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Houston Controller Chris Brown sounded an alarm saying that the city’s structural imbalance in its budget is getting “much bigger, rather than smaller” and he was concerned about what could happen once federal relief dollars run out.
“I’m sounding the alarm now, that number is growing and yet we’re getting record amounts of revenue in, both from recurring sales tax and others, and one-time from federal sources,” he said. “But yet, that budget deficit is growing, and it’s not growing by a few million I think it’s growing by hundred million.”
While Houston officials always claim to pass a “balanced budget” the budget is never structurally balanced, which is a difference.
To close annual budget gaps, the city has used one-time funding sources, asset sales, and other ways to fill the gap, a structurally balanced budget would have recurring revenue exceed recurring expenses and not really on a patchwork of fixes to close the gap.
Truth in Accounting’s Financial State of Cities report said, “Houston’s elected officials have repeatedly made financial decisions that left the city with a debt burden of $8.9 billion. That burden came to $13,200 for every city taxpayer.”
Houston’s finance director, Tantri Emo, said that the city hasn’t made any cuts during the pandemic because of their receipt of federal relief dollars.
Brown also noted that there is an outstanding lawsuit for the Houston Firefighters pay parity proposition which would bring their pay in parity with the police department. Despite winning at the ballot box, the city challenged the proposition. If the city’s challenge is unsuccessful, Brown says the cost could be “substantial.”
Brown projects one the federal relief dollars runs out, unless revenue picks up, the city could be looking at laying off 3,000 employees.
While Mayor Sylvester Turner was away during the comments, he made sure to address them upon his return.
“When I came into office, the unfunded liability was $8.2 billion and growing…with the reforms we have put in place, the unfunded liability today is $1.49, a decrease of $6.72 billion.” He went on to argue that the pension systems are healthier today than when he came into office and attempts to undo his pension reforms will erode any of the gains made in recent years.
“In almost every category, the debt has gone down,” Turner said. Going on to say that the biggest cost driver is personnel, which accounts for 63% of the overall budget, public safety accounts for 75% of that 63%.
Turner said if they want to bring costs down the only actionable way would be to start cutting employees.
Charles Blain is the president of the Urban Reform Institute.