Overview of the Houston City Budget
The Houston budget is approved by the City Council annually. The procedure involves discussing all critical issues and amending budget items such as the police, fire departments, and, for example, solid waste management. Each city has different specifics and dynamics of financial requirements – the example of Houston is no exception in this respect.
The approved budget for 2023 was $6.2 billion (Turner, 2023). In addition to the approved budget, an essential aspect of the city’s financial reporting is revenue, which includes primarily taxes and water, aviation, interest income, and fines. Along with revenue, city councils also account for liabilities and expenses – supplies, personnel services, debts, equipment, etc.
Analyzing these financial movements is essential for assessing the city’s development potential. This paper offers a critical examination of the budget of the city of Houston and compares it with the city of New York. The comparison will consider the magnitude of the difference between the two cities. It includes an assessment of the administration’s focus, the budget’s main directions, the impact of internal and external factors, and the estimated growth rate of revenues and expenditures.
Budget Size
Horizontal and vertical analyses can help estimate the size of the budget. Firstly, Houston is among the top ten cities with the largest budget in the US, which allows the conclusion that the budget is quite large on the one hand (Analysis of spending in America’s largest cities, n.d.). On the other hand, a more adequate indicator is the per capita budget, which is also quite significant in Houston.
The city is already well below the top ten, yielding ahead of more than thirty cities, most of which have a smaller total budget (Analysis of spending in America’s largest cities, n.d.). In absolute terms, Houston’s budget is indeed significant. However, in relative terms, it is no longer so important, although it is still larger than most other cities in the country.
Secondly, by evaluating the individual components of the financial plan in more detail, it is possible to give a more accurate estimate of the budget size in particular areas. For example, on public safety, particularly on the police, several states spend up to 46% of their budget, like Milwaukee. In comparison, Houston spends about 16% (Buchholz, 2023, para. 4). In this regard, Milwaukee’s budget can hardly be called large by comparison since a significant part of it goes in only one direction – Houston has a more even distribution (Turner, 2023).
Most money goes to development & maintenance services: public works and solid waste management. The issue of solid waste is raised annually at city councils as requiring the most attention and, consequently, an expansion of the budget (Gonzalez, 2022). This year, a relatively large amount is allocated to parks and recreation – comparable in scale to medical services (Turner, 2023). Finally, a significant share is the cost of the Houston airport and various current liabilities.
Fiscal Year for the City of Houston
Most of Houston’s revenue growth is driven by the city’s water services and an increase in the tax budget. Positive growth dynamics compared to 2022 were observed in almost all essential income items, with the most significant increase coming from the most prominent sources: water & sewer – 24% and several taxes – up to 55% (Turner, 2023, p. 19). As a result, the city is realizing its potential by demonstrating such a high rate of income, which partly allows a significant increase in the requested budget with such dynamics.
Evaluating a similar report for 2022, where comparisons with 2020 and 2019 may be more revealing due to the need to overcome the pandemic crisis, one can see that spending on human services, including medicine, has remained relatively high. However, most of these expenditures were allocated at higher federal levels and were not included in city budget reporting (Gordon et al., 2020). Consequently, horizontal analysis shows that 2023 is broadly in line with growth rates over the past three to four years despite various external factors that did not directly affect the city budget.
The central spending was concentrated on personnel services and debt servicing. In 2023, compared to the previous year, spending on the debt part increased significantly – by almost 20%, which is generally the only negative sign of the analysis of financial statements (Turner, 2023, p. 24). Despite various global challenges, such dynamics were not observed in 2020-2022.
On the other hand, given current challenges, increasing debt could save money through unstable current inflation and key rate hikes (United States Fed Funds Rate, 2023; United States Inflation Rate, 2023). Accordingly, since it is difficult to make forecasts in the current conditions of uncertainty, such a decision can only be assessed on a longer time horizon. In addition to these features in the form of increased debt, revenues, and the considered directions of the financial plan, Houston has a calm and even dynamic budget growth despite the current domestic macroeconomic changes.
Comparative Analysis: Houston City Budget vs. New York City Budget
Total Expenditure Comparison
A more detailed comparison with other cities can give a clear picture of the quality of the budget. New York is the largest city by budget and is in the top five per capita (Analysis of spending in America’s largest cities, n.d.). However, city councils’ goals in budget planning vary, considering more than just the magnitude of the difference. While Houston focused on firefighter incentives and solid waste management, New York cited problems with high asylum numbers, financing of labor deals, and a slowdown in tax collections (NYC, 2023). Expert estimates predict a recession precisely because of macroeconomic indicators, to which, due to scale, New York is exposed to a greater extent than Houston.
Against the background of many asylum seekers and labor issues, New York also faces a much more severe domestic crisis than Houston. Only through the PEG program could Mayor Adams increase the budget without cutting other lines (NYC, 2023). Problems of this magnitude that require immediate resolution and allocation of funds for the next reporting period are much less in Houston – they mainly relate to long-term sustainability prospects (Gonzalez, 2022). Consequently, the political orientation of the budget is primarily dictated by current tasks in New York.
The consequences of the pandemic are currently reflected mainly as an attempt to establish urban infrastructure and encourage employees involved, not only from the medical industry. Houston focused on firefighters in this regard, with the City Council even attempting a $3,000 lump sum amendment (Gonzalez, 2022). Social services make up an essential percentage of spending in New York City. However, education accounts for a larger share—a necessary difference between cities is in this regard, even though Houston also has many famous universities (New York City Council, 2023; Turner, 2023). However, spending on education, even considering the scale of settlements, differs significantly.
Revenue Streams Analysis
New York’s income is also largely dependent on tax revenues. They increased significantly from 2022 through the fiscal plan for 2024. However, due to rising inflation and the critical rate, the impact of the crisis is expected to have a delayed effect on the budget. It will put New York against the backdrop of problems that need even more significant budget expansion. Houston, after the 2020 crisis, significantly reduced the unemployment rate – one of the main problems in New York, which the 2024 budget aims to correct (NYC, 2023; Turner, 2023). Although these factors and differences can be called the main ones, several lesser scales should also be mentioned.
At the same time, international companies bring significant income to both cities. Even when comparing settlement size, New York has an advantage in the number of such organizations despite Houston having 5 thousand (Turner, 2023). Finally, there are also significant cultural and sporting differences between the cities – for example, Houston does not have a professional club that plays in the NHL. At the same time, New York has two clubs in the NBA against one in Houston (New York City Council, 2023). Although such differences do not carry a critical budget dispersion on their own, they are noticeable in many similar aspects that distinguish the scale of cities.
This paper comprehensively analyzes the current budgets of two cities: Houston and New York. Although both cities are among the largest in the country, there are apparent differences in scale and funding approaches based on various political and policy considerations. However, considering this difference, these cities have, on average, similar growth rates and approximately equal relative distribution to various services and areas of city budget implementation.
References
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Buchholz, K. (2023). How much do U.S. cities spend on policing? Statista. Web.
Gonzalez, S. (2022). Houston City Council approves fiscal year 2022-23 budget. Community Impact. Web.
Gordon, T., Dadayan, L., & Rueben, K. (2020). State and local government finances in the COVID-19 era. National Tax Journal, 73(3), 733-758. Web.
New York City Council. (2023). Fiscal Year 2023 Budget. Web.
NYC. (2023). Mayor Adams releases executive budget for fiscal year 2024, largest executive budget in city history. Web.
Turner, S. (2023). Fiscal year operating budgets 2023. Web.
United States Fed Funds Rate. (2023). Trading Economics. Web.
United States Inflation Rate. (2023). Trading Economics. Web.