Houston Budget & Fiscal Affairs Committee Town Hall - May 16, 2026

On May 16, 2026, the City of Houston Budget and Fiscal Affairs Committee held its second annual budget town hall at 10 a.m. (with a virtual town hall scheduled for May 20 at 6 p.m.). Chair Sally Alcorn and Vice Chair Mario Castillo led the session. Stephen David, Chief Strategic and Operating Officer for the Mayor's office, presented the FY27 budget outlook and proposed fiscal measures. The town hall included a detailed presentation followed by public questions and comments.

Public Comments & Testimony

• Russell (former government employee): Asked whether the proposed flat $5 solid waste fee and the right-of-way fee could be scaled by density or usage (e.g., denser neighborhoods paying less). David responded that future rate structures (like pay-as-you-throw) are under consideration but the immediate focus is on a low, flat fee to establish a revenue stream and improve service efficiency.
• Bob Fleming (Metropolitan Organization / Coalition of Churches): Summarized his understanding that the right-of-way fee's impact on the Combined Utility System (CUS) would be offset by reducing overfunded reserves (debt service coverage at 215% vs. required 135%; operational reserves at 550 days vs. 300-day policy) and the $5 solid waste fee, with water rate increases as a last resort. David confirmed and added that efficiency gains also help.
• Speaker (unidentified): Questioned whether the $200+ million drop in CUS fund balance simply moves the deficit from the general fund to the utility, and whether police costs (adding $100M/year) are being addressed. David acknowledged the temporary subsidy for solid waste and explained that police and fire costs are driven by state law, union contracts, and recruitment challenges; the city is now net positive in officers and firefighters.
• Bill (First Ward Civic Club / Environment Texas): Expressed support for a solid waste fee but urged the city to reject chemical recycling (advanced recycling) and the MOU with ExxonMobil and LyondellBasell, citing air quality concerns and fires at facilities. He requested the city not to implement a fee tied to incineration.
• Young man (downtown oil & gas worker): Asked about amending or repealing the city's self-imposed property tax revenue cap (Proposition 1/Proposition H) and about commuters not contributing to city taxes. David noted that every mayor has considered reform but backed off, and that suburban tax burdens are actually higher than Houston's.
• Karina (Fondren Civic Club): Asked whether landfill space costs are included in the trash fee (David clarified they are not, as third-party operators cover landfill costs). She also requested more transparency on consulting fees in the budget, noting the city's Open Finance portal. She asked about the right-of-way fee comparison: David said Houston's 5% is conservative compared to other cities.
• Joe Higgs (Metropolitan Organization): Asked about funding for demolition of dangerous buildings and the ditch reestablishment program. David said $30M was allocated last year for demolition (with $20-25M reverted due to slow process), and $50M is included for local drainage and ditch reestablishment this year. He noted 300 of 2,200 eligible structures are ready for demolition, but only 10 are being demolished currently.

Discussion Items

• Presentation by Stephen David: Covered the city's three fund buckets (Airport Enterprise Fund ~$740M, Public Works Enterprise Funds ~$3.5B, General Fund ~$3B). Described the property tax revenue caps (state SB2 and local Proposition 1/Proposition H) that restrict revenue growth, causing a structural deficit. Showed a projected general fund deficit of $209M in FY27, growing to $446M by FY30 if no action taken, and a risk of dipping below the required 7.5% fund balance reserve (leading to credit downgrade).
• Mayor Whitmire's approach: No property tax increase; no layoffs; no expansion of programs; no reliance on one-time transfers; no deferring infrastructure obligations. Instead, two major proposals:
  1. Declare solid waste a municipal utility (removing $117M from general fund) and impose a $5/month administrative fee (cost of service is $25; fee to increase $5 annually starting FY29 until reaching full cost by FY32). The fee funds a revenue bond for new trucks and transfer station repairs.
  2. Impose a 5% gross revenue right-of-way rental fee on the city's water and sewer utility (~$104M/year), moving money into the general fund. This brings a net ~$220M improvement, reducing FY27 deficit from $209M to $25M and keeping fund balance above 12%.
• Response to public questions: David defended the CUS fee as lawful and supported by operational efficiency gains, overfunded reserves, and new project funding (e.g., Texas Water Development Board loans). He acknowledged the temporary nature of the solid waste subsidy and the need for future council votes on fee increases. He noted that property tax increases would require voter approval due to the local revenue cap, and that the city has limited revenue diversity compared to Dallas, Austin, and San Antonio.

Key Outcomes

• The budget proposals are still under discussion; budget workshops will continue on May 18 (Solid Waste, Public Works, Fire) and May 19 (Police). A virtual town hall is scheduled for May 20.
• Chair Alcorn stated she supports going up to the property tax cap but respects the mayor's stance. She encouraged residents to fill out the budget survey and attend workshops.
• No formal votes were taken at the town hall; the committee will continue deliberations before the FY27 budget adoption.