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Houston Mayor John Whitmire on Tuesday unveiled a $6.7 billion budget plan that will face a City Council vote at nearly the same time as a proposed settlement with the firefighters’ union, in a key test of the new mayor’s power.
On the campaign trail, Whitmire regularly declined to offer specific budget proposals, telling voters he needed a “look under the hood” of the city’s finances before offering solutions to Houston’s mounting budget deficit.
Tuesday’s budget presentation represented Whitmire’s first set of proposed repairs, which slows the city’s spending growth from last year, but includes no revenue increases through ideas floated in recent months, such as a garbage fee or property tax increase.
A non-negotiable for the Whitmire campaign was settling the city’s years-long contract dispute with the firefighters, and the proposed budget would let him follow through.
As the budget shows, however, the deal comes with immediate and long-term costs. In its first year, the city would spend a projected $30.6 million on bond payments for back-pay and $10 million on higher assignment and educational pay for firefighters.
The settlement's combination of back pay and payments will cost the city about $70 to $80 million in its first year.
In the process, the deal will drain the historic, $460 million-plus fund balance the city expects to have when this fiscal year ends June 30. Whitmire’s spending blueprint calls for the city to end the next fiscal year with $280 million leftover.
Whitmire’s budget did not spell out how he plans to pay for the firefighter settlement in future years. His office has floated the idea of raising property taxes or imposing a garbage fee to help fund the deal, both of which could draw pushback. Whitmire on Tuesday continued to allude to the proposals as potential sources of needed revenue but did not call for them in the budget.
“We have a lot to do, but I would ask my colleagues to help use 2025 as a pathway to 2026,” Whitmire said. “Everything is on the table. We’re going to listen to Houstonians, we’re going to see where the cost savings have gotten us, and then we’re going to make tough decisions. We have no choice.”
Houston Fire Department in spotlight
The mayor’s budget proposal funds a bureaucracy of more than 20,000 city workers in departments ranging from the Houston Police Department to an office of cultural affairs.
The most highly anticipated part of this budget was the funding for the firefighter deal, however. When Whitmire announced the pact in March, he shared its overall cost of $1.5 billion without explaining how he would pay for it.
The spending plan unveiled Tuesday shows that Whitmire will lean heavily on the fund balance left over from former Mayor Sylvester Turner to pay for the first year of the settlement, which covers back pay to 2017 and pay raises through fiscal year 2029.
Whitmire did not immediately propose any major new sources of revenue, which observers have warned are needed to address the city’s structural imbalance even before the mayor OK'd the pricey deal.
“We recognize we have financial challenges,” Finance Director Melissa Dubowski said. “Those challenges are something we are going to confront in fiscal year 25 to build toward fiscal year 26.
City Controller Chris Hollins said use of the city’s fund balance is not sustainable and warned time is running out to address the budget deficit.
“The City of Houston's expenses continue to rise while revenue decreases, and the situation is becoming critical,” Hollins wrote in a statement Tuesday. “With a structural deficit of $200 million and growing, we are in an unsustainable position and in need of real solutions.”
Along with the Houston Fire Department, Whitmire has promised to boost the ranks of the Houston Police Department. The mayor is proposing to increase the department's budget by about $77 million, on top of the current year’s $1 billion.
The added money will go toward 3.5 percent pay increases for officers and five cadet classes, according to the administration.
The Houston Police Officers’ Union is set to enter contract negotiations with City Hall next year.
Whitmire was clear that additional revenue will be needed soon, but he declined to answer when asked what options he was considering. He previously floated a garbage fee and a “public safety exception” to the city’s property tax revenue cap.
“We don’t have time to list them, but all of the above,” Whitmire said.
Whitmire also suggested the city could reap additional money from the state next year, citing his relationships with state leaders from decades in the Texas Legislature.
The Houston Organization of Public Employees, meanwhile, already is bargaining with the administration over its next contract. The labor group, which endorsed Whitmire last year, represents municipal staffers in non-public safety departments.
Next year’s proposed budget does not include raises for municipal workers outside the police and fire departments.
Sonia Rico, president of the municipal employee’s union, said she felt optimistic about the negotiations, which she expects to conclude in two to three weeks.
“I’m still hopeful we’re going to get a good chunk of what we’re asking for,” Rico said.
To cut or not to cut
Heading into budget season, Whitmire asked departments – except for police and fire – to suggest 5 percent budget cuts to alleviate the city’s fiscal crunch.
The budget unveiled Tuesday is a mix of cuts to some departments, reflecting an $11.7 million decrease in general fund departmental spending through identified efficiencies, Whitmire said. The overtaxed Solid Waste Department will see its budget fall by 4.3 percent and the Parks and Recreation Department – which Whitmire often has said lacks the proper equipment – will fall by nearly 11 percent.
At-Large Councilmember Sallie Alcorn, who chairs the council Budget and Fiscal Affairs Committee, agreed with Whitmire’s approach of targeting wasteful spending across departments before moving to revenue-generating measures, such a garbage fee or increased taxes.
“I think the public needs to see more of that sharp look before we move to new revenue,” Alcorn said.
City Council is set to begin holding hearings on the budget Wednesday, with meetings continuing into next week.
Drainage demands
Outside City Hall, Whitmire is facing growing legal and political pressure to spend more on infrastructure projects, such as roads, drains and sewers.
The advocacy group West Street Recovery has asked Whitmire to spend an additional $45 million on a ditch re-establishment program, $20 million for local drainage projects and $20 million for private sewer laterals.
In comments at City Council last week, the group’s co-director of disaster preparedness, Beth Lumia, noted that 73 percent of residents last year said they wanted the next mayor to tackle the city’s infrastructure needs. She also noted that Whitmire and many members of council had promised to boost funding on infrastructure.
“This is not an attack, this is just a reminder of your word,” she said. “Mayor Whitmire, your priority concern is public safety, which we heard today. Mine is too, but you need to understand that life-saving flood infrastructure is included in Houston public safety.”
As advocacy groups put the heat on Whitmire, two engineers have mounted a parallel fight in court. In 2019, engineers Bob Jones and Allen Watson filed a lawsuit against the city to stop it from diverting property tax revenues meant for a dedicated road and drainage fund.
Voters approved that fund in 2010 and 2018 votes, but the city has never funded it to the amount that its backers envisioned. Last month, an appeals court said the city must fully fund road and drainage projects going forward.
The Whitmire administration has said it will appeal, citing the potential hit to the police and fire budgets that claim the lion’s share of the city’s general fund revenues.
Jones, one of the engineers, calculates the city should spend an additional $100 million per year on roads and drainage to comply with the 2018 charter amendment. He said the city should come to terms with the will of the voters instead of trying to delay a final court ruling with another appeal.
“I think the city is hoping to push this past budget day,” Jones said last week. “Whether they face up to this problem this year or they end up having to face up to it next year, they ought to face up to it.”
Whitmire’s first budget does not fully fund the road and drainage projects. The mayor said the city is meeting with attorneys representing the plaintiffs Wednesday to discuss a settlement.
Whitmire said he has known Jones for 40 years and expects to be able to reach an agreement that is good for the city.
“Relationships matter, experience matters,” Whitmire said. “Those plaintiffs in the lawsuit … they care about the city of Houston. They care about my administration.”
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