Houston finance director to address structural budget gap
2 min readTackling Houston’s structural budget gap is at the top of Melissa Dubowski’s to-do list as the city’s finance director.
The nearly 10-year veteran of Houston government, who served as a deputy director overseeing debt and cash flow forecasts since 2019,
The outcome of contract negotiations to end a yearslong impasse with city firefighters will impact the upcoming budget, according to Dubowski. Shortly after taking office, Whitmire took action to move the dispute out of court and instead focus on a resolution. He
Dubowski said talks are ongoing with the mayor’s goal of reaching a deal by March.
Fitch Ratings, which rates Houston AA, has said an upgrade could occur with a contract “that results in sustainable public safety spending relative to its resource base and a reduction of carrying costs materially below 20% of governmental spending, leading to a strengthened expenditure framework assessment.” A deal with firefighters that weakens that assessment could lead to a downgrade, it added.
Houston is also rated AA by S&P Global Ratings and Aa3 by Moody’s Investors Service.
Public safety is the biggest expense for the Houston budget, with property and sales taxes accounting for its largest revenue sources.
A 2004 proposition approved by Houston voters caps property tax collections, although a subsequent proposition that passed in 2006 allows additional funding for public safety. Dubowski said options like asking voters to repeal or modify the cap are “on the table.”
On the infrastructure front, the Whitmire administration is evaluating a $2.6 billion financing for a major renovation of George Bush Intercontinental Airport’s Terminal B, she said.
Dubowski said city capital projects financed through commercial paper backed by a bank line of credit could be impacted by Texas laws
“As we see that pool of eligible banks shrinking, we anticipate that there could be increased costs … since there are fewer proposals that we’re getting,” she said.
Houston had $646.4 million of commercial paper outstanding at the end of fiscal 2023.