As the City of Houston’s elections get closer, Houston Matters with Craig Cohen is offering listeners a chance to speak directly with candidates. As part of the series, Cohen interviewed former council member and Harris County Treasurer Orlando Sanchez, who is running for Houston Controller.
As controller, the elected official acts as the city's chief financial officer. Duties include: certifying the availability of funds before City Council approval of city commitments, processing and monitoring payments exceeding $1 billion annually, investing the city’s funds, conducting internal audits of the city’s departments and federal grant programs, operating and maintaining its financial management system, conducting the sale of public improvement and revenue bonds, and producing an Annual Comprehensive Financial Report.
Martin is running against three candidates: current city council member Dave Martin, current deputy city controller Shannan Nobles and former Harris County Clerk Chris Hollins. They are all running to replace outgoing city controller Chris Brown, who is term-limited.
This interview has been edited for length and clarity. Questions from Houston Matters will be in bold. For the full interview, listen to the audio above.
Why do you want to be the next City Controller?
Well, I served six years as city council member was on the budget committee, served with two mayors, Bob Lanier and Lee Brown. Then I became the Harris County Treasurer, served there for 12 years. I’m on the Board of Directors for a bank here in Houston with about half a billion dollars in assets: Capital Bank. I chair the University of Houston Foundation Board of Trustees. We managed about 200 million (dollars) for the benefit of the university and students. I’m on the board of one of the largest hospital corporations, so I’ve seen a lot of money. I see how the government works. I’ve seen how the private sector works, and I believe Houston is on a, as everybody knows, precarious fiscal cliff that needs to be addressed.
You listed off a number of things on the resume there that could apply to this position. Is there any one that you would lean on among those? You would say ‘That’s probably the experience that is most relevant if you’re contemplating voting for me?'
Yeah, I think 12 years as a treasurer of the county overseeing billions of dollars of county operations and of course, city council on the budget committee. Billions of dollars that we oversaw every fiscal year. So, the two services both at the county and at the city have served me well. You know, I’ve run nine citywide and county-wide races. I’ve won six. So I think I’ve got pretty good experience and a pretty good grasp on county and city finances and a lot of institutional knowledge.
The other candidates that are running also have a variety of financial experience and backgrounds. Some have been locally elected officials some have run financial institutions, or have been auditors and we have one who is the deputy controller at the moment. So what would you point to in those years of experience that you say, ‘Well, what I’ve done is different from what any of them have done.'?
Well, when I was elected county treasurer, of course, I brought transparency to the county treasury. And then I won one national award from the Sunshine Foundation in Washington, DC for transparency. Gold Star ratings by the State Comptroller of Public Accounts. I was certified as a County Financial Officer, also known as the CFO, one of the few individuals at the county that was certified by the Texas Association of Counties. You know, they say the definition of insanity is doing the same thing over and over and expecting a different result, and I see that in government a lot. I’ll give you an example. When I served on the city council, we spent $27 million striping bicycle lanes. They didn’t keep them up. They went into disrepair, they went away. Today we’re spending tens of millions on bicycle lanes again. We build the Silver Line, $180 million of public money. One penny generates about $800 million for Metro. No one rides the Silver Line. So when we keep doing the same things over and over. Pensions, we have a pension system that is going to put a $17 million liability on the next fiscal budget, both police and fire. We’re not moving away from the defined benefit to a defined contribution plan, which we need to and I have a plan for that.
(Houston Matters listener) Dustin asks what specific accounting and finance tools do you plan to implement in the Controller’s office?
Well, obviously the office is about transparency. But you know, it’s not so much the tools, the accounting tools are all the same for both corporate and private. But I think that we, as Houstonians have to start thinking outside the box, offering ideas on how we relieve the pressure on the general fund to do things for the city. For example, our infrastructure, which we rehabilitated with a $2.5 billion bond under Bob Lanier because we were under federal sanctions by the EPA, have not been addressed in over a quarter of a century. We’ve got to start reinvesting in the infrastructure, but we can’t because we don’t have the money. We need more law enforcement. My idea is to create what I call a public safety district in Houston approved by the voters, which would create a stream of revenue for first responders. And because they’re serving in a district, we then can move our first responders out of the defined benefit plan and into a defined contribution plan, which is run by the Texas County and District Retirement System, one of the largest retirement systems in the nation. It’s in the black. And that would relieve pressure on the general fund, because about 60% of the city’s general fund is personnel cost and police and fire make a huge percentage of that.
That would require, of course, the mayor and the next mayor and city council to approve that. Put it to the voters, the voters, to approve it. By the time all that could happen and the most efficient manner possible, and I think we’d agree, there are times when government is not as efficient as you might want under such circumstances, we might already be in that fiscal cliff you’re talking about.
We may, but I’ll remind you that we have several districts throughout Houston, right? We have Metro, which is a taxing district. We have the Port of Houston. We have the hospital. We have the Sports Authority. I’ll remind you that when Houston wanted to build and construct three sports arenas, we passed in record time legislation that created the Harris County Sports Authority, which issued debt. And so we would need the help of the legislature, the approval of the voters and of course the approval of the city council to put the public safety district to the voters, we can do that. This is a crisis. We have only 5,000 police officers.
The outgoing controller, Chris Brown has noted that the city has been able to maintain a balanced budget the last few budget years, thanks in no small part to federal COVID relief funds. Those funds will be exhausted by 2025. Brown says the city could be in a financial crisis then if it does not cut spending and upcoming budgets to the tune of as much as $300 million. The idea that you’re floating, there’s no way that could happen that quickly, maybe close to that quickly. So assuming it doesn’t happen that state legislature and the city council and the mayor are not all in lockstep with you and that the voters are not, if, if, unless all of that happens, there are cuts that have to be made, where do you make them?
Well, unfortunately, everywhere public works, Parks and Recreation, first responders, police and fire. We know our fire stations are already in bad shape. Our police, we don’t have sufficient graduates from the academy because we can’t fund enough academies to keep up with the demand. And so we’ll become like other cities that have filed bankruptcy or have gone broke, or on the verge of being broke. One of the benefits of creating a public safety district is that you create a stream of revenue for our first responders, give them a decent wage for the jobs that they’re doing, and you remove that pressure from the general fund. So now the general fund can breathe and attend to infrastructure, issue parks and storm sewer lines. You know, flooding continues to be a problem. So if we had sufficient funds and people claim they’ve been paying into the water-sewer fund for many years for flood control projects, but they’re not happening, and that’s because the money is being diverted, as was the American Restoration Act, money that came from COVID that’s going away. So that builds in that $140 million deficit. And by the way, this administration currently used the American Restoration money coming out of Washington for recurring liability, meaning they gave pay increases. That doesn’t come back to us. So yeah, we’re in, we’re in deep trouble. Everybody knows that.
The job also entails telling the mayor and city council ‘We can’t spend the money you want to spend on something.' I gather you’re prepared to do that even when it’s something you might agree should be a priority?
Well, my duty is to report to the mayor and the city council once a month about the financial condition of the city. I go back many years ago, we had a city controller by the name of George Greanias at the time that Bob Lanier was elected mayor, we had just come out of the doldrums, economically. Downtown buildings weren’t being leased. There was very little. We had a diminution in sales tax and property taxes. You know, we had just come out of the oil slump. And Bob Lanier went on a debt issuing program to rehabilitate the city’s infrastructure, put the equivalent of 600 police officers on the road, build sidewalks for children. And the city took off after that. But I remember George Greanias coming to the City Council with his credit card in hand and telling the people ‘This is what the city’s doing. They’re charging this.’ And that’s what the city has to do. We have to go borrow money in New York anytime we issue a public debt.
One of the reasons for that is a limit in what can be raised through property taxes by the revenue cap. Would you like to see that cap change?
The cap could be changed if there was a responsible expenditure of public money. The reason we have the caps, as you know, if you followed Houston politics, is that for too long, the leaders of this city have squandered the public’s money, and so members of the legislature stepped in, and said we’re going to cap the revenue. But remember, in spite of the cap, the revenue to the city of Houston has continued to increase and outpace inflation. The city doesn’t have a revenue problem; it’s how they spend it. So yes, if the city will be more responsible spending our tax dollars, both sales taxes and property taxes, perhaps we could go to our friends in the legislature and ask for a little breathing room. Given the needs, we need the academy, we need police officers, we need to rehab our fire stations. We need to rehab our infrastructure and prepare for flooding in the region.