What happened?
Hollins raised concerns that the city would have to allocate $183 million in fiscal years 2024-25 and 2025-26 toward the dedicated drainage and street renewal fund if the judge presiding over the drainage lawsuit, filed by two Houston residents alleging that the city had not been adequately allocating funds to drainage and street projects, doesn’t approve the settlement, according to his estimates.
Hollins said in a May 22 statement that the judge’s ruling is “pivotal.”
“Our goal is to certify the budget and keep the city moving forward—but we must do so responsibly, without exposing Houston to further financial strain,” Hollins’ statement read. “If the payment terms aren’t approved, we’ll have to reassess key portions of the budget to ensure it remains fiscally sound.”
This isn’t the first time Hollins has raised alarms over the consequences of the drainage lawsuit. In February, he said he wouldn’t be able to certify the FY 2025-26 budget because of the lawsuit, calling it a “gut punch” to the city.
However, City Attorney Arturo Michel said in a May 22 statement that he disagrees with the controller’s position that “a court order is a condition that must be met before the budget is complete for certification purposes.”
“The motion is before the court,” Michel wrote. “The parties have a binding agreement that has received all City and plaintiff approvals.”
The backstory
The lawsuit centers around a city charter amendment that required Houston to allocate 11.8 cents per $100 collected in property taxes toward street and drainage projects. However, engineers and Houston residents Bob Jones and Allen Watson sued former Mayor Sylvester Turner's administration in 2019, alleging the city had not been allocating the funds and had underfunded infrastructure projects by almost $50 million.
The state's 14th Court of Appeals sided with Jones and Allen in April 2024, but Houston appealed to the Texas Supreme Court in July. That appeal was ultimately denied Jan. 31.
Houston was faced with having to allocate $100 million toward future drainage and street projects by the end of June. However, the city and the plaintiffs agreed to a deal that would allow the city to give $16 million to the drainage fund this fiscal year and $48 million the following year. The mayor’s Chief of Staff Chris Newport said Houston should be able to pay the full amount by 2028.
The deal is awaiting approval from the judge, with no confirmed date yet on when they will decide. The new fiscal year starts July 1, giving less than a month for Hollins to certify the proposed budget.
