How will Houston, Texas solve its budget deficit

HOUSTON — With a projected budget shortfall of $230 million to $280 million, the city of Houston has less than two months to make major financial decisions.

That will begin in the coming days when Major John Whitmire presents his proposed budget to the City Council, kicking off the annual debate.

But make no mistake, the city of Houston is facing some pretty serious financial problems.

Before we get into the why, Houston Comptroller Chris Hollins shared with us some positive news about In Texas Politics.

“The City of Houston has a record fund balance. We have more cash available than we’ve ever had before,” Hollins said. “But just because you have a big savings account doesn’t mean you can consistently spend more than you’re earning, because then that savings account is going to dwindle pretty quickly.”

Hollins says the city has faced a structural deficit for years, where more money is going out than coming in.

But a new deal with the firefighters union adds intense pressure on the budget for the new fiscal year that begins July 1.

This agreement covers two major areas of concern for firefighters: $650 million in back pay and a collective bargaining agreement for future salaries that Hollins said includes a 10 percent increase next year and up to 6 percent. every year until 2029.

Including other incentives in the deal, Hollins says when you add it all up, the fire department’s deal represents a $1.5 billion impact on the budget.

City council members have yet to sign off on that agreement, but Hollins says neither they nor he have seen specific details, although the deal was reached months ago.

“We have not been given any specific timeline or expectation as to when this information will be available,” he said.

Worse yet, from a financial standpoint, the city may have to find an additional $100 million for flood mitigation and drainage improvements due to a court order.

All of this brings us back to a fundamental question.

“The decision on everything, whether it’s fire, public safety, drainage or flood mitigation, comes down to how we’re going to pay for it,” Hollins said.

When Mayor Whitmire unveils his first budget proposal since taking office in January, he is expected to ask city departments to come up with plans to reduce spending by 5%.

And when Whitmire joined us In Texas Politics earlier this year, he told us the city was running out of land to sell, a common way Houston has plugged the budget gap for years.

Hollins says that as the city’s financial watchdog, that’s the story he’s sharing, too.

“These one-off fixes that we’ve used in the past, we’re running out of options,” Hollins explained. “So we need to get on the path to fiscal sustainability to truly, year over year, know what’s coming in and have our spending aligned with that. And it hasn’t been okay for a while. »