Mayor Whitmire Puts Forth Balanced Budget for FY 26, Closing Major Budget Shortfall

Published May 08, 2025 by Hannah Cobb

Mayor John Whitmire released the City of Houston’s proposed $7 billion Fiscal Year (FY) 2026 operating budget, which includes a balanced General Fund. For Houston’s business community, sound fiscal management at City Hall is more than just good governance – it’s essential to maintaining the services and infrastructure that enable our region to thrive. Perhaps most significantly, this plan reduces General Fund spending – the city’s primary tax-supported budget – by 2.4%, or $74.5 million.

“We applaud Mayor Whitmire for making hard choices to put forward a balanced budget proposal,” said Steve Kean, President and CEO of the Greater Houston Partnership. “The mayor has made good on his commitment to address waste and duplication, and the Partnership is committed to working with his administration to put the City on a sustainable path, delivering the quality services Houstonians expect.”

Explore the City’s structural deficit and potential solutions in our report, State of the City’s Finances: A Deep Dive into Houston’s Fiscal Issues Facing the City.

Key savings in the budget come from a combination of:

Workforce reductions: Over 1,000 city employees took advantage of the Voluntary Municipal Employee Retirement Payment Option, resulting in over $99 million in annual savings across all funds, including $29 million for the General Fund.
Operational efficiencies: Department budget reductions reached $16 million in savings.
Strategic reforms: $19 million associated with the consolidation of departments.

These efficiencies recommended in the Ernst & Young Citywide Efficiency Study underscore the city’s commitment to fiscal responsibility moving forward.

The proposed budget also addresses critical public safety needs, funding the first year of a new police contract and the second year of the firefighter contract. While also providing infrastructure investments, as the budget sets aside $184 million from property tax revenue for street and drainage projects, aligning with the recent drainage settlement agreement.

During the press conference, the mayor highlighted that while this budget is balanced through efficiency and cost-cutting, the door remains open for future revenue discussions:

“It would be wrong for me to say we are not going to allow Houstonians to consider a garbage fee or other matters,” the mayor said. “My responsibility is to balance the budget and provide services. I made a commitment to address waste and duplication. [Later] we will talk to Houstonians about the type of city they want to live in.”

What’s next: Over the next two weeks, department directors will present their budgets in a series of workshops providing a deeper look into the FY 26 budget through Tuesday, May 20. After these sessions, City Council will review the budget, with a final vote expected in June.