Houston Metropolis Controller Chris Hollins is urging sweeping modifications in how Houston budgets for disasters. Hollins warned the Metropolis Council that Houston’s monetary well being may drawback town when making ready for pure disasters.
“As we make our method via what has fortunately been a quiet hurricane season up to now, it’s necessary to keep in mind that Houston must do extra to financially put together for the disasters that strike our metropolis all too typically,” he stated.
He added that town’s monetary insurance policies solely put aside reserves to cowl a number of weeks of metropolis operations.
“We’re now coming into the roughest stretch of the season, simply as Washington is reducing funding for FEMA and different federal applications that cities like ours have lengthy relied on in occasions of disaster,” Hollins stated. “If we are able to now not depend on these {dollars}, we should make it possible for our personal funds are sturdy sufficient to offer the reduction, restoration and important companies that Houstonians want when catastrophe strikes.”
The doc “Weathering the Storm: Houston’s Monetary Preparedness for Pure Disasters” from Hollins’ workplace offers a evaluate of Houston’s fiscal vulnerabilities and catastrophe readiness methods. It highlights town’s historical past with pure disasters, present monetary limitations, catastrophe reserve insurance policies and alternatives for enchancment.
Rising storm prices and monetary strains
Hollins’ workplace lately warned in a monetary evaluation that Houston’s catastrophe prices are rising sharply.
Town already tapped into its rainy-day funds in report quantities to cowl a $330 million finances deficit as soon as federal reduction cash ran dry. Hollins has proposed elevating the minimal fund steadiness, increasing the stabilization fund and dedicating year-end surpluses to reserves moderately than one-off bills.
What does the report say?
The monetary preparedness report says Houston has repeatedly confronted devastating pure disasters, with hurricanes driving the biggest prices. Nationally, tropical cyclones are the costliest disasters, accounting for greater than half of U.S. catastrophe prices since 1980. Houston’s publicity is very extreme: Hurricane Harvey (2017) triggered $160 billion in damages, whereas Hurricane Ike (2008) triggered $43 billion.
FEMA knowledge reveals Houston has endured 25 federally declared disasters since 1983, with frequency rising previously decade. At this time, FEMA ranks Harris and Miami-Dade Counties (Florida) first in hurricane threat throughout the nation, underscoring Houston’s heightened vulnerability.
The report emphasizes that Houston’s monetary construction leaves it poorly ready for emergencies. Persistent structural finances deficits restrict proactive investments, whereas state-imposed property tax caps and spending mandates scale back flexibility.
Sallie Alcorn, chair of the Price range and Fiscal Affairs Committee, agreed that town’s finances deficit requires a property tax hike.
“I can’t see us staying on the identical actual course,” she stated. “We’ve to discover a strategy to generate extra income and we’re going to should make an unpopular determination so as to give the residents of this metropolis the companies they deserve.”
The expiration of federal American Rescue Plan Act (ARPA) funding has additional strained the finances, with Houston experiencing its largest fund steadiness lower in historical past in Fiscal 12 months 2025. Projected recurring deficits from FY2027-FY2030 paint a troubling image, with FY2026 anticipated to have the second-steepest lower in historical past. Moreover, public security and debt eat 75% of town’s finances, leaving little room for catastrophe preparedness.
Moreover, Houston’s reserve insurance policies are modest in comparison with peer cities and nationwide greatest practices. At present, town requires an unassigned fund steadiness of simply 7.5% of Common Fund expenditures and maintains a Price range Stabilization Fund (BSF) with a minimal of 1% or $20 million.
Though reserves peaked in FY2024, they’ve since been drawn all the way down to cowl deficits. In contrast, cities like Dallas and San Antonio require greater reserves, and the Authorities Finance Officers Affiliation (GFOA) recommends a minimal of 16.7% (two months of operations). Houston’s shallow reserves go away it financially susceptible within the face of rising catastrophe dangers.
The Controller’s Workplace outlines a number of coverage modifications that might bolster resilience. These embody elevating the minimal fund steadiness requirement, rising the scale of the BSF and dedicating year-end surpluses and clawback funds on to reserves.
One other key advice is separating catastrophe funds from financial stabilization funds to make sure that cash put aside for emergencies isn’t depleted throughout financial downturns. Collectively, these measures would assist Houston construct stronger reserves, align with greatest practices, and safeguard town towards future disasters.
Constructing resilience
Hollins related these fiscal reforms to his personal report of pushing resiliency initiatives on the metropolis stage. He argues that county and metropolis leaders should work collectively moderately than in silos in terms of catastrophe preparedness.
“Our monetary preparedness isn’t only a quantity on a report,” he stated. “It’s a distinction between the place the trash will get picked up, roads get cleared and emergency crews present up when folks want them. That’s why fiscal oversight and catastrophe readiness should go hand in hand.”
What’s subsequent?
As Hollins famous, Houston’s path ahead is constrained by state caps on property tax income, which restrict town’s capacity to lift cash at the same time as disasters develop extra expensive. That actuality, he argues, makes proactive planning all of the extra pressing.
“The selection is straightforward: Plan responsibly now or scramble later and threat falling brief after we want funds probably the most,” he stated.
