Houston Mayor Proposes $6.7 Billion Budget for 2025

Houston Mayor John Whitmire proposed a fiscal 2025 budget Tuesday that uses remaining federal pandemic funding to close a $160 million structural deficit and meet higher spending, while he puts “everything on the table” to find a recurring solution as the 2026 financial year approaches.

Whitmire, who took office in January, said the $6.7 billion all-fund budget, which includes $3 billion in general fund spending and marks an increase of $442 million over the fiscal year 2024, prioritizes public safety, including covering a proposed regulation with the fire department, and fails to do so. raise taxes or cut services.

Bloomberg News

“We have a lot to do,” he told reporters, emphasizing that his administration was still getting the city’s financial situation under control. He said he would ask his colleagues to help him use fiscal 2025 as a path to fiscal 2026.

Houston Finance Director Melissa Dubowski said 68% of the general fund budget for the fiscal year that begins July 1 is allocated to public safety, including a 3.5% salary increase for police and funding linked to a proposed collective agreement with the firefighters’ union which has yet to be approved by a judge and the municipal council.

This agreement provides lump sum payments, collected through the issuance of $650 million in court bonds, for current and retired firefighters to cover overtime owed while working without a contract since the last contract expired in 2016. It includes salary increases through 2029, with total firefighters’ compensation increasing by up to 34% over the life of the contract.

Fitch Ratings Announced Houston’s AA General Obligation Rating Trajectory could depend on retroactive contracts with the firefighters. The country’s fourth-largest city is also rated GO AA by S&P Global Ratings and Aa3 by Moody’s Ratings.

Houston is currently engaged in contract negotiations with city employees, followed by police next year.

Money from the Federal American Rescue Plan Act helped the city increase its budget balance, which is estimated at $467.6 million at the end of fiscal 2024. Dubowski said tapping the balance to fill the budget deficit would reduce it to $280 million, or 11.1% of spending.

She said the search for efficiencies and cost savings had produced an initial spending reduction of $11.5 million for the next budget, adding that this was just the beginning.

Whitmire, a former Democratic state lawmaker, said that in addition to efficiencies and collaboration with Harris County and other parties, “all options will be on the table” for the fiscal year 2026, including seeking additional resources from the State of Texas.

Houston Controller Chris Hollins said last month that while balancing the budget gives the city some room to maneuver, a sustainable solution will require increased revenue or spending reductions or a combination of both.