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You may say to yourself “Well, how did I get here?”

What’s missing from this story?

The city of Houston’s budget crisis that has resulted in 747 employees getting pink slips last month and likely will close pools and community centers did not happen overnight.

It has been brewing for the better part of a decade, the result of, among other things, spending more while taxing less, borrowing to pay bills, raiding its piggy bank and channeling ever more payroll dollars into funds for retirees. A public hearing on the coming year’s budget is scheduled for June 14.

Mayor Annise Parker inherited a city that she said last year had been spending more than it had taken in “for years.” Parker, who served as controller or councilwoman since the 1990s, has refused to second-guess her predecessor, Bill White.

However, she has distanced herself by highlighting that this year’s budget would not use pension obligation bonds to meet the city’s commitment to retirees — a signature feature of White’s budgets. The city borrowed $245 million to pay pension benefits during the White years. The money spent, the city now has to pay $34 million in principal and interest in the coming fiscal year.

What’s missing, at least until the very end, is any mention of the drop in revenue collected due to the downturn in the economy. Obviously, there’s nothing the city can do to change this, and obviously it is constrained by its past decisions as it tries to deal with it. But this is a huge factor, and the story contains many paragraphs about spending before it finally acknowledges that the loss of revenue is a pretty big deal, too.

All these squeezes occur as the city forecasts a drop in its income. Her fiscal 2012 budget projects $8 million less in property tax collections than this fiscal year, but it is a $50 million drop from fiscal 2010.

So if property tax collections had just stayed flat over the past two years, there would be at least $50 million more to spend in the 2012 budget, and there would have been $42 million more in last year’s. That doesn’t include a drop in sales tax revenues, which only started to recover last year at the state level. The city would still be in a deficit situation and would still need to make cuts, but that’s a pretty significant fraction of the total shortfall. Of course, the reason the city had been spending more in previous years is partly because it had more money to spend: Tax collections had been growing, not staying flat. With that growth in tax collections came a series of cuts in the tax rate, which the story says amounts to about $20 million per year. Undoing those rate cuts is of course off the table because that’s the way the world works these days, but add that $20 million to the drop in revenue due to the economy and you have more than half of the 2012 shortfall. We’d be having a very different budget conversation under those conditions.

The city clearly does have to deal with spending, with pension issues being front and center as the growth in the city’s pension obligations has been a big driver of the deficit as well. My point is simply that we need to understand all of the factors involved in order to properly respond to the situation we’re in. Some of the problem we’re facing is transient, and we need to be careful about using disruptive solutions for it. Nancy Sims and Houston Politics have more.

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