Following a Texas Supreme Court ruling denying the City of Houston’s appeal of a decision ordering the city to spend $100 million more on water drainage infrastructure, City Controller Chris Hollins warned that without significant cuts or increased revenue, he might not be able to certify the fiscal year 2026 budget this coming June.
Houston was already facing a roughly $220 million budget deficit because of a structurally imbalanced budget.
Mayor John Whitmire is conducting a citywide efficiency audit to produce savings and offset general fund expenses by pushing Houston Metro to take on the role, or assume costs, of certain street repairs.
The city has until June 30, the end of the fiscal year, to secure the initial $100 million. However, City Attorney Arturo Michel said there’s “still an opportunity for rehearing.” Whitmire told council members he is speaking with the plaintiffs to see if the two groups can agree to extend the payment timetable.
Hollins wants the mayor to create a task force to tackle the problem, including the mayor, controller, and the chair and vice chair of the Budget and Fiscal Affairs Committee.
During last year’s budget workshops, Councilmember Abbie Kamin brought this issue up, asking Finance Director Melissa Dubowski whether or not the administration’s 2025 budget included a set-aside amount for the looming payment if the city were to lose in court. At the time, Dubowski said, “no we haven’t and to your point, in FY25 that would add approximately $100 million to the budget gap.”
Now they are left to identify what could be a $320 million budget deficit in fiscal year 2026.
“We’re going to run out of money; now we knew this was coming,” Hollins said. “Warnings were shared, and necessary preparations could have and should have been made, and yet, despite our repeated messages about kicking the can down the road, here we are. We are down the road, the can is at our feet, and now we’re starting to run out of road.”
