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City finance officials report stronger receipts, Moody’s affirms Houston credit rating
Summary
Deputy Controller Will Jones and Finance Director Dabowski reported higher-than-expected property- and sales-tax receipts for the year to date, producing a stronger projected fund balance and a Moody’s affirmation of the city’s credit rating; officials warned revenue projections remain sensitive to month-to-month volatility.
Deputy Controller Will Jones and the city finance director told the Budget and Fiscal Affairs Committee on July 8 that year‑to‑date revenues ran ahead of earlier expectations and that the city’s fiscal position had improved, even as officials cautioned that some projections remain volatile.
Jones said the controller’s office projects a May 31 ending general‑fund balance of about $370.1 million — equal to 14.3% of expenditures excluding debt service — and noted that figure is roughly $38.6 million lower than the finance department's projection. Finance staff reported its own ending‑fund projection of about $408.7 million, up $27.9 million from the prior month.
Those upward revisions reflect recent stronger collections, the presenters said. The finance director reported April sales‑tax receipts of $75.1 million, roughly 6.2% above April 2024 and about 6.8% higher than budget; that performance and higher property‑tax collections contributed to an increase in revenue projections since the May report. Officials said interest income also rose, adding roughly $2.3 million to revenues.
Why this matters: a larger ending fund balance increases the city’s cushion for contingencies and affects borrowing and budget choices later in the year. Finance staff emphasized they continue to use conservative judgment before changing full‑year projections, because sales tax and other monthly receipts can be volatile.
Officials also described the city’s debt posture. The controller’s office said the city seeks to keep no more than 20% of each debt type in variable‑rate form — a practice it said aligns with rating‑agency guidance — while allowing temporary deviations during large capital projects. The finance director and deputy controller both said the long‑term portion of the city’s bond portfolio remains primarily fixed‑rate to limit exposure to interest‑rate swings.
The committee heard additional operational updates: the asset‑forfeiture fund is projecting roughly $900,000 more revenue than previously estimated, and the finance team reported a recent Moody’s surveillance concluded with the agency affirming Houston’s credit rating and stable outlook. The finance director credited the budget team’s multi‑year planning and ongoing engagement with rating analysts.
Committee members asked about forecasting methods and how and when staff revise estimates. Councilmember Flickinger pressed staff on their approach to updating annual projections when monthly trends emerge; staff said they monitor monthly results, model scenarios for different growth rates and try to avoid frequent, small swings in reported estimates. They said larger changes generally await a clearer multi‑month trend or quarter‑end results.
The presentations closed with recognition of the controller’s and finance department interns. No formal actions or votes were taken during this agenda item.
