Overtime payout for Houston’s fire and police departments is the biggest driver in the city’s projected expenditure increase, city officials said.
On March 31, Houston finance department officials at the monthly Budget and Fiscal Affairs Committee meeting told council members that the city is expected to increase spending by $68 million.
The cost
According to Finance Department Director Will Jones, the Houston Fire Department is expected to increase expenditures by about $51 million. Of that, about $39 million will go toward overtime costs.
For the Houston Police Department, it is expected to increase by about $16 million, with $11.8 million going toward overtime. The total overtime spending for both public safety departments is expected to be an additional $50 million from previous projections.
However, on the flip side, the city’s revenue projection increased by $39 million, mostly driven by sales tax, which is up $22 million, Jones said.
The remainder of the increase comes from ambulance-related fees, totalling about $14 million, along with other payments and transfers.
“On the bottom line for the general fund, revenues are trending upward this month,” Jones said. “But expenditures are growing faster, primarily due to overtime and personnel-related costs and public safety.”
Offering input
Houston City Controller Chris Hollins said the city is now projecting a significant budget gap.
“What we’re now facing is a $174 million general fund deficit for fiscal year [2025-] 2026,” Hollins told council April 1. “The largest single-year drawdown in the history of the city of Houston.”
Hollins added that the FY 2025-26 budget miscalculated overtime spending, allocating $64 million to overtime spending without any changes to operations.
“That gap wasn’t going to close on its own, and it didn’t,” he said. “That’s an additional $50 million in deficit spending.”
What’s next
The city enters budget season in May, and officials said the new projections will be taken into consideration for both the upcoming fiscal year and the five-year budget plan.
