The city of Houston has developed something of an addiction to federal pandemic aid. But its supply of “free” federal dollars will soon run dry, leaving many worried about its fiscal future.
To date, the city of Houston has received more than $1 billion in pandemic aid through the American Rescue Plan. Much of this funding has been misspent, according to outgoing city controller Chris Brown, who said in July: “We use one-time financing sources to plug the budget.” On Monday, Brown reiterated this concern in a Houston Chronicle article, saying:
“…we’ve sold much of the land and assets historically used to plug the recurring deficit prior to receiving federal recovery funding and robust sales tax receipts. We similarly used this federal recovery funding—also a finite resource—to plug recent years’ deficits.”
Because of the city’s various fiscal abuses, the next mayor and city council will be faced with an onslaught of difficult decisions. In fact, it’s expected that by 2025 city leaders will be staring down a “structural budget deficit of up to $300 million.”
To get ahead of this coming crisis, Brown said the city could reduce next year’s budget to 2021 levels. Still others, like TPPF, this approach should be paired with a suite of other reforms, including: utilizing zero-based budgeting, undergoing a third-party efficiency audit, instituting a hiring freeze, pausing across-the-board pay raises for public employees, eliminating longevity pay, and stopping spending on nonessential functions, like taxpayer-funded lobbyists.
These are just a few ways that Houston officials can competently prepare for what’s ahead.
However, given its past handling of pandemic aid, no one should be surprised if Houston doesn’t prepare and instead walks blindly into the storm ahead. Assuming that’s the case, everyday Houstonians should expect to be left holding the bag in some way, be it through paying higher taxes and fees, receiving fewer core services, or some combination of both.
Indeed, the next few years are likely to be very challenging for the city of Houston. It has managed to keep spending at an elevated level by abusing ‘free’ federal money, but the party’s almost over and no one is going to like what it looks like when the lights come on.