HOUSTON — Due to a projected $230 - $280 million budget shortfall, the city of Houston has less than two months to make some major financial decisions.
That will start in the coming days when Major John Whitmire is scheduled to present his proposed budget to the city council, launching the annual debate.
But make no mistake about it, the city of Houston is facing some pretty serious financial problems.
Before we get into the why, though, Houston Controller Chris Hollins did share some positive news with us on Inside Texas Politics.
“The city of Houston has a record fund balance. We have more cash on hand than, essentially, we’ve ever had before,” Hollins said. “But just because you have a big savings account doesn’t mean that you can consistently spend more than is coming in because then that savings account is going to dwindle pretty quickly.”
Hollins says the city has been facing a structural deficit, when more money is going out than coming in, for years.
But a new settlement with the firefighter’s union is adding intense pressure to the budget for the new fiscal year that starts July 1.
That agreement covers two major areas of concern for firefighters: $650 million in back pay and a collective bargaining agreement for future pay that Hollins says includes a 10% raise next year and up to a 6% raise every year until 2029.
Including some other incentives in the agreement, Hollins says when you add everything together, the firefighter agreement represents a $1.5 billion impact on the budget.
City council members must still sign off on that agreement, but Hollins says neither they nor he have seen any specific details, despite the deal being agreed to months ago.
“We haven’t received any specific timeline, nor expectation about when that information will be available,” he said.
Making matters worse from a financial standpoint, the city may have to find an additional $100 million for flood mitigation and drainage improvement because of a court order.
It all leads back to a basic question.
“The decision on everything, whether it’s fire, whether it’s public safety, whether it’s drainage and flood mitigation, is how are we going to pay for it,” said Hollins.
When Mayor Whitmire unveils his first budget proposal since taking office in January, he’s expected to ask city departments to come up with plans to cut spending by 5%.
And when Whitmire joined us on Inside Texas Politics earlier this year, he told us the city was running out of land to sell, a common way Houston made up budget shortfalls for years.
Hollins says as the city’s financial watchdog, that’s the story he’s sharing as well.
“These one-time fixes that we’ve used in the past, we’re running out of those options,” Hollins relayed. “And so, we have to get on a path of fiscal sustainability to truly, on a year-over-year basis, know what’s coming in and then what we’re spending be aligned with that. And it’s been out of whack for some time now.”