Galveston City Council on Feb. 19 voted to require interim reporting safeguards for hotel-occupancy-tax (HOT) expenditures after the city auditor presented preliminary findings from a conflict-of-interest audit of the Park Board.

The council approved a motion, introduced by Council member Peretta, directing staff to implement a policy requiring 30-day electronic expense reports showing expenditures, parties involved and the purpose of the expenditures for acceptance at regularly scheduled council meetings. The motion was approved by the four council members in attendance: (names recorded as cast at the meeting) Rob, Rollins, Peretta and Mayor Brown.

The action followed a status briefing from City Auditor Glenn Bulgarini, who told the council the conflict-of-interest audit is not yet complete but that auditors had identified two items of concern in the work to date: a disbursement of $3,200 to the spouse of a Park Board employee, and evidence that a Park Board-affiliated individual had established a business operating at Park Board facilities. Bulgarini described the work as ongoing and said the conflicts audit is expected to be completed in March unless the council approves an expanded scope.

Councilman Finkley objected to holding a meeting before the audit is finished, saying the council had not been given a comprehensive package and that taking final action on incomplete data would be “premature” and “reckless.” Finkley said, “To take action on incomplete data is not only premature, but it's also reckless and short sighted.”

Bulgarini and his audit staff described how the review has progressed: internal auditor Masha Lisova and Assistant City Auditor Carrie Simoral told the council the conflict-of-interest work had been completed for the two specific issues Bulgarini flagged, while additional review of HOT purchases has proceeded using a roughly 6% sample of transactions. Lisova said, “for conflict of interest, we did 100%,” language she and other audit staff later clarified to mean the conflict-of-interest checks on the two flagged issues had been completed to the extent possible pending follow-up interviews.

Audit staff told the council an expanded review of HOT purchases across the four-year period could take months. Bulgarini said a full HOT-purchase review would likely take about six months with additional staffing and could take longer without added auditors; auditors described a range of possible timelines from several months to as long as a year depending on scope and available resources. Council members pressed for an earlier presentation of completed conflict-of-interest findings if Park Board cooperation is forthcoming; Bulgarini said cooperation could allow auditors to present final findings on at least the first issue at the Feb. 27 council meeting.

Members emphasized the council’s fiduciary oversight role over tax-funded spending. One council member noted the scale of HOT revenue, saying the city collected $47,000,000 in 2024 from short-term rentals and similar sources and added that that scale makes oversight of HOT expenditures particularly important. Several council members argued the public has a right to interim updates because possible misuse of HOT funds creates municipal exposure and reputational risk.

In discussion before the vote, some council members cautioned against airing detailed personnel or investigative specifics in open session; others argued the public and council had already seen summary information and deserved an update. The motion passed with no recorded dissent among the members present.

The council’s approval instructs staff to implement the electronic 30-day reporting requirement pending the auditor’s final report and any later council action to expand audit scope. Bulgarini will appear at the council’s Feb. 27 meeting to present completed findings on the conflict-of-interest portion of the audit if auditors receive the cooperation they requested; any formal expansion of the HOT review would require separate council approval and could require additional budgeted staff resources.