[00:00:22]
OKAY, IT IS TUESDAY, MAY 10TH, 2020 2:11 AM WE DO HAVE A QUORUM AND I CALL THIS MEETING TO ORDER.
UM, WE'LL TAKE ITEM ONE A, CONSIDER THE APPROVAL OF
[a. Consider the approval of minutes of the Finance Committee Meeting held December 7, 2021.]
MINUTES OF THE FINANCE COMMITTEE MEETING HELD DECEMBER 7TH, 2021.CAN I GET A MOTION? A MOTION MAY APPROVE AND I WILL SECOND THAT.
[a. Consider the Property Tax Policy.]
CONSIDER THE PROPERTY TAX POLICY, VICTOR.SO WE HAVE A CONVERSATION A FEW MEETINGS AGO, AND I KNOW YOU, UH, HAVE SAID THAT THE COMMITTEE WOULD BE TA CLEAR POLICY ON PROPERTY FACTS FOR THE CITY COUNCIL TO CONSIDER.
SO RICK AND I HAVE, UH, HAVE A COUPLE OF DISCUSSIONS ABOUT THIS.
I'VE RUN SOME OF THE NUMBERS AND, UH, WHAT WE TRIED TO CAPTURE HERE ARE TWO DESIRES IN YOUR PART.
ONE, TO INCREASE THE HOMESTEAD EXEMPTIONS WHERE WE CAN.
AND CURRENTLY, UM, THE SCOPE TO DO IS FOR OVER 65 AND DISABLED.
AND THEN SECONDLY, TO DEAL WITH THE HEADLINE TAX RATE.
I WANNA TALK A LITTLE BIT MORE ABOUT THAT IN A MOMENT.
THIS IS KIND OF AN UPDATE FROM WHERE THE REPORT TO IS, BUT LONG STORY SHORT, WHAT I'M SUGGESTING YOU CONSIDER AND TAKE THAT TO THE TRANSFER FOR THEM TO AGREE, IS TO INCREASE THE EXEMPTIONS FOR THE OVER 65 AND DISABLE BY 20,000 INCREMENTS OVER THE NEXT THREE YEARS.
AND AT THE SAME TIME, AND IN ADDITION, TAKE A HALF CENT OFF THE HEADLINE TAX RATE EACH OF THE NEXT THREE YEARS.
THAT'S WHAT THE PROPOSAL SAYS IN A, IN A NUTSHELL, IS THIS THE FIRST TIME YOU'RE SEEING THIS? I, I MEAN, I LOOKED AT IT ON THE AGENDA, BUT YEAH.
OTHER THAN THAT, OKAY, SO FROM MY UNDERSTANDING, IF WE DID THIS, THE AVERAGE 65 AND OLDER HOMEOWNER IN BAYTOWN WOULD HAVE ZERO ZERO CITY TAX, WHICH I THINK IS PRETTY COOL.
CORRECT? THAT'S THE INTENTION.
UH, IS THIS, I MEAN, OBVIOUSLY IT'S A POLICY, SO YOU CAN'T TIE THE HANDS OF A FUTURE CITY COUNCIL, BUT THAT'S REALLY HELPFUL GUIDE.
AND REMEMBER, I'M SUGGESTING THIS IS THE VERY MINIMUM THAT YOU'RE COMMITTING TO.
SO IF NEXT YEAR, YOU KNOW, WE'RE LOOKING AT IT AND HEY, MIGHT WANT DO, WE CAN STILL DO THAT.
THIS REALLY SETS THE FLOOR OF THE CITY.
MY ONLY QUESTION WOULD BE, I, I LOVE THE CONTINUATION OF GOING DOWN AS PROPERTY, UH, VALUES RISE.
WHAT HAPPENS IF THE MARKET CHANGED AND EVERYTHING JUST FLIPPED AROUND AND SUDDENLY WE FIND OURSELVES NOT COLLECTING ENOUGH? UM, I DON'T EVEN KNOW IF THAT'S A POSSIBILITY OR IF THAT'S EVEN SOMETHING, IF THAT'S SUCH A LONG SHOT THAT THAT COULD EVEN HAPPEN.
BUT ARE WE GET, WOULD A FUTURE COUNCIL BE FORCED TO THEN RAISE RATES OR, OR THINGS LIKE THAT? OR WOULD, IS THAT WHEN YOU START SAYING WE HAVE TO OPERATE WITH LESS? YEAH, I, I JUST TOLD FROM MY PERSPECTIVE, THE FIRST THING I'D SAY, WELL, THOSE ARE THE RESOURCES YOU HAVE AVAILABLE TO YOU.
YOU HAVE TO WORK WITHIN THOSE.
SO I JUST WONDERING IF THERE, IS THERE A LOW, IS THERE A TOO LOW, IS THERE A TAX RATE THAT WOULD BE TOO LOW TO WHERE IF LIKE JUST EVERYTHING CHANGED THE CITY WOULD BE LIKE? SO I, I CAN TELL YOU JUST BASED ON MY EXPERIENCES THAT I, FIRST OF ALL, I THINK THIS IS SUSTAINABLE.
ONE OF THE LUXURIES THAT WE HAVE IN BAYTOWN IS THE DIVERSIFIED ECONOMY THAT WE HAVE.
WE ARE NOT, IF WE WERE A SMALLER COMMUNITY, I'D BE MUCH MORE CONCERNED ABOUT THIS.
BUT PROPERTY TAX, RELATIVELY SPEAKING, IS A MORE MINOR CONTRIBUTOR TO OUR, OUR REVENUE BASE THAN IT IS IN OTHER COMMUNITIES.
SO I WOULD BE LESS CONCERNED, BUT I THINK YOU ALWAYS HAVE TO BE CONCERNED.
THE THING THAT'S MOST OF DANGER TO US IS, IS THE SHRINKAGE OF OUR BASE.
SO THAT, YOU KNOW, AS BASE SHRINKS THEN WE HAVE TO TALK ABOUT RAISING RAISING RATE.
IT'S ONE OF THE REASONS WHY OUR RATE IS SO HIGH TO BEGIN WITH, IS BECAUSE WE'RE, WE'RE TRYING TO BROADEN OUR BASE.
I ACTUALLY DON'T SEE THAT HAPPENING IN THE NEXT THREE YEARS.
I THINK YOU CAN MAKE THAT COMMITMENT FOR THE NEXT THREE YEARS WITH RELATIVELY LITTLE CONCERN BECAUSE 60% IDAS OUR SALES TAX IS AMAZINGLY
[00:05:01]
ROBUST.I TRIED TO GO TO THE STORE YESTERDAY ON A MONDAY AND I HAD TO PARK IN AN ENTIRELY DIFFERENT PARKING LOT FROM THE, FROM THE STORE.
I, I JUST CANNOT BELIEVE THE CONSUMING THAT CONTINUES TO TO BE OUT THERE.
AND ACROSS THE BOARD IN THE STATE, THERE'S, THEY'RE REPORTING OVER 11%.
AHEAD OF PROJECTED STATEWIDE, WE'RE AT 15 UH, PERCENT.
SO I DON'T SEE THAT GOING ANYWHERE, UH, SOON.
SO I'D FEEL MY RECOMMENDATION TO YOU IS THIS IS A COMFORTABLE, UH, PLACE FOR US TO BE.
NOW, IF THE LEGISLATURE SAID, LET'S LET YOU EXPAND THE HOMESTEAD EXEMPTION, WE MAY NEED TO BE MORE DELIBERATE AND INCREMENTAL ABOUT HOW WE IMPLEMENTED THAT.
BECAUSE THERE IS A COST TO EXPANDING THE HOMESTEAD EXEMPTION, OBVIOUSLY.
SO MAYBE THE RATE WOULD SAY CORRECT.
GUESS THAT WOULD BE THE, AND THAT, AND, AND THE THING ABOUT IT IS THAT GIVES YOU A MUCH MORE BANG FOR YOUR BUCK BECAUSE CHANGING IN THEIR HOMESTEAD EXEMPTION DOES NOT AFFECT THE, THE IDA LOSSES.
I MEAN, IN AN IDEAL WORLD, WE COULD KEEP HOME SETTING, WHICH IS WHY WE PUSHING FOR THAT, RIGHT? RIGHT.
IT IS THE WAY THAT WE FIGURED OUT TO HOW TO BIFURCATE THE RESIDENTIAL PROPERTY TAX BURDEN VERSUS THE CORPORATE WHERE WE'RE, WE'RE ALREADY GIVING A 33% DISCOUNT.
YOU KNOW, HOW DO WE, HOW DO WE GIVE OUR RESIDENTS A BREAK WITHOUT AFFECTING THE IDAS, THE EX EXPANSION OF THE EXEMPTION'S, THE KEY.
WELL, AND WHILE WE CAN THE 65 MAN THAT BUYS YOU A TON OF GOODWILL OUT THAT, SO IS THAT, UM, THAT IS STATE LAW THERE.
WE DON'T HAVE A LIMIT ON WHAT WE CAN GIVE TO 65 OVER AND DISABLED.
YEAH, IT'S NOT, IT'S NOT RESTRICTED IN THE SAME WAY THAT I FIGURED THAT'S, AND WE ARE, I, I MEAN I'M LOOKING AT WHAT OTHERS, SO I FORGET WHICH OF OUR KIND OF SISTER CITIES IN THE REGION HEARD ABOUT THIS AND THEY'RE TALKING ABOUT INCREASING THEIR EXEMPTIONS, BUT THEIR INCREASE, I DON'T BELIEVE EVEN TAKES THEM TO WHERE WE CURRENTLY ARE.
SO OUR OVER 65 DISABLED EXEMPTION IS IN THE, LIKE WE TALK FOUR POUNDS.
SO THE ONES PROBABLY LOOKING AT THAT WOULD BE LIKE YOUR TEXAS CITIES OF THE WORLD, YOUR LA PORTS, DEER PARK.
I WAS, I THIS IS, IT'S ONE OF THE LANDS.
JACOB, DO YOU HAVE ANY QUESTIONS OR? NO, I MEAN, I, I THINK FIRST SOMETHING FOR US TO TARGET, I LIKE IT.
UM, OBVIOUSLY ANYTHING WE CAN DO TO DECREASE, YOU KNOW, THE TAX BURDEN ON RESIDENTS.
AND SO I DO THINK, I MEAN, I THINK THIS IS A GOOD THING TO TARGET FOR.
I DEFINITELY WANT TO, HOPEFULLY THE LEGISLATION WILL HELP US OUT AS FAR AS THE YEAH.
BUT IN THE ABSENCE OF THAT, UM, THIS DOES, I MEAN, IT DOES HELP TO SEE LIKE WHAT THE HALF CENT ACTUALLY DOES.
IT DOES SHOW PEOPLE, I MEAN, IT'S THE 400 K FOR IDAS VERSUS MM-HMM
WHAT WE LOSE FOR GENERAL FUND.
AND ONE OF THE THINGS I'LL SAY TO YOU NOW, UH, AND I WAS TALKING WITH OUR, WITH JOE MOR, YOU KNOW, OUR FINANCIAL ADVISOR THIS MORNING ABOUT THIS, JUST LOOKING AT THE CURRENT APPRAISAL ESTIMATES FOR HARRIS COUNTY, AND I'VE HAD ONE CHAMBER AS WELL.
SO PROPERTY VALUES, RESIDENTIAL PROPERTY VALUES ARE UP A LITTLE UNDER 20% YEAR OVER YEAR FOR HARRIS COUNTY AND A LITTLE UNDER 24% YEAR OVER YEAR FOR PERSPECTIVE.
SO I'M JUST SAYING THAT WE MIGHT BE IN A POSITION WHERE THE VOTER APPROVAL RATE IS CALCULATED THROUGH THE TRUTH AND TAXATION ACTUALLY DIVES FOR US.
SO WE MAY BE REDUCING OUR HEADLINE TAX RATE EVEN MORE.
I'M JUST PUTTING THAT OUT THERE FOR US AS ONE JUST TO THINK ABOUT.
UM, BUT THAT WOULD, THAT IS PURELY A FUNCTION OF THE, THE UPLIFT IN APPRAISED VALUES.
SO THAT'S A AND I SAW THAT IN HERE.
THAT'S, UM, THAT TAKES INTO ACCOUNT JUST YOUR OVERALL REVENUE.
THAT, THAT, SO, SO THAT'S THE EFFECT OF SB TWO WHERE WHAT THEY'RE TRYING TO DO IS CAPTURE, SO THE UPLIFT ON VALUES FOR CURRENT PROPERTIES IS ESSENTIALLY CAPPED WHAT YOU CAN GET IN TERMS OF EXTRA REVENUE FROM THAT AS CAPPED THAT.
SO THIS IS, THIS IS WHERE SB TWO BYTES, AND I'M ACTUALLY USED TO THIS MECHANISM IN OTHER JURISDICTIONS.
UM, SO WHERE ARE WE GETTING THE FIGURE THAT THE AVERAGE, UM, HOME FOR 65 OR DISABLED IS AROUND ONE 20? THAT SEEMS LOW TO ME.
WELL THAT'S FROM, THAT'S FROM A MIXTURE OF THE SCHOOL DISTRICT WHO IS OUR TAX COLLECTOR PLUS FROM, FROM HARRIS COUNTY.
IT'S A DIFFICULT YEAH, IT'S, THERE'S NO EASY CALCULATION OF IT.
BUT THAT'S THE AND THAT IS THE ESTIMATE.
THE, THE, THE OVER 65, PARTICULARLY OVER 65, UM, AVERAGE IS LOWER THAN THE OVERALL AVERAGE.
[00:10:01]
FEELS ABOUT RIGHT.BUT I GUESS WHEN COMMUNICATING THAT, YOU GOTTA REMIND PEOPLE THAT IT'S HOW HARRIS HCAS VALUING THE HOME, NOT THE REAL ESTATE.
WHAT YOU CAN SELL UP FOR THAT.
SOMETHING KEY THAT VICTOR SAID THAT WE NEED TO REMEMBER IS THAT THIS, UH, THAT THIS IS A MINIMUM, RIGHT? THIS IS A MINIMUM.
SO WE CAN ALWAYS ASK THE QUESTION WHEN THE BUDGET COMES UP, CAN WE DO MORE THAN HALF A CENT? YEAH.
CAN WE AFFORD MORE THAN THAT? YEAH.
AND I WOULD LIKE TO BE MORE, I MEAN THIS GETS OUTSIDE THIS POLICY, BUT I WOULD WANT GET CREATIVE ABOUT HOW, HOW CAN WE TARGET RESIDENTS HELP VERSUS, I MEAN, BECAUSE WHEN YOU SEE WHAT WE'RE DOING BACK TO THE IDA A, SO OTHER SERVICES WE PROVIDE, HOW CAN WE OFFSET LIKE THE WATER BILL OFFSET? HOW CAN WE OFFSET COSTS AND OTHER SERVICES? YEAH.
I MEAN I THINK THE TRASH NEGOTIATIONS GOING UP AND THINGS LIKE THAT.
SO THOSE THINGS ARE DEFINITELY GONNA HELP, YOU KNOW, TARGET RESIDENTS.
WHEREAS WHEN WE DO, WE CUT THE RATE, WE ARE HELPING YOU, WE'RE CUTTING A LOT OF THE IDA REVENUE.
AND THEN ALL THREE OF US HAVE HAD LONG CONVERSATIONS ABOUT RATE DECREASES, UNLESS YOU LOOK AT IT OVER A LONG, LONG PERIOD OF TIME.
BUT IF YOU'RE LOOKING AT SINGULAR YEAR RATE DECREASES, THEY'RE MOSTLY COSMETIC.
THEY'RE, THEY'RE A COMMUNICATION DEVICE FROM YOUR BODY TO THE CITIZENS SAYING, HEY, WE CARE ABOUT YOUR PROPERTY TAXES AND, AND THINGS LIKE THAT.
NOBODY WANTS TO BE THE HIGHEST, I MEAN THERE'S A LOT OF RATIONALE FOR LOWERING THE PROPERTY TAX RATE, BUT ONE OF 'EM IS NOT DECREASING BURDEN WITH A CENT DECREASE, BASICALLY BUYING ABOUT 12 TO $15 A YEAR IN PROPERTY TAX RELATED.
IT ALL IS ABOUT, I LOVE THAT SONG.
YOU KNOW,
BUT IT'S IMP I I THINK THIS IS A GREAT POLICY 'CAUSE IT ATTACKS BOTH AND IT'S EXPENSIVE FOR CITIES WITH LOTS OF IDEAS TO GET RATE REDUCTIONS.
SO, AND, AND, AND TO THAT, AND THIS, AGAIN, IT'S SOMETHING RICK AND I HAVE BEEN TALKING ABOUT.
I'VE BEEN TALKING TO BJ ALSO ABOUT THAT.
UM, IT'S THIS WHOLE ISSUE OF THE LINK BETWEEN THE TAX RATE AND THE IDA RATE WHEN THE IDAS ARE LIKE A, A PAYMENT IN LIEU OF TAXATION.
AND HOW DO YOU GET OUT OF THAT? SO FOR INSTANCE, ONE OF OUR IDAS WAS NEGOTIATED ON THE BASIS OF A DOLLAR AMOUNT SET.
YOU MIGHT KNOW THAT COMPANY, YOU MIGHT OVER, OVER A CREATED YEARS.
AND WE THINK THERE IS MERIT WHEN IT COMES TO RENEGOTIATING THE, UH, THE, THE DISTRICT AGREEMENTS ARE COMING UP AND A VERY BIG ONE IS ABOUT TO COME UP.
SHOULD WE LOOK AGAIN AT WHAT THE WHOLE UNDERLYING STRUCTURE FOR THAT PAYMENT IS.
NOW, THERE'S A REAL LOGIC IN TYING IT TO A TAX RATE, BUT WHEN THIS HAPPENS, UH, YOU START TO WONDER IS THERE ANOTHER WAY OF LOOKING AT IT? AND THAT'S, I'M JUST PUTTING OUT THERE, THERE'S NO EASY FIX FOR IT.
UH, BUT THERE ARE, WE BELIEVE THERE ARE OPPORTUNITIES WHEN IT COMES TO RENEGOTIATING THESE OF THE INDUSTRIAL DISTRICT GAMES, PARTICULARLY BIG ONES TO DO SOMETHING THAT, UH, THAT DOESN'T HAVE THIS GEARING EFFECT FOR THE RESIDENTS OR DISADVANTAGE.
THERE'S GOTTA BE A WAY OF DOING IT.
THE COUNCIL'S CHANGED POLITICALLY TOO.
I USED TO HAVE COUNCIL MEMBERS TO SAY, WELL, YOU KNOW, HEY, THEY'RE, THEY'RE CITIZENS TOO.
WE WANT TO GIVE THEM A TAX BREAK.
AND I'D HAVE TO REMIND THEM WE ALREADY DO.
THAT'S BUILT INTO THE FORMULA THAT YOU'RE HANDING THEM ANOTHER, YOU KNOW, MILLION AND A HALF DOLLARS, YOU KNOW, AND, AND NONE OF IT'S GETTING TO THE RESIDENCE VIRTUALLY ANYTHING ON A RATE PRICE.
AND, AND THERE'S A TRADE OFF IN THAT AS WELL BECAUSE IT'S ALSO ABOUT INCENTIVIZING INVESTMENT AND GROWING THE ECONOMY.
SO THAT'S, THAT'S A FINE BALANCE.
ONE OF THE OTHER, UH, ISSUES WITH THAT IS LOOKING AT THE, THE TIMEFRAME FOR THOSE TYPES OF AGREEMENTS.
AND I THINK THERE'S MERIT, PARTICULARLY WITH THE BIGGER ONES, LIVING ALONG THE TIMEFRAME.
AND THAT THEN GIVES YOU A LITTLE BIT MORE LATITUDE TO DO SOMETHING ABOUT THE TAX RATE AND MAYBE AGREEING A, YOU KNOW, A FIXED AMOUNT OVER A PERIOD OF TIME WITH SOME TYPE OF UPLIFT FOR VALUE.
ARE YOU OKAY WITH PRESENTING THIS BEING PRESENTED TO COUNCIL? YES.
WHEN DO Y'ALL PLAN TO PUT THIS ON A COUNCIL AGENDA? PART OF THE BUDGET PROCESS? SO OUR PRESENTATION TO THE COUNCIL ON THE BUDGET, THE GENERAL FUND, UH, PARTICULARLY WOULD, UH, INCLUDE DISCUSSION OF THIS.
I, WELL, THE ONLY THING I'LL SAY IS, UH, IT MIGHT GET A LITTLE DILUTED IF WE
[00:15:01]
DO IT WITH THE BUDGET.WELL, I WAS GONNA SAY FOR THE EXEMPTIONS TO, TO KICK IN, WE NEED TO, AS I UNDERSTAND THAT WE TO GET THIS DONE BY THE END OF JUNE SO THEY, SO THAT IT CAN BE INCLUDED FOR THE CALCULATION AND THE TAX OFFICE FILES.
SO THERE IS A REASON WHY WE HAVE TO GO EARLIER WITH THIS.
I WAS GONNA SUGGEST THAT BE STANDALONE.
BUT THIS IS A BIG DEAL AND I, I'D LOVE TO SEE PUBLIC AFFAIRS, UH, COMMUNICATED IN A VERY SIMPLIFIED WAY SO PEOPLE UNDERSTAND IF WE FOLLOW THIS, THIS POLICY, 65 AND OLDER WITH THIS AVERAGE HOME VALUE WOULD HAVE NO CITY TAXES TAX FREE.
ONE THING GUYS, AND, AND, AND THAT'S FINE.
WE, WE CAN COMMUNICATE THIS WHENEVER ITS IMPLEMENTATIONS, OBVIOUSLY WITH THE, THE KICKS IN WITH THE NEXT BUDGET.
I WANNA BE CAREFUL THAT WE UN WE DON'T UNVEIL SOMETHING AND FIND SOMETHING IN THE BUDGET THAT IS SO CRITICAL THAT WE HAVE TO ADDRESS.
OR THERE'S SOMETHING THAT COMES UP THAT WE HAVE TO BACKTRACK IN THE LEASE ON ANY OF THIS.
'CAUSE IT'S NOT A DONE DEAL TILL Y'ALL SAY AMEN TO THE BUDGET.
SO I JUST A POLICY, I THINK THE, THE NEWS IS THE POLICY, IT SETS THAT FLOOR AND THEN IT BECOMES A COMMITMENT.
AND I DON'T WANT YOU TO PAINT YOURSELF IN A CORNER AND GO, OH GOSH, WE, WE CAN'T DO THAT FLOOR.
AND I DO BELIEVE IT SHOULD BE A STANDALONE DISCUSSION.
I AGREE WITH YOU, BUT I THINK IT'S PART OF THIS ENTIRE BUDGET PROCESS.
IT HAS TO PLAY OUT IN THE BUDGET.
YOU SEE, IF YOU REMEMBER LAST YEAR WE FOCUSED ON THE HEADLINE TAX RATE, WHICH YOU DON'T SET UNTIL THE VERY, VERY END.
BUT IN DOING THAT, WE, IT WAS A CONSCIOUS DECISION.
WE KIND OF PARKED THE IDEA OF THE EXEMPTIONS AND THEN I THINK IT WAS THE MAYOR LATER ON SAID, WHAT ABOUT THIS? AND, BUT THEN IT WAS TOO LATE.
WE'D ALREADY MISSED THE OPPORTUNITY, WHICH IS WHY WE, WHICH IS WHY WE NEED THIS SPECIFICALLY ON THE OVER 60.
SO I, I WAS ANTICIPATING BECAUSE THAT WILL BASE OUR WHOLE BUDGET ON THESE TYPES OF NUMBERS.
THE OTHER BIT OF IT, THE HEADLINE TAX RATE SAYING, YOU KNOW, YOU'RE AIMING FOR 78 CENTS, THAT'S A HALF CENT DOWN.
THE VOTER PAPER MIGHT COME IN AT 75.
SO WHAT DO YOU THINK, UH, GUYS, ABOUT COMING TO THE COUNCIL BEFORE I DO MY BUDGET PRESENTA MY ACTUAL BUDGET PRESENTATION AND SCHEDULE THIS FOR A WORK SESSION WHERE WE JUST, WE UNVEIL THE POLICY AND WE SAY THIS IS WHAT OUR AMBITION IS GOING TO BE IN.
AND, AND GET COUNCIL FEEDBACK ON THAT AND MOVE FORWARD FROM THERE.
OR EVEN JUST BEING A DISCUSSION ITEM ON A REGULAR AGENDA.
I CAN'T IMAGINE ANYONE'S GONNA HAVE ISSUE WITH IT.
SO I JUST FORESEE Y'ALL PRESENTING.
PEOPLE CAN ASK QUESTIONS, WE'LL MAKE COMMENTS.
AND I THINK, ARE YOU DOING A QUARTERLY UPDATE? UH, YEAH.
SO, UH, WHEN OUR COURT RELEASE WILL BE SO 26TH, AREN'T THEY? YEAH.
'CAUSE I WAS ANTICIPATING IN MY HEAD, I HAD THIS DONE FOR THE 26TH OF MAY WHERE I'LL DO THE QUARTERLY UPDATE ON THE GENERAL FUND.
THIS IS WHERE YOU ARE AND THEN HERE'S THIS, AND THEN WE'LL BE COMING TO YOU.
COULD WE DO THAT? THAT'S PRACTICALLY YOU.
YEAH, IF YOU'RE GOOD WITH THAT, DAN, BOTH TOPICS TOGETHER MAKES SENSE.
AND THEN I, I WILL THEN AFTER THAT, COMMUNICATE THAT TO THE TAX COLLECTOR FOR US AND THEN WE'LL GET THIS IN.
IS THAT ALL FOR TWO A? YES, HONOR.
ALRIGHT, LET'S MOVE ON TO THREE
[a. Receive and Discuss General Financial Update.]
A, RECEIVE AND DISCUSS THE GENERAL FINANCIAL UPDATE.SO, UM, AS I SAY FOR THE DEFENSE, WE WILL HAVE THE COURTLY FINANCIAL REPORT.
WE'RE GONNA HAVE TO HAVE ANOTHER MEETING OF THIS BODY IN ADVANCE OF THE NEXT MEETING AND BECAUSE OF THE AUDIT APPROVED.
SO I'LL BRING YOU THE, UM, THE, THE, YEAH.
NEXT QUARTER UPDATE THEN SUFFICE TO SAY, RICK ALREADY MENTIONED THAT SALES TAX VERY ROBUST.
JUST, I MEAN, THIS IS THE BEING NATURALLY CONSERVATIVE TRYING TO LOOK INTO THE FUTURE AND WE'RE PROBABLY GOING TO BE HAVING SLIGHTLY MORE DIFFICULT ECONOMIC TIMES.
THINK THE BIG, WHERE INFLATION IS, AND YOU KNOW, THERE'S A DOUBLE-EDGED SWORD WITH INFLATION.
PRICES ARE GOING UP, PEOPLE ARE STILL BUYING STUFF.
HOWEVER, I LOOK AT IT AND THINK THERE'S GONNA BE A TIME WHERE THIS ACTUALLY STARTS BITING AND PEOPLE WILL DIAL DOWN THEIR CONSUMER EXPENDITURES AND FOCUS JUST ON THE, YOU KNOW, THE NECESSITIES, WHICH WE DON'T GET TAX ON.
SO, UM, LOOKING FORWARD INTO NEXT YEAR, I'M ASSUMING THAT WE'VE REACHED PEAK IN TERMS OF SALES TAX, UH, GOING
[00:20:01]
FORWARD.I, I WILL BE FACTORING IN SOME UPLIFT, BUT IT WON'T BE AT THE SAME MAGNITUDE.
SO NO, I WOULDN'T, WE'RE UP 15%, YOU KNOW, YEAR OVER YEAR.
I'M NOT ASSUMING 15% NEXT YEAR.
UH, BUT WE ARE STILL AT A VERY HIGH LEVEL, UM, LOOKING INTO NEXT YEAR, CERTAINLY IN THE GENERAL FUND.
AGAIN, THE, THAT SIDE OF IT FOR A MOMENT IN THE GENERAL FUND, UH, PUBLIC TAX WILL BE THE THIRD OF OUR REVENUE STREAMS. FIRST THE GENERAL FUND OPERATIONS.
SO THAT'S THE WAY IF, UH, OF THE GENERAL UPDATE, THERE'S NOTHING CURRENTLY THAT'S CONCERNING IS YES, WE'RE SEEING INFLATIONARY PRESSURES BOOT OUT ON THEIR SPEND, THAT'S BEEN OFFSET.
BUT THE FACT THAT WE CAN'T EMPLOY STAFF BECAUSE WE CAN'T RECRUIT THEM LIKE EVERYBODY ELSE IN THE WORLD ACTUALLY KNOW.
SO, SO WE'RE, SO WE'RE HAVING, YOU KNOW, SAVINGS ON STAFFING'S, OFFSETTING SOME OF THE PRICE INFLATION.
UM, WE'RE HAVING TO BE MUCH MORE IMAGINATIVE ABOUT RECRUITING PEOPLE AND WE'RE HAVING TO PAY MORE.
WE, WE SEE THAT IN FINANCE, YOU KNOW, WE'VE BEEN RECRUITING NOW FOR SEVERAL POSITIONS FOR SOME TIME.
LUCKILY WE'VE LANDED ONE, UM, HOPEFULLY TWO, BUT WE STILL HAVE, UM, ANOTHER COUPLE POSITIONS OUT THERE.
AND WHEN WE'RE BRINGING PEOPLE IN, WE'RE NOT STARTING AT THE BOTTOM OF THE SCALE.
WE ARE NOT EVEN AT THE MID POINT ANYMORE.
I, I LIKE THE IDEA OF BEING CAUTIOUS ABOUT FORECASTING SALES TAX INTO THE FUTURE.
I JUST THINK THIS IS MORE OF AN OPERATION.
UH, IT'S BEEN, YOU KNOW, THE LAST COUPLE OF YEARS.
BUT I THINK USUALLY YOU SAY YOU NEVER BUDGET, YOU ALWAYS, YOU ALWAYS BUDGET ON HISTORY, NOT ON THE WHAT YOU THINK'S GONNA HAPPEN.
YOU, YOU WAIT TO SEE WHAT'S HAPPENED.
WELL, THIS IS IN DEFIANCE TO THAT RULE WHERE WE SAW WHAT HAPPENED AND WE'RE STILL NOT WILLING TO, TO BUDGET ON, ON WHAT HAPPENED BECAUSE WE THINK IT'S JUST SO, UH, UNUSUAL.
SO WE'RE TREATING A LOT OF THAT DELTA OR THAT MONEY BETWEEN WHAT WAS FORECASTED AND WHAT WE WERE GETTING AS REALLY ONE TIME, ONE TIME FUNDS.
SO WE'LL MAKE A MODEST INCREASE IN THE PROJECTION OF SALES TAX.
THE THING ABOUT BAYTOWN IS THAT HISTORY SHOWS US THAT EVEN IN THE WORST OF TIMES, IT'S A PRETTY ROBUST AND RESILIENT ECONOMY.
SO WE DON'T HAVE TO, EVEN IF WE, FOR EXAMPLE, THERE'S TWO FACTORS RIGHT NOW.
THE, A POSSIBLE BEAR MARKET EMERGING AND A POSSIBLE RECESSION, WE'LL SEE NEXT QUARTER, WE'RE 1.5% DOWN THE LAST QUARTER.
IF WE GET ANOTHER NEGATIVE THAT'S A RECESSION, THOSE ARE 13 MONTHS USUALLY IN DURATION.
WE, UH, HAVE THE LUXURY OF BEING ABLE TO BE A LITTLE LESS CAUTIOUS THAN A LOT OF OTHER CITIES THAT ARE SO DEPENDENT UPON SALES TAX AND PROPERTY TAX.
I DON'T, I ACTUALLY THINK IT'S SO, IT'S SO INTERESTING.
AND IF YOU'RE A PROPERTY OWNER, YOU KNOW, AND YOU MANAGE PROPERTIES, YOU KNOW, AND YOU'VE, YOU'VE PUT A LOT OF YOUR INVESTMENT IN THOSE PROPERTIES, THOSE VALUES ARE NOT GOING ANYWHERE BECAUSE THE HIGHER INTEREST RATES, THE COMMODITY COSTS ARE ALSO DETERRING BUILDER ACTIVITY, WHICH EXACERBATES THE SHORTAGE OF HOUSING AND THINGS LIKE THAT.
SO I THINK PROPERTY VALUES ARE GONNA HOLD, UH, PRETTY STEADY.
THEY MAY NOT GO UP 10 TO 15% LIKE THEY DID LAST YEAR FOR SOME PROPERTIES, BUT PROBABLY, I, I, WHAT I UNDERSTAND AND I READ IS THREE TO 6% IS REALISTIC FOR PROPERTY TAX, UH, PROPERTY, UH, VALUATIONS THIS COMING YEAR, MAYBE MORE, UH, SALES TAX, I THINK A, A TWO TO, YOU KNOW, 5%, YOU KNOW, INCREASE IS PROBABLY OVER WHAT WE PROJECTED THIS YEAR IS RATIONAL, IT'S SUSTAINABLE.
AND REMEMBER ABOUT IDAS THAT WE HAVE OVER 80 IDAS NOW.
WE HAD 65 WHEN I CAME TO THE CITY.
SO THOSE CONTINUE TO GROW, UH, EXPANSIONS CONTINUE TO GO FORWARD IN THE INDUSTRY SIDE.
SO WE'RE, I THINK OVERALL WE COULD TELL COUNCIL THAT, UH, WE'RE IN A FAIRLY GOOD POSITION FINANCIALLY AS A CITY RIGHT NOW.
WE JUST HAVE TO NOT GET OVER EXUBERANT.
WE JUST GOT OUT OF A BUDGET MEETING DEPARTMENTS HAVE PROPOSED 72 ADDITIONAL POSITIONS.
WE CAN'T GET OVER EXUBERANT ABOUT 72.
WELL, WE'RE ABOUT A THOUSAND PEOPLE ANYWAY, SO WE, WE JUST HAVE TO, YOU KNOW, WHOA, IT'S NOT, OH, THEY ALL HAVE GOOD INTENTIONS.
OH, ONE OF THE, A COUPLE OF OTHER THINGS THEY HAD PROPOSED IS JUST, UH, JUST A LOT OF, THEY WANT TO DO A LOT OF STUFF.
WE HAVE GREAT STAFF THAT JUST WANT TO MAKE MAGIC HAPPEN.
MAGIC BING, BING HAS A PRICE TAG ON IT.
SO WE JUST NEED TO BE CAUTIOUS, BUT WE'RE IN A GOOD POSITION,
[00:25:01]
I THINK.ANY QUESTIONS? WHICH LEADS US TO THE AUDIT? NO.
[b. Discuss the September 30, 2021, Annual Audit.]
B.SO, UM, WE WOULD HAVE EXPECTED TO HAVE CONCLUDED THE ALL BY NOW AND ANY OTHER YEAR, LIKE WE WOULD'VE DONE.
WE HAVEN'T, THERE ARE A NUMBER OF REASONS FOR THAT.
UM, AGAIN, BEING, IT APPEARS TO ME THAT THE AUDITOR IS FACING THE SAME D IN TERMS OF HAVING STAFF.
AND ADMITTEDLY AS WELL, THEY LEFT, UM, OUR AUDITS A LITTLE BIT THAN THEIR PROCESS.
ONE OF THE REASONS BEING BECAUSE AS YOU KNOW, WE'VE HAD SIGNIFICANT TURNOVER.
THE FINANCE DEPARTMENT LOST, UH, A NUMBER OF KEY MEMBERS OF STAFF.
THEREA JOINED US WHEN SHE DID, BUT A LOT OF THE BURDEN NOW FALLS ON HER.
UM, AND THIS RELATES TO, YOU KNOW, THE A YEAR IN WHICH SHE WASN'T EVEN EVEN WITH THE CITY.
SO THAT HAS LED TO A DELAY, BUT BROUGHT US UP NOW TO, WE HAVE A, A, AN ISSUE.
UM, WE ARE DEALING WITH THE AUDITOR, UH, ABOUT THAT CURRENTLY.
UM, THEY HAVE OFFERED TO COME IN AND PUT MORE RESOURCE INTO GETTING THE ORDER COMPLETED.
UM, I'M STILL HOPEFUL THAT WE'LL BE ABLE TO TAKE THAT TO THE MEETING ON THE 26TH, WHICH IS WHY THERE'S ANOTHER MEETING ON THE DI THE 24TH OF THIS COMMITTEE.
UM, I WOULD ANTICIPATE, UM, THAT WE WILL HAVE SOME FINDING OR FINDINGS AS A RESULT OF THE AUDIT.
WITH THAT, DO YOU EXPAND ON THE FINDINGS? UM, I THINK THERE WILL BE ISSUES ABOUT THE TIME THIS TIMELINESS, FOR INSTANCE, OF OUR BANK RECONCILIATIONS, WHICH IS AN ISSUE THAT THERESA AND I ARE ALREADY IDENTIFIED.
I I THINK THERE WILL BE SOME OBSERVATIONS ABOUT THE CONTROLS.
UM, I'M GONNA SAY THE CONTROLS ARE, THIS IS NOT ABOUT MONEY GOING MISSING OR THIS ISN'T ABOUT FRAUD.
THERE ANY OF THOSE SORTS OF ISSUES.
THIS IS REALLY JUST ABOUT WORK KEEPING THE TIMELINESS OF THAT AND THE TIMELINESS OF CHECKING SOME OF THE TRANSACTIONS.
UM, WHAT, WHAT'S DIFFERENT BETWEEN THIS YEAR AND LAST YEAR WHEN THEY DIDN'T FIND ANYTHING? WHAT RECORD KEEPING PROCEDURES CHANGED? OKAY, SO, SO SOME OF IT RELATES TO CHANGES IN STAFFING, UM, WOULD BE MY FIRST.
SO LIKE SOMEONE USED TO DO THIS, BUT THEY'RE NOT HERE ANYMORE.
AND THAT APPEARS TO BE WHAT'S HAPPENED.
'CAUSE A NUMBER OF PEOPLE LEFT, I FEEL LIKE IN THE PRIOR YEAR THAT THE FOLLOWING YEAR OTHER PEOPLE WERE DOING JOBS THAT OTHER PEOPLE IN THE PAST HAD DONE.
UH, ACTUALLY MOST OF THEM ARE NO LONGER HERE TO EITHER, UM, WHICH ISN'T UNHELPFUL MM-HMM
UM, BUT WE ARE NOW HAVING TO DO A LOT OF TIDY UP, UM, WHICH IS WHY I'M REALLY GRATEFUL THAT WE HAVE A NEW DEPUTY CONTROLLER HOPEFULLY JOINING US IN THE SUMMER THAT WILL HELP TAKE A BURDEN OF, SHE'S BEEN ESSENTIALLY DOING FOUR PEOPLE'S JOBS FOR THE PAST FOUR OR FIVE MONTHS.
HAVE THE AUDITORS NOW ENGAGED IN THE SECONDARY PROJECT? YES.
UM, SO OVER THE COURSE OF LAST WEEK, UM, THROUGH YESTERDAY, WE WERE GETTING THEM SET UP WITH REMOTE ACCESS TO THE FINANCIALS.
UM, I UNDERSTAND THEY GOT A COUPLE OF STAFF ON THIS TREES.
HAVE YOU ANY UPDATE FURTHER THAT, UH, THE, THE UP THE ONLY UPDATE IS IT WAS GETTING A LAPTOP PREPARED FOR THEM, SO I HAVE TO GO PICK IT UP WHEN HE'S COMPLETE SO THAT THEY CAN COME IN, PICK THAT UP, GETTING THAT TODAY OR YES.
AARON CALLED ME THIS MORNING TO SAY IT WAS OKAY.
AND I INDICATED TO THEM THAT REALLY OUR, OUR DESIRE IS TO HAVE THIS BUTTON DOWN SO WE CAN TAKE IT TO THE COMING 26TH.
I SAID THAT, SO YEAH, THAT'S, YEAH, RAIN OR SHINE, IT'S GOTTA COME THE 26TH TO YOU.
I THINK WHAT, WHAT YOU'RE SEEING IS, KEEP IN MIND SOME OF THE PEOPLE THAT TRANSITIONED FROM FINANCE DID SO VOLUNTARILY.
THEY, THEY GOT, THEY'RE BEING PULLED IN MANY DIFFERENT DIRECTIONS BY HIGHER PAYCHECKS AND JUST GREENER FIELDS.
AND SOME, UH, WE, WE DISLOCATED BECAUSE THEY JUST SIMPLY WEREN'T, UM, COMPETENT, UM, IN DOING THEIR, THEIR WORK.
AND IT'S AMAZING WHEN IT'S LIKE A DECK OF CARDS WHEN YOU PULLED CERTAIN STAFF OUT WHO MAYBE VOLUNTARILY TRANSITION IT, EXPOSED THE WEAKNESS OF, OF OTHERS, UH, INTERESTING ORGANIZATIONAL STUDY THAT CAN BE DONE ABOUT THIS.
AND SO WE'RE, WE'RE HAVING TO, UH, FIX SOME MISTAKES THAT THOSE PEOPLE THAT USED TO BE WITH OUR ORGANIZATION, UH, CAUSED OR WE'RE CONTRIBUTING TO.
I THINK THAT'S THE BEST WAY TO PUT IT.
UH, THE GOOD NEWS, THERE'S, YOU'RE STARTING TO SEE THE FRAME THAT HAPPENS FROM NOT HAVING ENOUGH STAFF TO, TO MANAGE, UH, OUR FINANCES, WHICH WE'RE RESOLVING AS, AS QUICKLY AS HR CAN HELP US.
[00:30:01]
THE THING IS, WE HAVE TO MAKE SURE THAT WHO WE BRING IN DON'T, THEY DON'T CONTINUE TO CAUSE US PROBLEMS IN THE FUTURE.AND SOME OF THE PE SOME ONE PERSON IN PARTICULAR HAVE BEEN WITH THE CITY YEARS, BUT REALLY THOSE WEAKNESSES HADN'T BEEN EXPOSED UNTIL OTHER PERSONNEL UNDER THAT PERSON HAD LEFT.
IT'S A, IT'S A FULL-TIME JOB JUST MANAGING FINANCE, ISN'T IT? YEAH.
UH, AND I, I JUST APPLAUD, YOU KNOW, FIRST OF ALL, I CAN'T SAY ENOUGH.
I KNOW YOU'RE SITTING RIGHT HERE ABOUT HAVING THERESA, UH, AND, AND THAT GOES FOR ALL OF OUR FINANCE STAFF THAT WE HAVE RIGHT NOW.
THERE, THERE ARE SOME THAT NEED A LITTLE BIT MORE COACHING AND MENTORING, BUT HAVING THERESA HERE HAS BEEN JUST ABSOLUTE, WE JUST ROBBED HER FROM POINTS SOUTH OR WHERE THE HECK YOU CAME FROM
BUT, UH, WE DON'T EVEN CARE
SO WE'RE, WE'RE GETTING IN A BETTER POSITION, BUT YOU'RE STARTING TO SEE THE EFFECTS OF NOT HAVING THE EXPERTISE THAT WE'VE NEEDED.
SO I APPRECIATE Y'ALL GIVING US A HEADS UP ON THE FINDINGS.
UM, I DON'T THINK I NEED TO KNOW THE DETAILS OF WHICH PROCESSES OR DOCUMENTATION WASN'T DONE OR, BUT LET ME ASK YOU THIS.
IF WE HAD ONE OF OUR RESEARCH HEAVY CITIZENS, GOVERNMENT WATCHDOG OR ANOTHER COUNCIL MEMBER WHO WANTED TO LOOK INTO THIS FURTHER AND WANTED TO KNOW EXACTLY WHAT WASN'T DOCUMENTED, WHAT, WHY BANK RECONCILIATIONS WEREN'T DONE YEAH.
IS THERE ANYTHING THEY'RE, THEY'RE GONNA FIND THAT ME AND JACOB SHOULD BE CONCERNED ABOUT? UH, IS THERE ANYTHING THAT WOULD RAISE ALARMS OR CONCERNS THAT WE SHOULD KNOW ABOUT NOW? SO LET ME PUT IT OUT HERE AND BE OBVIOUSLY, UH, BRUTALLY FRANK WITH YOU.
YEAH, IT WILL, UH, CERTAINLY FOR ONE OF THEM.
UM, I WOULD SAY IT'S THE REASON WHY WE HAVE ENGAGED IN INVESTMENT, UH, ADVISOR TO MANAGE OUR INVESTMENTS.
I UNSURE THAT PROPERLY TRACK AND REPORT IT.
BECAUSE THAT WAS AN AREA OF WEAKNESS.
SO, AND IF YOU REMEMBER YEAH, I BROUGHT THAT TO YOU WAY BACK LAST YEAR AND WE TALKED ABOUT THAT AND SUGGESTED WE DO THAT AND WE'VE NOW, UM, WE'VE ENGAGED
SO THE GAP AT TIME IN BETWEEN HAVING OUR OWN INVESTMENT ADVISOR AND HIRING THE THIRD PARTY, THERE WAS A, THERE WAS A, WE NEVER, WE NEVER HAD, WE WERE RELYING ON THE PHONE, UH, AN INTERNAL AN INTERNAL PERSON DOING SOMETHING.
UH, SO THE GAP BETWEEN THOSE TWO IS WHEN THE DOCUMENTATION WASN'T DONE? NO, NO.
THE GAP BETWEEN THE TWO WAS, UH, WAS ACTUALLY, UH, DURING THE PERIOD THAT WE REALIZED THAT IT WAS, IT WAS A REASON THAT THAT PERSON DELIVER THING.
AND, UM, IF YOU REMEMBER, I SAID TO YOU THAT I FELT THAT THIS NEEDED FULL TIME FOCUS PROFESSIONAL IS THOSE FROM PEOPLE WHOSE JOBS WAS EVERY DAY, WHICH IS WHY WE, SO THAT'S THE ONLY THING I WOULD SAY, ACTUALLY, IT'S SOMETHING WE KNEW THIS SPECIFIC THING WOULD COME UP THROUGH THE AUDIT.
UM, AND IT'S, AND IT, IT'S A, IT'S A VERY PRECISE ISSUE ABOUT SOMETHING WAS NOT RECORDED AT THE RIGHT TIME.
TAKE THAT THE CHIN, WE CAN FIX IT MM-HMM
BUT IT JUST SAID TO ME ALL THE MORE REASON WHY WE'RE DOING WHAT WE'RE DOING NOW.
I'M ALWAYS HESITANT TO GET IN THE WEEDS ABOUT THIS.
AND HONESTLY, IF Y'ALL EXPLAIN IT TO ME, IT'D PROBABLY BE OVER MY HEAD ANYWAYS.
BUT I JUST WANT TO, I JUST WANNA MAKE SURE THAT IF SOMEONE WHO DOES WANNA GET IN THE WEEDS BRING SOMETHING AND THEY'RE LIKE, WELL THEN WHY DIDN'T, WHY WEREN'T Y'ALL CONCERNED ABOUT THIS? THEY, SO THAT'S, I JUST NEED Y'ALL TO JUST KIND OF BE REAL SIMPLE WITH ME AND TRANSPARENT.
SO FIRST OF ALL, THE PERSON THAT WE'RE TALKING ABOUT
OKAY? HE HAD ACTUALLY CALLED ME ON A COUPLE OF CIRCUMSTANCES WANTING TO GET IN THE WEEDS ABOUT A PERSONNEL CHANGE THAT WE MADE WHEN WE KNEW THAT THESE WEAKNESSES WERE EVIDENT.
UM, AND SO IT JUSTIFIES WHY WE MADE THE PERSONNEL CHANGES THAT WE DID.
NUMBER TWO IS THERE'S NO MONEY MISSING.
THIS IS CASH, ALL CASH IS ACCOUNTED FOR, SO THERE'S NO FRAUD.
SO THERE'S NOTHING THAT WE COULD SEE TO WORRY ABOUT ON THAT ONE.
THESE APPEAR TO BE ERRORS THAT WERE MADE IN RECORDING, UH, CERTAIN FIGURES.
ONE THAT HAS TO DO WITH THE, THE COSTS ASSOCIATED WITH RE BONDING.
[00:35:01]
RIGHT.WE DO RE WE DO, YOU KNOW, REFUNDING OF, UM, UH, BONDS FROM TIME TO TIME.
BUT, UH, YOU KNOW, IT USED TO BE THAT WE COULD, WE COULD THAT WHEN INTEREST RATES ARE GOING THE OTHER WAY, UH, AND THE OTHER ONE HAS TO DO WITH, UH, SOME INVE, UH, BOOKING SOME INVESTMENT EARNINGS.
IT'S ACTUALLY THE PURCHASE OF OF INVESTMENT.
THIS IS JUST ONE HAND NOT KNOWING WHAT THE OTHER HAND WAS DOING.
AND, AND, UH, THEY JUST DATA ENTRY.
WE MAY FIND THAT THROUGH THIS FORENSIC OPERATION THAT WE'RE GOING THROUGH RIGHT NOW, THAT THERE WERE SOME OTHER ERRORS, UH, CREATED.
WHICH IS WHY I HAVE ALSO ASKED VICTOR TO MAKE SURE THAT WE, I DID THIS IN, IN MY LAST CITY.
I HADN'T UP TO THIS POINT FELT LIKE THIS WAS NECESSARY, BUT WE WILL ENGAGE A FIRM TO ACTUALLY, WE'LL DO KIND OF FORENSIC LOOKS AT OUR, OUR FINANCES AND OUR DATA ENTRY THROUGHOUT THE YEAR TO MAKE SURE, SO IT'S NOT A SURPRISE AT THE END OF THE YEAR.
IT'S KIND OF AN AUDIT DURING THE YEAR.
SO WE MAKE SURE WE'RE JUST CLEAN AT THE END AND WE'VE BEEN S**C AND SPAN CLEAN EVERY YEAR.
AND THIS, THIS AUDIT IN TERMS OF CASH, I MEAN, WE ARE A SPIGOT SPAN THIS YEAR ALSO.
IT'S JUST THAT WE HAD SOME STAFF WEAKNESSES THAT BECAME APPARENT FOR THIS, THIS AUDIT.
WE HAVE ALREADY, UH, WE HAVE ALREADY MADE THOSE PERSONNEL CHANGES THAT WE FEEL LIKE WILL, WILL MAKE SURE WILL NOT HAPPEN.
AND THE DOUBLE LAYER OF REDUNDANCY WILL MAKE SURE THAT, THAT WE HAVE A, WE HAVE A SECONDARY SET OF EYES LOOKING AT WHAT WE'RE DOING DURING THE YEAR TO GIVE US EARLY ALERTS IF SOMETHING GETS OFF.
SO WE FEEL LIKE THERE WAS A HOLE IN THE BOAT, WATER GOT IN, BUT IT'S PLUGGED AND SPACKLED OVER.
THERESA, YOU HAD SOMETHING TO SAY.
WELL, I JUST WANTED TO MAKE SURE THAT YOU KIND OF UNDERSTOOD THE WHOLE PICTURE.
SO THOSE INSTANCES THAT THEY ARE REFERRING TO THE MISTAKES THAT WERE MADE, THAT'S WHAT TRIGGERED THE LOOK INTO THE BANK REC.
'CAUSE TYPICALLY THE BANK IS OFF IF YOU DIDN'T MAKE THESE ENTRIES.
SO WE CAN'T MAKE THE ENTRIES BECAUSE THE BANK LOOKS RIGHT TO THE AUDITORS.
AND SO WHAT THAT ALSO IDENTIFIES ON THE BANK SIDE IS THAT WHOEVER IS RECONCILING THE BANK IS NOT DOING A GOOD JOB.
LIKE WHAT THEY'RE PRESENTING TO THE AUDITORS IS NOT ACCURATE.
SO THAT'S WHERE THE FORENSIC LOOK COMES INTO PLAY.
SO I JUST WANNA MAKE SURE THAT'S WHAT TRIGGERED IT, BUT THAT JUST IDENTIFIED THAT WE HAVE A BANK BREAK PROBLEM.
WHICH IS WHAT THEY'RE LOOKING AT.
ANY QUESTION THAT, NO, I MEAN, I DON'T HAVE ANY MAJOR HEARTBURN OVER IT.
I MEAN, IT SOUNDS LIKE WE HAVE ADDRESSED IT.
UM, SO YEAH, ANY FINDINGS WE HAVE, IF WE'VE ALREADY, I MEAN IF YOU GIVE ME A FINDING, BUT YOU GOT THE SOLUTION RIGHT UNDER IT AND WHAT YOU'VE DONE TO ADDRESS IT.
WE JUMPED ON IT AS QUICKLY AS WE KNEW ACTUALLY BEFORE WE KNEW BECAUSE WE EXPOSED SOME STAFF WEAKNESSES THAT WE COULD NOT TOLERATE IN OUR ORGANIZATION.
AND WE MADE THOSE, AND THEY WERE TOUGH CHANGES TO MAKE.
THEY, THEY REALLY WERE VERY TOUGH CHANGES.
SO ONE PERSON HAD BEEN WITH OUR, OUR CITY FOR YEARS AND YEARS AND YEARS, AND, UH, REGARDLESS WE HAD TO MAKE THAT CHANGE.
AND I, I FEEL GOOD ABOUT DOING THAT.
ANOTHER INDIVIDUAL, YOU KNOW, THERE MIGHT BE SOME TRAINING OPPORTUNITIES THAT WE NEED TO MAKE WITH OUR, WHAT DO WE CALL THEM? LEARNING MOMENTS THAT WE NEED TO HAVE WITH SOME OF OUR STAFF TO CONTINUE TO DEVELOP.
NOW THINK OF THIS ALSO GUYS, IS THAT AS THIS MARKET TIGHTENS FOR, FOR TALENT, THERE ARE GONNA BE MORE INSTANCES WHERE WE'VE GOTTA DEVOTE MORE IN TERMS OF TRAINING AND, AND OVERSIGHT BECAUSE WE'RE NOT GETTING, ALSO, IT'S NOT JUST ABOUT HAVING TO PAY MORE.
YOU'RE ALSO NOT GETTING THE TALENT THAT WE USED TO BE ABLE TO DRAW INTO THE SOUTH CITY.
SO WE'RE GONNA HAVE TO GROW MORE PEOPLE AND, AND MAYBE MORE MISTAKES WE'LL, WE'LL SEE IN THE FUTURE.
BUT IT'S 'CAUSE WE'RE GROWING PEOPLE, UH, INTO THOSE POSITION.
WHAT I'M CONCERNED ABOUT MOST ON EVERY AUDIT IS FRAUD AND WHETHER THERE IS CASH MISSING, WE HAVE NO INDICATION OF THAT AT THIS POINT.
THAT DOESN'T MEAN WE WON'T FIND IT, BUT THERE'S NOTHING TO BE ALARMED ABOUT THERE.
SO WHEN THE AUDITOR, I HAD A MEETING WITH THE OWNER OF THE FIRM BELT, MR. BELT, YOU KNOW, AND WE HAD A ZOOM CONFERENCE AND THAT WAS THE FIRST THING HE ASSURED ME OF IS YOU'RE, YOU'RE ALL CASH.
IT'S JUST THAT YOU'VE GOT SOME COMPETENCY ISSUES OUT THERE WITH SOME OF THE NUMBERS.
WE'RE GONNA FIX IT, WE'RE ADDRESSED IT.
AND, AND THAT'S THE THING THAT WOULD REALLY GIVE SOMEBODY THAT'S REAL CHUM IN THE WATER FOR THE SHARKS IS IF THERE WAS MONEY MISSING OR IF THERE WAS FRAUD.
[00:40:01]
THERE'S A COMPETENCY ISSUES THAT WE'RE ADDRESSING.VICTOR, ANYTHING ELSE? AND HE CAN DIG ALL HE WANTS AND HE CAN MAKE A BIG ISSUE ABOUT ALL HE WANTS, YOU KNOW, BUT IT IS WHAT IT IS AND WE'VE ADDRESSED IT AND WE ARE BEING TRANSPARENT WITH YOU.
AND ACTUALLY WE WANT YOU TO KNOW THAT WE'RE WILLING TO ENGAGE THE FIRM TO DO A FORENSIC EXAMINATION INSTEAD OF TRYING TO RESOLVE THIS OURSELVES, WHICH WE DON'T HAVE STAFF TO DO THAT.
UH, AND WE'RE, WE'RE PAYING $20,000 TO HAVE A COMPLETE FORENSIC EXAMINATION OF ALL OF OUR RECONCILIATIONS.
AND IF THERE ARE MORE MISTAKES, WE'LL LET YOU KNOW ABOUT, WE'RE GONNA BE COMPLETELY TRANSFERRED.
I THINK BASED ON WHAT Y'ALL SAID, IF ANYONE DOES BRING THIS UP AS AN ISSUE, I FEEL COMFORTABLE DEFENDING YOUR ACTIONS.
SO YEAH, WE APPRECIATE HAVING THIS BODY TO BE ABLE TO WORK WITH THAT.
YOU, YOU TWO, AND CHARLES, UH, BECAUSE IT ALLOWS US TO HAVE CONVERSATIONS WITH YOU AND GET YOU UP TO SPEED AS THOUGH YOU'RE PART OF THE STAFF AND YOU CAN KNOW EXACTLY WHAT'S GOING ON.
AND IF YOU WANT TO KNOW ANYMORE, WE'LL LAY IT OUT IN FRONT OF YOU.
IT DOESN'T HELP US TO OBFUSCATE OR TO TRY TO COVER UP ANYTHING.
NOW WE'RE JUST BURYING OURSELVES, SO, OKAY.
VICTOR, DO YOU HAVE ANYTHING ELSE? MM-HMM.
AND IF Y'ALL DON'T MIND, I WILL NOW ADJOURN THIS MEETING AT 11:41 AM.