{"id":991326,"date":"2026-08-09T16:14:19","date_gmt":"2026-08-09T16:14:19","guid":{"rendered":"https:\/\/www.europesays.com\/us\/991326\/"},"modified":"2026-08-09T16:14:19","modified_gmt":"2026-08-09T16:14:19","slug":"houstons-finances-just-got-a-better-report-card-heres-why-that-matters","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/991326\/","title":{"rendered":"Houston&#8217;s finances just got a better &#8216;report card.&#8217; Here&#8217;s why that matters"},"content":{"rendered":"<p class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Text-nO2aZ44r__TextBase-sc-s2hv5x-0 jJNfBD fSvavs article-text\"><strong>HOUSTON<\/strong> \u2013 For the first time in about 12 years, Moody\u2019s Ratings has given the City of Houston a better \u201creport card\u201d on its finances.<\/p>\n<p class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Text-nO2aZ44r__TextBase-sc-s2hv5x-0 jJNfBD fSvavs article-text\">Last week, Moody\u2019s upgraded Houston\u2019s general credit rating to Aa2 from Aa3, the city\u2019s first ratings upgrade from the agency in about 12 years. Moody\u2019s also kept a stable outlook, meaning it expects Houston\u2019s finances to stay on a steady track for now.<\/p>\n<p class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Text-nO2aZ44r__TextBase-sc-s2hv5x-0 jJNfBD fSvavs article-text\">Houston\u2019s credit rating matters because the city borrows money to pay for big, long-term projects \u2014 and a better rating can help Houston borrow at lower interest rates, saving money over time.<\/p>\n<p>Why Moody\u2019s says Houston is in better shape<\/p>\n<p class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Text-nO2aZ44r__TextBase-sc-s2hv5x-0 jJNfBD fSvavs article-text\">Moody\u2019s said the upgrade is tied to budget decisions the city made for fiscal year 2027.<\/p>\n<p class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Text-nO2aZ44r__TextBase-sc-s2hv5x-0 jJNfBD fSvavs article-text\">The rating agency said Houston made changes that bring in more ongoing revenue and shift certain costs \u2014 steps it says narrowed a projected budget gap.<\/p>\n<p class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Text-nO2aZ44r__TextBase-sc-s2hv5x-0 jJNfBD fSvavs article-text\">Moody\u2019s said the city reduced its projected fiscal 2027 budget gap to about $26 million (about 0.83% of revenues) from an earlier estimate of $209 million.<\/p>\n<p class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Text-nO2aZ44r__TextBase-sc-s2hv5x-0 jJNfBD fSvavs article-text\">Among the moves Moody\u2019s cited:<\/p>\n<ul class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 etvbxt font_openSans articleList\">\n<li class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Stack-vJ7SwH7U__StackBase-sc-1m5bkhd-0 evEXvX dsnUCb\">\n<p>A new right-of-way fee equal to 5% of combined utility system gross revenues<\/p>\n<\/li>\n<li class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Stack-vJ7SwH7U__StackBase-sc-1m5bkhd-0 evEXvX dsnUCb\">\n<p>Moving solid waste (trash) costs into the city\u2019s combined utility system<\/p>\n<\/li>\n<\/ul>\n<p class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Text-nO2aZ44r__TextBase-sc-s2hv5x-0 jJNfBD fSvavs article-text\">Moody\u2019s also pointed to Houston\u2019s improving long-term cost picture, including declining pension-related liabilities, as a sign the city has more breathing room than it did a few years ago.<\/p>\n<ul class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 etvbxt font_openSans articleList\">\n<li class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Stack-vJ7SwH7U__StackBase-sc-1m5bkhd-0 evEXvX dsnUCb\"\/><\/ul>\n<p class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Text-nO2aZ44r__TextBase-sc-s2hv5x-0 jJNfBD fSvavs article-text\">Houston\u2019s massive economy also works in its favor. Moody\u2019s estimates the city\u2019s economy at about $760 billion \u2014 roughly a quarter of Texas\u2019 economic output \u2014 and said Houston has become more resilient as industries such as health care, transportation, logistics and tourism have grown alongside energy.<\/p>\n<p>City controller has warned Houston isn\u2019t out of the woods<\/p>\n<p class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Text-nO2aZ44r__TextBase-sc-s2hv5x-0 jJNfBD fSvavs article-text\">The Moody\u2019s upgrade comes after months of public debate over Houston\u2019s budget and financial stability.<\/p>\n<p class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Text-nO2aZ44r__TextBase-sc-s2hv5x-0 jJNfBD fSvavs article-text\">City Controller Chris Hollins has repeatedly warned that Houston\u2019s finances are under strain and has criticized the city\u2019s approach as relying too much on fees and assumptions that could fall short.<\/p>\n<p class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Text-nO2aZ44r__TextBase-sc-s2hv5x-0 jJNfBD fSvavs article-text\">In June, Houston City Council passed a $7.5 billion budget that included a new $5 monthly solid waste administrative fee and a proposed utility-related right-of-way charge. Hollins criticized the plan, arguing it lacked transparency and relied on what he called \u201cgimmicks\u201d and \u201chidden costs.\u201d<\/p>\n<ul class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 etvbxt font_openSans articleList\">\n<li class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Stack-vJ7SwH7U__StackBase-sc-1m5bkhd-0 evEXvX dsnUCb\"\/><\/ul>\n<p class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Text-nO2aZ44r__TextBase-sc-s2hv5x-0 jJNfBD fSvavs article-text\">Hollins also <a href=\"https:\/\/www.click2houston.com\/news\/local\/2026\/06\/09\/houston-controller-chris-hollins-certifies-mayor-whitmires-dollar75-billion-budget-proposal-ahead-of-council-vote\/\" target=\"_blank\" rel=\"nofollow noopener\">certified the mayor\u2019s budget proposal<\/a> ahead of the council vote, fulfilling one of the controller\u2019s duties under the City Charter. He stressed that certification was a legal determination, not an endorsement of the spending plan. Hollins previously said the administration\u2019s plan to raise more than $100 million annually through a combined utility system right-of-way fee could be uncertain and unsustainable over time.<\/p>\n<p class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Text-nO2aZ44r__TextBase-sc-s2hv5x-0 jJNfBD fSvavs article-text\">Earlier this year, Hollins warned the city could be facing a large shortfall \u2014 a claim Mayor John Whitmire disputed.<\/p>\n<ul class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 etvbxt font_openSans articleList\">\n<li class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Stack-vJ7SwH7U__StackBase-sc-1m5bkhd-0 evEXvX dsnUCb\"\/><\/ul>\n<p class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Text-nO2aZ44r__TextBase-sc-s2hv5x-0 jJNfBD fSvavs article-text\">The upgrade does not mean Houston\u2019s budget challenges have disappeared. Credit ratings primarily measure a government\u2019s ability to repay debt, and Moody\u2019s noted that the city still faces financial pressures. Hollins\u2019 criticism has focused more heavily on whether the city\u2019s new budget strategies are sustainable over the long term.<\/p>\n<p class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Text-nO2aZ44r__TextBase-sc-s2hv5x-0 jJNfBD fSvavs article-text\">Moody\u2019s also cautioned that the city could face a future downgrade if its projected budget improvements fail to materialize and Houston returns to persistent structural budget gaps.<\/p>\n<p>Another ratings firm recently moved Houston\u2019s outlook to stable<\/p>\n<p class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Text-nO2aZ44r__TextBase-sc-s2hv5x-0 jJNfBD fSvavs article-text\">Moody\u2019s isn\u2019t the only ratings agency following Houston.<\/p>\n<p class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Text-nO2aZ44r__TextBase-sc-s2hv5x-0 jJNfBD fSvavs article-text\">In June, S&amp;P Global Ratings <a href=\"https:\/\/www.click2houston.com\/news\/local\/2026\/06\/25\/houstons-financial-outlook-revised-to-stable-by-sandp-global-ratings-mayor-whitmire-says\/\" target=\"_blank\" rel=\"noreferrer nofollow noopener\" title=\"https:\/\/www.click2houston.com\/news\/local\/2026\/06\/25\/houstons-financial-outlook-revised-to-stable-by-sandp-global-ratings-mayor-whitmire-says\/\">revised Houston\u2019s financial outlook from negative to stable<\/a>, a change Whitmire said reflected progress. In prior reports, S&amp;P cited pressure from rising debt costs, salary obligations and Houston\u2019s limited ability to raise revenue under the city\u2019s property tax cap.<\/p>\n<ul class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 etvbxt font_openSans articleList\">\n<li class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Stack-vJ7SwH7U__StackBase-sc-1m5bkhd-0 evEXvX dsnUCb\"\/><\/ul>\n<p>What Moody\u2019s said about reserves<\/p>\n<p class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Text-nO2aZ44r__TextBase-sc-s2hv5x-0 jJNfBD fSvavs article-text\">Moody\u2019s also pointed to Houston\u2019s sizable financial cushion. The agency said the city ended fiscal 2025 with an available fund balance equal to about 44% of annual operating revenue. Moody\u2019s expects that cushion to remain around 40% through fiscal 2027, even as Houston uses some reserves to cover higher public safety costs and slower revenue growth.<\/p>\n<p>A separate upgrade tied to hotel tax money and the convention center<\/p>\n<p class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Text-nO2aZ44r__TextBase-sc-s2hv5x-0 jJNfBD fSvavs article-text\">In a separate action, Moody\u2019s also upgraded Houston\u2019s Convention and Entertainment debt backed mainly by hotel occupancy tax revenue \u2014 money connected to tourism and convention business \u2014 to A1 from A2.<\/p>\n<p class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Text-nO2aZ44r__TextBase-sc-s2hv5x-0 jJNfBD fSvavs article-text\">Moody\u2019s said the rating reflects improved debt-payment coverage following a $1.1 billion debt issuance and restructuring earlier this year to fund improvements to the George R. Brown Convention Center.<\/p>\n<p class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Text-nO2aZ44r__TextBase-sc-s2hv5x-0 jJNfBD fSvavs article-text\">Moody\u2019s expects hotel-tax collections to decline about 5% in fiscal 2026 before rebounding 6.4% in fiscal 2027, supported in part by Houston\u2019s seven FIFA World Cup matches this summer.<\/p>\n<p>Start Here, Houston<\/p>\n<p class=\"Box-_wrDxHtU__Box-sc-10sa3ie-0 Text-nO2aZ44r__TextBase-sc-s2hv5x-0 bTVksG\">More Stories Like This In Our Email Newsletter<\/p>\n<p>Copyright 2026 by KPRC Click2Houston &#8211; All rights reserved.<\/p>\n","protected":false},"excerpt":{"rendered":"HOUSTON \u2013 For the first time in about 12 years, Moody\u2019s Ratings has given the City of Houston&hellip;\n","protected":false},"author":3,"featured_media":991327,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[5130],"tags":[13237,10882,26448,79,4345,6459,116208,358,3187],"class_list":["post-991326","post","type-post","status-publish","format-standard","has-post-thumbnail","category-houston","tag-city-budget","tag-city-of-houston","tag-debt","tag-economy","tag-houston","tag-money","tag-moodys-ratings","tag-texas","tag-tx"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/117066443529991221","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/991326","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=991326"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/991326\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/991327"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=991326"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=991326"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=991326"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}