Houston City Council passes $6.7 billion budget, $1.5 billion firefighter deal in danger
HOUSTON, Texas (KTRK) -- Houston City Council passed its $6.7 billion budget on Wednesday.
"I think we all know we have challenges going forward, but there will be no fee increases or tax increases (for residents)," Houston Mayor John Whitmire said.
There is a $200 million shortfall for the fiscal year 2025 budget.
Controller Chris Hollins said the city would pull money from its "historically high" general fund, which he equated to a savings account, to fill the gap.
Hollins said approximately $450 million is currently in the fund, meaning the city is burning through more than 40% of its savings this coming fiscal year.
Whitmire said the city is conducting audits this fiscal year, and when they are complete, it will look for additional revenue sources for next year.
However, the above figures are contingent on the city's deal with the Houston Firefighters Union passing.
The council authorized $650 million in settlement bonds to fund the settlement. Hollins said the $650 million deal will cost taxpayers somewhere between $1.2 billion and $1.5 billion approximately over the next 30 years when accounting for interest.
However, the council was unable to vote on the agreement itself Wednesday because of Hollins.
Hollins must certify the agreement for it to appear on the council's agenda for a vote. To date, he has declined to do so.
"The action today that Council took is to authorize the issuance of funding judgment bonds. So, that allows us to move forward to go to the market to get Attorney General approval, but it still requires something to fund, which is the item that is not in yet," City Attorney Arturo Michel explained.
On June 5, Hollins declined to certify the agreement.
He said his office needed more time to review it. It was set to appear on the agenda on Wednesday.
However, on June 11, Hollins' office sent Whitmire's office a series of questions seeking additional information on the agreement.
Whitmire's office replied with a response that afternoon and more in-depth information late that evening.
Hollins asked several questions regarding negotiations that Whitmire's office declined to answer, stating the questions were outside the scope of Hollins' job and would require them to disclose information he was not legally privy to.
One response from Whitmire's office, which is referenced repeatedly, reads in part, "Pursuant to Art. V Section 7a. of the City's Charter, all administrative work of the city government is under sole control of the Mayor, which includes negotiations and settlements with our unions... my team and I are the only people - by Charter - who could be at the table negotiating on behalf of the City of Houston. This interpretation is not mine; I am acting in a manner consistent with that of previous Mayors. Due to that, questions concerning the negotiations themselves and concessions that were or were not made as part of the settlement of a lawsuit are prohibited from disclosure under Rule 408 of the Texas Rules of Evidence and Texas Civil Practice & Remedies Code Section 154.073 therefore, we will not be answering them."
Read the questions and responses in full here:
Both Whitmire and Michel said the controller is only responsible for certifying the $6.5 million in attorney's fees tied to the deal.
"We have compensation increases here. Obviously, the firefighters are getting more. There's a Texas Supreme Court case that states that it does not fall under the certification of the controller. In other words, the controller is not required to approve employee compensation increases. So, that's why we believe the only thing that remains is approving the attorney's fees," Michel said.
"The power entrusted to me by the people of the City of Houston is to be the taxpayer watchdog," Hollins, also an attorney, told ABC13, disputing their argument. "(Whitmire and his administration) Lay out some citations of the law, and they're wrong about the law."
Whitmire's office has said Hollins' actions may cost the public upwards of $500 million.
If the agreement is not approved by the council within the week, an extension must be granted by the judge handling the settlement.
If an extension is not granted, the judge has a number of options, including a judicial ruling or jury trial.
In any of those scenarios, state laws would change the agreement, likely doubling the price tag of the settlement, according to Whitmire's office and the firefighters union. The union has previously stated that they are owed $1.2 billion instead of $650 million when taking such requirements into account.
READ MORE: City of Houston moves forward with $650 million deal with fire union
"To expose us to a trial is jeopardizing public safety," Whitmire said.
The current deal uses public sector equivalencies for compensation. Under state law, private-sector equivalencies would be required.
Firefighters have also agreed to accept back pay as paid time off. If they were to receive the money as a pay increase, it would be pensionable. The current deal also bundled years. Separating those years would require the city to account for inflation and subsequent wage increases.
"This doesn't seem very difficult to figure out," Marty Lancton, president of the Houston Professional Firefighters Association, said. "Seems like it's politics that are getting played but at the end of the day, the controller knows exactly what he's doing. He's trying to posture himself to run against the mayor in three years. He absolutely knows there's a deadline in a week for the courts. So why is it instead of working with somebody that he's working against somebody in order to make a political point?"
In 2023, Hollins suspended his mayoral campaign, citing his support for Whitmire's unsuccessful challenger, Rep. Sheila Jackson Lee, and instead ran for controller.
"Nothing about this process has been political," Hollins told ABC13.
When ABC13 asked about accusations that his actions could double the debt the city is required to pay down, Hollins circled back to the questions the mayor's office declined to answer, stating he was not legally privy to the information.
"If the mayor believes that this timeline is important, the mayor is opening up the city to this exposure," Hollins said.
Whitmire has said if the deal does not pass and goes back to the court, it will not only cost the city more money but further impact department morale. As it stands, firefighters have worked without a contract for eight years. Whitmire, who pointed to recruitment issues, anticipates the settlement, if kicked back to court, would be tied up for years.
"There's been a mass exodus," Lancton said.
Hollins said if the firefighters deal fails, the city would still have a budget shortfall "in the ballpark of $100 million to $150 million."
