Houston City Council Notes, prepared by Emily J Hynds

Notes on the Houston City Council Meeting on June 3 and June 4, 2025

Budget Meeting Part 2 of 3

Agenda

1. Public Comment
2. Monthly Financial Report
3. Mayor’s Report
4. Consent Agenda (items that require a vote, like purchases, resolutions, ordinances, etc.)
5. Council Member Pop-Off

*These notes cover the monthly financial report and non-budget agenda items. If you’re following along for budget stuff, there is much budget talk during the monthly financial report. Notes on the budget discussion and vote are forthcoming.

Monthly Financial Report

Controller Chris Hollins and Finance Director Melissa Dubowski both made their respective reports, each with more commentary than usual because it was budget day.

Controller Hollins projects an ending fund balance of $354M, which is $26.8M lower than the finance department’s projection. Hollins’ remarks on the proposed budget:

• The budget process fell “short of what Houstonians deserve.” He said his office did not receive the proposed budget with enough time to review. “No successful private company in the world would hold its CFO out of that process for that long, or would hold this board, which is you all, out of that process for that long.”
• He said the budget is not structurally balanced, contains a projected shortfall of over $100M, and includes a property tax rate increase and a water rate hike.
• Controller Hollins addressed pension bill HB2688.
  • His office had no clue about the bill until the bill was already on the way to be signed. Hollins said this bill has billions of dollars in potential financial impact for years to come and implied it could threaten the secure retirement of police and firefighters.
  • He complained that his office and City Council were not consulted and said the city has not conducted its own analysis to determine potential cost. “I take no comfort in statements that actuarial people have said that this bill is cost neutral. We’ve seen how those assumptions can unravel if market returns are just half a percent lower than what’s being projected.”
  • “City Council needs to understand the implications and have a voice in approving any changes to this critical aspect of city government before a lawmaker in Lufkin or Odessa makes billion dollar decisions on our behalf.” He urged the mayor “to lean on your relationship with the governor to hold off on signing this bill into law until a third party actuarial review is complete and Houstonians and this council have been given an opportunity to weigh in.”
• Hollins said the proposed budget “is based on a 9% increase in property tax revenue, while property valuations as of now are only expected to rise by about 2%. That gap means a tax rate hike of at least 5-8% would be required to make the math work. Last year, council also passed a budget that would have required a tax increase to reach revenue projections, but you ultimately held the tax rate steady. Those decisions coupled together resulted in increasing the city’s budget deficit by $50 million.”
  • Hollins admitted that an opportunity to “true up the budget” with property tax rates will happen in the spring. “My hope is that by then we haven’t seen a credit downgrade.”

Finance Director Dubowski predicts an ending fund balance of $380M, which is $186M above the target. She responded to many of Controller Hollins’ statements.

• Director Dubowski defended the budget process, which included a Budget and Fiscal Affairs committee meeting, an extra week of review before budget workshops, the 20 budget workshops themselves, and two town halls. She called Hollins’ remarks on the process disingenuous.
• “We certainly are drawing from the fund balance to close the remaining budgetary gap. But what [Hollins] failed to mention is that this proposed budget actually has a [2%] expenditure decrease from the previous year.” Dubowski attributed the decdrease to efficiency savings, voluntary retirement, and consolidation.
• Regarding the property tax rate, Dubowski said, “To say that there’s going to be a tax rate increase at this point in time is incredibly premature. The timing of our fiscal year and the timing of when we set the tax rate, which is dictated by state law, definitely creates a situation where we do the best we can with the budget, and we’ll true up the estimate” in the spring.

• “He talks about a water rate increase of 6%. What he doesn’t mention is that this rate increase was approved by City Council back in 2021.”
• Dubowski disagreed with Hollins’ claim that the budget will reduce services. She said that each department director said all department savings are coming from efficiency implementation.
• “He mentions that there’s vague savings with no explanation. He must have missed when we rolled out the Ernst & Young citywide efficiency study.”
• Dubowski said that overtime will decline as vacancies are filled.
• The city is “following the cost corridor mechanism” for pension funding. I think this means that the city is doing what it said it would do during pension reform in 2017.
  • Hollins interrupted her to ask, “What about OPEB?” Dubowski looked firmly at him and said, “This is my time, Controller.”
  • OPEB stands for other post-employment benefits and includes life and health insurance. The city enacted OPEB reform in 2022, which is still ongoing. Dubowski referred to an OPEB trust budget amendment proposed by CM Alcorn, which is supported by the administration, and will take steps to address the city’s OPEB debt.
• More zingers from Dubowski: Regarding Hollins’ claim the city will shift funding for some core services to water bills, she said, “I think he is confused about the details.” She said Hollins’ claim that the city is risking a credit downgrade is based on “questionable assumptions.”
• Regarding HB2688, Dubowski said it was discussed at the BFA committee on Tuesday (the day before this meeting) and that it would not undo pension reform. Even though it was not a city-initiated bill, Dubowski said they have been following it and engaged an actuary to analyze it. (I think an actuary is an independent consultant). The administration thinks it will be cost neutral.
  • Much discussion on pension reform ensued, much of which was over my head. They talked about HB2688, DROP accounts, DROP bills, actuary analyses, smooth averages, deferred gains, and more.
  • Mayor Whitmire had some stuff to say.
    • He explained the Texas legislature process.
    • He said that pension reform was not on Houston’s legislative agenda, so the city’s lobbyists didn’t track it.
    • He described HB2688 as a “cost neutral package” that evolved late in the session. The bill was vetted and approved by the Finance Committee and the committee’s chair, Joan Huffman. I looked her up on the internet and encourage you to do the same.
    • Whitmire praised Houston’s former mayor Sylvester Turner for pension reform in 2017.
    • “We did our due diligence. The pension review board in Austin approved it as cost neutral to Houston.” Dubowski approved it as well, and Whitmire said, “No one can be more protective of the city’s finances than Melissa.”
    • “The misrepresentation and the politicizing of people’s lives and careers is unfortunate.”

After Director Dubowski and Controller Hollins made their reports, several CMs had remarks.

• CM Pollard called attention to an “alarming” five-year forecast that points to a possible $500M deficit. He asked for a stated plan that directly discusses this issue, something that has been promised but never delivered.
• Whitmire, again talking about HB2688, referred to Senator Joan Huffman as a “Houston State Rep and probably the most powerful senator,” two reasons to trust her, apparently. He dismissed a Houston Chronicle article and called their sources “so-called experts.” He went on, “The time to oppose legislation is when it’s going through the process. Not a one of them said a word.” He agreed the five-year forecast is concerning, but implied that it always has been.
• CM Kamin said the city’s Budget Stabilization Fund, aka the rainy day fund, is underfunded and that individual departments do not have funding for disasters. She asked questions about this budget’s overtime estimates, saying we will need to draw from the general fund to cover it if (when) the city goes over budget. Dubowski disagreed and argued that filling vacant positions will reduce overtime expenses. Kamin suggested the city align its fiscal year with the Harris County Appraisal District, that way they wouldn’t need to “true up” in the spring.
• When CM Castex-Tatum asked Controller Hollins his opinion on HB2688, he said, “I don’t have an opinion on that because I have not seen any analysis whatsoever. That’s what we’re asking to see.”

Agenda Items, Selected Works

• Item 2 accepted final work and approved the final payment of $20M for improvements to the chlorine system at the East Water Purification Plant.
• Item 5 approved $93K for medical transport chairs for the fire department.
• Item 8 approved $96K for two mobile handheld detectors that provide “detection, identification, and analysis of both solid and liquid materials” for the fire department.
• Item 11 approved $55K for a one-year renewal of investigative database software for HPD.
• Item 14 approved an $825K contract with Career and Recovery Services for a two-year term. From the support doc: “Career and Recovery Services provides employment and on-the-job training and support services and opportunities for people with high barriers to work through the UpRise program, which operates as a Transitional Employment Program. CRR will begin working with the Parks and Recreation Department to staff seasonal work, including mowing, trimming, and debris removal.” If successful, the city could expand the program to Solid Waste.
• Items 16 and 19 approved grant agreements with the Federal Department of Housing and Urban Development (HUD). $1M will go to plumbing repair at West Gray Multi-Service Center. $850K will go to improvements to the community center at Mason Park. $573K will fund the construction of Rasmus Park Heritage House.
• Item 17 approved $139K to support housing for people with HIV/AIDS.
• Item 18 approved the submission of the city’s 2025-2029 grant funding plan to HUD. The plan projects ~$51M in federal funding, including programs for homelessness and affordable housing.
• Item 20 modified the loan to MacGregor GroceryLLC, the company that owns the MacGregor HEB, financed by the Houston Housing Finance Corporation (HHFC). The original loan anticipated that the county would exempt the property from property taxes. Ultimately, MacGregor Grocery LLC was not able to obtain a tax-exempt status from the Harris County Appraisal District and could not make their monthly loan payment. The city proposed a “deferred payment structure to ensure that the City will be repaid at a future date. The deferred payment will replenish the Economic Development Initiative (“EDI”) revolving loan fund when it is repaid.”
  • CM Ramirez thanked the partners that worked on this. He said they “dug deep” to find a deal that would benefit the city. Eventually, the repayment of this loan will result in $7M available for similar projects.
• Item 26 approved $888K for architectural services for the community center at Sylvan Rodriguez Park.

The rest of the meeting…

• Most of today’s 9 hour meeting was taken up by budget-related discussion. See the next installment for those notes.
• Almost every council member agreed to skip pop-off today. The Mayor wished his former Chief of Staff Chris Newport a fond farewell.

Who took these notes? And what resources did they use?

My name is Emily Hynds. I am a writer, small business owner, producer of the monthly storytelling series Grown-up Storytime, and lifelong Houstonian. I am not a journalist or government official. I am a local government enthusiast who believes meaningful change starts at home. These notes are presented from my point of view and with my framing and are not comprehensive. Your notes will certainly be different and I would love to read them if you attend.

I watched this City Council meeting via HTV: https://www.houstontx.gov/htv/

While compiling these notes I used the following sources:
https://houston.novusagenda.com/agendapublic
https://houwatch.com
https://www.houstonchronicle.com/politics/houston/article/legislature-whitmire-police-firefighter-pensions-20351119.php

You can find your City Council Member and their contact info at: https://www.houstontx.gov/council/whoismycm.html

Thank you to the volunteers who proofread these notes.
My Patreon is patreon.com/emilytakesnotes.