Houston City Council on Wednesday approved Mayor John Whitmire’s first budget, a $6.6 billion spending blueprint that will expand the city’s deficit unless leaders can find new sources of revenue.
That task begins in earnest next month.
While there are no new taxes or fees in the newly approved budget, the administration has been clear that Houstonians should be prepared for discussions about a range of revenue-generating measures once the new fiscal year begins in July.
Whitmire repeatedly has declared “all options are on the table” with regard to potential new revenue sources. Among the possibilities he specifically has floated: lifting the voter-imposed cap on property tax revenue, implementing a monthly garbage collection fee, and diverting some water and sewer utility revenue to the general operating fund.
The budget allows Whitmire to follow through on his campaign promise to end the years-long contract dispute with the firefighters’ union, but it drains nearly $200 million of the historic, $460 million-plus fund balance the city expects to have when this fiscal year ends June 30. That will be used to help pay for the firefighter deal that is expected to reach upwards of $1.5 billion when all costs and interest are considered.
“It’s a moment to come together, to try to make reasonable decisions, looking out for the public interest, making certain that quality of life issues are addressed,” Whitmire said. “This is a good budget. It emphasizes public safety, drainage and infrastructure.”
The budget is a 7 percent increase from last year and reflects $3 billion in general fund spending. It includes the impacts of the firefighter deal, as well as likely pay raises for municipal workers, who currently are negotiating a new labor contract with the administration.
A five-year forecast of the city’s finances predicts the city’s current deficit of $187 million could more than double to $389 million if the firefighter deal is approved and no new revenue sources are found.
Whitmire said in a news conference after the meeting that the city would prioritize an audit of city departments to find cost-saving measures, “then we’ll go to the public and tell them what the true financial picture of the city is.”
Firefighter settlement bond
While the forward-looking budget and financial picture dominated most of the afternoon in the council chamber, much of the morning was focused on the past in the form of a massive back pay settlement for the city’s firefighters, who have worked without a contract since 2017.
The impact of that deal on the city’s finances were at the core of a fiery debate on a plan to issue a bond to cover the $650 million settlement.
The proposed settlement and labor contract were partially derailed when Controller Chris Hollins announced he would not certify either until the Whitmire administration answered 44 questions his office delivered earlier in the week.
The council eventually approved the bond that will pay for the settlement and accrued interest over 30 years, but it was unable to consider the collective bargaining agreement because Hollins did not certify the availability of funds for the deal by the end of the council meeting. That certification is required by the city charter before any council vote to spend money, and it still will be required before the council will attempt to consider the contract again on Tuesday.
Hollins is seeking some basic information about the contract terms, including confirmation of the deal’s total cost, but seems focused on producing details about pay raises for firefighters tied to revenue increases he said are not included in the draft.
“I wouldn’t be doing my job as Houston’s taxpayer watchdog if I allowed this important item — one that will ultimately cost the City more than $1 billion — to move forward without answering critical questions that are relevant to the fiscal sustainability of the City and the safety of Houstonians,” Hollins wrote in a text Wednesday afternoon.
At the start of the meeting, council members were told neither the CBA nor the bond to pay for the deal would be considered unless certification was received from the controller’s office before the end of the meeting. However, City Attorney Artuo Michel then told council Hollins’ approval was not needed for the bond issuance and a vote could be taken during the meeting.
Hours of debate followed as council members questioned what they were voting for and what the effect would be on the deal and the budget.
District J Councilmember Edward Pollard clashed with Whitmire repeatedly during the debate. A lawyer by trade, Pollard argued the administration was not being transparent about the deal by refusing to tell council members how negotiators eventually landed on the $650 million figure for the settlement.
“If it was your money in your own savings account, you would ask more questions, but since it’s the taxpayers’ money, and it’s not coming directly out of your Wells Fargo or your Chase account, you’re not asking the questions,” Pollard said. “I must be the only fiscal conservative up here because I’m asking those questions.”
Contract questions
Other council members took issue with the short timeline in which they had to review the proposed contract, which was made publicly available June 3. Since its release, sections have continued to be modified.
District F Councilmember Tiffany D. Thomas said the council was notified Tuesday evening that a section of the CBA that prohibited random drug testing of firefighters was removed from the proposal. She said she was uncomfortable voting for the contract because she was not clear on its final terms.
Whitmire said the vote came after years of stalled negotiations that have risked the city’s public safety by forcing firefighters to work without a contract. He also warned that the deal faces a June 19 court deadline to be approved, although the two sides could go to the court to request an extension.
“I’m not going to go right down to the deadline when dealing with public safety and our fire and EMS protectors,” Whitmire said. “If we don’t go forward, you’re gutting the settlement.”
The bond issuance was approved by a 14-3 vote. Pollard, Thomas and District G Councilmember Mary Nan Huffman voted against the bond.
The CBA will be considered again during the council’s meeting on Tuesday, which will consolidate the public comment and council session because of the Juneteenth federal holiday that falls on the council’s normal Wednesday meeting day.
The council then pivoted to hours of debate over Whitmire’s fiscal 2025 budget, a proposal that slows the city’s spending growth from last year.
Dozens of proposed amendments were considered and debated, including one to provide $8 million for drainage projects around the city and the addition of a sixth Houston Police Department that will cost about $4 million. Both were approved by the council.
A majority of the council’s amendments were withdrawn at the mayor’s request or referred to a council committee for further review.
Council budget amendments historically are an opportunity for council members to message their priorities to their constituents.
Whitmire was again clear that future revenue sources would be needed to balance the city’s budget, but urged its passage, noting its investment in city priorities of public safety and infrastructure.
Pollard and Thomas were the lone no votes on the budget, citing the lack of new revenue.
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