Drawing on federal money, Turner’s $5.7 billion budget plan includes increases for all workers, healthy reserves


Relying on federal money again, Mayor Sylvester Turner’s proposal $5.7 billion budget for next year would pay raises for all city employees, provide tax relief for seniors and residents with disabilities, and save the largest reserves in years for savings, according to an overview Turner shared Tuesday at City Hall.

The city often faces nine-figure budget shortfalls, forcing it to sell land and defer costs to fill the gaps. For the third year in a row, however, the city will rely on hundreds of millions of dollars in federal COVID-19 relief funds to avoid a budget hole and free up other revenue for the mayor’s priorities.

The city is expected to receive more than $300 million this year from the latest stimulus package approved by Congress, and Turner has proposed using $160 million in the budget. The city has received more than $1 billion in this assistance over the past three years.

The city council is expected to propose amendments and vote to pass the spending plan next month. The budget will come into effect on July 1, at the start of the next fiscal year.

Your chance to be heard

Houston residents will have five chances to weigh in on Mayor Sylvester Turner’s proposed $5.7 billion spending plan.

Budget discussions will begin at noon on Wednesday, when the City Council’s Committee on Budget and Fiscal Affairs will offer a budget overview and a five-year forecast of city finances. Following the five-year forecast on Wednesday, city officials will review each department’s finances at four more public workshops from May 16-19. Members of the public will be able to express their priorities in person or virtually.

Or: Register online, by calling 832-393-3008, or at the meeting to comment in person at City Hall’s Second Floor Council Chamber, located at 901 Bagby.

When:Wednesday’s meeting begins at noon and will review the state of the city’s finances and review the spending proposal for the Houston Fire Department.

May 16: The workshop begins at 10:30 a.m. and will review proposals from the Department of Housing, Houston Public Works, Department of Neighborhoods, Office of Business Opportunities, and the Houston Public Library, among others.

May 17: The workshop begins at 10 a.m. and will focus on the Houston Police Department.

May 18: The workshop begins at 1 p.m. and is to review proposals for solid waste, the Houston airport system, and Houston Health.

May 19: The final workshop will begin at 9:00 a.m. and feature a report from the City Comptroller. The finances of the town hall, the legal department and the municipal courts will also be discussed.

With about $311 million in reserves, Turner is building the healthiest fund balance the city has seen in decades, which he called necessary given the uncertainty of rising inflation, the continuation of the COVID-19 pandemic and the Russian invasion of Ukraine.

The city budgeted $205 million in reserves last year, the first time it exceeded $200 million in reserves since 2009. City financial policy calls for an unrestricted reserve worth $7 .5% of the general fund; this year’s amount is almost double, 13.5%.

That money will also help the next mayor and council weather budgets when federal aid runs out and the city has to fend for itself, Turner said. Relief funds must be committed by 2024 and spent by 2026.

“I think what we all recognize is that some of the major cost drivers will be driving this budget over the next few years…I don’t want to put future mayors and councilors in a worse situation. “, said Turner. “As the city will eventually wean itself off (federal) funds, you will come back with the balance of the fund.”

As board members work out amendments and suggest other spending priorities, they’ll likely see the roughly $138 million in reserves above the required 7.5 percent.

Among these long-term costs are previously announced increases for firefighters (6%), police officers (4%) and municipal employees (3%) in this budget. Firefighters are expected to get another 6% raise next year, and police and municipal unions have also signed contracts with increases in future years, meaning those costs will outlive federal aid.

Turner said he plans to bring a separate measure to city council that would increase the property tax exemption from $160,000 to $260,000 for seniors and residents with disabilities. The city said that would save $440 for the owner of a $300,000 home, assuming the same tax rate.

Aside from the federal influx, the city’s more favorable budget numbers are fueled by a particularly large increase in sales taxes. The city estimates it will have collected $806 million in sales taxes when this fiscal year ends in June, about $100 million more than the year before. This is the largest single-year increase in at least a decade.

The figure was a key indicator for budget watchers during the pandemic, when the closure of many businesses caused revenue to plummet. The rebound helped improve the city’s financial situation.

Comptroller Chris Brown, the city’s independently elected financial watchdog, said the improved fund balance is good, but he’s concerned about the $487 million increase in the total budget from to last year.

“We have to do the opposite,” Brown said. “We need to cut the budget by $150 million, $200 million every year to get to the point where we don’t have to lay off thousands of people in a few years.”

Marty Lancton, president of Local 341 of the Houston Professional Fire Fighters Association, argued that the city’s financial situation is more precarious than it appears because the administration is not setting aside funds to implement much higher raises for firefighters. If the union wins the legal challenges to force the city to implement Proposition B, the voter-approved charter amendment that would give firefighters pay parity with police officers, it would have far-reaching effects on city ​​finances.

“There’s no question the bill is coming due,” Lancton said.

The overall $5.7 billion plan marks a 9.3% increase over the current budget. Much of this increase, however, comes from dedicated funds outside of tax money, such as revenue from water charges. The city raised those rates on residents last year to help cover a $2 billion deal with the Environmental Protection Agency. This money will be spent over 15 years to upgrade infrastructure and limit sewer overflows.

While property and sales taxes fuel the $3.1 billion general fund budget that pays for public safety and most basic city services, other departments rely on dedicated fees intended for their use. Houston Public Works, for example, is primarily funded by $1.5 billion in revenue from water and sewer bills. Higher rates boosted revenue in this category from $1.2 billion last year, and the department also receives $22 million in general funds. Houston’s airport system, meanwhile, receives $516 million in various fees and charges from airlines.

The general fund budget of $3.1 billion represents an increase of 8.6% over last year. This figure includes the unrestricted fund balance of $311 million.

The proposed spending plan includes $989 million for the police, an increase of $33 million from last year, and $559 million for the fire service, an increase of $23.6 million of dollars. In total, the mayor is proposing to spend $1.6 billion on public safety, including courts and emergency operations, which is more than half of the general fund.

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The Parks Department would see one of the largest percentage increases of any department. Turner is proposing to increase his budget from $67 million to $86 million.

The solid waste management department, which has fallen behind recycling and bulk waste collection due to staffing issues, will also see its biggest budget increase in decades. The mayor is proposing a budget of $95.6 million, an increase of more than $6 million from last year. It hasn’t seen an increase above $4 million since 2006.

The raise is still meager compared to what the department says it needs, and Turner reiterated Tuesday that his structure is unsustainable. In its long-range plan, the department said it was underfunded by at least $20 million to $40 million.

Turner, however, said he did not plan to dip into excess reserves to give that sum to the ministry.

“It’s one department out of 23. It doesn’t make the system sustainable, it pulls everyone down, and it puts us in a more vulnerable (position) in case urgent circumstances arise,” said the mayor. “That’s not the way to do it.”

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