Skip to main content

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

Published May 08, 2025 by Hannah Cobb

Houston City Hall

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: 

  1. 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. 
  2. Operational efficiencies: Department budget reductions reached $16 million in savings. 
  3. 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.
 

Related News

Public Policy

Texas Lawmakers Tap $361 Million to Bolster Regional Resilience

7/9/25
Houston has made significant strides to improve its resilience as a coastal city over the past two decades. Federal, state and local leaders have prioritized efforts to strengthen flood mitigation, enhance power reliability and secure the region’s water supply.  Each weather event has brought important lessons, prompting investments and solutions to protect homes, businesses and critical infrastructure.  In the most recent legislative session, Texas lawmakers secured over $361 million for the Houston region to bolster water supply and advance ongoing flood mitigation projects. Targeted Funding The Legislature used nearly $1 billion in surplus dollars to secure dedicated funding for water projects around the state. The funding was included in the Supplemental Budget Bill (House Bill 500), making the dollars immediately available. The projects that receive that funding are highlighted in the General Appropriations Act and include significant funding for highlighted projects, including: $100 million for the Lynchburg Pump Station; the city had requested $177 million from the state $60 million for the Lake Livingston Dam Improvement $54 million for Cypress Ditch Regional Flood Mitigation Projects in Bellaire Click here to download the one-pager highlighting all the Houston-area resilience projects funded by lawmakers this session. Downstream Dollars Another significant change made by lawmakers this session was to make flood prevention projects eligible to receive state dollars from the Texas Water Fund. When it was initially created in 2023, the Texas Water Fund was targeted at developing new supply and addressing infrastructure. This session, under Senate Bill 7, the state will now be able to transfer available dollars from the Texas Water Fund to the Flood Infrastructure Fund for mitigation projects, like those highlighted above. This presents a significant opportunity to ensure the state maximizes its use of available funds to control how water is brought to Texans and how flooding is managed during major weather events. Dig Deeper Learn more about local victories highlighted by the City of Houston Learn why infrastructure is everyone’s business when it comes to building a resilient Houston The Budget Explorer Tool is now updated with the final version of the two-year spending bill. Click here to explore water funding Click here to explore education funding Click here to explore the 2026-27 state budget toplines   For more updates and alerts on the Texas Legislature, click here to sign up for our weekly newsletter. 
Read More
Education

Texas Lawmakers Continue Reforming Small Colleges to Add More ‘Credentials of Value’

6/23/25
Houston is one of the nation’s biggest hubs for young professionals, thanks to strong job growth and an affordable cost of living. Between 2020 and 2024, the region added an estimated 240,000 new jobs, part of a broader economic boom across Texas. Now, a new law aims to build on that momentum by expanding access to workforce training and education programs. Senate Bill 1786 (SB 1786) was signed into law on May 27 and takes immediate effect to remove barriers for Texans seeking to enroll in local community and junior college programs. Additional provisions, including regional job demand studies and data analysis, will take effect on September 1. Free Courses for Disadvantaged StudentsSB 1786 expands free dual credit courses for economically disadvantaged students in grades 9–12, helping more Texans earn college credit before graduation. The law also addresses delays in the Texas Higher Education Coordinating Board’s rulemaking for financial aid, speeding up access to grants and loans. It improves coordination across state and federal programs, including Jobs and Education for Texans (JET), P-TECH early college high schools, and TRUE reskilling programs. These changes will begin with the 2025–26 school year. Aligning Funding with Workforce Needs SB 1786 builds on the 2023 overhaul of the state’s community college finance system by tying funding to student outcomes, specifically: Earning degrees or industry-recognized credentials that lead to well-paying jobs Successfully transferring to four-year universities Completing targeted dual credit coursework Supporting  Business Growth and Regional Competitiveness By strengthening access to high-value credentials and aligning education funding with workforce outcomes, SB 1786 reinforces the region’s position as a destination for business investment and expansion. These reforms help ensure Houston has a pipeline of skilled talent ready to meet the needs of employers in high-growth sectors such as energy, life sciences, advanced manufacturing, and technology. As the Partnership works to attract companies and jobs to the region, these policies send a strong signal that Houston is preparing its people for the careers of tomorrow. The law also strengthens the definition of a “credential of value” as one that helps a student earn more than a high school graduate and justifies the cost of their education. Credentials in high-demand sectors, such as healthcare and education, may also qualify. These updates will take effect in the 2027–28 school year. Workforce-Driven Reform The goal of SB 1786 is to reduce redundancy, maximize impact, and ensure postsecondary programs are aligned with the needs of Texas employers. By supporting this legislation, Houston’s business community is helping to sustain a robust talent pipeline for years to come.  
Read More

Related Events

Public Policy

State of the County

The Greater Houston Partnership is pleased to present the 2025 State of the County, featuring Harris County Judge Lina Hidalgo. As the chief executive of the third-largest county in the nation…

Learn More
Learn More
Executive Partners