Houston City Council passes fiscal 2025 budget

Bonds

The Houston city council passed a fiscal 2025 budget Wednesday that eschews tax increases or new fees and taps a general fund balance to help fill a structural budget gap.

Mayor John Whitmore said the $7.3 billion all-funds budget, which includes about $3 billion in general fund spending, was responsible, while noting the city continues to have unmet needs and has an unsustainable finance system. 

The budget passed by the Houston City Council Wednesday for the fiscal year that begins July 1 contains no tax increases or new fees to address a structural budget shortfall.

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“This is a good budget,” he said.  “It emphasizes public safety, drainage, infrastructure, things that we’re asked about.” 

Council Member Edward Pollard, who voted against the budget for the fiscal year that begins July 1, said it relies on one-time funding. 

“We’re spending more than we’re bringing in and I don’t think that’s fiscally sound,” he said.

 In a May presentation on the proposed budget, Whitmore, who took office in January, said it represented a pathway toward seeking a solution in fiscal 2026 to the city’s structural deficit problem.

As of May, the gap was about $187 million. The adopted budget preserves an unrestricted fund balance of about $86 million above a required 7.5% reserve of expenses less debt service, according to the mayor’s office. It also incorporates $11.7 million in general fund expenditure reductions.

Federal American Rescue Plan Act money has helped the nation’s fourth-largest city boost its budget balance, which is estimated at $467.6 million at the end of fiscal 2024. 

The 15-2 budget vote came after the council approved issuing $650 million of general obligation judgment bonds that are part of a proposed settlement with Houston’s firefighters’ union, although action on a collective bargaining agreement was delayed. 

The judgment bonds would be issued along with about $155 million of public improvement GO refunding bonds, which include the refinancing of short-term commercial paper with long-term, fixed-rate bonds.

The refunding measure also passed the council on Wednesday. Houston Finance Director Melissa Dubowski said all of the debt would be sold in separate series at the same time.

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