S&P Revises Houston’s Credit Outlook to Stable

S&P cited the FY2027 budget, a replenished stabilization fund with structural revenue moves as the reason for a more stable near‑term outlook.

Overview

S&P Global Ratings changed Houston’s outlook from negative to stable on Thursday, June 25, while keeping the city’s underlying credit rating unchanged.
The agency said the shift reflects substantial progress in closing the fiscal 2027 budget gap driven by the newly approved FY2027 budget and related measures.
City officials point to internal efficiencies led by an Ernst & Young review, department budget consolidations, and a voluntary retirement program for over 1,000 eligible employees as tools that cut costs.
Revenue and structural reforms cited include an $18 billion capital improvement program, a $5 monthly trash fee that officials plan to raise over time, moving Solid Waste into Houston Public Works, and charging utilities for rights‑of‑way.
S&P warned that the city must sustain disciplined budgeting and demonstrate Solid Waste performance and other implementation details to keep reserves stable, with potential risks if budget deviations continue.