Off the Kuff Rotating Header Image

Bill King wants you to lower his property taxes

That’s not what he says in this op-ed, but it is the effect of what he’s arguing for, even if he’s not honest enough to come out and say it.

Let’s start with the basic point that despite King’s disingenuous attempt to rebrand it, what the city has is indeed a revenue cap and not a property tax cap. The mechanism that causes the cap to kick in is a combination of inflation and population growth, and if the city’s total revenue from one year to the next exceeds that combination, the cap gets enforced, which has so far always meant a reduction in the property tax rate. My point is that it doesn’t have to be an increase in property tax collections that triggers the cap. If sales tax collections were sufficiently robust, it could tip the revenue increase past the limit. If population growth plus inflation, which together have at best a small influence on the city’s expenses, are sufficiently small then even a modest increase in revenue could cause the cap to come into play. The factors that define the cap have basically nothing to do with the things that drive the city’s finances.

What the revenue cap does above all is prioritize property tax cuts over anything else the city might choose to do. If in a flush year the city wanted to pay down some bond debt or make an extra payment into the pension funds, well, too bad. The cap says the city has to cut the property tax rate, which doesn’t just affect the flush year in question. The reduced rate remains in place, thus hampering the city further in bad times like we just experienced. It also takes the option of increasing the tax rate off the table, which is one reason why Mayor Parker raised fees so much. These are the policy decisions that get made when policy options are artificially limited by bad laws. The effect of the cap is especially pernicious when the city is recovering from down years, as it is now, because even the process of revenues getting back to previous levels after falling due to a bad economy can trigger it. Every candidate for office in Houston I have ever interviewed has talked about spurring economic growth to improve the city’s bottom line. The revenue cap puts a limit on how much that growth can be leveraged. Why would anyone think that’s good policy?

And let’s be clear about who the main beneficiaries are when these forced property tax cuts are enacted: Wealthy property owners like Bill King. Renters get nothing, while owners of lower-priced houses get nominal reductions. It’s only once you get up int seven figures and more that the cuts start to add up. To be sure, it’s still not that much, mere pocket change to the beneficiaries, but the point is that the lion’s share of those benefits go to those who have the most to begin with.

Which brings me back to my main point. If Bill King thinks this dumb law is really good public policy, even if ratings services that he likes to cite when he argues about how to fix the city’s finances think it’s a dumb law, then fine, he’s allowed to argue for it. But just as people have been asking how much Donald Trump would benefit from the tax “reform” plans that are being floated by his administration and its Congressional enablers, we should ask how much he himself has benefited in recent years from the coerced property tax rate cuts that he wants us to go along with. The least he can do is tell us how much this policy that he advocates will add to his own bottom line.

UPDATE: King insists in the comments and via email that “other revenue sources” like sales taxes don’t trigger the charter amendment. Fine, whatever. This does not change my point that the revenue cap is a stupid idea, nor that people who have benefited from it, like Bill King, should be honest about that when they advocate for its continued existence.

Related Posts:

14 Comments

  1. Bill King says:

    Charles,

    You are dead wrong. An increase in other revenue sources, such as sales tax, utility charges, drainage fees, etc., do not trigger the charter amendment limitation. You need to correct your post.

    BTW, the amount I save from the cap is about $77 per year. Property taxes are one of the most regressive taxes. An increase in my property taxes has almost consequence for me. But for the widow in Sunnyside trying to hang on to her house or the young couple in the Heights trying to but their first home, property taxes are a real issue. And if you do not think property taxes are not passed on to renters, you missed Economics 101.

    Plus, you completely miss the point, that this is not about how much the City has been forced to cut the rate to keep the to keep the overall increase to about 5% per year. It is that it keeps City Council from raising taxes. The current PFM report shows that we would need a 14% increase in taxes to keep funding the city at its current level.

    The City charter limitation allows Council to call from a vote to exceed the cap anytime they want. Let’s put a 14% increase on the ballot and see how that comes out.

  2. neither here nor there says:

    Numbers one has to love them because they can be used to prove that is night or day.

    Harris County receives more than $400,000,000 a year in property taxes than the City of Houston. What do I as a resident of Houston get from the county? Toll roads

    The thing about the so called fiscal conservatives is that it only matters when the Democrats are in control that government is wasteful, like using it for the benefit of all the community. The “Fiscal Conservatives” would rather use it to save millions for the millionaires and billionaires.

    I would also point out many of the very large property owners protest their taxes and have the money tied up in litigation for years, not to mention that the system seems to be geared to lower the value of their property.

  3. Steve Houston says:

    Bill, your continued use of selective statistics is amusing but not very helpful. If you think the revenue cap helps widows in Sunnyside to keep their homes, I’d remind you that the average cost of a house there is well under 100k and said widow would likely be exempted altogether if she was over 65. And excuse me if I find the likelihood of a “young couple” trying to buy their first home in the Heights as mighty slim considering the average price of a house there is well over 600k (maybe they should look elsewhere if their budget is so tight that an extra 30 bucks a year might kill their dream).

    Houston is a full service city and as such must cover the costs of all those services. In the recent past, Mayor White juggled finances by underpaying into employee pensions while Mayor Parker continued that mistake while charging increased fees and making retirees pay a great deal more for health coverage. Now Mayor Turner is further whittling down employee benefits and offering a limited version of the bond arbitrage deal you hawked for over a year on the campaign trail. Mayor Turner has told voters and employees alike that there was a need for “shared sacrifice”, the employees about to take their lumps and now it is time for residents to decide whether they want the levels of services they have grown accustomed to or if they want to save what amounts to a single trip to the movies for a couple.

    And frankly, your big talk about regressive taxes would be more believable if you proposed legislation or solutions that addressed them, when was the last time you spoke to an audience in Sunnyside (other than when you were on the campaign trail) compared to your frequent flyer trips to Kingwood to speak to their Tea Party crowd? In your op-ed you complain about the minor increases in numbers of public safety personnel yet slyly fail to mention how most of the increased costs were due to the maturing of employees from Mayor Lanier’s hiring wave of the early 1990’s, admittedly raises and healthcare cost increases were part of that too. Fire and police hired and paid in the low to mid 20 thousand range eventually become seasoned employees paid in the 60k and up range, still paid less than their counterparts elsewhere.

    I don’t think there’s much more to be gained by bleeding employees dry, existing amendments in pending legislation would lead to many hundreds of public safety personnel exiting, even without them the numbers are showing retirements increasing a minimum of 200 to 300% (I’m told virtually the entire police command staff has left or are in the process of leaving before July 1, many District Chiefs and Senior Captains with HFD have loudly claimed they will exit as well). And there hasn’t been a rush to start charging for trash service, closing libraries, or otherwise cutting demanded services either so voters better decide what they want, your continued caterwauling because you were rejected by voters not endearing you to the voters for another shot.

  4. C.L. says:

    @Steve… re: “Bill, your continued use of selective statistics is amusing but not very helpful. If you think the revenue cap helps widows in Sunnyside to keep their homes, I’d remind you that the average cost of a house there is well under 100k and said widow would likely be exempted altogether if she was over 65. And excuse me if I find the likelihood of a “young couple” trying to buy their first home in the Heights as mighty slim considering the average price of a house there is well over 600k.”

    You can’t rail against Bill using selective statistics if you’re going to turn around and cite the difficulties of first time home buyers in the Heights being forced to look elsewhere due to an AVERAGE home price…. that’s selective as well. There’s six 2/1 homes in HAR in 77008 under $250K, and another 37 in 77009…. all a first time buyer’s likely purchase.

  5. C.L. says:

    @NHNT… re: “Harris County receives more than $400,000,000 a year in property taxes than the City of Houston. What do I as a resident of Houston get from the county? Toll roads.”

    What you get is a Sherriff’s Dept. and Court System and County Judges who have a hard on when it comes to spending a couple hundred million on an Astrodome rehab.

  6. CL, as noted here, “the owner of a $200,000 Houston home saved about $84 in taxes over the last three years”, which is to say, about $28 a year. I’d say that affirms Steven’s point. Also, for what it’s worth, much of 77009 is not in “the Heights”. Everything north and east of North Main is not “the Heights”.

  7. Steve Houston says:

    CL, that’s a false comparison, my examples were used to illustrate what was wrong with his narrowly drawn, cherry picked for effect, points. Your own example cites homes that are not in “the Heights” as Charles points out and you left out the context of providing just how many homes for sale there were total to show your use of extreme statistical outliers. The main point made was that a young couple on so tight a budget that they can’t afford the minute difference in taxes should probably consider a different location to buy that first home of theirs, admittedly not in the county where the total cost for the same services the city of Houston provides will almost certainly end up costing you a good sum more (and that doesn’t include the costs tied to commuting).

    And in defense of Manuel’s point you addressed separately, until the Harris County Sheriff’s Department starts answering calls for help inside the city limits of Houston, you might want to remove that one from your list of examples. If a city resident calls them up for help at a city address, they will refer you to the city and not take any action to assist you.

  8. neither here nor there says:

    C.L. what does the Sheriff department do for my neighborhood? Can I call them when there is someone that looks suspicious. We get toll roads from the county that raise almost another billion dollars for the county. I want services and expect to pay for them the same way I pay for everything else. I do not get my money worth from the county when it comes to tax dollars. Let us get to lower the County taxes by 1 billion and give to the city where we do get services.

  9. Ross says:

    Picking the right school district and MUD will make a bigger difference in your taxes than removing the revenue cap. If I moved into a house with the same value as mine almost anywhere in the County, my taxes would go up by thousands of dollars. HISD has the lowest tax rate of any ISD in the County, and many MUD’s have higher taxes than the City.

    It is beyond annoying that the County will not provide services within the City.

  10. Steve Houston says:

    Ross, exactly! But try to tell that to some ultra right wing tea party nut that is convinced it costs much more to live in the city, reminding them to add in the HOA fees, garbage service, and other costs. Then they will tell you how “city taxes are going to triple any time now” or something to that effect, most unable to fathom how even without a tax cap, the tax rate is capped not far from where it is now and how it is the county that assesses property tax values on their homes.

    And those toll roads were paid for a few times over, the county shuffling a growing variety of other services under their budget category to subsidize yearly budgets, yet the promises made when they were first erected long forgotten as regular increases pick our pockets.

  11. neither here nor there says:

    Steve I can’t find that the City Property Tax Rate is capped but they are limited

    Sec. 44-25. – Tax rate limitation.

    The city council shall not, except by ordinance approved by two-thirds of the full city council, levy ad valorem taxes at a rate expected to increase the city’s ad valorem property tax revenues for the then current fiscal year in an amount greater than five percent more than the ad valorem property tax revenues collected during the immediately preceding fiscal year.

    But there are 435 cities in Texas that have a higher property tax rate than Houston. Houston is about in the middle.

  12. Steve Houston says:

    NHNT, every year during budget workshops the 64.5 cents per $100 was brought up as the theoretical maximum without a vote, even subsequent to Prop 1 and Prop H. I’m sure a quick call to Finance would clear it up if the point is that important to anyone. Lately, the rate has been set at under 59 cents and various exemptions have been increased, most notably the senior exemption, but the point is that no one is suggesting that the rate be increased anything close to what some of the crazies have claimed for years now (yes Bill K., that includes you), even discussions of a partial garbage fee going nowhere (and that wouldn’t require a citywide vote either).

    How many cities or counties in Texas provide full garbage service but do not charge a direct fee for it? That’s about $80 million right there but despite all the ultra right wing types running around for years now claiming city taxes were going to explode, the city was going to go bankrupt, and all their other nonsense, Houston continues to grow, home prices continue to increase (thank you, laws of supply and demand), and the demand for increased services continues.

  13. neither here nor there says:

    I remember that number also, 64.5 cents but was unable to find anything in Charter that would have that limit nor did I find that the state has set a limit for Houston, at least for the present. There are some cities that have over 80 cents per thousand.

    The funny thing that most homes outside of Houston have HOAs that are much more restrictive on what one can do with their property. So much for those people believing in individual property rights they agree to give away their rights.

  14. Steve Houston says:

    I hadn’t really thought about the HOA restrictions, friends have been complaining about all the petty “neighbor nazis” that want cookie cutter similarities in homes for years. I suppose as long as the people ordering them about are fellow tea party types, they don’t mind being told what to do as they are when it’s by a democrat mayor. But as long as they “save” a few pennies on the front end and don’t look too closely at the true costs, they are content to sell the false narrative of high city taxes…lol.