Houston official warns of widening budget deficit

During a budget meeting Wednesday with council members, Houston Finance Director Melissa Dubowski projected that the city’s deficit could increase as much as $229 million by next year and potentially reach $389 million. million dollars by 2029, in a pessimistic vision. Earlier this year, officials warned the city faced a bleak financial future as it struggled with a $187 million financial deficit.

And now the city’s top financial watchdog says Houston’s financial situation is “critical.”

Houston City Comptroller Chris Hollins described the situation in a statement to Chron Wednesday morning before the budget meeting. Hollins also said he plans to meet with the mayor and other city officials in the coming days and weeks to “ensure transparency and accountability” for Houston’s finances.

“The City of Houston’s expenses continue to increase while revenues decrease, and the situation is becoming critical,” Hollins said. “With a structural deficit of $200 million and growing, we are in an unsustainable position and need real solutions.

“The City’s historic fund balance gives us a brief window to turn our financial situation around, but time is running out. Like previous budgets, the proposed FY 2025 budget is balanced primarily through one-time funding. Correcting this structural imbalance is essential to ensuring Houston’s long-term financial health and viability,” Hollins added.

“We recognize that we need to do more to find efficiencies and savings, but I cannot hide the fact that these efficiencies and savings will not be enough to close the budget deficit,” Dubowski said .

Due to the city’s financial woes, Houston leaders have previously expressed a need to increase revenue and have considered instituting a monthly trash tax or possibly selling voter approval to increase the first increase in the property tax ceiling in 20 years. Mayor John Whitmire unveiled his first city budget proposal Tuesday, emphasizing that neither option would be considered this year but that “everything is on the table” for the future and that he is using federal dollars from COVID-19 to close the gap.

The proposed budget is 7 percent higher than last year and includes $1.7 billion for public safety. $1.04 million is for firefighters and police, while $636 million is for fire services. City officials asked departments to cut five percent of their budgets, saving $11.7 million. It also includes the $1.5 billion deal for firefighters and the promise of a 10 percent pay raise for firefighters in the coming year.

Dubowski added that the city is adapting to existing revenue streams it hopes to increase and exploring short- and long-term solutions to close the gap.

Some short-term actions include reviewing the solid waste service report to determine possible waste fees once completed. And supervise the recruitment of city employees. One provision Whitmire said he wasn’t interested in considering was expanding parking meters, an amendment raised by Councilmember Edward Pollard to become a possible “revenue generator.”

Houston is hosting workshops throughout May for the public to discuss the budget. Council members are expected to vote on the final budget in June and before the budget for the fiscal year beginning July 1, 2024, and ending June 30, 2025.