Mayor Sylvester Turner today announced the details of his proposed budget for fiscal year 2020 which starts on July 1. If approved by Houston City Council, the 2020 budget for all funds would be $5.10 billion, 3.1 percent or $151 million, higher than 2019’s budget.
Overall General Fund spending is up marginally by 2.5 percent, $2.156 billion for 2020 as opposed to 2019’s $2.104. Public safety, which has drawn a lot of interest as of late, is up by 3.57 percent, primarily due to increases of $24 million in the Fire Department and $27 million in the Police Department.
Increased Spending Explained
$16.7 million in employee compensation
- Prop B,
- 4% police raises
- 2% municipal employee raises
$13.7 in pension costs
$10.3 million in healthcare costs
$4.3 million in service charge backs
When it comes to revenue, property tax revenues are up by 1.9 percent from $1.193 billion in 2019 to $1.217 billion this year. This is due to property appraisals increasing from $231 billion to $244 billion.
However, total general fund revenues are down by 2 percent from $2.782 billion to $2.728 billion ($54 million less) primarily due to fewer sales of assets and lower transfers from other funds.
To close the $179 million gap, Turner looked at an increase in revenue, layoffs, and a massive draw down from the fund balance:
Budget Deficit Explained
$7.4 million in increased revenue from property taxes
$35.8 million in department reductions (firefighter layoffs and attrition)
$116 million draw down fund balance (combination of sales tax, completed one-time land sales, controlled hiring)
While Turner claimed that the budget gap was closed without one-time land sales, what he meant was the city didn’t sell land to close this gap. They did, however, use proceeds from completed one-time land sales to help fill the deficit. While there is a difference, the point remains that it was a one-time funding source.
The city’s financial policies draw some concern as some areas remain “not in compliance” or “in progress” of becoming complaint, some of these areas have not seen a status change since last year’s budget.
They are “in progress” of complying with a policy that requires a written methodology for determining “minimum and maximum cash reserves to serve as a margin or buffer for meeting obligations, mitigating risk, and ensuring stables services and fees.” But, they are “not in compliance” with rules dictating funding for Other Post-Employment Benefits (OPEB), or retiree healthcare benefits, with a rule regarding forced prioritization of operating maintenance funding, maintaining credit ratings, a soft-close of the city’s books within 65 days of each year’s fiscal end, and the city’s internal control structure.
Now the proposed budget goes to council for review. Budget hearings begin tomorrow and end on May 21. Council is expected to vote on the budget on June 5.