Mayor Sylvester Turner presented his proposed FY 2021 budget on May 12, closing a $169 million gap caused in part by the COVID-19 pandemic.
The proposed budget for all funds total $5.1 billion, an increase of $62.2 million or 1.2%. The proposed General Fund budget of $2.53 billion reflects a decrease in spending by $22.17 million or 0.9 percent from the FY 2020 Current Budget of $2.55 billion.
Pre COVID-19, the City experienced a modest growth in sales tax revenue in FY 2020 and anticipated another conservative 2% growth in FY 2021. As a result of COVID-19, the City will experience a cumulative estimated loss in sales tax revenue of approximately $107 million during both FY 2020 and FY2021. This combined with decreases in other revenue sources, will have a significant adverse impact on city services.
"We are presenting a budget that does balance, even in a very uncertain time. We are obligated to balance our books. We are doing that," said Mayor Sylvester Turner. "It's the toughest budget we've had to put together since I've been mayor in January of 2016."
To make up for a $169 million budget shortfall, the city will draw down $98 million from the general fund balance and exhaust the $20 million Budget Stabilization Fund, better known as the rainy day fund, which will leave the City in a precarious position in the upcoming hurricane season.
Other measures to close the gap include:
- Furloughing 3,000 municipal employees for a maximum of 10 days saving the City $7 million. Fire, police and those who collect trash and recyclables will not be impacted.
- Deferring 5 police cadet classes saving $13.9 million
- $14.5 million in new revenue sources
- $13.7 million reduction in contingency
Unlike other municipalities, the City of Houston must operate under the property tax revenue cap while contending with the loss of revenues from COVID-19 in FY 2021 and beyond. Despite the tough financial challenges, this budget provides funding for overtime for police, three cadet classes for fire, funding for parks, libraries, trash pickup, and upgrades to drainage and streets.
The proposed budget also fully funds the costs of the police, fire and municipal pension systems.
"The proposed budget is extra, extra lean but it balances," said Mayor Turner. "It comes with some costs, sacrifices, and reductions in services. It is a tough budget and the work is not done."
City Council will hold a May 27 hearing on the proposed FY 2021 budget and consider the budget for adoption on June 3.
The new fiscal year begins on July 1, 2020.