At-Large Position 4
City Council Approves FY18 Budget
May 31, 2017 --Today, by a vote of 16-0, City Council approved the City of Houston's budget for Fiscal Year 2018 (FY18), which begins July 1, 2017 and ends June 30, 2018. The total approved budget amounts to approximately $5.2 billion, of which, approximately $2.38 billion in expenditures are allocated to the tax-supported General Fund. It is important to note that pension reform and a litany of reductions across departments helped address the estimated $130 million General Fund operating shortfall that would have adversely impacted FY18.
The FY18 General Fund Budget contains expenditure reductions and efficiency measures designed to help resolve the City's financial challenges. Each City department and the Mayor's Office participated in "shared sacrifice" by taking such actions as eliminating unfilled vacancies in personnel, reducing supplies and frequency of services, and agreeing to cuts to retirement benefits as part of the historic Houston Pension Solution, among other measures. In fact, the Houston Pension Solution ultimately will result in approximately $2.8 billion in cuts across the pension systems for police officers, firefighters, and municipal workers. Consistent with the FY17 budget process, the departments linked their FY18 budgets and initiatives to the core strategies outlined in Plan Houston, the City's general plan.
The FY18 Budget also includes funding for Houston's Enterprise Fund operations, such as: Aviation, Convention and Entertainment Facilities, and the Combined Utility System. Unlike the General Fund, Enterprise Funds are not funded by property or sales taxes; rather, these funds are covered entirely by user fees or other dedicated revenue sources.
Council Member Edwards submitted amendments to the FY18 Budget designed to push the City towards fostering more innovation, achieving financial stability, and acting with strategic purpose for the benefit of all Houstonians. Council Member Edwards' amendments (as approved by City Council) are listed below in their entirety.
- In order to cultivate innovation in a manner that enhances quality of life for Houstonians and helps brand Houston as a smart city of the future, the City of Houston may adopt, through future grant funding, a Smart Cities Initiative Strategic Plan within Fiscal Year 2018 that identifies its objectives, and its strategies for establishing partnerships and grant funding for the use of smart city technologies.
- In an effort to safeguard against the adverse impact of unexpected multi-million dollar lump sum settlements owed by the City of Houston (within a fiscal year) resulting from residential or commercial property tax disputes with the applicable appraisal districts, the City of Houston may seek to enter into Memorandums of Understanding (MOUs) with the applicable appraisal districts in Fiscal Year 2018, to formalize a process of notification by which the appraisal districts provide to the City of Houston notice of any large scale property tax refund litigation that may have a multi-million dollar impact in a particular fiscal year, so that the City of Houston may have the opportunity to negotiate and enter into multi-year settlement agreements, as needed, rather than lump sum settlements or payments.
- In order to increase transparency and allow for increased oversight of the City's finances, the City of Houston Finance Department shall analyze each Special Revenue Fund to evaluate the following: (1) the source of revenue within the Special Revenue Fund; (2) the manner in which the Special Revenue Fund was created; and (3) the use of such funds within the Special Revenue Fund. The Finance Department also shall provide recommendations regarding the continued use of each Special Revenue Fund. The Finance Department's review of the Special Revenue Funds shall be presented to the Budget and Fiscal Affairs Committee no later than the end of FY2018 Q2 or September 30, 2017.
City Council also approved other amendments to the FY18 Budget related to the following:
- Restoration of Council District Service Funds to $1 million per district council office;
- Elimination of administration fees and service charges to Council District Service Fund projects when the City of Houston already performs the service;
- Identification of Market Based Revenue Opportunities;
- Discontinuation of the use of the Dedicated Drainage and Street Renewal Fund to reimburse developers for new Chapter 380 Agreement properties;
- Requirement of unanticipated Fiscal Year 2017 department budget savings to return to the General Fund balance;
- Establishment of a mechanism to reimburse The Heritage Society (THS) for any lost revenue from non-THS events planned or permitted by the Mayor's Office of Special Events at Sam Houston Park;
- Exploration of expansion of the Safe Sidewalk Program to include curb, gutter, and culvert repairs;
- Inform City Council, via Requests for Council Action, of the utilization of drainage utility charges to fund Public Works & Engineering projects, the Rebuild Houston program, or any related projects.
With adoption of the FY18 Budget, Mayor Turner, City departments, and City Council concluded a multi-week period of budget workshops and discussions, during which each department budget was reviewed carefully to ensure the implementation of smart cost saving measures while also providing for the continuation of vital City services. Thank you to all the staff members involved in ensuring the success of the FY18 Budget!
The FY18 budgeting process was accompanied by a pivotal turning point in Houston's financial trajectory - the Houston Pension Solution. The Houston Pension Solution is one of many strategies that will be utilized to achieve long-term financial stability for the City. It provides for a fair and balanced answer to the City's longstanding, complicated pension challenges. The City also looks forward to the forthcoming PFM recommendations for the Ten Year Financial Plan that will include strategies for increased efficiencies and appropriate investment to ensure the City's long-term, strong fiscal health.
The final text of the approved FY18 Budget will be posted online in the coming days.
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