The Office of Management and Budget told Harris County Commissioners Court on Thursday that they project a $3 billion budget needed for the 2027 fiscal year.
HARRIS COUNTY, Texas — Harris County officials on Thursday presented a preliminary fiscal year 2027 budget forecast, projecting a $129 million deficit, driven by rising health care costs, inflation, pay equity increases and state-mandated spending obligations.
The county’s Current Level of Service and Spending forecast, a planning tool used to estimate the cost of maintaining existing county operations, projects a FY27 budget of approximately $3.056 billion.
Officials with the county’s Office of Management and Budget said the forecast reflects increasing financial pressures across nearly every area of government, including law enforcement compensation, healthcare costs, technology costs and the continuation of programs previously funded through one-time sources.
“The results show that Harris County’s financial picture is very quickly changing for the worse,” county officials wrote in the presentation, citing “significant growth in healthcare costs, substantial vendor inflation, additional pay equity and compensation expenses, restoration of countywide obligations previously funded through one-time sources, and state-mandated requirements.”
Property taxes remain the county’s primary revenue source, accounting for roughly 80% of total revenue. Officials said maintenance and operations tax revenue, which funds day-to-day county services and administrative expenses, is expected to increase in FY27 because the 2025 tax rate came in slightly higher than anticipated and non-tax revenues are projected to rise.
Based on the voter approval rate, county officials estimate that FY27 general fund revenue will increase by about $158 million over the adopted FY26 budget.
Even with that increase, projected expenditures are expected to exceed revenues by $129 million.
The forecast projects FY27 spending will be approximately $287 million higher than the adopted FY26 budget. The largest increase, about $193 million, comes from countywide “build-ins,” including law enforcement pay parity, the restoration of obligations previously funded through one-time sources, and the continuation of American Rescue Plan Act (ARPA) priority programs.
Among the major spending drivers (dollar amounts show the projected increase from FY26 to FY27):
- $73 million for Year 2 of the law enforcement pay parity ($42 million) and to fund vacant law enforcement positions ($31 million).
- $69 million to restore county obligations previously funded through one-time sources, including $25 million in hiring freezes and $44 million in special revenue funds.
- $38 million in projected health care cost increases, largely tied to rising use of “certain designer medications.”
- $35 million in department Current Level of Service and Spending requests, including $14 million for ARPA Priority programs.
- $32 million in TIRZ increases, state-mandated requirements and general administrative cost increases.
- $30 million in countywide compensation increases related to the annualization of a pay equity study, in addition to $50 million already budgeted in FY26.
- $20 million in inflation-related costs, including for critical software, fuel, vehicle maintenance and utilities.
- $6 million in mid-year supplementals, including general order bond attorneys, worksite safety, AI solutions, HRT compensation positions, county clerk and other supplementals.
Officials, however, projected no increases in workers’ compensation or pension costs in FY27.
General government spending accounts for the largest portion of the countywide build-ins for FY27 at roughly $100 million more compared to FY26. That includes restoring one-time funding sources, setting aside money for countywide obligations and funding election-related costs such as temporary worker pay increases and voter outreach programs.
Public safety and law enforcement costs account for another $75.4 million increase in spending next year, compared to this year, including Year 2 of the law enforcement pay parity and funding for vacancies in law enforcement departments.
The county also projects increases in spending tied to state mandates, including five new civil district courts and one new civil county court.
Flood Control District projections, however, showed a more stable outlook. Officials projected FY27 revenues of approximately $263 million and expenditures of about $258 million, resulting in a projected $5 million surplus.
Flood control spending increases include infrastructure maintenance, sediment removal, erosion repairs and vegetation management, along with inflation-related increases for construction management and facility operations.
Officials with the county’s Office of Management and Budget also outlined the upcoming FY27 budget timeline during Wednesday’s presentation:
- Mid-June: Updates to the Current Level of Service and Spending forecast
- July 13-16: Department budget hearings
- June-August: Budget town halls hosted by commissioner precincts
- August 17: Next year’s proposed budget and tax rate
- September 8: Budget amendment process
- September 17: Commissioners Court approval of next year’s budget and tax rate
Harris County’s FY27 begins on Oct. 1, 2026.
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