Mayor Turner reveals plan to close $160 million budget gap

HOUSTON – Mayor Sylvester Turner unveiled his preliminary General Fund budget Friday and detailed how he plans to close a $160 million budget gap.

Turner said in a press release he is releasing his budget proposal a month in advance "to send a strong message about City budget management to the public and the credit rating agencies."

“I strongly urge City Council to resist the urge to tinker with this budget,” said Turner.  “Even one small change will upset the delicate balance we’ve achieved as a result of shared sacrifice and put the City at risk for a credit rating downgrade.  This plan prepares us for the additional fiscal challenges anticipated in FY18 while also improving public safety, increasing employment opportunities and meeting the critical needs of the less fortunate in our city.”

He said the shortfall was the result of cost increases, voter imposed revenue limitations, a broken appraisal system and economic downturn. According to a release, the mayor has requested an accelerated approval from City Council.

“This was the largest fiscal challenge the City has faced since before the Great Recession,” said Turner.  “By bringing all parties to the table to engage in shared sacrifice, we have closed the budget gap and started addressing the long-standing structural imbalance between available revenues and spending.”

The release stated several parties — including employee unions, the Tax Increment Reinvestment Zone and City Council — partnered with the Mayor’s Office to outline plan that minimizes employee layoffs and maintains the City services.  

“The budget includes the elimination of 54 vacant positions and 30 to 40 layoffs, most of which the mayor hopes to accomplish through attrition,” according to a release from the City. “There are no significant reductions to park and library operations, which have been hit hard in the past and there will be no layoffs of police officers or fire fighters.  There is funding included for an additional police cadet class, for a total of five classes and the mayor continues to look for ways to streamline operations to get more officers back on the street.”

According to the City, the rest of the budget gap was closed utilizing a combination of savings from debt restructuring, spending reductions, revenue from anticipated land sales and a small contribution from the City’s fund balance. Even with this fund balance contribution, the City’s savings account will remain well above the threshold necessary to satisfy the credit rating agencies, the release said.

Turner said the budget was balanced using both recurring and non-recurring initiatives.  If non-recurring items had been taken off the table, there would have been drastic cuts in City services and another 1,235 City employees would have lost their jobs, according to the City.

According to the City, the elimination of redundancies and increased efficiency in operations has generated $36.2 million in recurring annual savings.  In addition, the TIRZs will continue to contribute at least $19.6 million in subsequent years.

“Yet to come is a new approach for the City’s pension liabilities,” Turner said. “Productive discussions are underway with stakeholders and I am committed to having an agreement ready to take to the legislature by the end of this year.”

City Council is scheduled to vote on the budget May 25 before the fiscal year starts July 1.