Loss of state grants sparks 'crisis situation' for Houston

ICE agents at Houston's George Bush Intercontinental Airport in March.
ICE agents at Houston's George Bush Intercontinental Airport in March. Houston faces having to repay $110 million in Texas public safety grants unless it repeals a recent ordinance that decreases cooperation with U.S. Immigration and Customs Enforcement, according to the governor’s office.
Bloomberg News

Houston's budget troubles worsened this week after Texas Gov. Greg Abbott pulled $110 million in public safety grants, citing the recent passage of a city ordinance that decreases cooperation with federal immigration enforcement. 

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Calling it "a crisis situation," Mayor John Whitmire set a city council meeting for Friday to vote on repealing the ordinance, which was passed on April 8.

"We have to provide safety in the city of Houston," he told the city council on Tuesday, adding some of the funding is needed for 2026 FIFA World Cup preparations. "This is not a time to play politics. The bottom line is the governor means business."

The executive director of the Republican governor's public safety office gave Houston until April 20 to rescind the ordinance or face having to repay within 30 days the entire $110 million in grant money it received for fiscal 2026. Last week, the state's Republican attorney general launched a probe into whether the city ordinance violates a Texas law banning policies that prohibit or materially limit cooperation with U.S. Immigration and Customs Enforcement. 

The nation's fourth-largest city is already facing a $174 million deficit in its current $3 billion general fund budget as a result of unrealized property tax revenue, as well as unbudgeted overtime and back pay for firefighters, Houston Controller Chris Hollins reported earlier this month.

"We can't budget based on assumptions that we know won't hold, and we cannot ask Houstonians to trust the plan if the plan doesn't reflect the truth that we all know to be true," he said. "When the numbers don't add up, the impact doesn't just stay on sheets of paper. It shows up in people's lives. It shows up in reduced response times. It shows up in garbage not being picked up. It shows up in services not being delivered or reduced." 

Spending pressures and shrinking budget reserves led to negative outlooks in 2024 on Houston's AA bond ratings from Fitch Ratings and S&P Global Ratings. Both warned their ratings could be downgraded due to the continued depletion of reserves. The city has a stable outlook on its Aa3 rating from Moody's Ratings.


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Budgets City of Houston, TX Texas Politics and policy Public finance
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