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Mayor Sylvester Turner unveiled his $6.2 billion proposed Fiscal Year 2024 budget on Tuesday, his last tenure as Mayor, and said the budget is in better shape than when he first took office in 2016.
The FY 2024 budget includes a 3% pay raise for municipal workers, including police, and a 6% raise for firefighters. This would be the fire department's third pay raise in three years. The Houston Police Department will get the biggest piece of the budget pie compared to any other city department, receiving $1.6 billion of the general fund.
"It is the best budget that we've presented in eight years," he said "It’s the final one, but it is also the best one."
The proposed budget is a $379.2 million increase compared to 2023's budget. The city's budget is divided into a General Fund, which is tax-supported, and an Enterprise Fund, which accounts for city operations like the Airport System and Public Works.
The General Fund has a spending balance of $2.9 billion, an increase of $120 million from 2023’s budget. Turner noted that the ending fund balance would result in saving $401 million.
"This represents the strongest fund balance in recent history for a proposed budget," Turner said. "This budget fully funds the Budget Stabilization Fund, representing more than $20 million and this budget does not draw down from the fund balance and does not include any one-time land sales or deferrals."
The budget would utilize $160 million from the American Rescue Plan Act (ARPA) – funding the city has used to help maintain critical services that would have otherwise resulted in employee layoff and cut city services due to the COVID-19 Pandemic. Turner said Houston and other cities heavily relied on federal funds, but the city would have still maintained its current financial position without it.
"Even in the absence of the ARPA funding, the city would have been able to balance the fiscal year 2024 budget by drawing down from the fund balance with the assistance of the ARPA funding," Turner said.
The city has been working to cut down on debt by achieving a historic pension reform through Turner's administration that reduced a $8.2 billion liability to $2.2 billion. The city is establishing a $10 million trust fund to help reduce liability quicker.
This is the first year the city will operate with an outcome based budget that focuses on allocating funding for citywide programs and services based on outcomes or results. The city released a survey in December with about 2,500 Houstonians rating how important the city's top priorities are to them, and 70% of survey takers agreed that public safety tops the list. In a budget meeting last month, Finance Director Will Jones said it’s important for citizens to know where their money is being spent.
"My vision for the city is to transform the way leadership’s make decisions on the allocation of financial resources by focusing on expected results and outcomes of city services,” he said.
Controller Chris Brown, the city's Chief Financial Officer, gave Mayor Turner his praise for establishing the new trust fund, and healthy fund balance, but he told Houston Matters, the city still has a challenge with its structural imbalance budget.
"Every year, we spend more than we take in revenue," he said. "We've had eight years to deal with that issue."
Brown said eight years ago, the imbalance was at $150 million and with this budget, it sits at $160 million. The city sometimes addresses such imbalances by selling capital assets, like the Compaq Center to Lakewood Church. The city received over $1 billion in federal funds which has helped with the financial crisis, but Brown said it was a one-time grant.
"Anytime you have a one-time financial source and you use that for recurring expenditures in the future, it presents a challenge," he said.
Budget Hearing Workshops kicked off Wednesday. Each city department will get an opportunity to present their own individual proposed budgets to council members and the public over the next few weeks. A public hearing is set for May 31 at 9 a.m. at City Hall on the proposed budget.
Council will adopt the new budget in June and it takes effect July 1st.
