Houston City Controller Chris Hollins called the proposed $50 million anti-annexation agreement with The Woodlands a "bad deal" for Houston on Sept. 1.

Houston City Council is scheduled to vote on the measure Wednesday, Sept. 2. Hollins' opposition marks the first public dissent from inside Houston's government against the deal, which The Woodlands Township Board of Directors approved 7-0 on Aug. 26.

Under the agreement, the third amendment to the 2007 Regional Participation Agreement, The Woodlands would pay Houston $50 million over four years. In return, Houston would affirm it has no intention to annex the township and would end The Woodlands' obligation to contribute a share of its sales tax revenue to a restricted fund for joint projects.

Hollins projects $173M loss

Hollins' office estimated Houston could miss out on as much as $173 million by 2057 if the sales tax contributions stop, Houston Public Media reported. The existing agreement's obligations run through that year.

"It's a bad deal for Houston," Hollins said. "This is the equivalent of basically giving away future paychecks to try to pay today's bills, and then doing nothing about the actual spending problem that we have."

In a separate written statement reported by the Houston Chronicle, Hollins cited a figure of nearly $200 million, suggesting his office used more than one projection.

Whitmire fires back

Mayor John Whitmire disputed the controller's numbers in a Sept. 1 interview with Houston Public Media, saying Hollins "totally manipulates the numbers for political reasons." Whitmire's finance department said it did not have an exact projection of lost revenue over the next 30 years.

Under the agreement, Houston would receive an initial $22.63 million by Dec. 31, 2026, followed by $9 million by the end of 2027, $9 million by the end of 2028 and a final $9.37 million by the end of 2029, according to Community Impact. Houston Finance Director Melissa Dubowski told the council's Budget and Fiscal Affairs Committee on Sept. 1 that the first payment would help cover the city's roughly $26 million deficit in the current fiscal year.

Budget committee chair Sallie Alcorn told Dubowski the finance department had been "charged with finding additional revenue sources, and this is a revenue source straight to our general fund."

What it means for The Woodlands

The township projects it will save an average of $4.5 million a year over the next three decades by ending the sales tax payments. The Woodlands' adopted 2025 budget included about $2.3 million to Houston under the existing agreement, according to Community Impact.

Township Chairman Brad Bailey attended the Houston committee meeting on Sept. 1 and told the Houston Chronicle that Houston has not requested funds from the Regional Participation Fund since 2018. Bailey called the $50 million "no strings attached" money for Houston and said keeping the sales tax revenue from 2030 onward is "a huge win for The Woodlands."

The original 2007 agreement included a $16 million upfront contribution from The Woodlands and an ongoing dedication of one-sixteenth of 1% of sales tax toward regional projects. In exchange, Houston agreed not to annex the township through 2057. The Texas Legislature outlawed forced annexation in 2017, requiring a voter referendum before a city can absorb an area.

Woodlands voters rejected incorporation as a city in 2021 by 67%.

What's next

Council member Edward Pollard tagged the measure the prior week, delaying the vote to Wednesday, Sept. 2. He said at the time he wanted further discussion but did not "have any reservation" about the deal.

Whitmire predicted the council would approve it.