Houston City Controller Chris Hollins is urging sweeping changes in how Houston budgets for disasters. Hollins warned the City Council that Houston’s financial health could disadvantage the city when preparing for natural disasters.
“As we make our way through what has thankfully been a quiet hurricane season so far, it’s important to remember that Houston needs to do more to financially prepare for the disasters that strike our city all too often,” he said.
He added that the city’s financial policies only set aside reserves to cover a few weeks of city operations.
“We’re now entering the roughest stretch of the season, just as Washington is cutting funding for FEMA and other federal programs that cities like ours have long relied on in times of crisis,” Hollins said. “If we can no longer count on those dollars, we must make sure that our own finances are strong enough to provide the relief, recovery and essential services that Houstonians need when disaster strikes.”
The document “Weathering the Storm: Houston’s Financial Preparedness for Natural Disasters” from Hollins’ office provides a review of Houston’s fiscal vulnerabilities and disaster readiness strategies. It highlights the city’s history with natural disasters, current financial limitations, disaster reserve policies and opportunities for improvement.
Rising storm costs and fiscal strains
Hollins’ office recently warned in a financial analysis that Houston’s disaster costs are rising sharply.
The city already tapped into its rainy-day funds in record amounts to cover a $330 million budget deficit once federal relief money ran dry. Hollins has proposed raising the minimum fund balance, expanding the stabilization fund and dedicating year-end surpluses to reserves rather than one-off expenses.
What does the report say?
The financial preparedness report says Houston has repeatedly faced devastating natural disasters, with hurricanes driving the largest costs. Nationally, tropical cyclones are the most expensive disasters, accounting for more than half of U.S. disaster costs since 1980. Houston’s exposure is especially severe: Hurricane Harvey (2017) caused $160 billion in damages, while Hurricane Ike (2008) caused $43 billion.
FEMA data shows Houston has endured 25 federally declared disasters since 1983, with frequency rising in the past decade. Today, FEMA ranks Harris and Miami-Dade Counties (Florida) first in hurricane risk across the nation, underscoring Houston’s heightened vulnerability.
The report emphasizes that Houston’s financial structure leaves it poorly prepared for emergencies. Persistent structural budget deficits limit proactive investments, while state-imposed property tax caps and spending mandates reduce flexibility.
Sallie Alcorn, chair of the Budget and Fiscal Affairs Committee, agreed that the city’s budget deficit requires a property tax hike.
“I cannot see us staying on the same exact course,” she said. “We have to find a way to generate more revenue and we are going to have to make an unpopular decision in order to give the residents of this city the services they deserve.”
The expiration of federal American Rescue Plan Act (ARPA) funding has further strained the budget, with Houston experiencing its largest fund balance decrease in history in Fiscal Year 2025. Projected recurring deficits from FY2027-FY2030 paint a troubling picture, with FY2026 expected to have the second-steepest decrease in history. Additionally, public safety and debt consume 75% of the city’s budget, leaving little room for disaster preparedness.
Additionally, Houston’s reserve policies are modest compared to peer cities and national best practices. Currently, the city requires an unassigned fund balance of just 7.5% of General Fund expenditures and maintains a Budget Stabilization Fund (BSF) with a minimum of 1% or $20 million.
Although reserves peaked in FY2024, they have since been drawn down to cover deficits. By contrast, cities like Dallas and San Antonio require higher reserves, and the Government Finance Officers Association (GFOA) recommends a minimum of 16.7% (two months of operations). Houston’s shallow reserves leave it financially vulnerable in the face of growing disaster risks.
The Controller’s Office outlines several policy changes that could bolster resilience. These include raising the minimum fund balance requirement, increasing the size of the BSF and dedicating year-end surpluses and clawback funds directly to reserves.
Another key recommendation is separating disaster funds from economic stabilization funds to ensure that money set aside for emergencies isn’t depleted during economic downturns. Collectively, these measures would help Houston build stronger reserves, align with best practices, and safeguard the city against future disasters.
Building resilience
Hollins connected those fiscal reforms to his own record of pushing resiliency projects at the city level. He argues that county and city leaders must work together rather than in silos when it comes to disaster preparedness.
“Our financial preparedness isn’t just a number on a report,” he said. “It’s a difference between where the trash gets picked up, roads get cleared and emergency crews show up when people need them. That’s why fiscal oversight and disaster readiness must go hand in hand.”
What’s next?
As Hollins noted, Houston’s path forward is constrained by state caps on property tax revenue, which limit the city’s ability to raise money even as disasters grow more costly. That reality, he argues, makes proactive planning all the more urgent.
“The choice is simple: Plan responsibly now or scramble later and risk falling short when we need funds the most,” he said.
