Houston will likely need tax and fee hikes to pay for firefighters’ contract, city’s financial leaders say

From Houston Public Media:

After working for the City of Houston for eight years without a contract, Houston firefighters are in sight of a new labor agreement. The deal would address longstanding concerns of both firefighters and ordinary Houston residents, but it would mean some tough choices for taxpayers.

The settlement must still be approved by a judge and by Houston City Council, but the Houston Professional Fire Fighters Association has already voted to ratify it by an overwhelming margin of 94% of its members.

Union president Patrick M. “Marty” Lancton says getting a contract in place will make a huge difference in the lives of his members.

“They have been working without that contract and that pay, and they’ve still come to work — through pandemics, floods, natural disasters, freezes, they’ve come to work,” Lancton said. “I can tell you that the rates of PTSD and mental health issues that we’ve had to deal with have just exponentially gone up because of this issue, because of not having safety and security of a contract, because you didn’t have the city that followed the law.”

Lancton says those conditions have led to an exodus of firefighters from Houston. Eight years ago, the city had about 4,100 firefighters and paramedics. Today, it’s down to about 3,650. And the fire department is running twice as many calls. Response times have slowed by several minutes.

“The strain on the firefighters on the men and women is huge,” Lancton said. “What it means is that, the longer it takes us to get to you, your survivability goes down. This isn’t a joke for us. Heart attacks, strokes, car wrecks, if you’re involved in any sort of medical emergency that needs immediate attention, seconds matter. When you’re stuck in a fire, seconds matter.”

Lancton hopes the new contract will help reverse that trend by attracting hundreds more firefighters, either through training new cadets or through luring credentialed firefighters and paramedics from other cities around the country.

The settlement, valued at $650 million, would include a lump sum payment to current and retired firefighters back to 2017, as well as to the families of those firefighters who have died since then. It would also lock in a series of raises of up to 34% through 2029.

“This allows every firefighter and paramedic to know, A, they’re valued,” Lancton said. “B, this is coming to an end, and we can focus on rebuilding a world-class fire department that was destroyed by the last administration.”

Lancton said that, had Mayor John Whitmire continued the legal challenges filed by the administration of former Mayor Sylvester Turner, a court finding in the union’s favor could have put the city on the hook for more than $1 billion. Instead, Whitmire ordered City Attorney Arturo Michel to drop the legal challenges on his first day in office.

“Mayor Whitmire has been very clear: you can’t put public safety on the back burner. That is a core, critical function of city services, and as a taxpayer, that’s what you expect,” Lancton said, “because we’re going out to serve the citizens of Houston on their worst day.

But there’s a problem, as Whitmire said last week as Houston City Council approved a tax break for childcare service providers.

“As we talk with a passion of these city services,” Whitmire said, “we also need to talk with a passion of being broke, and I’m going to say that repeatedly.”

Houston City Council Member Sallie Alcorn, who chairs the Budget and Fiscal Affairs Committee, said Houston isn’t broke just yet. But the danger is approaching fast.

“We have about $400-plus million in reserves. We’re supposed to keep 7 1/2% in reserves of expenditures, less debt, and we have over 17%,” Alcorn said. “But this next year will be definitely better than (2025) and following years because we still have the benefit of some of the ARPA (American Rescue Plan Act) money and the COVID money.”

Houston City Councilwoman Sallie Alcorn.
Lucio Vasquez / Houston Public Media

Houston City Controller Chris Hollins spelled out the problem. “What we’re doing is that we’re spending…somewhere between $160 and $200 million more than is coming in on a recurring basis,” Hollins said. “Without righting the ship, without significantly cutting costs, or significantly increasing revenues, or some combination of both, then we’re going to run out of money pretty quickly.”

Hollins stressed he can only make recommendations, and that making policy is up to the mayor and council members.

Hollins also emphasized he believes the firefighters deserve a new contract. “They put their lives on the line for us, and they come in day in and day out and work to keep this community safe,” Hollins said. “They deserve to have financial stability. That having been said, we are already in a bit of a fiscal conundrum. And now that’s going to be exacerbated by the fact that we are going to have to pay this bill.”

Hollins and Alcorn are hardly the first to sound the alarm on Houston’s finances. Former Controller Chris Brown warned repeatedly that the city was on an unsustainable path, relying first on property sales and then on COVID relief funds to close budget gaps. The city has no significant properties left to privatize, and federal ARPA funds are about to run out. So, where will the money to pay for the firefighters’ settlement come from?

Houston City Controller Chris Hollins.
Andrew Schneider / Houston Public Media

“A judgment bond will be sought,” Sallie Alcorn said. “The Texas Attorney General will have to approve that. And the judgment bond does not go to the voters. That’s how we will handle the back pay. So, we will spread that out. It will not be a $650 million hit to our budget immediately, it will be over 25 to 30 years.”

Still, there will be interest payments due on those bonds. Chris Hollins compared them to a home mortgage. “It’s going to cost us somewhere in the realm of $40-45 million per year for that 25-to-30-year period,” Hollins said. “And that’s going to stack up to $1.1-1.3 billion.”

More immediately, Hollins said, the only way the mayor can fund the firefighters’ pay hikes without catastrophic cuts to city services will be by asking the voters to let him raise taxes.

Whitmire previously said he would be in favor of going to the voters and asking for an exemption to the city’s revenue cap for public safety, which would mean the city can raise taxes to a certain point without getting voters’ approval. That, however, would require a charter amendment, which Houston voters can only approve once every two calendar years. Charter amendments were last on the ballot in Houston in November.

“What (the mayor) can do is go to the voters this fall and lay out the reasons why a tax increase is needed and ask the voters to approve that tax increase,” Hollins said. “Now, I imagine that he’d want our firefighters, our police officers, and others to stand alongside him to talk to voters about why that’s important. And that’s going to be up to them.”

Separately, Alcorn and Hollins each said the other component should be for the City Council to institute a trash fee, which the mayor and council members can do without voter approval. But Hollins said they’d need to make sure any use of the trash fee to pay firefighters and paramedics wouldn’t worsen the city’s existing problems with trash pickup.

“We have to make sure we’re taking a holistic look at this versus playing a game of Whack-a-Mole,” Hollins said.

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