Overtime costs are one of the items of contention as Houston’s budgeting season kicks off.
City Controller Chris Hollins is urging Houston’s leadership to address runaway spending, especially in the police, fire, and solid waste departments. Mayor John Whitmire, meanwhile, contends Hollins does not consider all funding sources. Tension has been boiling over as city officials confront a projected budget shortfall of $330 million and ballooning overtime costs.
The controller’s report revealed the city budgeted $65 million but is projected to spend $137 million in overtime.
“The volume and magnitude of the overages is concerning,” Hollins said. “Equally troubling is the fact that, historically, departments have relied on vacancy savings from unfilled positions to offset the excess. Plugging the gap with that same approach will be increasingly difficult.”
However, considering all funding sources, Whitmire’s administration projects an overtime spending of $148.8 million.
Deputy Controller Will Jones also noted that solid waste, fire and police departments are projected to exceed their overtime budgets by 75%, 95% and 190%, respectively, and are on track to reach all-time highs.
Solid waste disposal and temporary personnel services are over budget. According to Hollins, HPD is also facing ongoing uncertainty related to federal reimbursement for disaster-related overtime and “persistent challenges in fighting violent crime.”
Additionally, federal aid from the American Rescue Plan Act (ARPA) and the CARES Act, once critical sources of overtime funding, has dried up. Hollins argued that despite knowing these “one-time funding sources will no longer gonna exist,” city leaders budgeted less for overtime in the last budget passed in June 2024.
“Simply put, we have to get these numbers under control with such a significant deficit already in play,” he explained.
Whitmire disagrees
Pushing back against the controller’s report, Whitmire attributed the issue to a continuation of long-standing challenges rather than a new fiscal crisis. Whitmire accused Hollins of excluding other sources of overtime funding and failed to give context, pointing to emergency responses, weekend police surges and two recent storms as unavoidable drivers of overtime.
“A political report is not acceptable in March of 25,” Whitmire said. “It’s just so essential that we use complete information and not use scare tactics, because in previous years, there was not the transparency that we’re currently displaying today.”
Whitmire added that the concerned departments have new leaders who will help the council with “efficiencies and operation models.”
Finance Director Melissa Dubowski said that general fund spending on overtime has increased, but when considering total spending that includes federal funds and special revenue funds, spending on overtime is not drastically higher than in previous years. She added that the city will bring in $50 million of recurring revenue from METRO to offset the expenditures absorbed by the general fund.
“It’s misleading to paint a picture that the amount of overtime that’s happening has increased drastically from prior years. It’s just the funding source is different,” Dubowski explained.
What councilmembers said
Despite the tense discussions, both sides agreed on one thing: Houston is facing serious financial headwinds. The city’s ability to balance its books hinges on several variables, including payouts tied to ongoing drainage litigation and looming federal cuts to key grants.
Challenging the assertions presented in the financial report, Councilmember Edward Pollard said the city’s financial practices do not reflect its funding.
“If we knew we didn’t have the same funding sources, why would we continue to approve so much over time?” Pollard said. “It seems as if we’re spending way more than what we’re bringing in and we’re going in the wrong direction when it comes to our city finances.”
Defending previous administrations, Councilmember Abbie Kamin said each administration deals with its challenges. For the current one, two revenue caps pose difficulty during budget discussions.
“I don’t think anybody is saying that we should not be funding overtime,” Kamin said. “We do not have the vacancies that we didn’t previously, but that is our burden and our responsibility to address.”
The debate briefly touched on the risks of losing the tax-exempt status of municipal bonds, a shift currently being debated in Congress. Kamin warned that if approved, such a change could increase the cost of borrowing for Houston’s capital projects by up to 30%.
So, what now?
To address the growing overtime burden, Hollins’ office plans targeted audits across both civilian and uniformed departments, which he said will determine whether overtime is being used appropriately, internal controls are functioning and waste or inefficiencies are driving costs. Per his report, the total overage for solid waste is projected to be $3 million, $26 million for HPD and “north of” $42 million for HFD.
Hollins explained that the audit will span four years and include a review of back pay to ensure compliance and accountability.
“The commitment I will make is to deliver practical, actionable facts so that your decisions can be well-informed, data-driven, and clearly understood by all Houstonians,” Hollins said, requesting cooperation from city departments and leadership. “We need a plan to get this under control, to cover the cost of the services that we provide.”
Monthly Financial Report for the month ended February 28, 2025: https://www.houstontx.gov/budget/mfr/fy25/feb/fr.pdf
