Our City officials repeatedly make the false claim City’s budget is balanced. But according to the independent auditor last year the City ran a deficit in its general fund of $435 million. Here is the portion of the audit that shows that deficit.
The City’s definition of a balanced budget is that it can find the money from any source to pay the bills without taking into account increases to debt, failing to fully fund expenses, transfers from ancillary funds, burning up reserves and depreciation of the City’s assets. In other words, by ignoring all of the generally accepted accounting principles which those in the private sector must follow.
For example, in the current budget, the City plans to use just under $100 million of its reserve funds to “balance” the budget. Can you imagine having to withdraw money from your personal savings account to pay your bills and then claiming you had a balanced budget?
And it is not just me that believes the City does not have a balanced budget. City Controller, Chris Brown, recently wrote an essay in the Houston Chronicle. He said that the City’s “imbalanced budgets have relied on non-recurring funding sources like drawing down on savings, deferring maintenance, selling assets, and a variety of other one-time funding sources to close their structural deficits. This is not financially sustainable.” [Click here to read Brown’s op/ed]
In the last twenty years the City has lost over 90% of its net worth. And that decline is accelerating.
It is past time that we had a candid discussion about our City’s finances. We will never fix our streets, solve our flooding problems, add the police officers we need or address any of the other issues our City is facing until we fix this financial mess.