Call to Order

Opening prayer by Roger D. Young of Hope Church in Houston.

Priority 1

Reducing dependence on short and long term debt

Short term debt
Short term debt refers to the annual issuance of tax anticipation notes (TANs) to provide
interim funding during the fiscal year that is necessary since most of the County’s revenue
from property taxes isn’t collected until the last few months of the fiscal year, while expenses
are incurred relatively evenly throughout the year. As indicated, significant progress has
been made since the economic downturn to reduce TANs borrowing from $450 million to
the expected $225 million for the upcoming budget year.

The way to continue this trend is to allocate additional resources each year to the General
Administration accounts until the need for interim borrowing is eliminated.

Long term debt
The County’s long term debt includes bonds issued to build roads & bridges, buildings,
parks, libraries, flood control and other infrastructure projects which are repaid with
property taxes each year. As indicated, the annual debt service for the Port of Houston is
also repaid with property taxes. Other long term debt related to the Harris County Toll Road
Authority and the Hotel Occupancy Tax do not involve property taxes for their repayment.

Voters authorized $70 million in new bonds for the Joint Processing Center in November
2013. Once the new center is built and the bonds are issued, the debt service will be repaid
using property taxes but the resulting improved efficiencies in operations will help offset the
cost.

The only other significant building project in progress is the new Forensic Science Center
expected to open in a few years.

The Mobility Fund, established in 2009 has continued to provide pay-as-you-go funding for
road & bridge design, construction and maintenance reducing the need for the County to
borrow money for this purpose.

The continued modernization of systems will include new debt to acquire and develop
financial, law enforcement and justice related information systems.

Budget Management will continue to work with our financial advisors to monitor financial
markets and identify opportunities to manage outstanding debt obligations.

Priority 2

Investment in human capital

Harris County has not adopted an across the board salary increase since 2008. Budget
Management believes that providing more specific salary increases based on job requirements, market conditions and performance results in a more productive work force. The HRRMDivision of Budget Management has worked with departments to make adjustments and position reclassifications. Each department received additional funding which can be used to provide for salary increases in the proposed budget. It is up to the elected official or appointed department head to determine how to allocate their resources to provide efficient services to the public.

Budget Management will continue to work on recommending policies that help balance the need
to retain valuable, experienced employees with the need to attract new employees in a competitive job market.

Law enforcement salaries and benefits make up nearly half of total General Fund labor expenses. Budget Management has worked with the nine county law enforcement agencies to increase law enforcement compensation and will continue to work with these agencies on salary and classification issues during the fiscal year.

Contract Patrol Services
The increases in labor costs for law enforcement officers has an impact on the County’s cost of providing contract patrol services. The Court adopted a policy last year to provide notice one year
in advance for any contract patrol rate increases. The rates have not increased since the economic downturn. Budget Management recommends a 5% increase in the rates for Contract Patrol services that, if approved, would be effective on March 1, 2015.

Facility Improvements and Parking
In addition to salary and benefits, the workplace facilities are an important aspect of attracting and keeping a solid workforce. Budget Management working with Facilities & Property Management (FPM) and the Public Infrastructure Department (PID) will continue to review county facilities to make sure they are safe, secure and well maintained. Funding for minor improvements or repairs to these facilities will be identified and allocated in the Facilities repair and replacement cost center as needed. Budget Management will continue to work on identifying solutions to address issues related to parking for all downtown employees and/or other lower cost transportation solutions.

Priority 3

Investment in infrastructure and information systems

Harris County has a significant investment in buildings, parks and equipment as well as the
systems used to manage the financial, law enforcement and judicial activities.

Last year, Court approved a recommendation that changes the funding process for repair and
replacement projects. Separate cost centers were established at the beginning of the current fiscal
year in FPM, PID and ITC (Information Technology Center), so that funds for repairs and
replacement could be allocated to these departments without affecting their normal operating
budgets.

This year, a recommendation will be included to establish an R&R Committee, composed of the
directors of A&E, FPM, ITC and the Budget Director, to accumulate, evaluate and prioritize these
projects and make recommendations to Court.

Projects approved at the Capital Improvements Plan (CIP) meeting last June were funded using
these three cost centers. New projects will be brought to Court at the next CIP meeting in June
2014 with some individual projects brought to Court on regular agendas. Budget transfers to the
appropriate repair & replacement funds will be made as Court approves the projects or plans.