Mayor Whitmire promised to stop diverting drainage funds. The courts may hold him to it.

In a decision that could put Mayor John Whitmire and City Hall in a financial bind, a state appeals court ruled Tuesday that Houston must spend the money it collects for a special road and drainage fund on those purposes alone.

If it stands, the court’s ruling would mark a win for Houston residents who long argued that former Mayor Sylvester Turner ignored the will of voters by shorting drainage projects by hundreds of millions of dollars.

The ruling also could blow a hole in the city budget for Whitmire, who already is trying to figure out how to pay for a proposed $1.5 billion back-pay settlement and raise for Houston firefighters.

A mayoral spokeswoman said the city will appeal. In a statement, Whitmire said the court decision would place the city in an untenable position.

“I certainly agree the city must invest more to address our infrastructure needs, but I don’t believe Houstonians would elect to do that through a court’s order that funds drainage infrastructure at the expense and sacrifice of public safety or quality of life services,” Whitmire said.

Drainage, derailed

In 2010 and 2018, voters passed amendments to the city charter meant to ensure that Houston spent about a fifth of its property taxes on fixing up the city’s woeful street and drainage infrastructure.

The dedicated fund failed to receive all the funds its supporters intended, as the Houston Chronicle reported last year . Instead, city officials seized on a legal interpretation of the charter amendment that allowed them to shunt up to $419 million toward other purposes.

Turner argued the diversion was crucial to ensure that the city was able to provide police, fire and garbage services. Local engineers Bob Jones and Allen Watson disagreed and filed suit.

The case already has been to the state Supreme Court once as it meandered through the legal system, but Tuesday’s decision marked a major win for the plaintiffs.

The 14th Court of Appeals panel examined questions of law and mathematics in its 20-page opinion, unanimously concluding the city had it wrong.

“The City Charter requires City Council to allocate a certain amount of ad valorem tax revenue to the drainage fund,” the court found, in an opinion written by Chief Justice Tracy Christopher. “The question presented in this case is whether City Council has been making the required allocation. The short answer is ‘no.’”

The court decision is forward-looking and does not require the city to make up for past diversions.

City of Houston in the hot seat

The court ruling carries extra weight because City Council must approve next year’s budget by July 1.

Over the course of 20 years, the appeals court noted, the drainage diversions could amount to “several billion dollars.”

Whitmire last year promised to end the diversions from the fund. He made that promise, however, before reaching a proposed $1.5 billion settlement with the Houston Professional Fire Fighters Association that could cramp the city budget for years to come. The Houston Police Officers Union also is up for contract negotiations next year.

Whitmire acknowledged his previous position while voicing his objection to the ruling.

“While I recognize and campaigned on the importance of drainage infrastructure, I don’t believe drainage infrastructure should compete with public safety funding,” he said. “This shows again the need for us to have a grown-up discussion about the short- and long-term condition of city finances, which I inherited, and we should not continue to kick this can down the road.”

In a prepared statement, the plaintiffs urged the city to spend the road and drainage money on those purposes alone.

“We are pleased to see the Fourteenth Court of Appeals affirm our position that the City of Houston violated the 2018 voter-approved charter amendment and has been illegally withholding hundreds of millions of dollars from the Dedicated Drainage and Street Renewal Fund,” Jones and Watson said. “The City of Houston must now follow what Houstonians voted for and approved in 2018, forcing this illegal practice to cease.”