By Houston Chronicle
If you thought Mayor Sylvester Turner’s $1 billion pension bond issue solved all of Houston’s budget problems, think again.
A newly released consultant’s report offers a grim assessment of the city government’s financial future: Houston is on track to spend $1 billion more than it will take into its coffers in the coming decade. The city will have to dramatically cut spending and raise revenue to balance its budget. Otherwise it will eventually face insolvency, triggering layoffs in the city workforce, a shrinking police department and a general decline in services.
The city paid an outside consultant, PFM of Philadelphia, $565,000 to take a hard look at municipal finances. We won’t dwell on the fact that this is a job we’re already paying the mayor and city controller to do. But we will point out that this report highlights the need for some fundamental changes in the way Houston’s city government does business.
Take, for example, the recommendations for the city’s fire department. The report suggests saving up to $40 million a year by changing the structure of firefighters’ schedules, going from four shifts down to three. Fire Chief Sam Peña says that would require his people to work longer hours, but it could also allow him to raise firefighters’ pay, deploy more ambulances and provide more training without raising the budget.
The Houston Fire Department is long overdue for fundamental restructuring, because it’s now mostly an ambulance department that responds to many of its emergency medical calls in firetrucks. Today about nine out of every 10 calls to HFD are for emergency medical help. Figuring out the most cost effective way to provide fire protection and ambulance service in the 21st century is an essential part of any serious discussion about the city’s financial future.
The dire picture painted by this report is also further evidence that Houston needs to repeal its revenue cap. If you’re new to Houston or you haven’t followed this complicated mess, you should know that the nation’s fourth-largest city has its hands tied when it comes to raising money for municipal government. An arbitrary algorithm dictates that if the city takes in more than a certain amount of property tax revenue, it has to cut its rate. Homeowners get a few extra bucks, but the city government loses a fortune. A couple of the nation’s biggest bond rating agencies, Moody’s and Standard & Poor, specifically cited the revenue cap as one of the reasons they downgraded Houston’s credit rating a couple of years ago. Nobody likes paying property taxes, but Houston needs to get rid of the cap.
Meanwhile, there’s no cap on tax increment reinvestment zones that suck up millions in property taxes to spend on questionable endeavors.
And as this consultant’s analysis makes abundantly clear, the landmark pension deal painstakingly negotiated by Turner was no panacea. Two years from now, the city government is projected to spend just as much on pension plan contributions as it did two years ago. And the costs just keep on rising, albeit nowhere near as drastically as they would have without Turner’s deal making. Constantly escalating pension costs cannot be a permanent fixture in Houston city budgets.
Our city government spent more than a half-million bucks on this report. The mayor and City Council shouldn’t just set it on a shelf and watch it gather dust. Some council members have already expressed dismay that the upcoming municipal budget doesn’t implement enough of the recommended reforms.
As this report clearly explains, City Hall needs to make some difficult decisions or face potentially ruinous consequences.