Houston spending less amid economic woes

October 17, 2008 4:33:32 AM PDT
Houston plans to push back some projects, tap into cash reserves and not borrow as much money through bonds because of the country's economic meltdown, city leaders announced Thursday. But Mayor Bill White reassured residents that Houston -- the state's largest city and the fourth-largest in the country -- is not experiencing a financial crisis of its own and said no services will be cut back.

"The city is in good financial shape," he said.

White and City Controller Annise Parker announced a plan to ensure the crisis doesn't hurt Houston in the future.

"So far the city's finances have weathered the storm pretty well," Parker said.

The city plans to use its cash reserves to finance short-term debt needs and not borrow money from the credit markets, which are "charging really exorbitant rates right now," Parker said.

While Houston will still need to borrow some money through bonds for its long-term debt needs, White said the city won't borrow as much as originally planned. The city will explore all alternatives, including going to commercial banks, when it has to borrow.

Even though Houston's credit rating on its general obligation bonds has been upgraded twice over the last 4 1/2 years, which would normally result in low interest rates, the opposite is happening because of the financial crises, White said.

The mayor said the city also plans to slowo down some of its capital spending.

"We are not going to cancel but push projects back," White said. "We are going to tighten our belt right now."

The mayor also asked all city departments to review their budgets and cut spending. So far, $20 million has been identified and that figure could grow to a couple hundred million dollars, he said.

The city is trying to be proactive and avoid having to make up for any shortfalls through a tax increase, said White, who is expected to run for higher office in 2010.

"We don't want to react after the fact," he said.

White credited the city's good financial condition to sound fiscal practices, which have included making sure the city built up its surpluses.

"We are going to be stronger than other major metropolitan areas," he said.

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