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Now let’s take on the revenue cap

With the pension issue settled, this can be the next big item on Mayor Turner’s to-do list.

BagOfMoney

Mayor Sylvester Turner plans to ask city voters next fall to do away with a decade-old cap on city revenues, but for now he’s stuck with it.

So City Council on Wednesday will consider cutting Houston’s property tax rate for the third time in three years, saving taxpayers money but also straining city coffers at a time when rising pension and debt costs risk forcing widespread layoffs and service reductions next summer.

The rate proposed to be set – 58.642 cents per $100 of property value – is the lowest since 1987, and represents an 8.2 percent drop since the cap took effect.

“We’re a growing, dynamic, vibrant city and we have a lot of needs,” Turner said. “People want us to be cost efficient and fiscally prudent and we are demonstrating that, but people want more police out on the street – that costs money. They want more paramedics – that costs money. They want better streets, flooding, those things cost money. For us to be forced to lower our property rates … it doesn’t make good sense.”

[…]

If the cap had not come into force, Houston would have been able to collect a projected $220 million more in the current fiscal year and the two prior ones, officials estimate.

During the same time period, the owner of a $200,000 Houston home with a standard homestead exemption will have saved about $84 in taxes, compared with the cap never having taken effect.

“People really haven’t seen the benefits of that,” Turner said. “They’re not feeling that.”

That’s an awful lot of revenue to forego for some $28 a year in savings. The revenue cap has always been a bad idea, based on a bad theory of economics, and we’re lucky to have escaped its effects before now. With the pension reform plan in place, Mayor Turner will have the capital to go to the voters and ask them to fix this error. Good riddance when that happens.

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16 Comments

  1. Paul Kubosh says:

    The real question I have is this: When the revenue cap vote loses does Boykins run for re-election? Also the average age of the people who vote is about 65-67 so I say screw the seniors. Tax away. A good progressive position.

  2. Bill Daniels says:

    When the appraisal board tells homeowners they live in the Taj Mahal, lowering the tax rate an infinitesimal amount really doesn’t do anything. It’s a lot like inflation. Each year, it costs more and more money just to keep your home out of tax foreclosure. Ending the revenue cap? Uh, no thanks. Maybe the city should privatize all those hike and bike trails Annise built, and they can become toll trails, so the people that want to use them can pay for the experience.

  3. Paul A Kubosh says:

    Make the Bike trails toll trails. Make them wear an ez tag on their helmet. Bill this is a great idea.

  4. Neither Here Nor There says:

    Bill you get my vote on that, 100 million on trails that create problems.

  5. Steve Houston says:

    1) By no means is “the pension issue settled”, the Mayor himself saying his proposal will cost at least as much for the next 30 years and that is IF he gets all three groups on board and the legislature (including some that are already beginning to claim they will not support key components of the existing proposal) agrees. Agreeing something needs to be done and agreeing on specifics are two different things.

    2) I’m not sure where this idea of pushing seniors out of their homes is coming from given the median value of a senior’s home in Houston is about $120k and the city’s exemption for them is $160k (most pay no city property tax) the same as Harris County. Those that live in multi-million dollar homes also benefit from other exemptions to I’m not losing sleep over them either.

    3) If the Mayor tried to repeal the entire Revenue cap without any restrictions, I wish him all the luck in the world because he’s going to have to make a better case to the unwashed masses. Any pension deal that includes revenue cap removal as a core component might as well be crossed off the list too, some of the reps suggesting they won’t be too happy if the Mayor comes back needing further cuts.

    4) Sell the hike and bike trails to someone that will properly maintain them because the city is not going to have the money to do so, maybe sell portions to commercialize them if need be.

    Reading the comments of late, the city pays $167 per person right now for all pension benefits. This is included in the yearly city budget but to stop the deficit spending, close to $25 more needs to be spent. That doesn’t include the deficit itself, only the yearly component, the cuts figured to how the deficit is addressed. Valuation increase covers most of the budget’s yearly increases but further lowering of rates is only going to force service cuts (and they are never the cuts a regular person would make).

  6. Bill Daniels says:

    @ Steve:

    The runaway tax problem isn’t a senior citizen only issue. People buy houses, live in them, can afford them, and gradually, CANNOT afford them due to skyrocketing property taxes. The rich can absorb these costs. The public housing residents and Section 8’ers don’t care, they have little to no skin in the game, but everybody else…..the taxing entities are actively seeking to destroy the American dream of home ownership by taxing people out of their homes.

    Sure some people probably bought too much house, but that isn’t the majority. Visit HCAD during tax protest season and see the misery the government has wrought on its people. There’s a reason Taxed Enough Already became a national rallying cry.

  7. Jen says:

    You should be glad for property taxes and bike trails, so you have something to whine, and whine and whine about. I notice, for some reason, no whining about skyrocketing home insurance costs, prescription drug gouging, health care gouging, ridiculous tax breaks given to massive corporations and extravagantly paid CEOs, and a state government coincidentally wholly owned by said corporations.

  8. Paul A Kubosh says:

    Where did I say “pushing seniors out of their homes”? Lets see how they vote…I bet it is keep the caps

  9. Steve Houston says:

    PK, it’s a commonly stated belief and several of the mayoral candidates used it last year to try and garner votes. I did not claim you made such a claim though Bill seems more than happy to jump in about it (“…isn’t a senior citizen only issue…”) as though seniors are being taxed out of their homes any more than disabled vets are. As long as society collectively thinks it’s a good idea to pay for government services via a property tax, some on the margins will not have the money to afford the upkeep or other costs of owning a house. I don’t think “many” people lose their houses just for rising city property taxes though, especially not the age group with the lowest collective poverty rate, many of whom pay no city or county property taxes.

    Otherwise, we agree that removing the revenue cap is unlikely. Just tell people what specific services truly cost and if they don’t want to pay the cost, lower the level of services.

  10. Public finance is simple and boring.

    This isn’t rocket science folks.

  11. Paul A Kubosh says:

    Yep, I still like putting an ez tag on bicycles. Make the progressives pay for their bike trials.

  12. Jules says:

    As long as the city is handing out tax abatements and 380’s to the wealthy, I will never vote to end the revenue cap.

  13. Paul Kubosh says:

    Jules, can’t argue with you on that one. Are we in agreement?

  14. Jules says:

    Paul, yes!

    But not on the bike ez tag. 🙂

  15. Jules says:

    Paul, off topic but I think we may be in agreement on this also

    http://www.khou.com/news/taxpayers-money-reportedly-not-put-toward-flooding-prevention/323462821

    Thanks to your brother for representing the people!

  16. Paul Kubosh says:

    You are right. We do agree on that one. Lets not make a habit of this agreeing stuff.

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