In a nutshell
Deputy Controller Will Jones told City Council during a Sept. 2 Budget and Fiscal Affairs Committee meeting that the city has faced 25 Federal Emergency Management Agency-declared disasters since 1983. The city also experienced two of the most expensive hurricanes for the U.S., with Hurricane Harvey in 2017 resulting in $160 billion in disaster costs and Hurricane Ike in 2008 causing $43 billion in damages, according to the presentation.
Jones said the city is spending more than it brings in, leaving limited space in the budget for disaster preparedness. The most recent budget adopted by the city in June took $76 million from its fund balance to help bring down the $330 million budget shortfall at the time, according to the presentation. If the city doesn’t find new revenue, officials said the city would have to take $463 million from its general fund balance by fiscal year 2030 to replace projected revenue loss.
“Preparedness doesn’t begin the moment a storm hits—it starts with thoughtful preparation long before that,” Hollins said in a Sept. 2 news release. “When the next hurricane, freeze or flood arrives, Houstonians should be able to count on a city that’s ready to respond—not one forced to choose between covering the costs of core services versus emergency recovery.”
Jones said if the city wants to sustain itself after hurricanes, Houston would need to consider making policy changes, such as:
- Raising its minimum fund balance
- Increasing the size of its budget stabilization fund
- Directing year-end surpluses toward the budget stabilization fund
Council member Sallie Alcorn, the BFA committee chair, said during a Sept. 3 City Council meeting that the city needs to find a way to generate more revenue, even if there are “unpopular decisions.”
“We have to have resources to attack those needs,” Alcorn said. “I believe, as my role as chair of the Budget and Fiscal Affairs Committee, I cannot see us staying on the same exact course.”
More details
Jones said the city is limited in what it can do to cover disaster costs, such as the amount of property tax the city can bring in, which is expected to be even stricter after the Texas House passed Senate Bill 9, which would cap property tax increases for cities, during the most recent legislative session.
He also said the city is constrained due to the cost of public safety, with police and fire making up more than half of the city’s budget, and 17% of the budget toward debt, leaving minimal flexibility to fund disaster preparedness.
The presentation compared different cities in Texas and how they divide up parts of their general fund reserves, with Dallas reserving around 20% and San Antonio reserving around 16% of their general funds, which both cities can do through trash fees. Jones said the Government Finance Officers Association—a professional association of approximately 19,000 state, provincial and local government finance officers—recommends keeping 16.7% on hand.
Council member Abbie Kamin proposed an amendment to the city’s financial policies during the meeting that, if passed, would increase the budget stabilization fund from $20 million to $25 million and replenish it within a year. Currently, the city needs to replenish the budget stabilization fund by the end of the second subsequent fiscal year, according to a presentation by the city’s finance department.
“A disaster doesn’t wait two years, it doesn’t wait six months,” Kamin said. “The importance of having those dollars set aside, protected and ready to go is all the more critical. My concern remains that with such a low amount, it barely skims the surface of what is needed for disaster recovery.”
Stay tuned
As of Sept. 3, there is no specific timeline for when City Council will vote on the amendment.
