Houston City Council recently approved my proposed $5.1 billion budget for the fiscal year 2021-22. A city’s budget says a lot about how it prioritizes people and services, and I am proud that the FY 22 budget is fiscally responsible and will deliver core services to our residents.
The budget includes police and fire cadet classes, a commitment to improving neighborhoods, addressing homelessness and encampments, implementing policing reform, and increasing the response to illegal dumping. It also provides the first of three 6 percent annual pay raises for our firefighters, and there will be layoffs of municipal employees.
This was the sixth budget that I proposed and passed as mayor and each one was different. In my first year, I inherited a $160 million deficit. But 2020 was a year like none other because the loss of revenue due to COVID-19, along with the city’s existing property tax revenue cap, combined to create a $201 million budget shortfall in the General Fund – the city’s largest deficit in recent history. The impact was in many ways worse than the financial hit we took from Hurricane Harvey.
Like most states and local governments across the nation, the City of Houston faced a record revenue loss due to the pandemic. Sales tax is one of our hardest-hit sources, with an expected $113 million cumulative loss for those fiscal years. Additionally, we projected $65 million in revenue losses from other sources such as Charges for Services, Parking Revenues, Mixed Beverage Tax, among others.
Thankfully, the city will receive $607 million from the American Rescue Plan Act (ARPA), signed into law by President Joe Biden on March 11, 2021. As a result, we were able to close our budget deficit, and it will put us on a steady foundation through the end of 2023. But for the dollars coming from ARPA, the city would not be able to do what we are doing to guarantee services and provide a firefighter pay raise.
The past year has been challenging for all of us as we have lived through a global pandemic. Fortunately, businesses have started to reopen, and events are once again being scheduled, and the impact on the city’s finances are slowly started to recover.
Now that the budget battle behind us I look forward to working on projects to keep moving Houston forward. Issues like affordable housing, street repairs and improving underserved and resourced neighborhoods remain my priorities. Stay tuned.
