5 things to watch for in Mayor John Whitmire’s budget

Mayor John Whitmire’s administration is expected to unveil its first City Hall budget this week, offering insight into how the administration plans to prioritize resources as it seeks to strengthen public safety.

The city has a strained financial outlook after years of running a deficit of about $160 million a year. The city hall usually fills these gaps through one-off measures such as land sales, deferral of maintenance and other budgetary band-aids. The city was able to avoid this budget crisis during Mayor Sylvester Turner’s second term, thanks to approximately $607 million in federal COVID-19 relief.

Turner primarily used those funds to build up the city’s savings account, which stood at about $467.7 million as of March — the highest level in at least decades. That will give Whitmire some breathing room to get through this year, before the administration faces a harsher reality over the next two years.

However, these reserve funds will likely disappear quickly. The city faces a budget deficit of about $230 million to $280 million this year, and Whitmire will almost certainly use its reserves to make up that deficit.

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Here are five things to watch for during budget season.

The city’s increasingly strained financial situation is likely to hit residents’ pockets in the near future, but that’s not expected to show up in this year’s spending plan. Although the city’s property tax rate has been declining for a decade, that could soon change.

Whitmire’s team proposed increased property taxes, trash collection fees and other user-based revenue sources to help shore up the city’s finances. Although they may not appear in the budget, there will likely be plenty of discussion at the hearings about what strategy the administration plans to implement in the coming years.

The Whitmire administration could ask voters to raise the tax rate as early as next November.

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The $1.5 billion settlement between Whitmire and the firefighters union is one of two external factors weighing on the budget — and the city’s long-term financial viability.

Firefighters worked without a contract for years under Turner, an impasse that resulted in legal and political battles. Whitmire — a longtime labor ally in the Legislature — announced a framework in March to break the impasse by giving firefighters $650 million in back pay, with up to a 34 percent increase in over the next five years.

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The settlement also includes a 10% salary increase in this year’s budget. The city plans to spread the cost of the settlement over 25 to 30 years. Administration officials have put the annual cost of the entire framework at $72 million to $82 million per year.

The budget should offer more concrete numbers on these financial effects – and provide insight into how much revenue the city will need to generate in the years to come.

The second external factor is a court ruling last month that could result in a $100 million hole in the city’s budget. The 14th Court of Appeals found that the city had significantly reduced the amount of property taxes it is supposed to spend on streets and drainage since 2016, and it ordered the city to stop shortchanging that fund.

Whitmire quickly said the city would appeal the decision, despite promising during the campaign to stop shortchanging the drainage fund. It appears the appeal will mean City Hall will not have to fully fund the program in this year’s budget, while this litigation remains ongoing. In these types of cases, state law says higher courts must grant a stay of the decision when the government requests one during an appeal.

That will be bad news for engineers who have fought a long legal battle to ensure the city spends its fair share of dedicated taxes, as well as neighborhood activists who have pushed for more funding for drainage in general.

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Whitmire’s team has asked all city departments — except the police and fire departments, which collectively make up about half of the city’s operating budget — to propose 5 percent budget cuts before the cycle. expenses.

Was it a mental exercise or an effort to actually implement reductions? The spending plan will help determine whether the Whitmire administration intends to make gradual reductions in services outside of public safety.

This could include the Parks Department, which had a budget of $91.7 million last year, Libraries, which had a budget of $52.3 million, and the Neighborhoods Department, which had a budget of $14.6 million.

Houston budget devotees will remember that most of the city’s spending is personnel-related, meaning it’s difficult to make substantial cuts to services without laying off employees.

Whitmire made it clear that public safety was his top priority. Besides compensating firefighters, what will that look like in his first budget?

The mayor campaigned on promises to recruit more police officers and reduce police response times. He said he would get personally involved in recruiting.

If the goal is to get more officers on the street, Whitmire could try using the money to add additional cadet classes to bolster the Houston police ranks. The city typically funds five classes per year, at a cost of about $2.6 million each.

The spending plan will offer a first look at how Whitmire plans to allocate police resources.