Council spurns mayor’s request to keep tax rate
Turner’s plan would have raised $7.8M using disaster revenue cap exemption
City Council rejects Mayor Sylvester Turner’s proposal to leave the tax rate unchanged, instead approving a tiny rate cut to comply with the voter-imposed cap.
City Council on Wednesday rejected Mayor Sylvester Turner’s proposal to leave Houston’s tax rate unchanged from last year, instead approving a tiny rate cut to comply with the voter-imposed cap on property tax revenues.
Turner had proposed using Hurricane Harvey to invoke a disaster exception clause in the 13-year-old revenue cap and leave the rate at 58.642 cents per $100 in assessed value. That plan would have let the city collect $7.8 million next year for storm recovery costs in addition to what the cap otherwise would allow, or about $7 next year for the typical homeowner.
It was the same process, Turner stressed, that his administration and former Mayor Annise Parker’s administration had followed to collect funding above the revenue cap after floods in each of the last two years — actions that went unnoticed by council members and news media at the time.
The council nonetheless voted 15-2 to approve an amendment from Councilman Mike Knox to lower the rate by 0.221 cents — the rate City Controller Chris Brown had said the revenue cap dictated independent of Harvey-related expenses.
A Monday afternoon memo from Brown outlining Turner’s plan to keep the rate flat caused a stir among the council members who had not been told what rate Turner would ask them to consider.
The mayor had proposed a 9 percent rate increase last month but scrapped that plan after federal officials increased their contribution to the recovery and Gov. Greg Abbott provided $50 million in state disaster funds.
Brown’s memo also stated that he could not verify Turner’s proposed rate because the mayor publicly had said he would “not exercise the emergency
provision under the revenue cap.”
Turner said Wednesday that his comments about not invoking the disaster clause were intended to convey that he would not do so to seek a higher tax rate; after questions from Brown and council members, he agreed he was using the exception to seek a flat rate.
Brown’s memo also stated he could not “validate” the Turner administration’s estimates of Harvey costs that would be used to justify a higher rate if the disaster exception was invoked.
Conflicting accounts
Former city finance director Kelly Dowe, who left the city last month but was involved in the tax rate discussions and addressed the council Wednesday, pushed back on that point.
It was easier to adjust the tax rate within the revenue cap to incorporate expenses from prior storms because they hit earlier in the year, Dowe said, adding, “There’s going to be $7 million worth of costs either way.”
Turner produced a 2016 memo from Brown and a 2015 memo from Brown’s predecessor, Ron Green, in which the controller’s office had no trouble validating storm cost estimates to adjust tax rates within the revenue cap after less severe storms in recent years. That let the city collect an extra $6 million after the Tax Day Flood last year and an extra $16 million after the 2015 Memorial Day Flood.
“No one is busting the revenue cap. No one is going around the revenue cap,” Turner said before council voted. “We’re being consistent with what we’ve done in 2015 and 2016 with the support of the previous and existing controller.”
The mayor and controller gave conflicting accounts of their private phone conversations leading into Wednesday’s discussion, but there was little question about the level of acrimony between the two over the issue.
Turner accused Brown of changing his process “based on what you thought you heard me say.”
“If you’re going to be a watchdog, be a consistent watchdog,” Turner said to Brown. “If you were following the same process, we wouldn’t be having this conversation.”
The situation is different, Brown said, because Turner last year and Parker in 2015 had not publicly stated they would avoid invoking the exception clause in the revenue cap.
“I’m trying to be transparent,” Brown said. “If you’re going to exercise the emergency provision, we need to be transparent about it.”
Several council members argued that setting any rate other than that dictated by the revenue cap would be taken as an affront by many voters just days before they begin heading to the polls to weigh a crucial $1 billion bond to secure Turner’s landmark pension reforms and another $495 million in city improvement bonds.
“If we lose the pension obligation bonds, the $7.8 million will be nothing,” said Councilman Greg Travis, noting much of the nearly $3 billion in benefit cuts included in the reform plan could be unraveled if the pension vote fails.
‘Not the right vote’
Councilwoman Brenda Stardig agreed, saying, “I don’t think the timing is such that we should proceed.”
Turner argued it sent the wrong message for the city to be cutting its tax rate voluntarily when it is asking state and federal officials for billions of dollars for storm recovery efforts. The need for city services will only grow in the coming months, he added.
“Many of the people who are suffering today, they’re going to need us to ease their situation as we go forward. Are we going to take actions today that are going to limit our ability to meet their needs?” Turner said. “The easy vote is the vote to lower. But in my humble opinion, it’s not the right vote. It’s not what’s in the best interest of the people in this city.”
Ultimately only Councilwoman Ellen Cohen joined the mayor in opposing Knox’s amendment to lower the rate and in the subsequent vote to set the rate at that lower amount.