Houston Mayor John Whitmire unveiled a $7.5 billion budget proposal this week that his administration is calling a structural reset for the city’s finances, but the plan is already facing sharp pushback from the city’s controller.
The proposal centers on two significant funding changes: designating the city’s solid waste department as a municipal utility, which would trigger a $5-per-month administrative fee for roughly 400,000 residential customers, and establishing a right-of-way rental fee on Houston’s water and wastewater utility. Together, the two revenue streams are projected to eliminate a general fund deficit of more than $200 million in the upcoming fiscal year.
Whitmire framed the moves as long-overdue structural corrections rather than new burdens on residents. “State law says you cannot provide a utility, which solid waste is becoming, without a charge. It could have been $2. We did the very minimum of 5,” he said. The fee is expected to generate roughly $24 to $25 million annually and would remain fixed for the first two years, with any increases requiring city council approval.
The right-of-way component carries considerably more financial weight.
Houston’s water and sewer system would begin paying a 5 percent fee on gross revenues for occupying public streets, something every other major utility operating in the city already does. “CenterPoint’s a utility and they pay a right-of-way fee. AT&T, Comcast, they pay right-of-way fees,” said Steven David, the mayor’s deputy chief of staff. “We have never made our wastewater and sewer utility be accountable to the same right-of-way occupancy rental fee into the general fund.”
At 5 percent, that fee would generate roughly $104 million per year.
David said internal memos dating back more than two decades recommended the move, and that the rate was chosen deliberately. San Antonio charges 4 percent; Dallas charges 6. Houston’s proposal lands in the middle, and the administration wants to act before the Texas Legislature potentially caps such fees in the next session.
City Finance Director Melissa Dubowski described the changes as straightforward modernization. “Electricity, natural gas, cable TV utilities, all of those are paying the right-of-way fee already,” she said. “This is really just bringing in that last utility to modernize how we charge that fee.”
The water utility’s financial cushion made the fee more viable, David explained. The system currently holds roughly 550 days of operating revenue, well above the city’s 300-day policy requirement, with a debt coverage ratio of 215 percent against a required threshold of 120 to 135 percent.
Beyond the new fees, the budget preserves all existing city services and avoids layoffs, according to the city.
It funds five police cadet classes and 11 firefighter cadet classes, allocates $31 million to drainage improvements from the general fund, and includes $12 million in efficiency savings. Whitmire also pointed to elevated overtime costs in public safety as a reflection of current demands, citing frequent large-scale protests as one factor requiring additional staffing resources.
Eleven of the city’s 16 council members stood behind Whitmire at Tuesday’s announcement, including Budget Committee Chair Sallie Alcorn, who called it “something new and different and, I think, really maximizing the resources that we already have.”
City Controller Chris Hollins was not among them.
Hollins, who has clashed repeatedly with Whitmire over budget matters across the past two years, called the proposal financially reckless and said it obscures the true cost of city services. “This budget shifts costs onto working families. It hides the price tag of city services, and it puts Houston on a dangerous financial path,” he said.
Hollins also challenged Whitmire’s claim that last year’s budget was balanced through efficiencies, pointing to a significant drawdown in the city’s reserve funds.
The controller’s office has projected that the city’s fund balance, essentially its savings account, will fall below $300 million by the end of the current fiscal year in June, leaving roughly $77 million in cushion before dropping below the minimum threshold required by city code. A dip below that floor could threaten Houston’s credit rating.
Houston is staring down a projected $381 million budget gap in fiscal year 2029, growing to $446 million the following year. “I can close a $100 million budget gap,” David said. “I cannot find $381 million. And that’s the problem.”
Whitmire pushed back on concerns about long-term sustainability. “We are not kicking the can down the road in my administration,” he said.
Department heads will present their funding requests throughout May, with committee hearings and possible amendments to follow. A final City Council vote is scheduled for June 3. If approved, the new fiscal year begins July 1.
