City of Houston, TX

The event went on as scheduled Tuesday against a backdrop of escalating conflict between the mayor and controller, with each requesting a probe of the other.

Conference sponsorships targeting bond firms led Mayor John Whitmire to call for a probe into actions by Controller Chris Hollins, who denied any wrongdoing.

Houston and other Texas cities face financial pressure caused by weather disasters, public safety salaries and pensions, or capped property tax collections.

A negative outlook for the city's AA rating by Fitch Ratings follows similar action taken by S&P Global Ratings in July.

The mayor and controller debated the causes for the rating outlook revision to negative from stable ahead of a July city bond sale.

S&P Global Ratings revised the outlook on the city's AA rating to negative from stable, citing increased debt and costs from a settlement with firefighters.

The spending plan for the fiscal year that begins July 1 contains no tax increases or new fees and puts off finding a recurring solution for a structural budget gap.

The bonds are part of a proposed settlement with the city's firefighters union that would need court approval.

The spending plan for the fiscal year that begins July 1 would draw down the city's general fund balance to fill a budget gap that has grown to $187 million.

Delivery delays for Boeing planes are impacting airports, with Southwest Airlines recently announcing it is pulling out or reducing flights at some facilities.

As the nation's fourth largest city faces a growing structural budget deficit, it is also expecting to issue more than $3 billion of debt for its airport, water and sewer system, convention center, as well as to fund a settlement with firefighters and for cash-flow purposes.

Under the proposed deal, the city would sell $650 million of judgment bonds to fund back pay for firefighters, whose wages would increase by up to 34% over the life of a new five-year contract.

Funding for a $2.55 billion expansion and renovation of George Bush Intercontinental Airport's Terminal B had been held up for months by the city's former and current controller.

The deal announced by Mayor John Whitmire last week would end an eight-year-long impasse with the firefighters union and require $650 million of judgment bonds.

The $650 million settlement will fund back pay for firefighters, who will also get future wage hikes.

The Houston City Council was unable to vote on initial financing for a $2.55 billion terminal renovation project at George Bush Intercontinental Airport without certification by the city controller.

The upcoming fiscal 2025 budget will take "some first steps" to address a structural gap of about $158 million, Melissa Dubowski said.

Mayor John Whitmire expressed confidence in Melissa Dubowski's ability to guide the city through its financial challenges.

Office sectors in some Southwest cities, including Houston, are stressed due to elevated vacancy rates that may lower assessed values and property tax revenue.

Fitch Ratings said the trajectory of the city's AA rating could depend on how Mayor John Whitmire, who took office this week, resolves the years-long impasse over firefighter pay.