Study Reveals Financial Mess for City of Houston

The City of Houston is in the middle of a financial mess.

A citywide efficiency study was conducted on Houston's 22 departments and then looked at during the Houston City Council meeting Wednesday. The accounting firm Ernst & Young conducted the review which shows the misuse of city credit cards and other widespread financial and operational problems.

The city has it's challenges with pay equity and competitive compensation. Purchasing cards, or “p-cards,” can be obtained by authorized city employees to make purchases for city business. The review found that spending limits went over and some items were purchased from unauthorized vendors.

So, the city has a plan to switch things up from an organizational structure and also better monitor spending. This, to try and restore public trust in city government.

"They have lost confidence in our ability to provide the needed services," Houston Mayor John Whitmire said during Wednesday's meeting about Houston-area residents.

The efficiency study showed a need for improvements in four main categories: performance and accountability, operations and efficiency, spending and procurement, and financial controls and risks.

City officials unanimously agreed to hire Ernst & Young to do a complete audit in May 2024 and received a summary of the results on Tuesday. As part of the review, Ernst & Young talked to 12,000 city employees and came to an agreement that they spent too much time and money on "things that don't matter" and "output, not outcome."

"There's been glaring inefficiencies, duplications and lack of accountability, but it's going to end now," the mayor said.

After speaking to Houstonians and listening to their concerns about the city, Mayor Whitmire said the financial standing of the city was a top reason for why he decided to run in the first place.

"Frankly, they (Houstonians) were disturbed in the direction that the city was going," Whitmire said. "Until we did the best we could do eliminate waste, duplication and corruption, I would not seek additional resources."

Houston has a budget shortfall of around $330 million. The financial deficit will grow after the city lost a court appeal in a lawsuit from 2019 over bridge and drainage fees. That forced the city to spend an additional $100 million on related projects.

"Obviously we know that we have financial challenges," said Whitmire. "I do support the premise of the lawsuit."