April 15, 2016
Today I sent to Houston City Council a proposed Fiscal Year 2017 General Fund budget that eliminates a projected $160 million shortfall that was the result of cost increases, voter imposed revenue limitations, a broken appraisal system and the economic downturn. At $2.3 billion, this budget totals about $82 million less spending than the current FY2016 appropriation. This is especially significant when juxtaposed against the $60 million of contractual and mandated cost increases we are forced to cover in FY2017.
This was the largest fiscal challenge the City has faced since before the Great Recession. By bringing all parties to the table to engage in shared sacrifice, we have closed the budget gap and started addressing the long-standing structural imbalance between available revenues and spending. Each City department, the employee unions, the Tax Increment Reinvestment Zones, City Council and various other parties have worked together to identify cost savings and efficiencies while preserving a healthy fund balance, minimizing employee layoffs and maintaining the city services I know each of you rely on and deserve.
This budget was balanced using both recurring and non-recurring initiatives. If non-recurring items had been taken off the table, there would have been drastic cuts in City services and another 1,235 City employees would have lost their jobs. I was not prepared to do that to the residents of this great City or our municipal workforce.
How we closed the gap:
- The tax increment reinvestment zones will send an additional $19.6 million back to the City to help cover increased operating costs citywide.
- Savings from debt refinancing and other restructuring
- Streamlined operations, eliminated redundancies and forced greater efficiencies to generate savings and reduce costs
- A $10 million contribution from the City's fund balance. Even with this fund balance contribution, the City's savings account will remain well above the threshold necessary to satisfy the credit rating agencies.
Less than 40 layoffs are planned and 54 vacant positions are being eliminated, but there will be no layoffs of police or fire fighters and no significant reductions to park and library operations, which have been hit hard in the past. There is funding included for an additional police cadet class, for a total of five classes and I am working with the police chief to find ways to get more officers back on the street.
I am urging City Council to resist the urge to tinker with this budget proposal. Even one small change will upset the delicate balance we've achieved as a result of shared sacrifice and put the City at risk for a credit rating downgrade. It could also force more layoffs. This plan prepares us for the additional fiscal challenges anticipated in FY18 while also improving public safety, increasing employment opportunities and meeting the critical needs of the less fortunate in our city.
There will be more discussion in the weeks ahead. A vote by City Council is scheduled for May 25, 2016.