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Houston Mayor John Whitmire’s proposed settlement with the firefighters union could cost significantly more than previously advertised, City Controller Chris Hollins said Tuesday.
The total cost of a back-pay settlement with the city’s firefighters could be $1.1 billion to $1.3 billion after taking into account interest and fees, Hollins said.
In addition, a forward-looking contract that raises firefighter pay over the next five years could cost upwards of $400 million by the end of that period, according to the controller.
Hollins declined to weigh in on whether he thinks the settlement is fair, but his take on the settlement cost underscores the heavy hit to taxpayers from the deal that Whitmire struck earlier this month.
Before the end of June, Whitmire hopes to win approval from the Texas Attorney General’s Office and City Council for the historic settlement, which would wrap up a protracted dispute with the union representing thousands of firefighters. Whitmire was elected to office promising to strike a deal that eluded his predecessor, Sylvester Turner.
Whitmire’s administration previously had pegged the cost of the back-pay settlement at $650 million. That figure does not include the interest and fees that will come with the financial instrument known as a judgment bond that the mayor hopes to use to spread the cost of the settlement over 25 to 30 years.
Under questioning from council members last week, Whitmire defended the deal as a win for taxpayers, noting the high cost of a loss in court to the firefighters.
“This was the businesslike approach to get out of court and not have a billion-plus exposure,” Whitmire said. “I didn’t go into this for the purposes of making people feel good. These are tough discussions.”
Council members also asked Whitmire why he elected to strike a long-term deal with the firefighters on their pay going forward. Whitmire said he wanted to lock in financial predictability while enticing more firefighters to work for the city.
A mayoral spokesperson said the city still was in the process of calculating the long-term cost of the back-pay settlement.
“The numbers will be reviewed with the judge and the agreement will go to the council,” Communications Director Mary Benton said.
Hollins said his assessment of whether the deal is sound will hinge on a comparison of Houston firefighter pay to counterparts in other cities in Texas. He still is waiting on that analysis from the Whitmire administration, he said.
Whitmire has yet to release a detailed plan of how to pay for the firefighter settlement. Administration officials have broached the idea of instituting a garbage collection fee or creating an exception to the city’s property tax revenue cap to pay for the Houston police and fire departments, which make up the lion’s share of the city’s operating expenses.
Both of those ideas are worth exploring, Hollins said at his Tuesday news conference. He said the city cannot meet its mounting obligations through cost-cutting measures alone.
Adding the firefighter settlement to the city’s structural deficit, Houston soon will be on the hook for an extra $230 to $280 million dollars in expenses per year, Hollins said.
The city should have enough money from its $400 million fund balance to pay for the added costs during the upcoming June budget cycle, Hollins said.
“Because of our historic fund balance, we will be able to pay the bill in the near term. The question is whether we will be able to pay it in the longer term,” he said.
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