As in years past, Houston’s upcoming budget is expected to face a shortfall of between $160-200 million, and the administration is now laying out a plan to address it. 

In this month’s financial report, Houston Finance Director Melissa Dubowksi—who was appointed in January by Mayor John Whitmire to serve as the finance director after having served as the deputy finance director since 2019—told council members to expect a shortfall of at least $160 million in the upcoming fiscal year 2025 budget. 

“This gap is going to necessitate us to use proactive measures to ensure financial stability,” she said.

She said the administration has asked all departments, except police and fire, to provide, in preparation for the budget cycle, a template of what a 5 percent reduction to their department budget would look like. She also said they are looking at service consolidation, eliminating vacancies, and finding additional revenue sources to close the gap. In addition, they would consider a public safety exemption for Houston’s property tax cap, “other enhancements to property tax,” along with other fees. 

While the current gap is $160 million, Dubowski said that if a resolution can be obtained with the firefighters, that could also be added to the fiscal year 2025 budget. In his post-council press conference, Mayor Whitmire said the budget gap could be as much as $200 million. 

In 2004, well before the state implemented the property tax cap, Houston voters petitioned the city and passed its own cap that limited property tax growth to the combined rate of population and inflation growth or 4.5 percent, whichever is the lower of the two.

In 2006, they amended it to allow the city to collect more for the sole purpose of public safety. That is the same policy Dubowksi is considering. 

The administration plans to release the proposed budget in mid-May, at which time the council will set a formal date for the public hearing.

Department budget workshops for the council and the public will take place during the second half of May. They will vote on the budget in early June just ahead of the July 1 start of the 2025 fiscal year. 

Charles Blain

Charles Blain is the president of Urban Reform and Urban Reform Institute. A native of New Jersey, he is based in Houston and writes on municipal finance and other urban issues.