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Houston Mayor Turner Solves $160M City Budget Shortfall

Houston Mayor Turner Solves $160M City Budget Shortfall

“This was the largest fiscal challenge the City has faced since before the Great Recession,” said Mayor Turner.  “By bringing all parties to the table to engage in shared sacrifice, we have closed the budget gap and started addressing the long-standing structural imbalance between available revenues and spending.  Each City department, the employee unions, the Tax Increment Reinvestment Zones, City Council and various other parties have worked together to identify cost savings and efficiencies while preserving a healthy fund balance, minimizing employee layoffs and maintaining the City services our residents rely on and deserve.”

Due to an arrangement negotiated by the mayor, the City’s tax increment reinvestment zones will send $19.6 million back to the City to help cover increased operating costs citywide.  The rest of the budget gap was closed utilizing a combination of savings from debt restructuring, spending reductions, revenue from anticipated land sales and a small contribution from the City’s fund balance. Even with this fund balance contribution, the City’s savings account will remain well above the threshold necessary to satisfy the credit rating agencies.

The budget includes the elimination of 54 vacant positions and 30 to 40 layoffs, most of which the mayor hopes to accomplish through attrition.  There are no significant reductions to park and library operations, which have been hit hard in the past and there will be no layoffs of police officers or fire fighters.  There is funding included for an additional police cadet class, for a total of five classes and the mayor continues to look for ways to streamline operations to get more officers back on the street.

The budget was balanced using both recurring and non-recurring initiatives.  If non-recurring items had been taken off the table, there would have been drastic cuts in City services and another 1,235 City employees would have lost their jobs.

The recurring initiatives mark the start of institutionalizing a new way of running City government.  The elimination of redundancies and increased efficiency in operations has generated $36.2 million in recurring annual savings.  In addition, the TIRZs will continue to contribute at least $19.6 million in subsequent years. Yet to come is a new approach for the City’s pension liabilities.  Productive discussions are underway with stakeholders and I am committed to having an agreement ready to take to the legislature by the end of this year. 

“I strongly urge City Council to resist the urge to tinker with this budget,” said Turner.  “Even one small change will upset the delicate balance we’ve achieved as a result of shared sacrifice and put the City at risk for a credit rating downgrade.  This plan prepares us for the additional fiscal challenges anticipated in FY18 while also improving public safety, increasing employment opportunities and meeting the critical needs of the less fortunate in our city.” 

City Council is scheduled to vote on the budget May 25, 2016, nearly a month ahead of last year.  The new fiscal year begins July 1, 2016.  


Last Updated ( Friday, 15 April 2016 19:18 )

 

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