Potential Problems With Mayor Turner's First City Budget

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Mayor Sylvester Turner’s first city budget, approved this week by Houston City Council, has been touted as some sort of crazy amazing feat of leadership. 

Instead of slicing deep into the city’s workforce or cutting major corners with firefighting and library services, Turner rallied the troops into a group circle at City Hall and they chanted kumbaya in unison and engaged in “shared sacrifice and laser fine attention to fiscal management.” (At least that’s what city literature sort of portrays. No word on whether kombucha was served to lubricate city officials' parched-from-kumbaya throats.)

“By unanimous vote and in record time,” reads a city press release, “Houston City Council [on Wednesday] approved Mayor Sylvester Turner’s first city budget. In stark contrast to budget discussions of years past that lasted into the wee hours of the next morning, the vote came just before noon [Wednesday] and nearly a month ahead of the normal schedule.”

Just because the $2.3 billion budget was done quickly doesn’t mean it’s trouble-free.

To deal with a $160 million shortfall, Mayor Turner’s team decided to steer $19.6 million of Tax Increment Reinvestment Zone money — which helps pay for neighborhood improvement projects and basic infrastructure — back to the general fund in order to pay for essential services such as firefighters and solid-waste collection. Overall, Turner says that he plans to spend $82 million less in fiscal year 2017 (which begins on July 1) than the city has spent in fiscal 2016. 

“The criticism of TIRZs is that they don’t pay their fair share of city costs. When a TIRZ is created, we freeze the amount of ad valorem tax that gets contributed to the general fund…but those tend to be for capital projects, not for operating costs,” Andy Icken, City of Houston chief development officer, tells the Houston Press.

Instead, says Icken, they’ve recalibrated the percentage of what constitutes a TIRZ’s “fair share” of city operating costs. They came up with a total of $19.6 million for the city’s 27 TIRZs.

“You actually have to look at the year the TIRZ was created to calculate the average growth that would’ve occurred,” says Icken. “Obviously the number is different on every TIRZ, but I’ll tell you that it’s about 20 percent of the increment.”

Capital improvement projects, such as building more trails in Memorial Park, will be delayed from five years to seven years, says Icken.

Oh, but there’s that pesky revenue cap, which the city hit in 2014. The measure, approved by voters in 2004, has been a contributing factor in Houston’s budget crisis; Turner, during his first State of the City address, said that he hopes to eliminate the revenue cap by November 2017.

Jim Bigham, president of the Sharpstown Civic Association, thinks that the city has erroneously misdirected funds away from the revenue cap and to Tax Increment Reinvestment Zones, which are undergoing their own set of problems. After reviewing Turner’s budget and the reallocation of TIRZ revenue, Bigham says, “I think it raises a lot of questions…you can’t just pluck nearly $20 million out of that pool. That’s a lot of money.”

“In my view, the money that’s withdrawn shouldn’t be exempt from the revenue cap. That’s not a fee. It’s a diversion of resources. That would no longer be applicable to the revenue cap,” says Bigham, a community journalist who lost his debut bid for Houston City Council Position, District J, in a run-off election with incumbent Mike Laster in December 2015.

When asked about the $19.6 million and the revenue cap, Icken says, “Doesn’t change anything. Because the services that they’re paying for are delivered within the TIRZ itself, that’s the way the law and the charter amendment was written, and we believe it doesn’t change any calculation on the revenue cap.”

“We’re sitting down with each TIRZ,” adds Icken. “They all know what we believe the numbers to be...my target is by the middle of July to bring all the detailed TIRZ budgets back before City Council.”

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