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Houston’s proposed $7 billion FY26 budget draws on reserves, staffing cuts and pay raises for police and fire
Summary
City officials presented a $7.0 billion FY26 proposed budget that relies on efficiency savings, a $107 million draw from reserves and voluntary retirements to close a roughly $230 million initial gap; the plan includes proposed raises for municipal, fire and police employees and preserves a fund balance above policy minimums.
Houston officials presented the city’s proposed fiscal year 2026 budget on Saturday, outlining a $7.0 billion spending plan that relies on efficiency measures, voluntary retirements and a one-time draw from reserves to close a remaining $107 million gap.
Paula Lichampanet, a finance department presenter, said the FY26 citywide expenditure plan including debt service and pay-go is $7.0 billion, about $160 million (2.3%) higher than the FY25 current budget, and that the general fund portion of the budget is roughly $3.0 billion.
The budget keeps a general fund reserve equal to 10.8% of expenditures (less debt service and pay-go), above the 7.5% minimum in city financial policy. Lichampanet told the meeting the plan uses a $107 million drawdown from the fund balance for FY26 and also includes a $12 million replenishment to the budget stabilization fund.
The proposal would fund…
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