Houston officials presented the city’s proposed fiscal year 2026 budget on Saturday, outlining a $7.0 billion spending plan that relies on efficiency measures, voluntary retirements and a one-time draw from reserves to close a remaining $107 million gap.

Paula Lichampanet, a finance department presenter, said the FY26 citywide expenditure plan including debt service and pay-go is $7.0 billion, about $160 million (2.3%) higher than the FY25 current budget, and that the general fund portion of the budget is roughly $3.0 billion.

The budget keeps a general fund reserve equal to 10.8% of expenditures (less debt service and pay-go), above the 7.5% minimum in city financial policy. Lichampanet told the meeting the plan uses a $107 million drawdown from the fund balance for FY26 and also includes a $12 million replenishment to the budget stabilization fund.

The proposal would fund pay increases included in negotiating positions: a 3.5% raise for municipal employees, a 3% raise for fire-classified employees and a 10% raise for police-classified employees based on the proposed police contract. The FY26 budget also funds five police cadet classes and nine fire cadet classes and provides full pension funding for the city’s three pension systems, Lichampanet said.

The finance presentation put total FY26 general fund revenue (excluding other funds) at $2.9 billion, driven primarily by property tax (about 50.7% of the general fund revenue budget) and sales tax (about 31.3%). Lichampanet said the budget assumes a modest sales tax increase and a property tax calculation that reflects Proposition 1 and H adjustments and a 2.46% CPI figure used in the January receipts.

Council Member Alcorn described several measures used to narrow an initial $230 million gap: roughly $52 million of revenue adjustments (including a $20 million interest increase and transfers), $70 million of expenditure savings from consolidations, retiree savings and service efficiencies, and the voluntary retirement program. He said more than 1,000 employees citywide accepted the voluntary retirement offer, which reduced payroll costs and contributed materially to the reductions in this budget.

Lichampanet said the FY26 general fund FTE count is 13,075.4 and that personnel costs comprise about 61% of the general fund budget (personnel vs. non-personnel). She also noted the budget continues to rely on non-property tax sources for enterprise functions — for example, water and sewer, aviation and other enterprise funds — and that some functions moved to enterprise funding to reduce general fund pressures.

The presentation and council remarks referenced an Ernst & Young efficiency review the administration has used to identify procurement, organizational and performance-measure changes the city hopes will produce longer-term savings. Alcorn said some procurement consolidations were projected to yield savings (he cited an $18 million figure tied to procurement consolidations and a roughly $17.175 million management-savings line baked into the budget).

City officials closed the briefing by inviting residents to follow department budget workshops next week and to submit questions; several members of the public then asked about specific departments and service impacts.

Ending: Officials said FY26 represents a year of smaller general fund spending than FY25 and significant one-time measures; they signaled ongoing budget work, further departmental workshops and possible future proposals to address structural revenue shortfalls going forward.