HOUSTON — A new garbage fee and asking voters to approve higher property taxes are ideas Houston leaders are considering to plug a budget deficit north of $230 million.
That’s up from a shortfall of at least $160 million since the city and firefighters union agreed in February to settle their years-long legal dispute over pay.
“We’re not broke, but we have what you might characterize as a spending problem or a revenue problem,” Houston City Controller Chris Hollins said during a committee hearing on Tuesday.
Hollins told city council members it’s up to them to figure out how to close a budget gap estimated between $230 to $280 million.
He said the city’s savings account can fill the gap during the first year, but not the second.
Other ideas floated Tuesday included cutting costs by five percent across each city department, vacancy reductions and consolidating call centers.
“The amount of money we’re talking about, we need additional revenues,” City Finance Director Melissa Dubowski said.
Dubowski told the council they’re considering adjusting fees to keep up with inflation and studying the possibility of a new garbage fee of around $20 a month.
“That would free up $100 million of general fund resources that could be used on something else,” Dubowski explained.
She told council members the total cost of $650 million in back pay owed to firefighters since 2017 plus interest paid over 25 to 30 years, along with five years of raises is estimated at around $1.5 billion.
Houston Fire Chief Sam Peña took questions from council members.
“I was not in the room on the negotiations for this particular draft agreement,” Peña said.
Several council members questioned details of the deal.
“As a council, we still have not seen the details,” District C City Council member Abbie Kamin, chair of the Labor Committee, said. “We still do not have the full financial analysis, but we’re having an almost three-hour committee meeting related to this because it is so important to the financial future of the City of Houston.”
“I agree,” replied Marty Lancton, president of the Houston Professional Fire Fighters Association. “Doing nothing would have put us in a situation far worse.”
Lancton said settling this case instead of going to trial saves taxpayers money and spreads the payments out.
“If there was a judgment, you would carry forward that liability immediately on July 1,” he said.
The Texas attorney general, Houston City Council, and District Judge Lauren Reeder must approve the settlement agreement.
City Attorney Arturo Michel hopes to finalize the deal before July 1, when the 2025 fiscal year begins.