“2020 was a year like none other, financially it was worse than hurricane Harvey because it was a disaster that lasted 14 months,” Mayor Sylvester Turner said. “This is the worst budgetary shortfall that we’ve faced as a city.”
The budget is composed of a $2.58 billion General Fund, which supports a majority of city functions outside of debt payments and self-sustaining funds such as the Houston Airport System. The approved general fund budget represents a 3.9% increase from the FY 2020-21 budget, or a $96 million increase.
A $608 million infusion of federal funds from the American Rescue Act helped the city resolve the potential shortfall. Projected sales, hotel and property tax revenue decreases due to the COVID-19 pandemic put the city in a precarious position leading into the new fiscal year that could have forced layoffs, land sales and withdrawal from the city’s reserves without the federal funds, Turner said.
The city will receive the funds in two installments in 2021 and 2022 and will have until the end of 2023 to spend it.
With the increased funds, council members voted for amendments to the budget that pulled about $8 million in funds from the city’s fund balance, which, according to the finance department’s projections, was going to end up with $44.5 million above a required 7.5%. The city will now end with about $36 million above the required fund balance. Among the new expenditures was increased funding for low cost spay and neuter services through the city animal shelter and increase in district council member’s office budgets from $750,000 to $1 million.
In addition to filling the FY 2021-22 budget gap, the funding will go toward a $25 million investment, increased mental health intervention funding for the Houston Police Department and an 18% pay raise for Houston Firefighters.
Council Member Mike Knox voted against the budget proposal and Council Member Letitia Plummer attempted to as well but had her vote recorded as a yes due to a procedural error.
Plummer said she planned to voted no because of concerns about the Rescue Acts Funds being for recurring expenses.
“We need to have a plan to put forth an effort to create a structurally balanced budget, and until we do that, the city of Houston is going to see its demise,” she said. “Sustainable one-time expenses would have been building grocery stores, a citywide WiFi system, for example.”
In a separate vote in October, City Council will set its tax rate. Houston’s voter-approved revenue cap, which has been in place since 2004, limits property tax revenue growth to 4.5% or a calculation that factors in inflation and population growth, whichever is less. However, State Senate Bill 2 that passed in 2019 limits total revenue from property taxes to no more than 3.5% higher than the previous year. An exception to that allowed cities to set a tax rate that results in up to 8% more revenue if a state of emergency is declared, which was the case in 2020 because of the COVID-19 crisis.
Police Department increases
The Houston Police Department budget will increase by $30 million for a total of $955 million. It has been subject of more intense scrutiny since June 2020 when Houstonian George Floyd’s murder by Minneapolis Police sparked renewed outcry for police reforms and reallocation of funding.
Callers from groups such as the Houston Abolitionist Collective, Black Lives Matter Houston and the ACLU of Texas frequently requested funds from the police department be reallocated away from police and toward other departments such as the Houston Health Department and the Houston Housing Department.
Although the budget increased, a significant portion of it is determined outside of the budget process. Wages and benefits are determined during the meet and confer process which sets the department's labor contract and is currently ongoing. The contract expired at the end of 2020, triggering an evergreen clause that gives all police officers a 2% raise.
An amendment to the budget proposed by Plummer altered the mayor’s plan for mental health crisis response spending proposed by the mayor’s task force of policing reform.
The amendment increased the number of new Mobile Crisis Outreach Teams to 20 rather than the 18 new teams the task force recommended. To offset the cost, the amendment reduced the number of new Crisis Intervention Response Teams from six to four. The mobile teams address crisis calls without police presence while the crisis intervention teams respond to calls with a combination of police officers and trained clinicians.
“This is a plus for even our police officers,” Plummer said.
Council Member Greg Travis offered an amendment to support a seventh police cadet class into the FY 2021-22 budget using $2.4 million of the American Rescue Act Funds. However, it was voted down by council. The mayor committed to using the funds to add a sixth class but said he could not commit to adding a seventh using the federal funds.
“The reality is, every single year that I’ve been here we’ve run five cadet classes ... of course we are needing and wanting more cadet classes,” Turner said. “But [the police department] may be needing more technology or in some cases overtime pay.”
Firefighter raises
Firefighter pay raises, a longstanding dispute between the administration and the firefighters’ union, were also addressed during the budget discussion.
Council member Amy Peck offered an amendment that would earmark $115 million out of the city’s American Rescue Act funds for firefighter raises. Instead, she was asked to withdraw the amendment because Turner said the city council will be expected to vote on an ordinance in the coming weeks that will establish the 18% pay raises that he announced on May 19.
Simultaneously, the fire fighters’ union hosted a press conference announcing it will circulate a petition to force a citywide vote on the issue. The petition proposes requiring the city and the union enter binding arbitration to settle the dispute. Doing so legally requires the city and the union to reach an agreement via an arbiter rather than being allowed to re-enter negotiations independently or through mediation, which is non-binding.
Environmental needs
Several council members took the opportunity to offer amendments to the budget to alter the solid waste department’s functions, impose further penalties for illegal dumping and increase recycling opportunities.
To address illegal dumping, council member Tarsha Jackson proposed two amendments, both successful, that expand the operation of the city’s depositories. The amendments extend the deposities’ hours to 7 a.m. to 8 p.m. and from six days a week to seven days a week, adding in Sundays.
An amendment from Council Member Abbie Kamin requires the city to begin the process to develop an ordinance that requires multifamily apartment buildings to give residents the option to recycle waste. The amendment requires the ordinance be implemented by January 2024.
Among solid waste department updates, Council Member Amy Peck successfully passed an amendment that will create a text-message reminder system for junk trash pickup and tree waste pickup days, which occur on an alternating basis by month. Council Member Sallie Alcorn passed an ordinance that creates a 6-to-8 week compost pickup pilot program in up to three neighborhoods in the city.
Turner indicated that although the solid waste department needs more improvements, a more thorough overhaul of the department would need to happen outside of the budget process. He suggested the city begin evaluating the recommendations in a long-range plan for the department published in October 2020.
“The way we are running this is simply not working ... we are just going to have to decide in the next 60 to 90 days,” Turner said of changes to the solid waste department.
Two proposals aimed at improving flood mitigation were also passed. One allowing residents to request drainage ditch cleanups using city council member’s office’s funds and another beginning the process of developing an ordinance to penalize developers that repeatedly violate city building codes.
Over two dozen amendments were referred back for further review by the city council’s committees. Among them was a detailed plan by Plummer to better regulate building standards among apartment owners.
Editor's note: this post has been updated for clarity.
