$230M shortfall estimated for Houston
Houston Controller Chris Hollins has projected a budget shortfall of $230 million to $280 million for the upcoming fiscal year, warning that the city’s savings cannot sustain the extra costs from the latest firefighters’ deal beyond another year.
Mayor John Whitmire recently announced a landmark settlement with the firefighters union, putting an end to a bitter contract dispute that had dominated Houston’s municipal politics since 2017. As part of the deal, the city promised the firefighters $650 million in back pay and salary increases of up to 34% over the next five years.
Houston was able to build up its budget reserves during former Mayor Sylvester Turner’s tenure using federal COVID-19 relief money. Its fund balance currently stands at about $428 million, $241 million above the legally required minimum. Hollins cautioned Tuesday, however, that this buffer provides the city with only about a year to fix its finances.
The Whitmire administration is planning to issue a judgment bond to finance firefighters’ back pay over the next 25 to 30 years, which Hollins said will amount to between $1.1 billion and $1.3 billion when factoring in interest.
Combining debt repayments, interest and planned salary hikes, the city’s budget is bracing for an additional cost of $70 million to $80 million in the next fiscal year that starts in July. This is on top of an already projected deficit of $160 million to $200 million that does not account for the impact of the firefighters’ agreement, Hollins said.
“This is a long-standing pattern that the city for years and years has been spending on a recurring basis more than is brought in,” Hollins said during a Tuesday news conference. “You start to look at the numbers and they pile up, and it’s my job to at some point say, ‘Hey, we can no longer foot this bill.’”
Whitmire’s team has proposed potentially adjusting the city’s property tax revenue cap, charging a garbage fee and implementing 5% budget cuts across most city departments as potential ways to cut down expenses and generate new revenues.
Hollins said he has long advocated for removing the revenue cap and is open to exploring the addition of a garbage fee, noting Houston is the only major city in Texas without one. He said, however, that he does not support large-scale budget cuts or layoffs that would undermine essential city services such as water provision, trash collection and road safety projects.
“These are fundamental necessities that residents expect, depend on and pay for with their tax dollars,” he said. “We were elected with a mandate to not only maintain, but to improve the quality of critical city services … and we must uphold that responsibility.”