Houston Mayor Annise Parker and city council members adopted a new budget for fiscal year 2015.
"Next year, we have a $140 million budget deficit projected and that's without taking into consideration any raises for police, fire or capital expenditures," said City Council Member Oliver Pennington.
The passing of the budget came one day after the Houston Professional Firefighters Union rejected an agreement that would have provided a pay raise, while cutting overtime and eliminating the need for brownouts. Some city leaders worried the firefighters' actions could have a significant impact on the city's budget.
Mayor Parker says the current budget should be fine as long as the city taps into its contingency fund.
"There's plenty of money in the fire department budget to go through the year without browning out apparatus or a major disruption," Mayor Parker said. "The only place we can cover that if we take away fund balance is in our government contingency fund."
The city's current contract with the firefighters union expires on June 30.
"Unless the mayor is able to sit back at the table and actually offer a fair contract to the firefighters, I would like to see the current contract remain in play until we get a new mayor," said HFD paramedic Roy Cormier.
Last month, the mayor outlined her administration's proposed $5.2 billion spending plan. It allocates $10 million for pothole and street repairs, money for police and firefighter cadet classes and meets the city's rising pension obligation.
Council members have also proposed more than 60 budget amendments.
"My priorities continue to be after-school programs," said City Council Member C.O. "Brad" Bradford, who successfully passed an amendment for $500,000 to fund after school programs.
However, council members rejected an amendment from their colleague Dave Martin to cut property taxes.
Despite Houston's strong economy, the mayor also warned the city faces a bleak financial outlook because of a voter-mandated revenue cap passed during a previous mayor's term.
The cap limits city property tax revenues to the combined rates of inflation and population increases.
Unless voters approve a referendum to lower or remove the cap, the city could be forced to layoff employees and cut basic services.
The budget will take effect on July 1.