After a lengthy debate, Houston City Council voted to put a hefty property tax hike up for consideration in October as an emergency measure to assist the city in Hurricane Harvey relief.
The tax hike currently on the table would increase property taxes by 8.9 percent for one year, changing the rate from 58.64 cents per $100 of assessed value to 63.87 cents per $100 and resulting in an uptick of $118 next year in property taxes for the average Houston homeowner. It would result in an extra $113 million in tax revenue for the city.
Mayor Sylvester Turner repeatedly stressed during City Council that council members' votes on Wednesday did not indicate any support for the merits of the tax hike. The only thing council members voted to do was put the measure up for consideration on City Council agenda on October 18 and set three public hearings over the next month: September 25 at 6 p.m.; October 2 at 6 p.m; and October 11 at 9 a.m.
Turner stressed that, based on the financial department's more detailed analysis and public comment, the proposed tax rate increase could be lowered — or raised — by the time October 18 rolls around. Still, three council members — Michael Kubosh, Greg Travis and Jack Christie — voted no, not wanting to indicate in any way, shape or form that they supported the tax increase.
"I think we’re all in agreement — we need the money. But I just want to know all the different avenues we can use to get it," Travis said. "I think we'd all like to know what's all available to us, and then we can have a discussion about which is feasible and choose a proper course," rather than rushing into a property tax hike.
Backlash against Turner for proposing the hike has already begun in waves, with the Harris County GOP saying Wednesday that Turner was simply taking advantage of Hurricane Harvey to get what he always wanted: to increase taxes and do away with the city's revenue cap, which limits how much the city can hike up property taxes. The GOP called it an "opportunistic tragedy tax."
Turner, however, maintains that the increase is absolutely necessary, given that FEMA will certainly not reimburse the city for everything. First responders are currently owed a hefty amount of overtime pay, debris removal is estimated to cost $230 million alone — 10 percent of which the city will pay for — and the total cost estimate for Houston's recovery is largely unknown. He said it is only "serendipitous" that Hurricane Harvey hit around the same time he had been considering a tax increase.
"Of course, there's only one exception to the revenue cap, and that's when it's an emergency," Turner said. "This happens not only to be an emergency, but it's the most rainfall we've ever gotten. It's unprecedented. It's historic. You see the debris that's out here — it doesn't even compare to the debris we had in 2015 and 2016. This is an emergency, and based on preliminary assessment, we're expecting damages that won't be recovered from FEMA to be well over $110 million. But we'll get better numbers. We'll streamline it."
See, the big problem for many council members — not just those who voted no — was that the numbers are seriously murky at this point. The city has no way of knowing how much FEMA will reimburse the city for various repairs or for city vehicle or equipment replacements thanks to damage from Harvey, versus how much FEMA will leave for the city to pay for. Kelly Dowe, the city's chief financial officer, said that, given all the unknowns, it was his recommendation that the city build itself a "significant cushion" with the tax hike so the city could have some idea how it would pay back millions in loans it may need to take out soon.
"The challenge we all face right now is being at the front end of this years-long process to establish what is going to be reimbursable, what will not be allowed, and having to make a lot of assumptions about what that will look like at the end of this year," said Dowe, who is set to leave the administration at the end of September for a new job. "It's a monumental task for all of us."
But council members including Mike Knox and Greg Travis pushed back, questioning how the city finance department even came up with a nearly 9 percent property tax increase without even knowing most of the variables. Turner, in fact, said that 9 percent probably won't even be high enough, but did not appear to be gunning for a bigger increase, saying he was trying to strike a balance between being sensitive to many flood victims' current predicaments and the need to get Houston collectively back on its feet. At one point, he snidely told Knox that if he had any suggestions for how to do that beyond a property tax hike, he was all ears — perhaps they could just leave all the debris on the curb to save $230 million, he added sarcastically.
Knox said, "I think it’s clear we must have a great deal more information than we currently have before we can vote on this. And I honestly don’t see how we’ll have that information by October 18: There’s so many FEMA requirements about how we’ll be reimbursed and what’s reimbursable. We’re supposed to look into a crystal ball and make a decision? I don’t think so.”
Dowe seemed doubtful that council members would have an entirely clear understanding of Harvey's impact on the city's finances by the time October 18 — the day council will vote on the tax hike — arrives. But he said the finance staff is working around the clock to compile the most accurate estimates possible.
And by October 18, in Turner's view, a no vote on this property tax increase would amount to a no vote on helping Houston recover. For flood victims, however, it's just another financial burden to weigh on their backs.
"There are tremendous needs in this city, in these districts, and people have been calling me, asking me for things to happen," Turner said. He paused, then shook his head and let out a subtle laugh. "You can’t do it without paying us. I’m sorry. Nobody wants a tax increase. I don’t want a tax increase. But you can’t do it without paying for it. You can’t."
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