Four years after Sylvester Turner took office, Houston continues to kick the can down the road when it comes to fixing city finances. The city should have moved toward zero-based budgeting by now, but instead one-time fixes, deferred maintenance and depletion of our rainy-day savings account are still the order of the day when it comes to balancing the budget.
The concept of zero-based budgeting was first developed in 1970s. The theory is to assume that the budget for each department every year will be zero and that any expenditure must be justified in the budget process. It stands in contrast to incremental budgeting where the amount from the previous year is brought forward as the starting point.
In the 2015 campaign, I heard Turner promise to implement zero-based budgeting on scores of occasions. Here is one example of him making that promise.
He also promised he would ask every department to cut their budgets by 5-7.5%.
The truth is that in the last four years Turner has made zero progress toward implementing zero-based budgeting or reducing spending. In fact, as soon as a month into the job he was already backtracking.
“You know, we talked a lot about zero-based budgeting. It’s very, very difficult to do zero-based budgeting in a five-month period. That takes a much longer period of time. But performance-based budgeting you can do right now.” [i]
Last week City Council approved a budget that was $656 million higher than the Parker administration’s last budget. That is a 15% increase in spending in the last four years. The city will spend $244 million more than last year, an increase of over 5%. Click here for the 2020 summary or here for the 2016 summary.
As part of the budget approval process Turner also finally relented to an amendment to the budget by Mike Knox which requires the city to use zero-based budgeting in 2021. But don’t get your hopes up. Council approved a similar provision five years ago only to be ignored by both the Parker and Turner administrations.
Also do not be fooled for one moment that we have a balanced budget. We are not even close. Turner’s bogus claim that he has balanced the budget is based on a purely cash basis accounting in the general fund. It includes non-recurring revenues and does not take into account increases to liabilities or activity in “off balance” entities like the TIRZs.
When these items are fully accounted for in a full accrual accounting, the city auditors found the city ran an overall operating deficit last year of $300 million and a $435 million deficit in the general fund. Click here for the auditors’ summary. This deficit is far in excess of anything we have ever seen before and is even more unprecedented given the city’s robust economy. By the way, City Controller Chris Brown agrees. Click here for Brown’s Sunday op-ed.
Turner will never truly implement zero-based budgeting. He is a transactional politician whose principal aim is to buy votes with patronage, not make the hard decisions to rein in the city’s spending.
[i]“Performance-based budgeting is a watered-down version of zero-based budgeting in which the amount of funds being spent is compared to performance outcomes. But I see no evidence that even this scaled-back budgeting process was implemented.
This is political advertising paid for by the Bill King Campaign.