Finance director outlines Houston's proposed FY27 budget, keeps tax rate steady

The finance director presented the City of Houston's proposed FY27 finance department budget at the Budget and Fiscal Affairs Committee's May 12 workshop, laying out revenue projections, program-level changes tied to staff consolidation and a schedule shift that would move the public hearing to June 3 and the final council vote to June 10.

The presentation showed total finance-department revenues and allocations dominated by property and sales tax receipts: a proposed property-tax budget of $1,500,000,000 (about $50 million higher than the FY26 estimate) while keeping the tax rate unchanged at 51.919 cents, and an estimated $920,000,000 in sales tax receipts. "We're keeping the tax rate the same at 51.919¢," the director said when describing the property-tax projection and the appraisal-district-based growth assumptions behind it. The finance director also said the combined revenues the finance area books are approximately $2.5 billion for FY27.

Staff described a central service revolving fund used to allocate and charge back shared services (finance, HR, IT, fleet) to client departments; the finance presentation said FY27 increases are concentrated in that revolving fund because positions consolidated from other departments are now budgeted in finance. The presentation showed a roughly 15% increase in expenditures by program, which the director attributed largely to consolidation of staff previously budgeted elsewhere, plus some net new employees and cost increases tied to HOPE and contractual cost adjustments.

On personnel and non-personnel costs, the director said personnel remains the majority of finance's costs (about 78% in the general fund and about 90% in the revolving fund). Major non-personnel items called out included the city's audit firm, Weaver, and payments to the Harris County Tax Office for property tax billing and collection.

The director reviewed individual programs: accounting and financial reporting (61 FTEs budgeted), capital projects and debt management (division head Alma Tamburello; the CIP will be presented in coming weeks), disaster cost recovery (liaison work with FEMA and TDEM), grants-management (audit and SAP grant processes), a performance-improvement team led by Jesse Bounds working with Ernst & Young, and a small Treasury team responsible for more than $2.5 billion in general-fund revenue and tax-rate calculations.

During Q&A, committee members pressed several operational and forecasting points. The chair asked about the city's current electricity contract (described in the meeting as a $640,000,000 contract) and whether the budgeted amounts will cover costs before a new contract is secured. The director said staff is monitoring market rates, pursuing a longer-term procurement to secure the most favorable rate possible and may need to return to council during FY27 to increase the maximum contract amount based on current market conditions.

Members also discussed performance measures and collection metrics. A roughly 50% collection-rate figure prompted questions; the director clarified the figure in the slide deck referred to EMS collection rates and vendor-managed collections for delinquent citations and alarms (not that vendors are failing to pay the city). Committee members asked for follow-up detail on a discrepancy the slides showed for utility rebates; the director said staff would follow up with the team and with Reliant on rebate and load-management strategies that may appear in other budget buckets.

Councilmember Joaquin Martinez asked when procurement-consolidation savings will appear. The director said the FY27 budget uses conservative savings projections but expects savings to materialize in targeted categories (portable-restroom rentals, ground maintenance, janitorial security, some IT contracts and vehicle parts) as category-management work and the procurement dashboard mature.

As a procedural matter, the director proposed adding two weeks to the public-comment period to allow more time for review: moving the public hearing to June 3, asking council members to submit amendments on June 3, and taking the final budget vote on June 10; the chair supported circulating an updated memo and calendar to council members.

The presentation concluded with appreciation for staff work on new and revised performance measures; no public speakers had signed up for the finance-department portion of the workshop. The committee recessed and planned to return for the fleet department presentation.