Houston officials outline FY26 proposed budget, say gap narrowed to a $107 million draw from reserves

City Councilmember Sallie Alcorn, chair of the Budget and Fiscal Affairs Committee, and Finance Director Melissa Dubowski presented an overview of the City of Houston’s proposed fiscal year 2026 budget during a virtual town hall meeting. Officials said the overall proposed city budget is about $7 billion and the tax-supported general fund is roughly $3.1 billion; the administration reduced an initial estimated FY26 gap and plans a $107 million draw from fund balance to balance the proposed budget.

The presentation and subsequent discussion focused on how the administration lowered a previously projected budget shortfall through a mix of revenue adjustments, expenditure reductions and one-time use of reserves. Dubowski said the proposed general fund shows a 10.8% fund balance (about $273 million), which she said is roughly $84 million above the city’s 7.5% target set by city ordinance. She outlined major changes that reduced the projected gap from roughly $230 million to the $107 million planned drawdown.

Why it matters: the general fund pays for core, tax-supported services — chiefly public safety, which accounts for the largest share of the general fund budget — and the balance and reserves determine the city’s ability to respond to emergencies and future revenue shocks.

Key figures and measures - Total proposed city budget: about $7,000,000,000 (rounded, presented in thousands on slides). - General fund (FY25 to FY26): proposed decrease in the general fund portion to roughly $3.1 billion. - Fund balance: proposed 10.8% of expenditures (excludes debt service and pay-as-you-go transfers), roughly $273…