Houston's top finance official says he may not certify city's next budget as deficit grows
HOUSTON, Texas (KTRK) -- Houston's top elected finance official told Houston City Council on Wednesday that the city may run out of money within the next several months.
Controller Chris Hollins told the body that he may not certify the city's next budget, which would prevent it from passing unless the city reverses course.
The city is in a fiscal bind following a recent court opinion. The ruling, which Hollins described as a "real gut punch to the City of Houston financially," comes on the heels of other pricey ordeals including the firefighters settlement, the May derecho, and Hurricane Beryl.
Back in 2010, Houston voters approved diverting a portion of their tax dollars each year to fixing streets and drainage. In 2019, the city was sued by two engineers who accused officials of manipulating the approved allotment formula to substantially short change the program.
PREVIOUS REPORT: Houston ordered to spend money it doesn't have on street, drainage improvements after losing lawsuit
"This lawsuit goes back to 2019, five years ago. It's not a surprise to anyone. In fact, I think most of us support the premise of the lawsuit -- that we need to spend more money on roads and drainage. The real disappointment is that it was not addressed and negotiated when it was filed," said Mayor John Whitmire.
The city dragged the suit through court, something several officials have publicly acknowledged was a strategy intended to delay payout. Last week, the state's highest court, the Texas Supreme Court, rejected the city's request to appeal.
Hollins said the decision means the city now must come up with an additional $100 million each year. City Attorney Arturo Michele told the council his interpretation of the suit is that the money is due by June.
"I will publicly acknowledge that we're in contact with the plaintiffs and we are meeting with them to see if there's a timetable that can be adjusted," said Whitmire.
Prior to the ruling, Hollins said the city was spending north of $200 million more this fiscal year than it was bringing in. The suit now balloons that deficit to more than $300 million. Hollins said there is nearly the same amount in what he refers to as "the city's equivalent of a savings account." City Finance Director Melissa Dubowski has also provided similar, though slightly less extreme predictions.
"That means simply that we are going to run out of money," Hollins told the council.
On Wednesday, Hollins called for the formation of an "Emergency Task Force" to address the issue. He said the team should be comprised of himself, the mayor, and the two officials heading the city's Budget and Fiscal Affairs Committee.
Notably, Hollins did not include Dubowski in his blueprint for the plan. Hollins is the city's top elected finance official. Dubowski is the city's top finance official appointed by the mayor. Several officials told ABC13 they viewed the absence of Dubowski's name as a snub to Whitmire. Public tension and fighting between Whitmire and Hollins has long been reported.
"Mayor, we've had our differences," Hollins acknowledged during council Wednesday.
The mayor dismissed Hollins' public request to form a task force as a political stunt.
"My team is competent and fully engaged in addressing this issue. Controller Hollins needs to stop playing politics with a serious matter. This challenge didn't begin in 2019. It's one my administration inherited. I ran for mayor to fix Houston, and that's exactly what we're doing," Whitmire told ABC13.
Budget and Finance Committee Chair Sallie Alcorn and Vice Chair Mario Castillo told ABC13 they were open to the idea of a task force, but felt Dubowski should be included.
You can read their full statements below:
"I am open to participating on a task force to explore available options to address the city's significant budget shortfall. This task force should also include the city's finance director. Further, in coming weeks, we should have a better idea of the Whitmire administration's plans to tackle the shortfall, including the Ernst and Young recommendations," said Alcorn, referencing an Ernst & Young audit analyzing city spending and services. Officials promise the audit's results will be released within the next month.
"As Vice Chair of the Budget and Fiscal Affairs Committee, I would be more than willing to participate in a task force aimed at addressing our structural budget deficit. I agree with Council Member Alcorn that the City of Houston Finance Director should be part of this effort. This is a longstanding issue, and we need to find real and innovative solutions to resolve it," said Castillo.
