Every year, about this time, the Houston City Council considers the budget presented by the Mayor with which we operate the city for the next fiscal year. The Mayor and Council are required, by city ordinance, to pass a balanced budget on or before July 1
st
of each calendar year.
The Mayor’s proposed budget estimates how much we are likely to spend and the amount of funds which will be available. The Mayor structured his proposed budget to indicate that we would be able to meet the anticipated expenses of the city with a 9% cushion in our Fund Balance (city savings account). In other words, the Mayor’s budget is balanced. However, the Mayor’s budget relies heavily on the one-time movement of money from various special revenue sources, a multi-million dollar “windfall” from a lawsuit settlement, and a drawdown of the Fund Balance (city savings account). The Mayor's budget closes a 114-million dollar shortfall by using 104-million dollars in these one-time revenue sources. The Mayor’s proposed budget is, therefore, not structurally sound.
The Mayor, for some reason known only to him, felt it necessary to rush the approval of the budget by at least one month. He became quite animated when the target date of May 23rd came and the budget was delayed by a member of council for one week. He railed against Council Members for their apparent lack of concern for their duty to pass a budget. The following day, May 24
th
, the U.S. census numbers were released indicating the growth rate for the city was far below that anticipated by the finance department, creating an additional 17-million-dollar shortfall in the Mayor’s proposed budget. Had council passed the Mayor’s budget on May 23
rd
, we would be struggling to alter the budget to account for this huge hole. Because the budget was delayed by one week, Council Members were made aware of more accurate information regarding the financial condition of the city and the Mayor had an opportunity to pull his budget and scrub it for additional savings to diminish the impact of the 17-million-dollar gap.
The Mayor, however, was not going to allow a 17-million-dollar hole in his budget to interfere with his timetable of passing a budget one month early. Rather than pull the item from the agenda to scrub the budget for additional spending cuts and deal with the shortfall, the Mayor took the easy way out and decided to use the city’s savings account (Fund Balance) to balance the budget.
The Mayor’s decision to raid the Fund Balance and stay on his schedule reduced the city’s savings account (Fund Balance) from approximately 9% to 8% leaving about a 16-million-dollar cushion over the 7.5% reserve required to be maintained in that account.
I voted against the Mayor’s budget for the following reasons: The Mayor’s budget, according to both the City Finance Department and the City Controller’s Office, is not structurally sound nor sustainable. I believe the Mayor knew the census report would be problematic to his original proposed budget and deliberately withheld this information from Council Members to avoid recalculating his figures prior to passage of his budget on his targeted date. I am disappointed that the Mayor took the fast and easy step to simply draw down our Fund Balance another 17-million-dollars. Rather than pulling the budget to scrub it and find additional spending cuts from the various departments, his budget leaves our city vulnerable in the event we have an emergency this coming fiscal year.
After a lengthy, and sometimes heated discussion, council approved the Mayor's budget by a vote of 13-4. Once again we are kicking the can down the road. We are running out of special revenue accounts to raid. We cannot rely on the odd windfall of cash from a lawsuit and, after this year, we will not have enough reserves to drawdown our savings next year. In short, I believe the Mayor’s 2019 budget, while theoretically balanced for this year, will create an even larger deficit during the 2020 budget year.
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