Mayor John Whitmire on Wednesday lauded the results of a long-awaited efficiency study that found potential mismanagement of funds among city departments and a lack of accountability measures, but how much money the city could save remained unknown.
The mayor’s team presented the findings of the Ernst and Young study at City Council and identified duplicative contracts, a lack of accountability in department spending and redundancy in departments as opportunities for change.
Specific savings, however, largely will stay unidentified until Whitmire unveils his budget proposal in the spring.
In the meantime, Whitmire said the administration plans to offer the firm another contract to help find solutions.
Whitmire’s executive team said the bulk of savings is estimated to be between 5 and 15 percent of Houston’s $2.2 billion facilities and construction budget. That represents an estimated savings of $113 million to $341 million.
Whitmire repeatedly has pointed to the report as his reason to reject calls for a property tax rate increase or the implementation of new fees. He said Wednesday he would see through the auditing process before asking taxpayers to contribute more money to close Houston’s growing $330 million deficit – which could be further impacted by ongoing negotiations with the Houston Police Officers Union.
“It is so revealing why Houstonians are frustrated and why I will not go to them and ask for additional resources, until, in my judgment, regain their confidence that we’re using their money wisely,” the mayor said.
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The efficiency study examined 22 city departments, including police and fire, and focused on performance, organization, spending and forensic accounting. Ernst and Young is completing a similar audit of Houston’s tax increment reinvestment zones.
City Controller Chris Hollins last week called for an emergency task force comprised of representatives from his office, Whitmire’s office and the City Council budget committee to identify specific spending cuts. He reiterated that Wednesday following the release of the Ernst and Young report.
“The study presented today highlights some real opportunities to cut waste and improve city services,” Hollins said. “But make no mistake – a report alone won’t fix our budget. These recommendations won’t be of value if they are allowed to collect dust. The best ideas from this study must be evaluated for their financial impact, with clear timelines and full transparency.”
Whitmire did not agree to Hollins’ suggestion last week. On Wednesday, he said people should not make the issue “political.”
Steven David, Whitmire’s deputy chief of staff, said 80 percent of the city’s contract spending goes to 6 percent of its vendors
One change already being implemented, David said, involves the process used by departments for smaller purchases.
Informal contracts worth less than $50,000 normally went through each department individually, resulting in vendors having contracts with multiple departments for the same services. David said employees that deal with purchasing in each city department will be moved into the Strategic Procurement division of the Finance Department.
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Having the process centralized with internal dashboards for departments to see will help streamline purchases and contracts, David said.
Ernst and Young also found employees were splitting costs among purchasing cards – informally known as p-cards – to make purchases above allotted limits. They also were used with prohibited companies, including Amazon or PayPal.
Employees across departments should not expect “pink slips” to help the city cut spending said Cynthia Wilson, the mayor’s special advisor for organizational culture and education
Wilson said payroll accounts for a majority of the city’s $3 billion general fund budget. Unnecessary vacant positions will be considered for elimination, and departments need to be reorganized, she said, calling the city too much of a “top-down” operation.
According to the Ernst and Young report, approximately 40 percent of city managers oversee three or fewer employees largely because there is no path for high-performing workers to earn raises or promotions without gaining a supervisory role.
City Council members thanked Whitmire and the auditors for their work on the report and said they looked forward to the results of the TIRZ audit and a review of the Solid Waste Department.
At-Large Councilmember Sallie Alcorn, who last year advocated for a property tax rate increase to close the deficit, called the report “music to her ears.”
“We’ve been knocking our heads against the wall like how can we do it?” Alcorn said, referencing council attempts to cut spending. “I love that you took it citywide. You took it citywide, and you looked at it by spending, by categories, by contracts. We’ve never done that before.”