Revenue cap likely off ballot

Turner backs off proposal to repeal limits on property tax collections, hoping to protect pension reform

Mayor Sylvester Turner abruptly reversed course Wednesday on his plan to ask voters to repeal Houston’s revenue cap this fall, saying it now is “unlikely” he will ask for its removal.

The politically cautious move would leave the city fiscally shackled in the hope that a lighter November ballot improves the chances voters sign off on hundreds of millions in general improvement bonds and $1 billion in pension obligation bonds, a crucial piece of the mayor’s landmark pension reform package.

“Do I believe that the needs are as much there to remove it as they were when I came into office? Absolutely,” Turner said. “Do I want to run the risk of losing the reforms that we’ve made to our pension system? No.”

Lifting Houston’s voterimposed cap on property tax collections had been a pillar of the mayor’s agenda, and he regularly discusses how the restriction constrains Houston’s budget, preventing the city from hiring more police officers, replacing its aging fleet and maintaining other city services, such as street repair.

Turner’s about-face came during a City Council discussion of how the cap, which has cost the city an estimated $220 million in revenue since 2014, likely will force the city to scale back the street and drainage projects budgeted in its five-year Capital Improvement Plan.

The CIP slated for council approval later this

“Do I want to run the risk of losing the reforms that we’ve made to our pension system? No.” Mayor Sylvester Turner

month accounts for the revenue cap this fiscal year but was written assuming voters would remove the restriction by the start of fiscal 2019.

The finance department estimated the cap will reduce revenue for ReBuild Houston, the city’s street and drainage repair fund, by roughly $201 million in fiscal years 2019-2022.

This would delay roughly 16 of 90 ReBuild projects planned for the next five years.

The city is identifying the affected projects, which the mayor intends to spread throughout City Council districts.

Turner does not, however, plan to remove projects from the CIP before council votes in two weeks, said Kris Banks, special assistant to the mayor on government relations.

“As we get closer to those fiscal years, we’ll make the appropriate adjustments,” Banks said.

‘A strategic decision’

Turner’s change of heart on the revenue cap surprised some council members, who first heard of his new plan during Wednesday’s meeting.

“It is unlikely I am going to ask for the revenue cap to be removed,” Turner said in response to Councilman Greg Travis, who criticized the CIP presentation as a “sales job” for repealing the revenue cap.

Turner said he expected to finalize his decision in the coming weeks.

Turner has not been shy about pointing out all of the initiatives he would like to see through, if only the city had more money.

Beyond removing a controversial item from November’s ballot, Turner said he hopes taking the revenue cap off the table will allow for more productive conversations about municipal spending.

“We need more police officers. We need more assets for our front-line responders. The CIP is directly connected to the revenue cap,” Turner said. “And so, maybe, my thinking is, if people know that I’m not asking them to repeal the revenue cap, we will pay more attention to the issues that impact Houstonians on a day-to-day basis.”

The mayor’s new plan was met with understanding around the council table.

“It’s a strategic decision,” Councilman Larry Green said. “It probably doesn’t make sense to put (the revenue cap) on the ballot, especially when we’re trying to get pension bonds passed and we’re also putting out general revenue bonds.”

Focus on bonds

Essentially asking residents to agree to increase their property taxes when other key financial measures hung in the balance widely was seen as unnecessarily risky.

A May poll from the University of Houston Hobby School of Public Affairs showed most Houston voters support issuing $1 billion in pension obligation bonds to invest in the city’s underfunded police and municipal pension funds.

However, local political analyst Nancy Sims said selling voters on hundreds of millions in bonds, together with a revenue cap repeal, “was going to be very challenging.”

The revenue cap “could have brought down all of the potential issues on the ballot,” she said.

If voters reject the November pension referendum, police and municipal workers’ $1.7 million in benefit cuts would be rescinded.

“It’s the right move,” Councilman Dave Martin said. “We’ve worked too hard to get where we are today with pension reform.”