What happens if the $34 million in additional property tax and $32 million in new sales taxes forecast by the city do not materialize?
The city bases its property tax forecasts on data from the Harris County Appraisal District, which gives it a bottom line figure on what local property is worth. Sales tax numbers are based on a model that considers population, income, prices and sales. So these aren’t shots in the dark. They are predictions. If collections go south, presumably, the city could draw down its reserve fund without going below a level that would affect the city’s bond rating. However, the city is already tapping it for $30 million in this proposed budget, so it’s not an unlimited backstop.
I think if there’s going to be serious pushback on the budget, this is where it will be. It’s perfectly reasonable to argue that the city should resist the urge to tap into its reserves, even for a long-term money saver like the sobering center, as a hedge against the revenue projection being too optimistic and/or to replenish what has been drawn down in recent years. Doing that will almost certainly mean that some cuts will be required this year, and I’m going to guess that Mayor Parker would prefer to avoid that if at all possible. I don’t know how this is going to play out, but I’ll be surprised if this isn’t a big part of the dynamic.