Here’s the plan for making ends meet for next fiscal year.
Mayor Sylvester Turner
Mayor Sylvester Turner’s proposed budget for the fiscal year that starts in July would close a shortfall of $114 million without employee layoffs by drawing down the city’s reserves, transferring money from special accounts to the general fund and cutting spending.
In a proposal unveiled Tuesday, Turner plans to spend $2.5 billion from the general fund, which is supported primarily by property and sales taxes and funds most core services, such as the police and fire departments, parks, libraries and trash pickup.
That is $83 million, or 3.5 percent, more than the current budget. The increase chiefly is driven by a $42 million increase in debt service, related mostly to the issuance last year of $1 billion in pension obligation bonds as part of the mayor’s pension reform package. Also driving the increase is $14 million in previously agreed to raises for police.
“This is a very, very tight budget,” Turner said. “I have scrubbed this budget, every line item that exists. I invite anyone to take a look underneath the hood. Because there are two departments that will always drive this budget: Police and fire.”
About 57 percent of the general fund, or $1.4 billion, goes to public safety – the police and fire departments, the municipal courts and emergency operations. Another $400 million goes to debt service. Parks, libraries, health services, trash pickup and most other city functions get the rest, about $672 million.
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Turner acknowledged two key developments helped prevent layoffs in the proposed budget, providing most of the $84 million the mayor intends to pull from the city’s reserves to spend in the upcoming budget.
First, the city settled a lawsuit it had filed against Towers Watson, an actuarial firm it blamed for contributing to the city’s pension crisis, saying city officials’ reliance on the firm’s advice led them to boost benefits in 2001 and saddle taxpayers with unaffordable pensions costs. That settlement, which was approved by city council last month, injected $29 million into the general fund.
The city also, as it routinely does, conservatively estimated the sales tax revenues it would receive in the current budget year. As a result, the city collected an “extra” $28 million that will be available for the upcoming budget year.
Yeah, that pension projection lawsuit settlement sure came in handy. I don’t know what rabbits there will be to pull out of next year’s hat, however. We’ll see what Council makes of this when it comes to them for a vote.
So the budget is going to be burdened by the service of debt, due to the pension bonds. I remember when Turner came up with the idea, he was hailed for fixing the pension crisis. All that he did was recast the obligation in another way. I can’t believe that such mediocre (at best) leadership is the best that a city the size of Houston can muster. Of course Turner will find a way to break the revenue cap and get his talons on more of the people’s money, and it will still not be enough. Perhaps he is better than past administration, because Houston has had a history of incompetent leadership. I remember when the red light cameras were removed by referendum, and the city had to pay the vendor the entire contract. Now, even I know that when negotiating a government contract, you always have a termination for convenience clause. And I don’t even have half a brain. I am sure that if the city reached out to me, I could help them with a lot of their woes.
Jason, you are just now figuring out that the pension fix recast the obligation? That was always very clear. What is your solution? Terminating the plan would not eliminate the obligstion. The obligation is owed, unless you want to file a municipal bankruptcy, which creates far more issues.
If you are so freaking smart, why don’t you run for the job?
I can solve the money issues immediately, but a lot of folks aren’t going to like losing 40 percent of the police and fire departments, which is the only place you can cut significant costs.
Okay Jason, if you’re so wise and all knowing with less than “half a brain”, regale us with how you would do better than what has been proposed for this year. I may not be a Turner cheerleader but he’s done fairly well, certainly better than how his opponents would have done based on their own campaign platforms. But blaming the shortfalls of this budget on the pension bonds makes no sense; the city won concessions to lower the overall debt, the three pensions will no longer be used as credit cards, and $42 million in a $5 billion dollar budget for all that is a very cheap price to pay.
Ross, the city could file for bankruptcy but short of extremely weird circumstances, it would be thrown out in a heartbeat. Bankruptcy is for when a person or organization CAN’T handle their fiscal affairs because their debts are too high and there is no way out of the mess. Houston has no obligation to continue hiring so many people, no obligation to provide so many services, and no obligation to do all that it does, it just wants to do more than it can afford. In recent discussions here, we’ve seen those representing themselves as firemen admit that the city’s way of doing things with their large budget makes no sense, the police have cut back on making thousands of pot arrests, are handing off the jail to the county, and have made other changes so that manpower increases are the opposite of what is needed for them, and if the city stopped duplicating services it could drop many more employees.
I don’t think losing 40% of public safety is needed but restructuring both departments would allow for huge savings, slowing down growth in other areas and changing certain programs would allow long term savings. Even if you just stopped hiring fire and cops for a few years to let attrition do the dirty work, you’d solve most of this yearly dilemma. Would that make HFD and HPD employees happy? Of course not but before the usual critics complain about that added pension debt as a deal breaker, don’t forget that the city has billions in non-pension bonded debt and has for decades. Most of it is self sustaining via water fees, airport fees, and so forth, the pension portion was just the whipping post where city leaders found it easier to not pay what was needed for so long.
I’m not finished reviewing the entire budget but there are some serious concerns mentioned in the article such as the modest infrastructure repairs listed, the fact that all three employee groups are in negotiations or should be in negotiations for pay raises, that pay petition literally a deal buster all by itself, and the continuation of past practices that should have been ended long ago.
I want someone with half a brain to run for local government ! Apparently we have a prospective candidate that’s checking all the boxes !