTHER FOLKS TO CLOSELY MONITOR THE ECONOMY, CLOSELY MONITOR THE SALES TAX ACTIVITY AND AS WE HAVE COMMITTED TO YOU EARLY ON IN THE FISCAL YEAR, IT'S IMPORTANT THAT WE KEEP YOU UPDATED ON A MONTHLY BASIS ON WHAT'S HAPPENING WITH NOT ONLY THE ECONOMY, BUT WHAT'S HAPPENING SPECIFICALLY WITH OUR SALES TAX SO THAT WE KNOW WHERE WE STAND AS COMPARED TO THIS -- AT THIS POINT THE REVISED PROJECTION. TO DO THAT, I THINK THE RESPONSIBLE THING TO DO IS THAT WE MAINTAIN THOSE TIGHT EXPENDITURE CONTROLS THAT WE HAVE PUT IN PLACE MUCH AGAIN EVEN BEFORE THE FISCAL YEAR STARTED. WE STARTED EARLY ON IN VARIOUS COST CONTROL MEASURES. IT'S IMPORTANT THAT WE KEEP THOSE IN PLACE TO CONTINUE THE -- TO POSITION US FOR ANY UNFORESEEN FURTHER UNFORESEEN REVENUE LOSSES OR ANY UNFORESEEN OR UNBUDGETED EXPENDITURES. HOWEVER, I WILL NOTE, AND -- AT THIS POINT, IT WILL BE MORE -- MUCH MORE DIFFICULT TO ABSORB ANY FURTHER SIGNIFICANT LOSSES IN REVENUE OR FUNDING OF ANY UNBUDGETED EXPENDITURES. ALSO LOOKING FORWARD TO THE FIVE YEAR FORECAST, WHICH WE WILL -- AT THIS POINT SCHEDULED TO SUBMIT TO COUNCIL THE EARLY PART OF MAY, IT'S IMPORTANT THAT WE PROVIDE YOU A VERY CONCERTED, VERY REALISTIC AND REASONABLE SALES TAX ESTIMATE. SO WE WILL LOOK FORWARD TO DOING THAT. MAYOR AND COUNCIL, THAT BASICALLY COMPLETES MY -- MY UPDATE ON THE SALES TAX.

FUTRELL: BEFORE WE MOVE INTO THE REST OF OUR PRESENTATION AND I WILL DO A LITTLE SEGUE, THIS DOES END THE SALES TAX COMPONENTS. SO WE HAVE TRIED TO GIVE YOU A NATIONAL OUTLOOK, A LOCAL OUTLOOK, HOW WE HAVE TRANSLATED THAT INTO OUR REVISED SALES TAX FORECAST, WHAT WE BELIEVE OUR NEW GAP IS WHICH IS 4.8 MILLION DOLLARS, AND A WAY WE INTEND TO CLOSE THAT THIS YEAR WITH NO -- NO PROGRAM ELIMINATIONS AND NO LAYOFFS. ONE OF... OF THE NEW MAJOR CITIES IN TEXAS THAT'S BEEN ABLE TO DO THAT TO DATE. BUT I DO NOT WANT YOU TO THINK THAT THIS FREEZE OF 75% OF OUR CURRENT VACANCIES IS WITHOUT AN OPERATIONAL IMPACT BECAUSE IT IS. WE WILL BE IMPACTING THE QUALITY AND CONTENT OF OUR PROGRAMS AND OUR SERVICES WITH THIS CUT. WE CAN KEEP THEM IN PLACE. AND WE WILL BE MONITORING THAT OPERATIONAL IMPACT. THAT'S ONE OF THE REASONS THAT WE HAVE LEFT THE 25% OPEN FOR HIGHER, SO THAT WE CAN JUDICIOUSLY DECIDE WHAT OPERATIONS ARE MOST CRITICALLY IMPACTED AND HOW TO FILL AND SHIFT POSITIONS THERE. BUT AT THIS POINT, WE ARE NO LONGER CUTTING AROUND THE EDGES. WE ARE IMPACTING SERVICES THAT WE ARE PROVIDING.

MAYOR GARCIA: LET ME SEE IF THERE'S SOME QUESTIONS, COUNCILMEMBER WYNN?

WYNN: THANK YOU, MAYBE. RUDY, AT THE END OF MR. HAUKENOSE'S PRESENTATION, HIS MOST LIKELY SALES TAX FIGURE OF 118 MILLION DOLLARS IF I READ THAT CORRECTLY. IT SEEMS LIKE, LOOKS LIKE IF I AM READING YOUR CHARTS CORRECTLY, YOU WERE SHOWING THAT WE ARE COMING IN, AT A $4.8 MILLION SHORT OF -- OF OUR REVISED FIGURE OF $124 MILLION. SEEMS TO ME THAT WE ARE SAYING 120, MR. HAUKENOSE IS SAYING 118.

THAT'S FAIRLY CLOSE. WE ARE -- I AM -- I HAVE NOT HAD A CHANCE TO WORK CLOSELY WITH JOHN ON EXACTLY THE CALIFORNIAATIONS, HOWEVER -- CALCULATIONS, HIS MOST LIKELY ESTIMATE IS NEGATIVE 2%, WE ARE SLIGHTLY MORE CONSERVATIVE ESTIMATING A NEGATIVE 3%.

YEAH, IT'S POSSIBLE. I MEAN, MINE IS 2.6 SPEAKERS DOWN FROM THE BASE THAT I WAS LOOKING AT WAS ABOUT 121 MILLION. WHAT WE MAY BE GETTING INTO IS THE DIFFERENCE BETWEEN WHAT ACTUALLY HAPPENED VERSUS APPROVED BUDGETS, ET CETERA, ET CETERA. THAT TYPE OF THING. THE KEY REALLY, HONESTLY, IS THAT IT -- I SAID I THINK IT'S GOING TO GO DOWN ABOUT 2.6% AND THE RESPONSE FROM STAFF WAS ESSENTIALLY WAS 3 IS A MORE CONSERVATIVE APPROACH.

OKAY.

A QUICK QUESTION, THIS FOCUSES ON SALES TAX. HAVE WE SEEN ANY REVENUE CHANGES IN THE OTHER INCOME SOURCES.

MAYOR, AT THIS POINT WE ARE ALMOST WRAPPING YOU UP OUR FIVE YEAR FORECAST. SOME OF THE AREAS THAT -- THAT WE ARE LOOKING CLOSELY AT AND I CAN'T TELL YOU AT THIS POINT WHETHER WE ARE GOING TO FORECAST ANY LOSSES, BUT DEFINITELY THERE'S BEEN AN IMPACT ON DEVELOPMENT FEES. AND WE ARE TRYING TO FINALIZE THAT TO SEE WHAT THE FUTURE HOLDS AND HOW WE THINK WE WILL END UP. BUT THAT IS AN AREA OF CONCERN AT THIS POINT.

FUTRELL: THAT WILL ACTUALLY BE A PART OF THE PRESENTATION ONCE WE GET TO THE NEXT STEPS THAT WE WILL HAVE READY FOR YOU MAY 8TH.

MAYOR GARCIA: SO PROPERTY TAXES AND -- FORECLOSURES, THOSE THINGS, HAVE NOT HAD --

RIGHT. OUR MAJOR REVENUES ARE BASICALLY HOLDING PRETTY STRONG AT THIS POINT.

MAYOR GARCIA: FURTHER QUESTIONS ON THE PRESENTATION BY MR. GARZA? OKAY, CITY MANAGER.

FUTRELL: ALL RIGHT. SO JOHN I KNOW THAT YOU HAVE ANOTHER EVENT TO GET TO. MORE GOOD NEWS I'M SURE THAT YOU ARE SPREADING TO CENTRAL TEXAS.

INDEED, SHARE UP AND DOWN I-35 IS WHAT I AM DOING TODAY.

FUTRELL: WE ARE THINKING ABOUT GIVING YOU A POLICE ESCORT, ACTUALLY. BUT THANK YOU AND I DO KNOW THAT YOU NEED TO LEAVE. I GUESS COUNCIL, THE BOTTOM LINE, THAT'S WHY WE GAVE YOU ASPIRIN AND ICE CREAM. YOU HAVE HEARD THE SOBERING SALES TASK FORCE FOR THE REST OF THIS FISCAL YEAR. WE HAVE UNVEILED OUR STRATEGY FOR ENCLOSING THAT ADDITIONAL PROJECTED GAP OF 4.8 MILLION. WE DID TAKE WHAT WE ARE HOPING IS A WORST CASE SO THAT BY THE END OF THE YEAR THERE ARE -- WE ARE HOPING THERE ARE NO MORE SURPRISE, WE ARE COVERED TO BALANCE US BY THE END OF THE YEAR. BUT THERE ARE MORE TOUGH DECISIONS AHEAD. WE HAVE PROACTIVELY WORKED TO CLOSE THE PROJECTED SALES TAX REVENUE LOSS, NOW A TOTAL FROM BUDGET, OF 7.6 FROM OUR APPROVED BUDGET WITHOUT ELIMINATING PROGRAMS AND WITHOUT EMPLOYEE LAYOFFS. BUT I WANT YOU TO KNOW THAT WE ARE OPERATING CLOSE TO THE BONE NOW. THAT IS IMPORTANT, BECAUSE AS WE HEAD INTO OUR BUDGET DECISIONS FROM NEXT YEAR, IT IS INCREASINGLY DIFFICULT FOR US TO NIBBLE AROUND THE EDGES, TO CUT AROUND THE MARGIN, BECAUSE WE HAVE ALREADY DONE SO MUCH OF THAT TO KEEP US IN BALANCE THIS YEAR. SOP OPPORTUNITIES -- SO OPPORTUNITIES FOR PAINLESSLY CUTTING AROUND THE EDGES ARE GONE. TODAY'S PRESENTATION IS DESIGNED TO BEGIN LAYING OUT THE DIFFERENT TOOLS FOR DIFFICULT DECISION MAKING IN BALANCING OUR BUDGET FOR NEXT YEAR. I WANT TO GIVE YOU SEE SIX STRATEGIES THAT WE ARE WORKING ON. WE ARE GOING TO TALK ABOUT TWO OF THOSE WITH YOU TODAY. ONE IS AN EVALUATION OF A REVENUE OPPORTUNITIES. THIS IS WHAT RUDY IS GOING TO TALK TO YOU ABOUT NEXT IN MORE DETAIL. THAT INCLUDES THE APPROPRIATENESS OF OUR CURRENT FEES AND FINES. AND IN MANY CASES SOME OF THOSE HAVE NOT BEEN LOOKED AT FOR DECADES. AND WE HAVE NEVER HAD IN PLACE SOMETHING THAT SYSTEMATICALLY TALKS ABOUT AN INDEX OR INCREASE TO THOSE FEES AND FINES. TWO, WE ARE GOING TO SHARE WITH YOU A PRELIMINARY LOOK AT OUR CORE SEVEN...... -- CORE SERVICE ANALYSIS. CRICK KEY WILL BE PRESENTING THIS, TALKING ABOUT BOTH THE METHODOLOGY AND PRELIMINARY FINDINGS OF THIS ANALYSIS. THEN OTHER THINGS THAT WE ARE DOING QUICKLY: ALL DEPARTMENT DIRECTORS HAVE BEEN CHARGED WITH LOOKING FOR OPERATIONAL PROCESS IMPROVEMENTS. HOW CAN WE DO MORE WITH LESS. HOW CAN WE BE MORE EFFICIENT. WE HAVE A CITY-WIDE ADMINISTRATIVE AS MUCH AS REVIEW UNDERWAY. LOOKING AT OUR SUPPORT SERVICES, LOOKING FOR WAYS TO STREAMLINE THOSE SUPPORT SERVICES. WE ARE FINE-TUNING OUR PERFORMANCE MEASURE SYSTEM. AS PART OF OUR OVERALL MANAGING FOR RESULTS INITIATIVE. IT'S PARTICULARLY IMPORTANT WHEN YOU ARE IN CUTBACK, WHEN YOU ARE TRYING TO DO MORE WITH LESS, THAT YOU KNOW HOW TO GAUGE THE EFFECT ON YOUR SERVICES. BOTH QUALITY AND QUANTITY OF SERVICES PROVIDED. AND FINALLY, I THINK NOW MORE THAN EVER, A VERY CAREFUL ANALYSIS, A CAREFUL REVIEW OF OUR CITIZENS SURVEY. LISTENING TO OUR CUSTOMERS AS WE GO THROUGH THIS IS GOING TO BE IMPORTANT. SO BOTTOM LINE, WHAT ARE WE HOPING TO ACCOMPLISH? TO POSITION OURSELVES FOR CONTINUED STRONG GOVERNMENT IN THE FUTURE. TWO, TO AVOID THE MISTAKES OF A PAST, A DECADE AGO. WHERE WE MADE -- WHERE IT IS EASY SOMETIMES TO MAKE THE SHORT-TERM CUTS THAT HAVE LONG-TERM RAMIFICATIONS AND A CLASSIC EXAMPLE OF THAT IS IT IS ALWAYS EASY TO CUT MAINTENANCE OF YOUR PHYSICAL PLANT. BUT WITH THAT COMES A HIGHER COST IN THE LONG RUN FOR NOT HAVING KEPT UP YOUR PHYSICAL PLANT. ANOTHER EXAMPLE IS SUPERVISOR TRAINING. TRAINING IS SOMETHING MOST ORGANIZATIONS CUT VERY QUICKLY. IN HARD TIMES. THE IMPACT OF CUTTING BACK ON SUPERVISORY TRAINING CAN LEAD US TO ENORMOUS PERSONNEL AND EMPLOYEE RELATION ISSUES DOWN THE ROAD. SO WE ARE TRYING TO TAKE A LONG-TERM APPROACH TO HOW WE ARE BALANCING THIS BUDGET. AND FINALLY, JUST TO MANAGE THE BUDGETARY PRESSURES DURING THE ECONOMIC DOWNTURN, TO PROVIDE YOU A STRUCTURED PROCESS FOR BALANCING THE BUDGET. AFTER TODAY, WHEN WE TALK ABOUT REVENUE INITIATIVE, WHEN WE TALK ABOUT CORE SERVICE ANALYSIS, THE NEXT STEPS, WE WILL REPEAT THIS AGAIN AT THE END OF THE PRESENTATION, MAY 8TH YOU GET YOUR FIVE YEAR FORECAST. THAT'S WHERE OUR GAP IS DEFINED WITH THE BEST INFORMATION THAT WE HAVE TO DATE. YOUR TARGET. MAY 15TH AND MAY 22ND, WE ARE SCHEDULING TWO FULL-DAY COUNCIL BUDGET WORK SESSIONS. THE GOAL HERE IS TO THE FRONT END TO GET DIRECTION FROM THE COUNCIL ON THE BUDGET PARAMETERS. HOW WE GO ABOUT -- ABOUT CLOSING THAT GAP. NOW, RUDY WILL TAKE IT FROM HERE AND DESCRIBE JUST BRIEFLY ONE OF THESE KEY STRATEGIES OR REVENUE INITIATIVES.

LET ME SAY A FEW WORDS TO THE COUNCIL ON THIS. TRADITIONALLY, THE BUDGET PROCESS STARTED OUT WITH THE ISSUANCE OF THE POLICY BUDGET. WHEN I TOLD THE CITY MANAGER IS THAT I WANT TO CONSIDER CHANGING THAT PROCESS SLIGHTLY, TO HAVE THE COUNCIL GIVE THE DIRECTIONS ON WHAT WE WANT IN THE BUDGET. THE BUGS IS OUR BIGGEST POLICY -- THE BUDGET IS OUR BIGGEST POLICY DOWMGHT THAT WE ADOPT. I WOULD LIKE FOR US TO TAKE A MORE PROACTIVE UP FRONT POSITION IN REGARDS TO WHAT PRIORITIES WE WANT SO THAT WE GIVE THE GUIDANCE TO THE CITY MANAGER. THAT WILL BE A SLIGHT CHANGE FROM THE WAY WE HAVE DONE THINGS IN THE PAST. COUNCILMEMBER SLUSHER?

SLUSHER: I WANT TO SAY I THINK THAT'S A REAL SOUND IDEA. IT WOULD APPLY AT ANY TIME. I THINK THAT THE COUNCIL SEEMS TO ME, IT SEEMS TO ME LIKE THAT'S A SHORT COMING IN THE BUDGET PROCESS. THE COUNCIL SHOULD GET INVOLVED EARLIER AND MORE FORMALLY EARLIER, BUT I THINK IT'S PARTICULARLY IMPORTANT THIS YEAR.

MAYOR, COUNCIL, I WANT TO BRIEFLY WALK YOU THROUGH SOME OF THE THINGS THAT WE ARE DOING WITH OUR REVENUE INITIATIVE. I WILL START OFF WITH -- WITH CLEARLY AS WE IDENTIFY BACK IN DECEMBER, REPEATED AGAIN TODAY, THE CITY MANAGER ALSO DISCUSSED THE GAP THAT WE PRESENTED TO YOU IN JANUARY, WHILE IT WAS PRELIMINARY, VERY EARLY GAP, SOMETHING WE USUALLY DON'T DO THAT EARLY ON IN THE FISCAL YEAR. IT'S CLEAR THAT IF I CANNING THE GAP, CLOSING THE GAP IS GOING TO REQUIRE WORKING ON BOTH SIDES OF THE EQUATION. WE HAVE A FUNDAMENTAL STRUCTURAL IMBALANCE OF CURRENT REVENUES TO CURRENT EXPENDITURES. TO DO THAT, THE CITY MANAGER AT THAT TIME DIRECTED THAT WE LOOK AT OTHER REVENUE SOURCES. WHAT CAN WE DO TO GENERATE NEW REVENUES. IN ADDITION TO NEW FEES, EXISTING FEES, YOU KNOW POSSIBLY AT THIS TIME, I BELIEVE MR. HAUKENOSE TALKED ABOUT IT, WHAT CAN WE DO TO STIMULATE MORE ECONOMIC ACTIVITY FOR NEW REVENUES OR INCREASED REVENUES. WELL, WHAT WE STARTED WITH WAS AN ASSESSMENT OF OUR CURRENT FEES. WE GOT AN INVENTORY OF OUR FEES, WE HAVE BEEN WORKING CLOSELY WITH OUR CONSULTANT TO IDENTIFY CLEARLY THE LEGISLATIVE SUPPORT OR THE ACTIONS THAT CREATED THE EXISTING FEES. ALSO REVIEWED THE HISTORICAL DATA AND THE ACTIVITY OF THAT FEES, AS FAR AS THE FEE INCREASES, REVENUES THAT COME IN, WHAT KIND OF SERVICES ARE BEING PROVIDED. THE ADVANTAGE THAT WE HAVE SEEN WORKING WITH OUR CONSULTANT IS THE CONSULTANT HAS VERY RECENT EXPERIENCE WORKING WITH OTHER CITIES IN THE -- IN THE EXACT SAME PROCESS, REVIEWING EXISTING FEES. THEY BRING TO US THAT KNOWLEDGE AND THAT EXPERIENCE. IN ADDITION TO THAT, THEY BRING US THE KNOWLEDGE AND EXPERIENCE FOR FEES FOR SERVICES THAT WE POTENTIALLY CAN BE PROVIDING RIGHT NOW AT NO COST TO THE USERS. TRADITIONALLY SHOULD BE CHARGED. THOSE ARE THE KIND OF THINGS THAT WE ARE EVALUATING. SPECIFICALLY AS WE LOOK AT FEES, LOOK AT THE HISTORICAL DATA, ONE OF THE VERY BASIC THINGS THAT WE NEED TO LOOK AT IS THE LAST TIME A FEW WAS INCREASED. THERE ARE SOME FEES THAT -- THAT HAVE GONE OVER 10 YEARS WITHOUT BEING -- WITHOUT BEING INCREASED. THAT COULD BE A GOOD THING. I -- AT THIS POINT IT WOULD BE PRELIMINARY FOR ME TO SAY THAT WE SHOULD IMMEDIATELY INCREASE THOSE, BUT CLEARLY THERE'S BEEN INFLATION IMPACT, COST IMPACTS, THAT JUSTIFY REVIEWING THOSE FEES TO DETERMINE WHETHER THEY ARE CANDIDATES TO BE INCREASED. OTHER CANDIDATES FOR A FEE -- FOR FEE INCREASES ARE THOSE THAT ARE SPECIFICALLY PROVIDED BY SERVICE, BUT WE NEED TO ASSESS THE COST OF PROVIDING THAT SERVICE. SALARY COSTS HAVE -- HAVE BEEN INCREASING. OPERATIONAL COSTS, CORE COSTS HAVE INCREASED. SO FOR THOSE FEES THAT ARE MORE INVOLVED, WE ARE COMPLETING COST OF SERVICE STUDIES TO DETERMINE WHAT A -- WHAT AN HE COULD......... EQUITABLE AND MORE ACTIVE FEE WOULD BE. WHAT WE ARE DOING THAT, THIS IS AN IMPORTANT POINT THAT I WANT TO MAKE SURE THAT I COMMUNICATE. WHAT WE ARE DOING IS JUST IDENTIFYING FEES OR NEW FEES THAT ARE CANDIDATES FOR DISCUSSION. CANDIDATES FOR OUR REVIEW TO BRING FORWARD AND PRESENT TO YOU AS PART OF OUR -- IN THE BUDGET PROCESS. KEEP IT IN MIND, YOU KNOW, THREE VERY KEY, IMPORTANT FACTORS AND ONE IS WE HAVE GOT TO MAKE SURE IT AN EQUITABLE FEE. WHATEVER WE COME UP HAS GOT TOING AN EQUITABLE FEE. IT'S GOT TO BE SENSITIVE TO WHAT'S HAPPENING AROUND US. WE HAVE GOT TO ENSURE THAT THE EXISTING CLIENTELE, THE EXISTING CUSTOMERS ARE NOT -- YOU KNOW, I GUESS THEY ARE NOT PROHIBITED FROM HAVING ACCESS TO THE SAME PROGRAM AND SERVICES BECAUSE OF ANY KIND OF FEE INCREASE THAT WE ARE PROPOSING. WHEN WE BRING SOMETHING FORWARD FOR YOU, TO YOU, IT WOULD BE IN THE FORM OF A RECOMMENDATION AND PROPOSAL FOR FURTHER DISCUSSION AND HOPEFULLY WE WILL HAVE THE -- THE INFORMATION YOU NEED TO MAKE SURE THAT WE HAVE -- WE HAVE CAREFULLY CONSIDERED ALL OF THE FACTORS. THAT'S WHERE WE ARE AT NOW. THAT'S A VERY QUICK STATUS ON WHERE WE ARE WITH OUR REVENUE INITIATIVE.

QUESTIONS FOR MR. GARZA? CITY MANAGER?

FUTRELL: I WAS JUST GOING TO SAY WHEN QUESTIONS WERE OVER, VICKI WILL KICK-OFF WITH TALKING ABOUT OUR LAST TOOL, WHICH IS THE CORE SERVICE ANALYSIS.

GOODMAN: I GUESS, COULD YOU GIVE ME A COUPLE OF FEES THAT WE ARE MENTIONING THAT HADN'T BEEN LOOKED AT, CAN YOU --

WE HAVE SOME BUILDING USE FEES, SPECIALLY IN THE PARKS AREA, THAT HAVE BEEN ACTUALLY PROBABLY THE -- IN 1990 WAS THE LAST TIME THAT WE LOOKED AT SOME OF THOSE FACILITIES, SOME -- SOME CLASSES LIKE RECREATIONAL CLASSES, ALSO EARLY '90'S, LIKE 1990, IT WAS THE LAST TIME THAT WE HAD A FEE INCREASE THERE. AND IT JUST -- THEY JUST KIND OF GO ALL AROUND. WE HAVE SOME REPORT FEES, THIS GOES BACK ACTUALLY BACK TO 1993. A POLICE REPORT. POLICE REPORT FEES I GUESS THE LAST TIME THAT SPECIFIC FEE WAS OCTOBER THE '94. IT'S BEEN -- THEY ARE KIND OF ALL OVER THE MAP, BUT THOSE ARE SOME OF THE EXAMPLES.

SLUSHER: MAYOR? COULD WE --

MAYOR GARCIA: [INAUDIBLE]

SLUSHER: THIS IS SORT OF [INAUDIBLE] AT THE MOMENT, BUT SERIOUSLY COULD WE LOOK AT WHAT THE -- WHAT WE MIGHT SAVE BY HAVING THE THERMOSTATS SET A LITTLE HIGHER IN THE CITY BUILDINGS? FOR INSTANCE, I DON'T WANT TO SEE PEOPLE AROUND HERE THIS SUMMER WEARING SWEATERS. I WISHED THAT I WOULD HAVE BROUGHT ONE THIS MORNING. OR A COAT. SO WE MIGHT BE ABLE TO SAVE A LITTLE MONEY, I REALIZE THEN THAT WOULD COME OUT OF AUSTIN ENERGY'S SIDE OF IT. BUT I WOULD REALLY LIKE TO SEE WHAT WE DO ON THAT.

MAYOR GARCIA: WHEN YOU TALK ABOUT IT IN THAT SENSE, IT'S ACTUALLY HOW MUCH WE SPEND, WHETHER IT COMES OUT OF ONE OR THE OTHER. THE CITY ITSELF --

SLUSHER: EXACTLY. ENVIRONMENTALLY MORE SOUND, TOO.

MAYOR GARCIA: RIGHT.

FROM AUSTIN ENERGY, SEE WHAT KIND OF INFORMATION, WHAT KIND OF THINGS WE CAN DO TO ASSESS ENERGY IMPACTS.

RIGHT, THERE MIGHT BE THINGS, TOO, BESIDE JUST THE THERMOSTAT THAT THE CITY IS NOT TAKING FULL ADVANTAGE OF SOME OF THE PROGRAMS, WE MIGHT BE ABLE TO HAVE SOME SAVINGS THROUGH THE CONSERVATION -- PROGRAMS, TOO.

MAYOR GARCIA: THE LAST COUNCILMEMBER THAT BROUGHT THAT UP WAS COUNCILMEMBER LOWELL L.B.J........ LEBERMAN, HE SAID WE ARE AT 78 AND LOVING IT, SWEATING AND LOVING IT.

FUTRELL: WITH THAT, WE ARE GOING TO HEAD INTO A VERY TRICKY DISCUSSION ON CORE SERVICES. VICKI IS GOING TO STRESS THIS, LET ME REPEAT IT ON THE FRONT END. ONCE AGAIN THIS IS A LITTLE BIT LIKE SAYING DEFINITIVE ART. THIS IS A VERY TRICKY METHODOLOGY IN TRYING TO HONE IN ON WHAT A CORE SEMICORE SERVICES FOR CITIES -- ON WHAT ARE CORE, SEMI CORE SERVICES FOR CITIES. EACH ONE OF THESE DECISIONS HAVE GENERATED ENORMOUS DISCUSSION AND CONVERSATIONS, I WOULD SAY ARGUMENTS, EVEN AMONG THE MANAGEMENT TEAM. SO WE ARE TRYING TO -- TO EXPOSE YOU, INTRODUCE YOU TO THIS METHODOLOGY, LETTING YOU KNOW THAT THERE CAN BE DEBATE AND DISCUSSION ON HOW EACH AND EVERY ONE OF THESE SERVICES ARE RANKED. AND MOST IMPORTANTLY, THAT WE ARE NOT TRYING TO SAY BY THE CLASSIC INDICATION THAT -- CLASSIFICATION THAT SOMETHING IS NOT IMPORTANT OR THAT SOMETHING IS RANKED SEMI CORE VERSUS NON-CORE THAT THAT IS A RECOMMENDATION FOR A CUT. THAT IS NOT THE GOAL OF THIS INITIATIVE. BUT IT IS A WAY FOR US TO TAKE A LOOK AT HOW WE HAVE APPROPRIATED OUR DOLLARS. IT IS ONE TOOL OF MANY THAT HAVE TO BE COMBINED WITH MANY OTHER FACTORS TO MAKE A DECISION. SO WITH THAT HEAVY CAVEAT, VICKI WILL START THIS PART OF THE PRESENTATION.

GOOD MORNING, MAYOR AND COUNCIL. MY NAME IS VICKI SCHUBERT. I'M THE ACTING DIRECTOR OF FINANCIAL SERVICES. AS TOBY TOLD YOU, I'M HERE TO TALK ABOUT OUR CORE SERVICES INITIATIVE. I THINK A STATEMENT THAT JOHN HAUKENOSE MADE A LITTLE BIT EARLIER FRAMED THIS IN A VERY SIMPLISTIC WAY IN MY MIND. HE TALKED ABOUT PEOPLE WHO LAST YEAR LOST THEIR JOB, FOUND OTHER JOB AT A LOWER PAYING SALARY AND THEN HE WENT ON TO SAY THAT WHEN THEY HAD THAT LOWER PAYING SALARY, THEY SPENT MORE OF THEIR MONEY ON THEIR CORE BASIC NEEDS AND THEY LET OTHER THINGS FALL BY THE WAYSIDE. THAT IS THE CONCEPT THAT WE WERE TRYING TO EMBRACE HERE AS WE DEVELOPED CORE SERVICES INITIATIVE. THE -- THE OBJECTIVES OF THE INITIATIVE WERE TO DEVELOP A PROCESS TO CLASSIFY ALL CITY SERVICES ACCORDING TO THEIR CORE MUNICIPAL FUNCTIONS. AND TO IDENTIFY THE CURRENT ALLOCATION OF RESOURCES BY CLASSIFICATION. AS A RESULT, WE BELIEVE WE HAVE A MANAGEMENT TOOL TO PROVIDE RECOMMENDATIONS TO COUNCIL ON ALLOCATION OF SCARCE RESOURCES AND WE HAVE A TOOL FOR COUNCIL TO ASSIST WITH THE REVIEW AND DECISIONS ON THE BUDGET. TO PUT THE CONCEPT KIND OF AT A VERY BASIC LEVEL, YOU COULD ASK YOURSELF IF I WERE ESTABLISHING A CITY TODAY, I HAD LIMITED RESOURCES, HOW WOULD I LIKELY SPEND THOSE? WHAT WOULD BE THE CRITICAL FUNCTIONS THAT I WOULD FUND. MOST LIKELY THE THINGS THAT WOULD COME TO YOUR MIND WOULD BE THINGS LIKE PUBLIC SAFETY FIRST RESPONDERS, CLOSELY FOLLOWED BY CONCERNS LIKE PUBLIC HEALTH AND SAFE FOOD, SAFE DRINKING WATER. IN THE NEXT SEVERAL YEARS IS YOUR -- AS YOUR NEW CITY GREW, AND YOUR REVENUE BASE GREW WITH IT, YOU WOULD LOOK TO FIND THE NEXT MOST IMPORTANT THINGS. THEY COULD FALL INTO CATEGORIES SUCH AS INFRASTRUCTURE OR BUILDINGS BEING CONSTRUCTED SOUNDLY TO KEEP CITIZENS SAFE. HEALTH, POLLUTION CONTROL, SEPTIC SYSTEMS ADEQUATE. AS THE YEARS PASSED AND YOU ADDED MORE SERVICES, MORE AND MORE OF THE SERVICES YOU ADDED WOULD MOST LIKELY BE LESS ASSOCIATED WITH THE CORE BASIC NEEDS OF THE CITY, AND MORE GEARED TOWARDS ENHANCING THE QUALITY OF LIFE FOR YOUR CITIZENS. SO THAT KIND OF GETS US TO OUR PROCESS, WHAT PROCESS DID WE USE TO INMEANT THIS PROGRAM? WE STARTED WITH THE ASSUMPTION THAT OUR DEPARTMENT'S BUSINESS PLANS ARE FAIRLY WELL DEFINED. AND IN NOVEMBER WE TRAINED ALL OF OUR DEPARTMENT HEADS IN KEY -- AND KEY FINANCIAL STAFF ON THE CORE SERVICES INITIATIVE. IN DECEMBER AND JANUARY, DEPARTMENTS WENT BACK AND WORKED WITH THEIR MANAGERS AND STAFF TO -- TO COMPLETED THEIR BUSINESS PLANS. AS PART OF THAT, THEY ACTUALLY DID A SELF ASSESSMENT CLASSIFYING ALL OF THEIR ACTIVITIES AND PROGRAMS BASED ON THE CORE SERVICE CRITERIA WE PROVIDED THEM. WE ARE NOW IN THE PROCESS OF REVIEWING ALL OF THESE CLASSIFICATIONS AND THE STUDY SAID DISCUSSING THEM AT VARIOUS LEVELS. BASED ON THE CRITERIA, A SERVICE CORE ACTIVITY OF THE CITY IS CLASSIFIED EITHER AS A CORE, SEMI-CORE OR A SERVICE ENHANCEMENT, WHICH SOMETIMES WE WILL CALL NON-CORE SERVICE. I'M GOING TO PROVIDE YOU MORE DETAILS ON THOSE CRITERIA IN JUST A MOMENT. IT IMPORTANT TO NOTE THAT THE CLASSIFICATION OF AN ACTIVITY IN ANY OF THESE CATEGORIES OR CRITERIA IS NOT THE ONLY THING THAT SHOULD BE OR CAN BE USED IN DETERMINING -- DETERMINING WHETHER AN ACTIVITY SHOULD BE FUNDED. AS WE GO THROUGH THE REMAINDER OF THE PRESENTATION, USE THIS TOOL DURING THE BUDGET DEVELOPMENT PROCESS, I WOULD LIKE FOR YOU TO KEEP THE FOLLOWING QUOTE IN MIND. JUST LIKE BUDGETING THE CORE SERVICE CLASSIFICATION PROCESS IS NOT AN EXACT SCIENCE. THERE WILL BE EXCEPTIONS AND AMBIGUITIES, THERE WILL BE LOTS OF OPPORTUNITIES FOR REASONABLE PEOPLE TO DISAGREE. TO ME IT ALL PART OF RUNNING A BUSINESS THAT DOES NOT HAVE AS ITS SOLE PURPOSE THE INCREASING FINANCIAL BOTTOM LINE. MAKING MONEY. IT MAKES DECISION MAKING MUCH MORE DIFFICULT. WITH THAT I WOULD LIKE TO MOVE INTO THE CORE CRITERIA. AND THERE ARE SIX OF THOSE AND I'M GOING TO GIVE YOU SOME EXAMPLES OF EACH. I ALSO WANT TO NOTE THAT CORE AND SEMI-CORE CRITERIA ARE RANKED IN DESCENDING ORDER ACCORDING TO IMPORTANCE. AS MENTIONED TO YOU IN A PREVIOUS MEMO, A CORE SERVICE IS FUNDAMENTAL TO CARRYING OUT THE RESPONSIBILITIES DELEGATED TO LOCAL GOVERNMENT FROM THE STATE OR THE FEDERAL GOVERNMENT. WITH THAT, OUR FIRST CRITERIA IS ANY ACTIVITY THAT HAS A POTENTIAL OR NEAR-TERM EFFECT ON PUBLIC SAFETY OR HEALTH. CLEAR EXAMPLE OF THAT WOULD BE PUBLIC SAFETY FIRST RESPONSE, AS I SAID SOME OF THE HEALTH ACTIVITIES. OUR SECOND CORE CRITERIA IS THAT IT MEETS BUT DOES NOT EXCEED A STATE OR FEDERAL MANDATE OR THE CITY CHARTER. AND NOTE HERE, WILL, THAT WE TALK ABOUT THE CHARTER, NOT THE CODE. AND HERE WE HAVE BUILDING PERMIT INSPECTIONS ENSURING THAT BUILDINGS ARE CONSTRUCTED SOUNDLY. OUR THIRD CORE CRITERIA IS THE LOSS OF ACTIVITY OR SERVICE HAS A LONG-TERM BUT POTENTIALLY CATASTROPHIC, IN OTHER WORDS SUDDEN, SWIFT, DISASTROUS EFFECT ON THE PUBLIC AND THE ACTIVITY OR SERVICE IS NOT THE CORE SERVICE OF ANOTHER ENTITY. AN EXAMPLE OF THIS IS KIND OF RODENT AND MOSQUITO CONTROL. IT'S CERTAINLY SOMETHING THAT YOU COULD LET GO FOR LITTLE WHILE, BUT IN THE LONG TIME, IF YOU ARE NOT CONTROLLING THEM, YOU ARE CERTAINLY MORE SUBJECT TO DISEASE OUTBREAKS. ALSO, IF WE WERE CLASSIFYING THE ACTIVITIES OF OUR WATERSHED PROTECTION DEPARTMENT, FLOOD CONTROL WOULD BE ANOTHER GOOD EXAMPLE OF AN ACTIVITY THAT WOULD FALL INTO THIS CORE CRITERIA. OUR FOURTH CORE CRITERIA IS THAT AN ACTIVITY HAS A BENEFICIAL EFFECT ON THE DAILY LIVES OF THE SIGNIFICANT SEGMENT OF THE POPULATION AND IS NOT THE CORE SERVICE OF ANOTHER ENTITY. EXAMPLES OF THIS WOULD BE LIBRARY CIRCULATION, OR OUR PARKS, POOLS OR OTHER PARKS PROGRAMS. OUR FIFTH CORE CRITERIA IS THAT IT PROVIDES REVENUE THROUGH A DIRECT REVENUE GENERATING OR COLLECTING FUNCTION THAT IS IN EXCESS OF ITS TOTAL COSTS AND THAT IS NOT OTHERWISE PROVIDED BY ANOTHER ENTITY. AN EXAMPLE OF THIS IS OUR COURT IN -- IN MUNICIPAL COURT, THE COLLECTIONS OF FEES AND FINES FOR WARRANTS AND TICKETS. OUR 6TH CORE CRITERIA IS ANYTHING THAT PROVIDES A DIRECT SUPPORT OR CRITICAL INDIRECT SUPPORT FOR A CORE SERVICE. THE EXAMPLE THAT WE HAVE CHOSEN HERE IS THE E.M.S. ACADEMY, YOU HAVE GOT NEW PARAMEDICS COMING IN. IN ORDER FOR THEM TO BECOME THE FIRST RESPONDERS THAT WE TALKED ABOUT UNDER THE FIRST CRITERIA, THEY NEED TO GO THROUGH THE ACADEMY TO BE TRAINED AND BE READY TO GO OUT THERE. SO THAT SUPPORTS THE -- THE CORE ACTIVITY. WITH THAT WE MOVE INTO OUR SEMI CORE CLASSIFICATIONS, THESE ARE SERVICES THAT LOCAL GOVERNMENTS MAY USE TO AUGMENT EITHER THEIR OWN CORE SERVICES OR THOSE CORE SERVICES OF ANOTHER ENTITY SUCH AS THE SCHOOL DISTRICT OR THE WORKFORCE COMMISSION. IF YOU WILL NOTE, I BELIEVE WE HANDED OUT A SHEET OF PAPER TO YOU THAT SHOWS A CORE AND SEMI CORE SERVICES SIDE BY SIDE, IT'S A SEPARATE THING. WE TRIED TO HAVE THEM SO THAT THEY CORRESPOND AND WHAT I HAVE DONE ON THE -- ON THE SLIDE UP HERE IS I HAVE ITALICIZED AND CHANGED THE COLOR OF THE DIFFERENCE BETWEEN THE CORE NUMBER ONE CORE CRITERIA AND NUMBER ONE SEMI CORE CRITERIA TO HELP YOU SEE THE DIFFERENCE BETWEEN THE TWO. SO OUR FIRST CORE CRITERIA WAS THAT AN ACTIVITY HAS A POTENTIAL NEAR-TERM EFFECT ON PUBLIC SAFETY OR HEALTH. OUR FIRST SEMI CORE CRITERIA IS THAT IT HAS A POTENTIAL AND BENEFICIAL LONG-TERM EFFECT ON PUBLIC SAFETY OR HEALTH. BUT THE LOSS OF THE ACTIVITY OR SERVICE WOULD NOT HAVE A POTENTIAL CATASTROPHIC EFFECT. OUR EXAMPLE HERE IS HEALTH AND HUMAN SERVICES DISEASE AND INJURY PREVENTION. THIS PROGRAM PROVIDES HEALTH PROMOTION AND EDUCATION SERVICES TO THE PUBLIC TO INCREASE AWARENESS OF RISK AND PREVENTION STRATEGIES FOR CLIENT DISEASES AND INJURIES. OUR SECOND SEMI CORE CRITERIA IS THAT A PORTION OF A -- IT IS THAT PORTION OF A CORE SERVICE THAT EXCEEDS A STATE OR FEDERAL MANDATE OR IT IS AN AUGMENTATION OF A CORE SERVICE. THE EXAMPLE THAT WE HAVE USED HERE IS WATER CONSERVATION. A CORR SERVICE WOULD BE PROVIDING -- A CORE SERVICE WOULD BE PROVIDING SAFE DRINKING WATER. BEING CONSERVATIVE WITH HOW YOU USE THAT IN PROPOSING CONSERVATION WOULD BE A SEMI-CORE SERVICE.

MAYOR GARCIA: [INAUDIBLE]. THAT THESE ARE SOME KEY DECISIONS THAT WE NEED TO MAKE, I CAN UNDERSTAND WHY YOU HAD THE ARGUMENT AT THE STAFF LEVEL. BECAUSE TO SOME PEOPLE THOSE KINDS OF WATER CONSERVATION IS VERY, VERY IMPORTANT. AND THAT -- THAT CRITERIA WOULD HAVE TO BE LOOKED AT CAREFULLY. TO ENSURE THAT WE MAKE THE PROPER DECISION.

FUTRELL: JUST TO REPEAT, EVEN IN GOING THROUGH THE DRY RUN OF THE PRESENTATION, WE ARGUED AMONG OURSELVES OVER THE EXAMPLES. THEY ARE -- I THINK THE MOST CRITICAL THING TO UNDERSTAND IS THAT THIS CLASSIFICATION HAS NOTHING TO DO WITH THE IMPORTANCE OF THE SERVICE. EVERY -- I PERSONALLY BELIEVE, HAVING EVALUATED, THERE IS EVERY DIME WE SPEND IN THE CITY HAS AN IMPORTANT SERVICE OR OUTCOME. THIS -- THIS ANALYSIS IS INSTEAD DESIGNED TO HELP YOU MAKE SOME DECISIONS GOING BACK TO WHAT DO -- WHAT ARE CITY'S REQUIRED TO PROVIDE AND WHAT SERVICES NO ONE ELSE PROVIDES BUT CITIES TO HELP GIVE YOU AN IDEA, AND I -- AND I GUESS A WAY TO BACK INTO THAT IS, IF WE WERE STARTING OVER TODAY, THE EXAMPLE THAT VICKI STARTED WITH, IF YOU ONLY HAD A MILLION DOLLARS AND YOU WERE A BRAND NEW FLEDGLING CITY, HOW WOULD YOU SPEND THAT MONEY? THEN YOUR SECOND YEAR, YOUR THIRD YEAR, YOU NOW HAVE $2 MILLION, YOUR CITY IS A LITTLE BIGGER, WHAT SERVICES WOULD YOU ADD? AND THERE IS A KIND OF NATURAL PROGRESSION ON HOW CITIES BUILD UP AND PRIORITIZE SERVICES. BUT THAT IS NOT A STATEMENT THAT THE SERVICES, OTHER SERVICES ARE NOT IMPORTANT.

IT'S NOT A STATEMENT THAT THERE IS NOT ANY DEBATE IN DETERMINING HOW YOU ADD THOSE CORE SERVICES. BECAUSE AT ALMOST EVERY LEVEL THERE ARE A LOT OF AMBIGUITIES. FOR OUR SEMI-CORE CRITERIA WE DID NOT HAVE AN EQUIVALENT TO THE THIRD CORE CRITERIA, SO WE WILL JUST MOVE PAST THAT. OUR FOURTH IS THAT AN ACTIVITY HAS A BENEFICIAL EFFECT ON THE DAILY LIVES OF SIGNIFICANT SEGMENT OF THE POPULATION, BUT IS THE CORE SERVICE OF ANOTHER ENTITY AND THE EXAMPLE THAT WE HAVE HERE IS THE CITY HAS A WORKFORCE DEVELOPMENT PROGRAM. THERE'S ALSO A TEXAS WORKFORCE DEVELOPMENT COMMISSION CHARGED WITH WORKFORCE DEVELOPMENT.

ALVAREZ: MAYOR? YEAH, I GUESS I WANTED A LITTLE MORE DESCRIPTION OF THAT ONE BECAUSE I COULD -- WE COULD ALMOST DEFINE ANYTHING AS A CORE -- AS A SEMI-CORE SERVICE BASED ON THIS CRITERIA. IN TERMS OF FINDING A -- A -- AN ACTIVITY THAT'S THE CORE SERVICE OF ANOTHER ENTITY. SO I GUESS THAT I'M TRYING TO FIGURE OUT WHAT -- WHAT OTHER EXAMPLES -- YOU KNOW, WHAT THE LIMITATIONS ARE IN THIS PARTICULAR CRITERIA.

WELL, COUNCILMEMBER, I -- I WILL TELL YOU THAT AS WE WENT THROUGH AND DID THIS EVALUATION, THERE WERE VERY FEW SERVICES THAT FELL INTO THIS CRITERIA. THE WAY WE HAVE DEFINED IT. IT HAD TO BE A FAIRLY SPECIFIC SERVICE PROVIDED BY ANOTHER ENTITY AND AT THE END OF THIS, I HAVE A LITTLE SUMMARY ABOUT THE TOTAL DOLLAR VALUE IN THE VARIOUS CATEGORIES, BUT IN THIS PARTICULAR CRITERIA, OVERALL THERE WERE ONLY PROBABLY $3 MILLION WORTH OF PROGRAMS THAT FELL UNDER IT. SO IT WAS NOT INTERPRETED VERY BROADLY.

ALVAREZ: OKAY.

OUR FIFTH SEM CORE CRITERIA -- SEMI-CORE CRITERIA PROVIDES REVENUE THROUGH A DIRECT REVENUE GENERATING OR COLLECTING FUNCTION THAT FUNDS MOST BUT NOT ALL OF ITS COSTS AND THAT IS NOT GENERATED OR COLLECTED BY ANOTHER ENTITY. AN EXAMPLE THAT WE THOUGHT OF UNDER THIS IS THAT THE CITY'S TENNIS PROGRAM USED TO BE TOTALLY SELF FUNDING. NOW IT GENERATES SOME FEES TO COVER IT, BUT ALSO RECEIVES SOME GENERAL FUND SUBPOENAEDZY. SO THAT IS THE -- SUBSIDY, SO THAT IS THE KIND OF THING THAT WE WOULD BE LOOKING AT. OUR SIXTH SEMI-CORE CRITERIA, IS ANYTHING THAT PROVIDES DIRECT SUPPORT FOR A SEMI CORE SERVICE OR INDIRECT SUPPORT FOR A CORE SERVICE. THE EXAMPLE WE USE HERE IS FIRING, PLANNING AND RESEARCH. THIS AREA WITHIN FIRE PROVIDES A LOT OF DATA ANALYSIS AND REPORTING AND CONSULTATION SERVICES TO THE MANAGERS AND THE EMPLOYEES IN FIRE. SO THAT THEY CAN MAKE DATA DRIVEN DECISIONS. THAT GETS US TO OUR LAST SEMI-CORE CRITERIA. AND ANY PROGRAM ACTIVITY OR SERVICE THAT DID NOT MEET OR DOES NOT MEET THE CORE OR SEMI-CORE SERVICE CRITERIA IS CONSIDERED A SERVICE ENHANCEMENT. JUST TO GIVE YOU SOME PRELIMINARY RESULTS, WE ARE IN THE CLASSIFICATION PROCESS, NOT EVERYTHING IS FINALIZED, BUT WE HAVE ONLY BEEN CLASSIFYING THE ACTIVITIES OF THE GENERAL FUND AND THE SUPPORT SERVICES FUND. WE HAVE NOT BEEN DOING THIS FOR ENTERPRISE FUNDS. THE SUPPORT SERVICES FUND IS FUNDED ABOUT 50% BY THE GENERAL FUND. THAT'S WHY IT WAS BEING HANDLED THE SAME WAY. WE FOUND THAT ABOUT 62% OR 290 MILLION DOLLARS OF THE GENERAL FUND APPROPRIATIONS HAVE BEEN CLASSIFIED AS CORE SERVICES. ANOTHER 37.5, 8.1% AS SEMI CORE. IN TERMS OF THE SERVICE ENHANCEMENT CATEGORY, THERE'S ONLY 650 -- 650,000 -- WELL, 650,000. IF YOU PUT TOGETHER THAT AMOUNT PLUS THE SERVICE ENHANCEMENTS IN THE SUPPORT SERVICES FUND, YOU END UP AROUND THE $2 MILLION RANGE. THE FINAL CATEGORY IS OUR TRANSFERS, OTHER AND DEPARTMENTAL SUPPORT SERVICES, WHICH IS ABOUT 29.6 OF THE TOTAL OR $138 MILLION. OUR TRANSFERS INCLUDE THINGS LIKE THE TRANSFER FROM THE GENERAL FUND TO THE SUPPORT SERVICES FUND, TRANSFER TO VEHICLE ACQUISITION TO -- BY VEHICLES -- TO BUY VEHICLES, TRANSFERS TO C.I.P., OUR GENERAL FUND CONTINGENCY, WORKERS' COMP, SELF INSURANCE, ALL OF THOSE KINDS OF THINGS THAT WE FUND AT A FUND LEVEL INSTEAD OF A DEPARTMENTAL LEVEL, AS WELL AS ANY INDIRECT AND SUPPORT COSTS OF DEPARTMENTS SUCH AS BUILDING RENT, FLEET SERVICES, ALL OF THE ADMINISTRATIVE STAFFS WITHIN THE DEPARTMENT. SO THAT'S WHAT THAT FINAL CATEGORY COVERS. FINALLY, I FOR THERE HAVE BEEN SOME QUESTIONS ABOUT WHAT ARE OTHER CITIES DOING. I THINK RUDY AND THE BUDGET STAFF DID SOME RESEARCH AND WE FOUND THAT NOT VERY MANY OTHER CITIES WERE LOOKING AT CORE SERVICES INITIATIVE OR ANYTHING SIMILAR. WE DID HAVE CONTACT OF THE GOVERNOR'S FINANCE OFFICERS ASSOCIATION OF TEXAS, WHO WAS VERY INTERESTED IN THIS BECAUSE SHE HAD BEEN GETTING A LOT OF CALLS FROM MEMBER ASKING HOW OTHER TEXAS CITIES WERE GOING TO DEAL WITH BUDGET SHORTFALLS AND SHE HAS ASKED US TO COME TO A PRESENTATION AT THEIR ANNUAL CONFERENCE TO HELP SHARE THIS INFORMATION. FINAL THING, JUST TO WRAP UP AGAIN, TOBY WENT OVER THESE, WHAT ARE THE NEXT STEPS, ON MAY 8TH, FIVE YEAR FORECAST, THAT'S WHERE THE BUDGET GAP IS TALKED ABOUT. AND AS WE ARE PROPOSING A MAY 15TH AND 22ND COUNCIL BUDGET WORK SESSION TO -- TO ALLOW YOU THE OPPORTUNITY TO PROVIDE SOME FUNDAMENTAL GUIDANCE ON THE BUDGET PRINCIPLES THAT YOU WOULD LIKE US TO USE IN FRAMING THE BUDGET, THE PROPOSED BUDGET FOR 2003. SO WITH THAT, I WILL OPEN IT UP FOR QUESTIONS.

MAYOR GARCIA: THANK YOU, MS. SCHUBERT. QUESTIONS FOR MS. SCHUBERT?

GOODMAN: I HAVE ONE.

MAYOR GARCIA: MAYOR PRO TEM.

GOODMAN: LET ME ASK YOU WHY YOU THINK OR IF YOU CAN SPECULATE WHERE OTHER CITIES HAVEN'T DEVISED SOME SORT OF PRIORITIZING PROCESS FOR THEMSELVES? MAYBE BECAUSE THEY ARE NOT WHERE WE ARE?

I GUESS I'M NOT SAYING THAT THEY HAVEN'T DEVISED ANOTHER PROCESS. BUT THEY HAVEN'T DEVISED ONE SIMILAR TO THIS. I MEAN, I THINK EVERY -- EVERYONE WHO GETS -- WHEN YOU GET INTO A BUDGET CRUNCH YOU CAN DO ONE -- YOU CAN CUT ACROSS THE BOARD OR TRY TO PRIORITIZE PROGRAMS SOMEHOW. WE HAVE NOT FOUND BUT MAYBE ONE OR TWO OTHER CITIES WHO HAVE TRIED TO USE THIS SAME METHODOLOGY TO ACTUALLY CATEGORIZE THEIR PROGRAMS.

FUTRELL: BUT WHAT WE HAVE FOUND IS A GREAT DEAL OF INTEREST IN LOOKING AT THIS METHODOLOGY AND CRITERIA TO SEE IF THEY CAN USE IT. I JUST WANT TO CAUTION AGAIN, THOUGH, IT'S ONE TOOL OF MANY. IT IS NOT DEFINITIVE. IT IS JUST MORE INFORMATION. FOR EXAMPLE, YOU KNOW, WE HEAR ALL THE TIME IN NEWSPAPERS AND EDITORIALS THAT WE ARE SPENDING MONEY ON THINGS CITIES SHOULDN'T SPEND MONEY ON. OF COURSE THAT'S -- THAT'S DEPENDENT ON THE PERSON WHO MAKES THAT JUDGMENT. BUT USING THIS METHODOLOGY AND WITH A VERY CRITICAL LOOK AT IT, FROM ALL ANGLES, ALL TOTAL, GENERAL FUND SUPPORT SERVICES AND DIRECT SERVICES, WE COULD ONLY IDENTIFY $2 MILLION THAT EVEN CAME CLOSE TO BEING CALLED SOMETHING CITIES DON'T NORMALLY DO. AND IN THOSE CASES, ONCE AGAIN, NOT A STATEMENT THAT THEY WEREN'T IMPORTANT, BUT JUST THAT THEY WEREN'T WHAT WOULD BE A CORE COMPONENT OF A CITY SERVICE DELIVERY SYSTEM WOULD BE. THAT'S WHAT, 2 MILLION OUT OF ABOUT 450 MILLION, VICKI, OF THE GENERAL FUND.

JUST ABOUT.

GOODMAN: OF THE -- I'M SORRY.

MAYOR GARCIA: GO AHEAD.

GOODMAN: OF THE PROGRAMS OR JOBS OR WHATEVER OVERLAYS THAT WE LOOK AT IN THAT CONTEXT, ARE WE ALSO GOING TO TRY TO ESTIMATE SOMEHOW THE INVESTMENT RETURN, THE PERFORMANCE MEASURES, AND HOW ARE THE -- HOW ARE THE OUTCOMES --

ACTUALLY, WE HAD A SLIDE A LITTLE WHILE AGO ABOUT BUDGET INITIATIVES, TOBY TALKED ABOUT KIND OF FINE TUNING OUR MANAGES FOR -- MANAGING FOR RESULTS AND OUTCOME PERFORMANCE BASED INITIATIVES. THAT'S ANOTHER TOOL THAT WE CAN USE THAT WE HAVE BEEN DEVELOPING OVER THE LAST FEW YEARS. IN SOME CASES YOU MAY WANT TO LOOK AT WHAT ARE YOU GETTING FOR THE MONEY THAT YOU ARE SPENDING THIS THAT AREA. IS WHAT YOU ARE GETTING WORTH THE MONEY THAT YOU ARE SPENDING? THAT GOES FOR ANY OF THE AREAS, CORE, SEMI-CORE OR SERVICE ENHANCEMENTS. NOT JUST THE ONES THAT FALL LOWER IN THE RANGE.

FUTRELL: ACTUALLY, THAT INITIATIVE WILL ALLOW YOU TO DO TWO THINGS. IT WILL ALLOW YOU TO DIED IF YOU ARE GETTING THE BANG FOR THE BUCK THAT YOU WANT. IT WILL ALSO ALLOW US IN CUTBACK TIMES TO MAKE SURE THAT THE QUALITY AND QUANTITY OF OUR SERVICES AREN'T DROPPING TO A LEVEL THAT ARE UNSEMIABLE TO US. -- SUN ACCEPTABLE TO US. -- UNACCEPTABLE TO US. IT'S A WAY TO GAUGE HOW HARD WE HAVE HIT THE SERVICE DELIVERY IN THESE AREAS.

WYNN: MAYOR?

MAYOR GARCIA: COUNCILMEMBER WYNN?

WYNN: IN THAT REGARD I WANT TO COMMEND THE CITY MANAGER FOR ATTEMPTING THIS PROCESS, BECAUSE RELATED TO OUR EARLIER DISCUSSION ABOUT THE -- OUR BUDGET WOES, IT SEEMS TO ME THAT THE EASY ANSWER FRANKLY IS TO CONTINUE TO LEAVE VACANT POSITIONS OPEN. BUT ONCE WE GET THE NUMBERS AS TO WHERE ALL OF THOSE VICK CAN'T POSITIONS ARE, WE WILL SEE WHICH DEPARTMENT REALLY ARE TAKING THE BRUNT OF THAT. BECAUSE EVEN THOUGH IT SEEMS EASY THAT WE JUST LEAVE A POSITION OPEN, DOWN IN THE TRENCHES WHAT THAT MEANS IS THERE'S A -- YOU KNOW, A MAN OR WOMAN OUT IN OUR SOME DEPARTMENT DOING MORE WORK THAN THEY FELT THAT THEY OUGHT TO BE DOING. AND SO I THINK THE CORE SERVICE ANALYSIS IS IMPORTANT FOR US TO THEN OVERLAY WHERE WE ARE GOING TO HAVE THESE VACANT POSITIONS REMAINING OPEN AND SEE WHETHER THERE'S DISPROPORTIONATE PAYING FOR SOME DEPARTMENTS. WE SORT OF OVERLAY THAT, SEE HOW MUCH OF A CORE, SEMI CORE SERVICE WE THINK IT IS.

WE WILL GET YOU THE DETAIL ON THAT. BUT IT'S WHAT YOU WOULD EXPECT IT TO BE. WITHOUT EVEN LOOKING AT THE NUMBERS, I BET MOST OF YOU COULD LIST THE DEPARTMENTS THAT HAVE THE MOST VACANCIES AND HENCE ARE GOING TO HAVE THE MOST POSITIONS FROZEN. THERE'S A CONCENTRATION IN LIBRARY, IN PARKS, AND CIVILIAN POSITIONS IN POLICE. AND HEALTH. NOW, ALSO NEED TO LOOK AT THAT AS -- THOSE ARE RAW NUMBERS, YOU NEED TO LOOK AT IT AS A PERCENT. IT MAY BE ACTUALLY A SMALL PERCENT OF POSITIONS IN THE DEPARTMENT. WE WILL WALK YOU THROUGH THIS. WE ALSO TOOK A STRONG LOOK AT HOW LONG THE POSITIONS HAVE BEEN VACANT. OF COURSE THAT'S WHERE WE STARTED. WE STARTED WITH THOSE THAT HAD BEEN VACANT FOR LONGEST AS ONE CAISHT THAT WE MIGHT BE ABLE TO CONTINUE SERVICE DELIVERY WITHOUT THE MOST IMMEDIATE IMPACT. BUT AT THIS POINT WE ARE PAST THAT. WE ARE NOW REALLY TAKING A LOOK AT EVERYTHING THAT'S OPEN AT THIS POINT. FOR A FREEZE.

ALVAREZ: I WAS JUST WONDERING IN TERMS OF THESE WORK SESSIONS, WE ARE CALLING THEM DAY-LONG WORK SESSIONS, BUT I REALLY DON'T HAVE AN IDEA WHY -- WHY, I DON'T KNOW IF -- IF THAT MEANS 10:00 TO 3:00 OR 8:00 TO 5:00 OR EXACTLY. THEN IF THERE'S --

MAYOR GARCIA: WE ARE NOT GOING TO START ANYTHING AT 8:00 IN THE MORNING.

ALVAREZ: OKAY. WELL, I MEAN, I HAVE BEEN GOING TO A LOT OF 8:00 MEETINGS LATELY. BUT -- BUT THAT'S NOT THE ISSUE FOR ME. THE ISSUE IS WHAT -- WHAT, YOU KNOW, WHAT IS THE AGENDA, HOW ARE WE GOING TO UTILIZE OUR TIME, IS THERE INFORMATION THAT COUNCIL CAN FORWARD, YOU KNOW, TO -- TO THE MANAGEMENT TO FACILITATE OUR TO MAKE THOSE MEETINGS MORE EFFECTIVE THE TIME WE SPEND BECAUSE MY SENSE IS IF WE SET FIVE HOURS FOR THIS, WE WILL USE THIS UP. IF WE SET 8 HOURS FOR THIS, WE WILL USE IT UP. I WANT SOME KIND OF STRUCTURE BECAUSE WHEN I FIRST HEARD THAT WE WERE GOING TO HAVE THESE WORK SESSIONS, I THOUGHT WELL WE NEED TO TALK ABOUT THE BUDGET. DO WE NEED TO TALK ABOUT IT FOR 8 HOURS ON TWO SEPARATE OCCASIONS. THAT'S WHAT I AM NOT SURE OF. I'M NOT SURE IF WE SHOULD JUST DISCUSS THAT RIGHT NOW OR IF WE NEED TO FLESH THAT OUT IN THE NEXT WEEK.

MAYOR GARCIA: WHAT I HAVE TOLD MY STAFF IS THAT WE WILL WORK TO GET QUESTIONS AND THEN MY STAFF WILL WORK WITH THE STAFF SO EACH OF THE COUNCIL OBVIOUSS TO SEE HOW THEY WANT TO -- TO STRUCTURE THE AGENDA SO THAT WE GET THE MOST -- THE BEST ACTIVITY COMING OUT. I DON'T WANT TO GO OUT THERE WITH AN OPEN AGENDA AND SAY, OKAY, EVERYTHING IS ON THE TABLE, WE ARE GOING TO NOW START THE OPERATION. WE NEED TO BE MORE PRECISE THAN THAT. WE WILL DO IT. WE WILL WORK WITH THE CITY MANAGER. SO THAT WHEN WE GO TO THOSE MEETINGS, I GUESS THE FIRST ONE IS WHEN? MAY THE --

MAY 15TH.

MAY 15TH. IN THE INTERIM, IF YOU HAVE IDEAS AS TO WHAT IT IS THAT I WOULD LIKE TO SEE AT THESE MEETINGS, LET US KNOW SO THAT WE CAN INCORPORATE IT INTO THE AGENDA. I WOULD ASK PAUL FROM OUR OFFICE TO -- TO COORDINATE THE WORK WITH ALL OF THE AIDES AND MAKE SURE THAT WE GET ALL OF THE INPUT FROM THE COUNCILMEMBERS. THIS IS GOING TO BE A NEW KIND OF BUDGET. AND WE MAY BE HAVING TO ASK THE COMMUNITY TO HELP AS WE GO THROUGH TOUGH TIMES. WE HAVEN'T BEEN IN THIS KIND OF A SITUATION SINCE 1988. AND I THINK IN 1988 WE DID SOME THINGS THAT WE HAVE DECIDED THAT WE ARE NOT GOING TO DO AGAIN BECAUSE THEY COST US A LOT MORE IN THE LONG RUN. SO WE ARE GOING TO BE AS -- AS JUDICIOUS AND AS -- AS INTELLIGENT IN MAKING THOSE DECISIONS AS POSSIBLE.

MAYOR, I'M CERTAINLY WILLING TO TAKE AS MUCH TIME AS IT TAKE, I GUESS, FOR IT TO BE A VERY STRUCTURED AGENDA. BUT IF WE GET IN ON THE FRONT END DISCUSSING WHAT THE POTENTIAL RAMIFICATIONS OF OUR ACTIONS ARE, AND I THINK THE WAY THAT COULD HAVE HAPPENED BACK IN THE '80'S IS THE COUNCIL COMES IN AT THE END OF THE BUDGET PROCESS, AND ALL THAT WE HAVE IS LINE ITEMS, THEY HAVE -- THEY SAY WE NEED TO CUT THIS MUCH AND HERE'S SOME LINE ITEMS, SO IT'S STREET MAINTENANCE, THERE GOES THAT, SOME OTHER THINGS, THEY WOULD HAVE LIKE THE CITY MANAGER WAS TALKING ABOUT EARLIER, HAD LONG-TERM EFFECTS, TOOK A LONG TIME TO RECOVER FROM IT, TO CATCH UP ON IT. I WOULD BE VERY WILLING, I THINK IT'S AN APPROPRIATE WAY TO DO IT, IS TO GO THROUGH THE BUDGET VERY DELIBIVELY AND LOOK AT WHAT ALL OF THE POTENTIAL RAMIFICATIONS ARE. DELIB RATIVELY.

ALVAREZ: ARE WE BEING ASKED TO GO THROUGH EVERY BUDGET, LOOK AT EVERY LINE ITEM OR ARE WE BEING ASKED TO LOOK AT THE CORE SERVICE, SEMI-CORE SERVICE, SERVICE ENHANCEMENT, THESE DIFFERENT CAT GOARTS WHICH I WOULD THINK, -- CATEGORIES, I WOULD THINK -- SEEMS LIKE THAT'S WHAT WE ARE GOING TO BE TALKING ABOUT. AS SOON AS WE CAN GET THAT INFORMATION ABOUT HOW STAFF DEFINED SO THAT SO WE CAN LOOK AT IT AND START, YOU KNOW, ASSESSING IT OURSELVES INDIVIDUALLY. YOU KNOW, HOW WE THINK THESE SHOULD FALL. I GUESS THAT'S MY SORT OF APPREHENSION IS I'M NOT REALLY SURE WHAT -- WHAT WE ARE BEING ASKED TO DO AT THESE SESSIONS AND THE SOONER WE CAN FIGURE THAT OUT, THE SOONER WE CAN LOOK AT FIGURES SO GO IN THERE WITH SPECIFIC RECOMMENDATIONS.

MAYOR GARCIA: LIKE I INDICATED EARLIER THIS IS A DIFFERENT WAY THAN WE HAVE DONE IT IN THE PAST. WE MA HAVE CITIES OUT THERE THAT HAVE -- WE MAY HAVE CITIES OUT THERE THAT HAVE DONE THIS IN THIS MATTER. THE CITY MANAGER PROPOSED WE LAY OUT THIS CORE, UNCORE, SO THAT WE BEGIN THE DISCUSSION. WE WILL WORK WITH RUDY AND WE WILL WORK WITH OTHER STAFF MEMBERS AND WITH THE COUNCIL OFFICES TO FIGURE OUT AN AGENDA THAT GIVES US THE BEST FLEXIBILITY AND THE SAME MAKES US FOCUS ON WHAT IT IS TO GET THE BUDGET APPROVED IN SEPTEMBER. BUT I WANTED TO START EARLY ON THIS ONE BECAUSE OF THE DIFFICULTY IN THE '03 BUDGET.

GOODMAN: MAYOR? IF I CAN LAY OUT A FEW THINGS THAT I WAS ASSUMING WOULD HAPPEN AT THESE RETREATS, AND THEN SOMEBODY TELL ME IF I AM WRIGHT OR WRONG. WHAT I ASSUMED WAS TO THE EXTENT POSSIBLE, STAFF WOULD BE BRINGING WITH THEM AT LEAST A -- AT LEAST A SORT OF PHILOSOPHICAL DEFINITION THAT WOULD HELP US LOOK FOR DEPARTMENTS AND PROGRAMS THAT THEY CONSIDERED CORE AND SEM CORE, NON-CORE. WHAT I THOUGHT THAT WE WOULD TAKE FOR US, AS FAR AS PRIORITIES, POLICY-WISE, EVEN IF THOSE ARE SOMEWHAT CONCEPTUAL, BUT FOR SOME OF US THAT WORK IN VERY DETAILED WAYS ON SOME INITIAL ACTIVITIES, THERE WILL PROBABLY BE SOME REAL SPECIFICS THAT WE COULD TAKE WITH US THAT WE WOULD CONSIDER RANCOR THE SENSE OF CRUCIAL AND CRITICAL. AND I WAS ALSO ASSUMING THAT TO SOME DEGREE, THE WAY THAT THOSE CONVERSATIONS AND DISCUSSIONS WENT WOULD HELP US DEFINE WHAT WE DIDN'T KNOW AND THEN REALIZED WE WANTED TO KNOW, SO THAT THAT ALSO WOULD IN SOME WAY SORT OF POINT OUT HOW WE WERE GOING TO SPEND THE OTHER HOURS OF -- OF EITHER THE SECOND HALF OF THE FIRST RETREAT AND THE SECOND RETREAT. SO I WAS READY TO GO IN WITH THE BASICS THAT I KNOW THAT I CAN PUT ON THE TABLE RIGHT NOW. WAITING FOR -- FOR WHAT STAFF WAS READY TO SHOW US BY THAT TIME AND THEN DEFINE PROBABLY WHERE WE ARE GOING TO SPEND OUR TIME THE REST OF THOSE RETREAT HOURS.

MAYOR GARCIA: TO FOLLOW UP ON THAT AND ON THE COMMENTS BY COUNCILMEMBER ALVAREZ, A GOOD WAY TO DO IT MIGHT BE TO HAVE THE COUNCILMEMBERS BEGIN SUBMITTING QUESTIONS. LET ME TELL YOU ONE QUESTION THAT I HAVE. SOME YEARS BACK WHEN I WAS ON THE COUNCIL, WE DECIDED TO MAKE A VERY SIGNIFICANT INVESTMENT IN COMPUTERS. WE JUSTIFIED IT BY SAYING WE WOULD BE ABLE TO BETTER SERVE THE COMMUNITY AND WE WOULD BE ABLE TO DO IT AS LESSER COST. I DON'T KNOW WHETHER THAT'S BEEN DONE. I DON'T KNOW IF ANYBODY THAT HAS EVALUATED THAT. WE CERTAINLY AS A COUNCIL HAVE NEVER HEARD WHAT HAPPENED. ALL WE KNOW IS THAT WE SPEND MANY MILLIONS OF DALLAS IN ARS IN COMPUTERS. THAT WOULD BE A QUESTION, HOW IS IT THAT WE ARE DOING THINGS BETTER. ARE WE ACTUALLY USING THIS OR ANSWERING E-MAILS FROM EVERYBODY THAT SENDS US TONS OF THEM.

GOODMAN: DITTO.

MAYOR GARCIA: JUST TO -- BECAUSE I THINK EVERYBODY IS FOCUSING ON THE PROGRAM DEPARTMENTAL KIND OF CUTS AND THE WAY WE HAD ORIGINALLY ENVISIONED THIS, NORMALLY STAFF WOULD HAVE GONE OFF AND IN ORDER TO PREPARE FOR THE PROPOSED BUDGET HAVE ANSWERED A SERIES OF QUESTIONS, EVERY YEAR, EVERY BUDGET, THOSE QUESTIONS HAVE TO BE ANSWERED. I WILL GIVE YOU SOME EXAMPLES. ARE WE WILLING TO DO A TAX INCREASE? AND IF SO, HOW MUCH? WHAT SHOULD THE UTILITY TRANSFERS BE? AND AT WHAT LEVEL? WHAT IS THE PAY PACKAGE FOR EMPLOYEES? WHAT ARE THE LEVEL OF BENEFITS AND WHAT LIVELY OF SUBSIDY ABOUT THE CITY. YOU GO ON, A DOZEN OR SO MORE BASIC QUESTIONS THAT HAVE A BIG COST RAMIFICATION AND -- IN BALANCING YOUR BUDGET. SO THE IDEA WAS TO START WITH THOSE DOZEN, TWO DOZEN QUESTIONS AND RATHER THAN HAND YOU A BALANCED BUDGET, THAT WE HAVE ALREADY MADE DECISIONS ON THOSE, WE WOULD GET DIRECTIONS ON THE FRONT END FROM YOU. ON HOW YOU WOULD LIKE TO MOVE FORWARD. AND FROM THERE I THINK THAT YOU WILL GENERATE ANY NUMBER OF OTHER QUESTIONS AND THINGS THAT YOU WANT MORE INFORMATION ON TO GIVE US BASICALLY BUDGET PARAMETERS OR BUDGET PRINCIPLES. THAT'S JUST A GENERAL IDEA OF HOW IT WAS ORIGINALLY CONCEIVED. AND IT WILL -- IT WILL START AT A BROADER CHUNKED UP LEVEL THAN IS THIS PROGRAM -- SHOULD THIS PROGRAM BE REDUCED VERSUS THIS PROGRAM. A REALLY HIGHER LEVEL QUESTIONS THAT YOU START WITH TO KNOW HOW TO BALANCE YOUR BUDGET. BUT THAT'S A STARTING PLACE. WE ARE GOING TO CONTINUE TO WORK WITH THE MAYOR'S OFFICE AND EACH OF YOU ALL TO MAKE SURE THAT -- THAT THE THINGS THAT YOU NEED TO KNOW TO MAKE THESE DECISIONS ARE PART OF THE STRUCTURE OF THESE WORK SESSIONS.

MAYOR GARCIA: YOU SAY THAT -- THAT MY BUDGETING PROFESSOR AT THE UNIVERSITY OF TEXAS, DR. GLEN WELCH USED TO SAY THAT WHEN YOU DO BUDGETING, YOU DO IT QUANTITY TAKE

THANK YOU. THE NEXT ITEM ON THE AGENDA, AND IT'S ABOUT 12:00 O'CLOCK. I DON'T KNOW EXACTLY HOW LONG WE'RE GOING TO TAKE ON THIS. THE PERSON THAT BROUGHT THIS TO OUR ATTENTION --

COUNCILMEMBER WYNN HAD ASKED THAT WE GO ON AND POSTPONE THIS DISCUSSION UNTIL TOMORROW BECAUSE WE KNOW ALL OF YOU ALL HAVE SOME COMMITMENTS AND WE'VE LOST OUR TIME. SO WE HAVE THIS POSTED TOMORROW AND WE'LL INCLUDE IT AS PART OF THAT PRESENTATION TOMORROW.

MAYOR GARCIA: MOTION TO ADJOURN.

SLUSHER: SO MOVE.

MAYOR GARCIA: MOTION AND A SECOND. ALL IN FAVOR, SIGNIFY BY SAYING AYE.

AYE.

MAYOR GARCIA: OPPOSED NO. MOTION CARRIES AND WE'RE AUNDER.

End of Council Session Closed Caption Log