The following is a transcript of the mayor’s remarks during Tuesday morning’s budget news conference.

The proposed budget for all funds is $5.71 billion, an increase of $487 million, or 9.3 percent compared to the FY2022 Current Budget of $5.22 billion. (Enterprise Funds accounts for $364 million of the $487 million increase primarily due to cost in the combined utility system related to the Consent Decree and other drinking water projects).

The proposed General Fund budget of $2.74 billion reflects an increase in spending of $102 million or 3.8 percent from the FY2022 Current Budget of $2.64 billion. This increase is primarily attributable to pay increases for all employee groups including 6 percent for fire, 4 percent for police, and 3 percent for municipal employees.

The budget also includes operational funding for the new Alief Neighborhood Center, the renovated Kendall Library, and the Dr. Shannon Walker Library.

ARPA Utilization

• Fiscal Year 2022 experienced increases across many revenue streams as our local economy outperformed all expectations. However, make no mistake, COVID-19 is still here and continues to impact our communities. The FY2023 Proposed General Fund budget utilizes $160 million federal American Rescue Plan Act (ARPA) funding to recognize the economic impact of COVID-19 and address the reduction in revenues due to the public health emergency.

Ending Fund Balance

• Significant uncertainty remains in the economy with inflation rates surging, interest rates on the rise, gas prices soaring, and global unrest with the Russia-Ukraine war. These issues create an extremely volatile situation and it is imperative that we build and preserve a strong fund balance heading into Fiscal Year 2023. With that being said, this proposed budget includes an ending fund balance of $311 million, which is 13.5 percent of expenditures less debt service and pay-as-you go (PAYGO), well above the minimum of 7.5 percent established in the City’s financial policies. ($138 million above the 7.5 percent of expenditures less debt service and PAYGO)

Additionally, this budget:

• Does not drawdown from fund balance
• Does not include any one-time land sales or deferrals.

Budget Stabilization Fund

• Fully fund the Budget Stabilization Fund placing the City in a better position heading into hurricane season.

Impact of Property Tax Revenue Cap

• The FY2023 proposed budget is based on the existing property tax revenue cap. Depending on the taxable valuation, the city of Houston may have to adjust our tax rate to comply with the property tax revenue cap. A higher taxable value may result in tax rate reduction.

“In view of the increase in property value and to provide relief to senior citizens and the disabled, I will be proposing in a separate measure in June, to increase the over 65 and disabled tax exemptions from $160,000 to $260,000,” Mayor Turner said. “In FY2023 alone, the full impact of the cap will result in a loss of $282 million. Since hitting the cap in FY2015, the full cumulative impact of the cap is $1.4 billion.”

Public Safety

• This proposal leaves the City of Houston in a better position as we face these economic uncertainties and at the same time upholds my priorities with public safety at the forefront, fully funding five (5) cadet classes each for fire and police. (Current police count is 5,117 with 5 classes expected to graduate by the end of June).

 Like all major cities in our nation, Houston has experienced an increase in violent crime because of the COVID-19 pandemic which is why Mayor Turner enacted the One Safe Houston Crime Reduction Initiative. One Safe Houston is a comprehensive violence reduction initiative that links research-based strategies to improve public safety and reduce the harms caused by violent crime focusing on four (4) key areas:

• Violence Reduction and Crime Prevention
• Crisis Intervention, Response and Recovery
• Youth Outreach Opportunities
• Key Community Partnerships 

The mayor initially advanced $5.74 million for overtime, adding 125 police per day. Although not a part of this budget, he will be advancing an additional $5 million in ARPA funding to HPD to continue this overtime initiative.

Other Initiatives
In addition to One Safe Houston initiatives, Mayor Turner has also outlined  plans to:

• Bring on-line, new and renovated libraries and multi-service centers to our communities; and 
• Improve and upgrade neighborhood parks through my Love Our Parks Complete Communities Initiative. Phase one of this program targeted five parks in under-resourced communities which enhanced neighborhood pride.  Phase two adds five (5) additional parks to continue this program. (Phase1 included: Malone Park, Our Park, Henderson Park, Delce Park, and Woodruff Park. Phase 2 includes: Irvington Park, Hobart Taylor Park, Lincoln Park, Evella Park, and Independence Height Park).

 Conclusion

• In closing, the Fiscal Year 2023 Proposed Budget is the mayor’s seventh consecutive budget that is balanced.
• We have addressed Pension Reform in 2017 that reduced City’s unfunded liability from $8.2B to $1.5B.  
• We have addressed OPEB Reform that was effective January 2022, that will reduce the City’s Net OPEB liability to half over the next 30 years – from $9.1B to $4.5B.
• We have authorized significant pay raises to the 3 employee groups including 6 percent for fire, 4 percent for police, and 3 percent for municipal employees.
• We have also brought all of our City employees to a minimum of $15 per hour.
• Our fund balance is strong, with $138 million above the required 7.5% of expenditures less debt service/PAYGO and the Budget stabilization fund is fully funded. This will leave the City in a much better position as we go into the hurricane season as well as preparing the City for the looming economic uncertainties.