HOUSTON – Houston’s budget battle is heating up as City Controller Chris Hollins warns the city is facing a projected $174 million deficit, the largest in Houston’s history. Mayor John Whitmire says the numbers are being overstated and insists the budget can be balanced without raising taxes.
During an interview with KPRC 2 anchor Andy Cerota, Hollins said Houston’s budget is “nowhere close” to being balanced as the fiscal year ends in June. He added the city has already spent more than a third of its reserves and is “heading in the wrong direction.”
Hollins went on to explain that the shortfall did not happen overnight, citing a series of choices he said ignored financial realities. He pointed to a document his office produced last year, called “10 hard truths,” which he said warned city leaders that parts of the adopted budget did not reflect actual conditions.
One example, Hollins said, was a revenue projection tied to property taxes. He said the forecast assumed collections that would have required changing the tax rate.
“We said these numbers aren’t real. They’re fictional,” Hollins said. Hollins said the city did not change the tax rate, and that decision contributed to additional deficit spending later in the year, including what he described as a $53 million increase in the shortfall.
Hollins also pointed to overtime costs, saying the city spent more than $140 million on overtime last year but budgeted $64 million this year “without any real operational changes.”
Whitmire disputed Hollins’ warning in a statement provided to KPRC. The mayor said his administration has “a solid plan to balance the budget without raising taxes,” citing an Ernst & Young efficiency study and efforts to eliminate “waste, fraud and duplication.”
On the tax issue, Hollins said his office did not call for a tax increase but warned that the city’s written revenue targets would require a tax-rate change to achieve.
Hollins noted that the Ernst & Young study the mayor referenced was conducted about two years ago and Whitmire promoted last year’s budget as balanced and it was not.
Whitmire also criticized Hollins for missing a recent finance meeting where the administration began outlining its approach. Hollins dismissed the mayor’s criticism as a non-issue.
“”This meeting accusation is just silliness." It’s a committee meeting with city council that neither the mayor nor I attend. Both of our staff go on our behalf. My staff updates me. I assume his staff updates him,” said Hollins.
Hollins also said that the mayor should “stick with the facts,”
Hollins said the key point for residents is that the city is not fully paying for the costs of core services.
“We’re not paying for all of the expenses that we have for critical city services,” he said, listing police, fire and trash pickup. He said the overall city budget is about $7 billion, with the general fund at about $3 billion, and argued the city needs a clear plan for how it will generate enough revenue to cover its bills.
“Just like at home, if you’re going to spend a certain amount of money, you have to know where that money is coming from. And right now, the city hasn’t figured out where its revenue is coming from to pay its bills. Hollins said.”