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Turner’s 2019 budget

Here’s the plan for making ends meet for next fiscal year.

Mayor Sylvester Turner

Mayor Sylvester Turner’s proposed budget for the fiscal year that starts in July would close a shortfall of $114 million without employee layoffs by drawing down the city’s reserves, transferring money from special accounts to the general fund and cutting spending.

In a proposal unveiled Tuesday, Turner plans to spend $2.5 billion from the general fund, which is supported primarily by property and sales taxes and funds most core services, such as the police and fire departments, parks, libraries and trash pickup.

That is $83 million, or 3.5 percent, more than the current budget. The increase chiefly is driven by a $42 million increase in debt service, related mostly to the issuance last year of $1 billion in pension obligation bonds as part of the mayor’s pension reform package. Also driving the increase is $14 million in previously agreed to raises for police.

“This is a very, very tight budget,” Turner said. “I have scrubbed this budget, every line item that exists. I invite anyone to take a look underneath the hood. Because there are two departments that will always drive this budget: Police and fire.”

About 57 percent of the general fund, or $1.4 billion, goes to public safety – the police and fire departments, the municipal courts and emergency operations. Another $400 million goes to debt service. Parks, libraries, health services, trash pickup and most other city functions get the rest, about $672 million.

[…]

Turner acknowledged two key developments helped prevent layoffs in the proposed budget, providing most of the $84 million the mayor intends to pull from the city’s reserves to spend in the upcoming budget.

First, the city settled a lawsuit it had filed against Towers Watson, an actuarial firm it blamed for contributing to the city’s pension crisis, saying city officials’ reliance on the firm’s advice led them to boost benefits in 2001 and saddle taxpayers with unaffordable pensions costs. That settlement, which was approved by city council last month, injected $29 million into the general fund.

The city also, as it routinely does, conservatively estimated the sales tax revenues it would receive in the current budget year. As a result, the city collected an “extra” $28 million that will be available for the upcoming budget year.

Yeah, that pension projection lawsuit settlement sure came in handy. I don’t know what rabbits there will be to pull out of next year’s hat, however. We’ll see what Council makes of this when it comes to them for a vote.

The revenue cap and the police

It’s something. Not what I want, but something.

Mayor Sylvester Turner

Mayor Sylvester Turner used his third State of the City speech to call — again — for the city to be able to collect more revenue than allowed by the property tax cap voters imposed 14 years ago, this time floating the idea of collecting extra dollars specifically for public safety.

Turner had taken a similar line during the 2015 campaign, then moved to advocating for a full repeal of the cap during much of his first two years in office. He backed away from placing such a request on last November’s ballot, however, fearing it would imperil the $1 billion bond referendum that was needed to secure the landmark pension reform package he shepherded through the Legislature last year.

The mayor on Tuesday instead highlighted the need to increase staffing in the Houston Police Department, and he suggested the idea of following former Mayor Bill White’s playbook from 2006, when White got voters’ permission to let the city collect $90 million more than the cap otherwise would have allowed for spending on public safety.

It took Houston eight years to exhaust that breathing room and run into the cap for the first time. Amid rising property values, the City Council has been forced to cut the property tax rate every fall since to avoid collecting more revenue than the cap allows. Council cut the tax rate to 58.42 cents per $100 of assessed value last September, the lowest rate since 1988.

The revenue cap limits the annual growth in city property tax revenue to 4.5 percent or the combined rates of inflation and population growth, whichever is lower.

Turner did not commit to White’s approach, to a dollar amount, or to placing an item before voters this November, saying he intends to force a conversation on the need to invest in more officers and in ancillary areas such as cybersecurity protections, adding “the current model is not sustainable.”

“I’m just simply sounding the alarm. We cannot continue to cut and cut and cut and add 500 to 600 more police to our force,” Turner said after his speech to a luncheon hosted by the Greater Houston Partnership. “I did not want to throw out a number because people then tag onto that number and we don’t have a robust conversation on the need and then how we should meet that need.”

Tweets from his official Twitter account, however, were more definitive about taking the matter to voters: “I will move to put an item on the ballot on (sic) this November to make sure Houston continues to be resilient and strong when it comes to protecting innocent people.” said one. Another said, “Our city sorely needs revenue to increase staffing & resources for first responders at Police & Fire Dpartments. But we’re constrained by the #revenuecap. That’s why it’s time to ask voters to lift the cap solely for strengthening public safety & city services.”

[…]

What makes Turner’s Tuesday comments different, said Rice University political scientist Mark Jones, is that he is focusing solely on public safety.

“There does not exist a strong public appetite for lifting the revenue cap unconditionally,” Jones said. “The only way to really sell it is via public safety. That’s probably the only winning method.”

Turner seemed to acknowledged as much Tuesday, saying in part, “It’s quite clear, it seems to me, people want to maintain the revenue cap. OK, fine. What I’m simply saying is, we need to find a way to generate some additional dollars on top of that revenue cap.”

It’s depressing to me that people have come to believe the BS about this stupid policy, which was imposed on Houston and basically noplace else by the usual gang of governmental nihilists, but propaganda does work. I’d love to see an all-out assault on the revenue cap, marshaling all the arguments about how it undercuts the city’s ability to prosper from economic growth and how it forces budget priorities on us whether we want them or not, but I recognize that this would be a tough fight against a wealthy and motivated opponent, which we could lose. It’s a fight we can engage another day, perhaps when the climate has changed enough. In the meantime, we all know that budgets can be flexible, and money is often fungible. Even earmarking extra revenue in this fashion makes the budget more manageable. If it’s the best we can do, then let’s do it.

Many more school districts are feeling the pinch

Not just HISD. Not by a long shot.

For eight-straight years, Cypress-Fairbanks and Conroe ISDs earned the Texas Smart Schools Award, bestowed on school districts with prudent financial practices and high academic achievement.

Now, Cypress-Fairbanks faces a $50 million deficit next school year, and Conroe is projected to face its first deficit in nearly a decade in the next two to four years.

They are not alone.

As the Texas Legislature studies potential changes to the state’s school funding mechanisms, the majority of large Houston-area school districts are facing budget shortfalls they say stem from a lack of state aid. Of the 10 largest Houston-area school districts, all but three approved budgets last summer that included deficits of more than $1 million, according to a Chronicle review. At least nine say they may have to dip into reserve funds within the next three to five years if revenues do not increase.

For some, it is more dire. If nothing changes at the state or local level, district officials say Spring Branch ISD in west Houston will be financially insolvent in three years. Cypress-Fairbanks ISD will use up all its reserve funds in four or five years. Pasadena ISD only avoided a $20 million shortfall for the next school year by passing a tax hike referendum, and multiple districts are considering similar measures to keep their schools afloat.

That pain is felt in large and small districts across the state. North East ISD in San Antonio expects to cut $12 million from its budget next year, likely leading to teacher layoffs, according to the San Antonio Express-News. By 2020, budget documents in Ysleta ISD near El Paso show the district likely will draw down its reserve funds by $12 million. Friendswood ISD, which educates roughly 6,000 students in a sliver of southeast Greater Houston, is facing a $1.9 million budget shortfall next year.

“If we’ve been one of the most efficient districts in the state, and we’re facing this crisis, imagine what other districts are dealing with,” Cy-Fair ISD Chief Financial Officer Stuart Snow said.

[…]

Sen. Paul Bettencourt, R-Houston, who sits on the Commission of Public Education Funding, said districts should expand their revenue streams to include sources other than local property taxes and the state. He pointed to Dallas ISD, which pulls in about $10 million annually from philanthropy. United Airlines also staffed one of DISD’s schools with 25 full-time employees, a partnership Bettencourt said should inspire districts elsewhere.

“It’s not going to be one-size fits all — there are many, many ways to do it right,” Bettencourt said. “At end of the day, we want the education system to get students the best educations they can get for best deals taxpayers can support. But we need to look for all the ways we can do it right.”

First of all, to Paul Bettencourt: You cannot be serious. Philanthropy? Are you kidding me? Dallas ISD’s 2017-2018 general revenue expenditures were over $1.4 billion. That $10 million represents 0.7% of the total. You gonna suggest everyone search their couch cushions, too? Oh, and I don’t know about you, but I’m old enough to remember when two of the biggest philanthropic entities in Houston were Enron and Continental Airlines. Good thing HISD didn’t make itself dependent on them, you know?

This is entirely the Legislature’s responsibility. We are here because they refuse to adequately fund schools, and because they use the increases in property valuations to fund the rest of the budget, while blaming local officials for their shortfalls and tax hikes. As with everything else in this state, nothing will change until the people we elect change. If you live in one of these districts, don’t take your frustrations out on your school board trustees. Take it out on the State Reps and State Senators who skimp on school finance, and the Governor and Lt. Governor who push them to keep doing it.

HISD will not change its funding mechanism

Not this year, at least.

Houston ISD officials have abandoned plans to overhaul the way the district funds its schools, opting to keep HISD’s long-standing financing system as they work to fill a $115 million budget deficit.

Schools will continue to receive an allotment of money based on their enrollments next school year, but the amount campuses receive will shrink by nearly $200 per student.

The announcement walked back proposals made by former Superintendent Richard Carranza in January to centralize some staffing and budgeting decisions now made by principals.

Interim Superintendent Grenita Lathan said the district needs to do more outreach and study its funding mechanisms before changing the way schools are allotted money. The district will create a committee in the coming months to study resource allocation.

“We wanted to pause and take a step back and give some proposals to the board about how do we engage the community about the funding allocation,” Lathan said. “What does it look like for HISD and our community?”

See here and here for some background. I was in full-on primary mode when the original plan was announced and I never quite had the brain space to pay close attention to it, and now it looks like I won’t have to. The plan now is the old-fashioned easier-to-understand one of cutting back a little bit here, there, and everywhere. It may be simpler, but I hope HISD will do outreach to make sure everyone has a chance to know what to expect. The Press has more.

From the “Grab that cash with both hands and make a stash” files

Same song, second verse.

If budget writers don’t come up with money to address a state employee pension shortfall and mounting needs for public schools, health care and transportation, credit agencies are likely to downgrade Texas’ AAA rating in the near future.

That was the warning Comptroller Glenn Hegar gave lawmakers at a Tuesday hearing of the Senate Finance Committee in Austin. Though the Texas economy is growing at a healthy pace, Hegar said, the state’s budget is riddled with enough unfunded liabilities to worry credit rating agencies such as Moody’s and Standard and Poor’s.

“We’re not at a crisis,” Hegar said, but “we’re going in the wrong direction.”

A downgrading of Texas’ credit rating would make it more expensive for the state to borrow money — and perhaps damage state leaders’ credibility when advertising Texas as “open for business.”

“I want to avoid that, because I think that’s a black eye on the state of Texas,” Hegar said.

Rebounding oil prices, natural growth and migration to Texas have led to an increase in tax collections, according to the comptroller’s office. But much of that new revenue is already dedicated to historically underfunded programs such as the state highway fund, meaning that Texas lawmakers likely won’t have more money at their disposal in 2019 when crafting the next two-year budget.

At the same time, lawmakers will need to plug holes in the pension system for state employees, and they’ll face pressure to make solvent a health insurance program for retired teachers. On top of that, big bills coming due for Medicaid, the federal-state health insurance program for the poor and disabled that is perennially underfunded by the Legislature, could put the state budget $2.5 billion in the red before lawmakers even convene in 2019. (The state’s current two-year budget is about $217 billion.)

In addition, state leaders will have to tackle the bills from Hurricane Harvey recovery.

I’ll just say again here what I said in January: The vast majority of these issues are the result of deliberate choices made by our Governor, our Lieutenant Governor, and our Republican-controlled Legislature. Instead of seriously addressing the needs of the state, current and future, our Republican leaders have been obsessed with trivia, from bathrooms to plastic bags to trees. We have gotten by and done all right because times have been good, but we are in a far more precarious position for when the economy goes south than we should be. In the meantime, we are squandering this opportunity to ensure a better future for all of us by making such cavalier and ill-advised fiscal choices. Every Democratic candidate running for state office needs to internalize and articulate that message going forward.

HISD’s budget deficit is a little smaller

A bit of good news.

Houston ISD administrators do not expect to cut magnet programs or re-open the magnet application process ahead of the 2018-19 school year, an announcement likely to ease fears among parents who send their children to choice schools.

Houston ISD leaders said Monday they are lowering the district’s projected budget deficit from about $209 million to $115 million, which would dramatically reduce the level of potential staff and program cuts.

The two announcements reflect the shifting nature of Houston ISD’s plans for major changes throughout the district, which have provoked anxiety among many parents and staff members. District leaders are proposing changes to the district’s magnet and funding systems — with the goal of providing more resources and programs to students in lower-income neighborhoods while facing a significant budget deficit largely brought on by the state’s school finance law.

Administrators are considering whether to phase out some magnet programs that have relatively little student interest or no consistent programming throughout a feeder pattern. District leaders want to better align magnets so students follow the same program from elementary through high school.

Administrators do not expect to cut many magnet programs, but any changes would not be made until 2019-20. Chief School Support Officer Mark Smith said the district did not want to rush any reductions that would force parents to immediately seek new options for their children.

See here for the background. What drove the sunnier budget estimate? Here’s the explanation.

When HISD first began budgeting for the 2018-2019 school year, it was in the immediate aftermath of Hurricane Harvey. Using a worst-case scenario, the district’s financial team projected a $208 million deficit based on four dynamic factors: the Local Optional Homestead Exemption (LOHE) lawsuit, a recapture payment to the state, a potential property tax value decreaseand an anticipated student enrollment decline. Taking direction from HISD Board President Rhonda Skillern-Jones, district administrators crafted a revised budget outlook for the 2018-19 school year.

The district’s legal team feels strongly that the state will prevail in the LOHE lawsuit. For HISD, this means a reduction in its recapture payment because the TEA will recognize half of the 20 percent local homestead exemption given to homeowners. A decision in the lawsuit could come after a hearing this spring. A win would reduce HISD’s recapture payment by $51 million.

Under the Texas Education Code, TEA Commissioner Mike Morath has the authority to adjust property values. Based on the damage sustained from Hurricane Harvey and the lasting impact of the storm on our students and staff, we anticipate the commissioner will adjust property values, which in turn, would reduce our recapture payment. Governor Greg Abbott, Lt. Governor Dan Patrick, and other state leaders have publicly stated their support for this action. Click here to review a September 2017 press release from Lt. Governor Dan Patrick that confirms his support for schools districts in Region IV impacted by Hurricane Harvey, which includes HISD. In addition, Commissioner Morath surveyed school districts after the hurricane to gather projections on their property tax collections post-Harvey. HISD estimates a $42 million adjustment for property value loss associated with Hurricane Harvey.

It was prudent to budget under the worst-case assumption, and it makes sense to adjust on the reasonable expectation that he reality is better. HISD still has a big hole to fill, and changes to the magnet programs will be difficult and disruptive, though long overdue. I confess that I haven’t been following all this very closely – sorry, all the election stuff has taken over my brain – but I will get back into it as the process begins.

The latest report on city finances

A little light reading for you.

Mayor Sylvester Turner

Even after Mayor Sylvester Turner’s landmark pension reforms, the city of Houston is on pace to spend $1 billion more than it will take in over the coming decade, and must cut spending and raise revenue bring its annual budget into balance, according to an exhaustive new report.

Failing to do so, the authors state, risks letting the city inch toward insolvency with all the symptoms that accompany such a fiscal crisis: Worker layoffs, an erosion in police staffing, fewer library hours, decaying parks facilities, a hollowing out of the city as the suburbs boom.

The analysts from Philadelphia-based consulting firm PFM did not shy away from controversial recommendations, including some that would dramatically restructure city government.

Among dozens of other reforms, the authors suggest Houston should:

  • break up its mammoth Houston Public Works department and consolidate its finance, procurement, human resources, and information technology staff;
  • cut the $9.5 million annual subsidy to the Houston Zoo roughly in half;
  • shrink the Houston Fire Department by up to 845 positions through attrition and lengthen firefighters’ work weeks; reduce the number of fire stations; hire civilians to do fire inspections and take 911 calls; and raise ambulance fees;
  • hire civilians for the Houston Police Department to enable cops now doing administrative tasks to get back on patrol; free up officers’ time by arresting fewer low-level offenders and writing more tickets; use civilians to conduct crash investigations and issue non-moving traffic tickets; consolidate with Metro’s police staff, and, perhaps, local school districts’ too;
  • cut health benefits for active and retired city workers; and
  • submit trash pickup, building maintenance and street repairs to “managed competition,” giving all or part of each task to city departments or to private companies, whichever submits the most efficient proposal.
  • City Council hired PFM for $565,000 in 2016, Turner’s first year in office, to craft a 10-year financial plan. Turner made clear in comments last week, however, that he views some of the recommendations as impractical.

“When you talk about structural changes, just because it’s identified doesn’t mean it’s easily done. It’s not about taking a report and just implementing it,” he said. “There are some things that, from my vantage point, yes, we will accept. There are some things that are going to require additional study. There are some things that will be more long term. And then there are some things that we’ll never get there.”

The report is here; it’s quite long, but the executive summary is only 16 pages, so read that if you want a feel for it. At first glance, a lot of it sounds reasonable and even doable. I appreciate the fact that they recognize that revenue is part of the equation and that removing the stupid revenue cap would go a long way towards alleviating the problem. Some actions could be done by Mayoral fiat, some by Council action, and some will require negotiations with third parties and/or legislative approval. It’s always possible that a report like this becomes little more than a doorstop, but I think we’ll see at least some of it happen.

Looking to hire more cops for Houston

We’ll see about this.

The head of the Houston police union announced Wednesday that city leaders had pledged to grow the Houston Police Department ranks by 500 officers over the next five years, far fewer than the city’s police chief said he needs.

“It’s no secret the Houston Police Department has been doing more with less, for far too long,” HPOU President Joseph Gamaldi said Wednesday afternoon at a crowded news conference at union headquarters.

The influx of officers would still be a fraction of the 2,000 new officers Chief Art Acevedo has said he believes the department needs to deal with the city’s growth, but comes as Houston has struggled for years to meaningfully increase the staffing in the department.

Gamaldi’s initiative, which the union is calling the “Drive for 500,” came after union officials visited all of the city’s council members, as well as Mayor Sylvester Turner, and asked them to pledge their support to increase the department that has nearly 5,200 officers on the job.

[…]

Currently, the HPD operates on a yearly budget of $827 million, and it costs the department around $3 million to run each class of recruits through its in-house academy.

The call for more officers comes as the city management last year had to close a $130 million budget shortfall.

The staffing proposal follows a concerted campaign last year to reform the city’s pension system, which officials warned was underfunded and threatened the city’s long-term financial health.

Meanwhile, Chief Acevedo and Gamaldi have stepped up calls for an large infusion of new officers into the department, saying it is dangerously understaffed, particularly compared to other large cities around the country.

Though Houston has fewer police officers per resident than other large cities, I remain unconvinced that we need to go on a hiring spree. At the very least, I’d like to understand what the plan is for a larger force. HPD’s solve rate isn’t so hot, so if the idea is to staff up on investigators with the goal of closing out more cases, then I can be on board with that. If it’s more like hire now and figure it out later, I’ll take a pass.

As the story suggests, hiring more cops would likely be part of the argument to alter or lift the revenue cap. Not my preferred approach, but I admit I’m not representative on this. I am ready for this argument to be fully rolled out, in anticipation of a vote this year.

From the “Nothin’ but good times ahead” department

Given the good economic conditions in Texas right now, you’d think the budget outlook would be better than it is.

The Texas economy is growing healthily, but that doesn’t mean state budget writers will have more money at their disposal next year, state officials said Tuesday.

In fact, though unemployment is low and tax revenue is on the rise, big bills coming due for the state’s highways and health care programs are giving Texas lawmakers reason for concern.

“I would like to offer a few words of caution for reading too much into the positive recent economic numbers,” Texas Comptroller Glenn Hegar told lawmakers at a Senate Finance Committee hearing.

As they often do, state budget writers last year underfunded Medicaid, the federal-state insurance program for the poor and disabled, which, alongside public education, makes up one of the largest shares of the state’s $217 billion two-year budget.

Then, during a special session called by Gov. Greg Abbott over the summer, state lawmakers shifted another $500 million away from the Texas Health and Human Services Commission to pay for public education programs.

As a result, lawmakers could face a $2.5 billion Medicaid bill shortly after they reconvene in Austin in 2019. Then there are the additional drains on Texas coffers from Hurricane Harvey recovery efforts, Hegar said.

That’s bad news for lawmakers given the comptroller’s prediction that the state will only have a $94 million “beginning balance” when lawmakers convene in 2019. By comparison, lawmakers had an $880 million beginning balance in 2017, which was ultimately a tight year for the state budget. Two years before that, lawmakers enjoyed a $7.3 billion beginning balance.

[…]

Another source of heartburn for budget writers is the ravenous state highway fund. In 2015, amid complaints of a highway system in disrepair, Texans voted to amend the state Constitution to require that up to $2.5 billion in sales tax revenue be dedicated to the highway fund.

That means that even as Texas collects more money from sales taxes — Hegar testified that sales tax revenue grew by an average of 10.3 percent over the last three months — the rest of the state budget will not benefit from that revenue since it is earmarked for the highway fund.

That was also an issue for budget writers in 2017. Last year, in order to free up some of that money for other purposes, Senate lawmakers pushed for an accounting trick that delayed a payment to the state highway fund into the next two-year budget cycle. That freed up about $1.6 billion for lawmakers last year, but it means there will be another bill to pay in 2019.

“In short, despite a strong economy and positive outlook for revenue growth in this biennium, it seems likely the next budget will be much like the one crafted in 2017, having to contend with restricted revenue relative to the spending trends of the state,” Hegar said.

Just a reminder: Underfunding Medicaid was a choice. Shifting money away from HHSC was a choice. The amendment to require all that highway spending was ratified by the voters, but it was there to be ratified because the Lege chose to put it there. Deferring that payment to the highway fund was a choice. And though the story doesn’t include it in its litany, spending nearly a billion dollars on boondoggle “border security” stunts was a choice, too.

We’ll probably be fine in the 2019 session, though the potential for shenanigans is always high. But remember, winter is coming, because it always does. When it does, we’re going to have a mess to clean up, one that was caused by the Republicans in charge of our state, one that could have been mitigated in many ways. I hope we’re ready for it.

(Note: This is the inspiration for the post title.)

HISD faces major changes

This is a very big story, but a key component to it is not discussed here.

Houston ISD officials said Saturday the district will need to cut about $200 million from its 2018-19 budget to bring spending in line with an increasingly gloomy financial outlook.

In an equally momentous move, Houston ISD officials also proposed far-reaching changes to how the district operates its magnet and school choice systems, some of the boldest moves to date by second-year Superintendent Richard Carranza.

Still reeling from Hurricane Harvey, Houston Independent School District officials revealed at a board meeting Saturday that the district is facing a double whammy: A multimillion-dollar, state-mandated “recapture” payment requiring districts with high property values to “share the wealth,” and an expected drop in enrollment and tax revenue because of the devastating storm, which severely damaged schools and delayed the start of classes by two weeks.

The proposed cuts come at an inopportune time, with the district battling to stave off a potential state takeover because of 10 chronically under-performing schools.

Although the measures outlined Saturday are preliminary and could change significantly before HISD’s board votes on them, officials acknowledged that the district is entering an uncertain time.

“It’s a sea change for HISD,” said Rene Barajas, the district’s chief financial officer. “But at the end of the day, from a budgetary perspective, we’re still going to get the job done. It’s just going to be harder.”

There’s a lot more and there’s too much to adequately summarize, so go read the rest. We know about the recapture payments, which even though they have been reduced due to Harvey are still significant. We know HISD has been talking about revamping its magnet programs for some time, and there’s a cost-savings component to that as well. We know that property values and enrollment have been affected by Harvey, and we know how daily attendance determines the amount of money the district gets from the state. So none of this is a surprise, though having to deal with all of it at once is a big shock.

What’s missing from this article is any mention of what the state could and should do to help ameliorate this blow. I think everyone agrees that if a school building is destroyed by a catastrophic weather event, it should be rebuilt via a combination of funding sources, mostly private insurance and emergency allocations from the state. Why shouldn’t that also apply to the secondary effects of that same catastrophe? It’s not HISD’s fault that its revenues, both from taxes and from state appropriations, will be down. There needs to be a mechanism to at least soften, if not remove, this burden. Bear in mind that one reason why the drop in property values is such a hit is because the state has shoved more and more of the responsibility for school finance on local districts. If Harvey had happened even a decade ago, the appraisal loss would still be felt, but not by as much. That’s not HISD’s doing, it’s the Legislature’s and the Governor’s and the Lieutenant Governor’s, all with the approval of the Supreme Court.

But what can be done can be undone. With little to no pain on its part, the Lege could tap into the Rainy Day Fund to get HISD past the worst of this, or it could recognize that the nearly one billion it appropriated last session for “border security” is little more than macho posturing, an endless boondoggle for a handful of sheriffs, and an sharp increase in traffic citations, and redirect some of that money to HISD and any other district in similar straits. There are other things the Lege could do, but all of it starts with the basic principle that the Lege should do something to help out here. When are we going to talk about that?

Don’t hold your breath waiting for Harvey aid

Your Republican Congress, ladies and gentlemen.

Republican lawmakers were hammering out a stop-gap deal Wednesday to avert a weekend government shutdown of the federal government this weekend, setting aside a long-sought disaster aid package for the victims of Hurricane Harvey and other natural disasters.

Frustrations are rising among officials in Houston and Austin over the inaction. As Texas officials feared, an $81 billion storm relief bill passed by the House in December continues to languish amid congressional brinkmanship over a wider budget agreement, with Republicans insisting on funding President Donald Trump’s border wall and Democrats holding out for a deal to protect young immigrants from deportation.

A spokeswoman for Texas Gov. Greg Abbott called the standoff a disappointment.

“The governor has been in frequent contact with leaders in Congress and the administration advocating the necessity for funding to rebuild Texas,” said the spokeswoman, Ciara Matthews. “He has received assurance after assurance. Yet every day that goes by without funding is another day that Texans who have been upended by Hurricane Harvey go without the resources needed to rebuild their lives.”

With time running out on a midnight Friday deadline to keep the lights on in Washington — the third since last September — GOP leaders unveiled a plan Tuesday night to pass another stop-gap funding measure until February 16.

With most Democrats expected to reject the plan, GOP leaders were whipping up support Wednesday to pass the funding extension with Republican votes alone. It remained uncertain, though, whether the plan could win the support of conservative Freedom Caucus members and defense hawks pushing for a full year of military spending.

Freedom Caucus Leader Mark Meadows, a North Carolina Republican, sounded a skeptical note Tuesday night, telling Capitol Hill reporters, “There’s not enough support to pass it with GOP-only votes in the House.”

The Republicans don’t need any Democratic help to pass a bill to keep the government funded, as they have the majority in both houses of Congress. Except they do need Democratic help because they’re a bunch of dysfunctional lunatics who can’t tie their own shoes without help. Enough members of their caucus won’t vote for anything non-destructive to prevent them from being able to get stuff done. You know what you’d get with a Democratic Congress? Not this. Being functional and keeping the lights on is what Democrats do. Oh, and providing disaster aid in a timely fashion, they do that too. It’s something they believe in, you know? Just something to keep in mind.

The Harvey effect on the state budget

You know what the solution to this is, right?

Senate leaders warned Tuesday that Hurricane Harvey could put a billion-dollar hole in Texas’ budget, an ever-growing number that could affect how much money is available for other state programs.

Only $20 million remains in the state disaster-assistance fund, Senate Finance Committee Chair Jane Nelson said at a public hearing Tuesday on the status of hurricane recovery efforts.

“Our state costs are escalating,” said Nelson, R-Flower Mound. “We need to be judicious. … If we, God forbid, had another disaster in the next 18 months, where would we get the money?”

The Legislature will not convene in a regular session until January 2019.

The state has spent more than $1.7 billion so far in state funds, along with billions in federal assistance, according to updated numbers provided to the committee on Tuesday. Legislative Budget Board officials said as much as $2 billion in additional state funds may be needed in 2019 to cover hurricane-related school costs.

[…]

[Land Commissioner George P.] Bush said that $1 billion in immediate state funding would allow temporary housing assistance to be speeded up. Those funds could be fully reimbursed later by the federal government, he said.

State Sen. Royce West, D-Dallas, suggested those funds could be borrowed quickly from the state’s Rainy Day Fund – a savings account – to expedite the housing recovery for thousands of Texans, some of whom are living in tents.

“We’d need to have a special session” to approve that borrowing, West said, drawing silence from other committee members.

Yes, that is what the Rainy Day fund is for. Not specifically for disaster recovery – that was the bogus justification invented by Rick Perry in 2011 as an excuse for not alleviating cuts to the public education budget – but to help cover budget shortfalls in bad times. The choice is pretty simple, either we draw money from the Rainy Day fund to help the thousands of people who remain displaced by Harvey, or we decide they’re not worth our time and compassion. No wonder Sen. West got no response when he brought it up.

Houston’s health care costs

Because dealing with pensions wasn’t enough.

Taxpayers also face a $2.1 billion liability for retiree health care costs in the coming decades, and Houston – like many state and local governments – has not set aside a penny to pay for those promises.

This burden is the city’s “next major long-term fiscal challenge,” according to PFM, a financial analysis firm Houston has hired to recommend ways to shore up its long-shaky books.

Turner said any financial hurdle concerns him, but the far-larger pension problem took precedence, as the city’s recovery from Hurricane Harvey will do now.

“That’s one of many issues that we have to address, but I am very much aware of it,” Turner said. “Let’s just say we tackled the biggest item and then we’ll tackle the other ones as we go. One step at a time.”

These costs for what are known as “Other Post-Employment Benefits” – OPEB for short – have become a growing issue for local governments, thanks to rising health care expenses and an aging population and public workforce. In Houston, retirees comprised a third of all the city’s health care beneficiaries in 2012, up from 18 percent in 1994.

A shift in accounting rules also has played a key role. In 2008, the Governmental Accounting Standards Board began requiring governments to report their retiree health care costs, not as an annual operating expense, but in the same manner as pensions: Trust funds fed by payments from the city and workers on which investment earnings accumulate to pay for benefits over the next few decades.

Houston and many of its peers have never stopped treating the expense as simply an annual bill to be paid, however.

I know nothing about accounting, so I don’t understand the reasoning behind that 2008 change in standards. Be that as it may, the city has a lot more flexibility here in that the Mayor can order changes in the health insurance system. Mayor Parker did exactly that a few years ago, raising premiums and ordering retired employees to enroll in Medicare at age 65. That cut costs by quite a bit at the time, but they have since climbed back up, as health care costs are wont to do. Ultimately, of course, this is a problem that is too big for Houston to solve. Any solution to control health care costs necessarily involves controlling how much doctors and hospitals get paid. In the meantime, entities like Houston will do what they can to manage their own costs, but they’re going to need help in the long run.

Texas v the feds, disaster recovery funding edition

This would be quite entertaining to watch, if the stakes weren’t so high.

Texas Republicans on Friday panned the White House’s latest disaster aid request, with Gov. Greg Abbott calling it “completely inadequate” for the state’s needs in the wake of Hurricane Harvey.

President Donald Trump’s administration was quick to respond, calling on the state to pony up its own dollars to help with the recovery.

Unveiled earlier Friday, the request seeks $44 billion from Congress to assist with the Harvey aftermath, as well as the recoveries from other recent hurricanes in Florida, Puerto Rico and the U.S. Virgin Islands. While not final, the number is far less than the $61 billion proposal that Abbott had submitted for Texas alone to Congress last month.

“What was offered up by Mick Mulvaney and [his Office of Management and Budget] is completely inadequate for the needs of the state of Texas and I believe does not live up to what the president wants to achieve,” Abbott said at a Texas Capitol news conference called to unveil a $5 billion grant from the U.S. Department of Housing and Urban Development.

“The president has told me privately what he’s said publicly, and that is that he wants to be the builder president,” Abbott added. “The president has said that he wants this to be the best recovery from a disaster ever.”

In Washington, White House press secretary Sarah Huckabee Sanders defended the amount in the request — and put the onus on Texas to tap its funds for Harvey recovery.

“Up until this point, Texas has not put any state dollars into this process,” Sanders told reporters. “We feel strongly that they should step up and play a role and work with the federal government in this process. We did a thorough assessment and that was completed and this was the number that we put forward to Congress today.”

See here for the background. I would just note that the Republicans have been working hard at passing a huge tax cut for billionaires, so there hasn’t been much time for small stuff like this. Priorities, you know.

There’s one other thing to consider here, which I haven’t seen mentioned anywhere yet, and that’s that this could turn into a big political liability for the Republicans, from Greg Abbott and Ted Cruz to the various members of Congress. The campaign ads write themselves: “Your party controls the government, and you couldn’t get anything done to help with the recovery. What good are you?” Maybe Abbott can survive that, against a low-profile opponent, but I sure wouldn’t want to be John Culberson or Ted Cruz and have that hanging around my neck. Maybe Trump and Congress get their act together on this and turn this into a positive for their team. They certainly have the incentive for it. They just don’t have the track record, or the ideological impulses. Keep an eye on it, that’s all I’m saying. A statement from Mayor Turner is here, and the Chron has more.

By the way, CHIP is still running out

Just in case you were wondering.

Advocates say Texas will run out of funding for the Children’s Health Insurance Program sooner than they thought. The program, which Congress failed to reauthorize last month, covers nearly 400,000 children from working-class families in the state.

“It’s expected that Texas will run out of CHIP funding in January,” said Adriana Koehler, a policy associate with the advocacy group Texans Care for Children. “With the holidays coming up in the next few months, we really need Congress to get the job done now.”

Just a few months ago, advocates said it was unclear when the state would run out of CHIP funds. Some advocates expected the state had until next September; others said funds would run out in February.

Carrie Williams, a spokesperson with the Texas Health and Human Services Commission, said the funding could run out as early as January.

Williams said the agency pushed up the timeline because of reduced income from co-pays. After Hurricane Harvey hit, the federal government waived co-pays and enrollment fees for CHIP recipients. That meant less money was coming into the program than expected.

“So funds may be exhausted a bit sooner than February,” she said.

See here for the background. One might think that such a fanatically and performatively “pro-life” state like Texas would be full of leaders who would care deeply about 400,000 children losing access to health care, but one would have to be deeply naive to believe it. At this time, it looks like the best bet for action will be CHIP reauthorization as a part of a successful government shutdown hostage negotiation. There’s a sentence I hope I never have to type again. Remember when we had a government that was interested in actually, you know, governing? Those were the days, I tell you.

Another property tax rate dustup

I have four things to say about this:

Mayor Sylvester Turner

Mayor Sylvester Turner plans to ask city council on Wednesday to sidestep the voter-imposed revenue cap by approving the same property tax rate as last year.

According to City Controller Chris Brown, the city would need to cut the property tax rate by about one fifth of one cent to comply with the revenue cap. The difference would mean about $7 next year to the average Houston homeowner, but the potential political damage to Turner could be much more.

Council must set the tax rate at its Wednesday meeting, but no specific rate was listed on the council agenda and no explanatory backup material was provided to council members until Monday night. Several council members, informed of Brown’s Monday afternoon memo outlining the mayor’s plan, responded with an incredulous, “What?”

The information angered the mayor’s critics and confused his allies on the council a week before voters begin heading to the polls to consider a crucial $1 billion bond that would cement Turner’s landmark pension reforms and another $495 million in city improvement bonds.

To comply with the revenue cap, Brown said, the council would need to set the tax rate at 58.421 cents per $100 of assessed value, not leave it at last year’s 58.642 cents. The difference to the city general fund, he estimated, is $7.9 million.

“I’d love to think of it as a misunderstanding,” Councilman David Robinson said. “Conspicuously on the agenda today it was not disclosed, so it certainly raised a lot of questions. Call it, what – $8 million? It sounds like a very small amount to have a standoff about.”

[…]

Turner’s spokesman Alan Bernstein said Monday afternoon that the mayor’s proposal to leave the rate flat did not rely on invoking the disaster declaration language, but hours later acknowledged that clause is the basis for keeping the same rate.

“The mayor clearly said at this meeting, the press conference with the governor and everybody, ‘We are not going to be invoking the disaster clause,'” Brown said late Monday. “So, now they’re saying they’re going to do it. OK, they can do that. My opposition is not if they do it or don’t, my opposition is that they do it and nobody knows about it.”

A Monday evening memo from interim finance director Tantri Emo said the charter not only allows the mayor to invoke the disaster clause to collect an extra $7.9 million for Harvey expenses, but also provides no process by which Brown is required to verify the tax rate. Therefore, Bernstein added, it is not relevant that Brown cannot verify the city’s estimated $1.1 billion in general fund damages from Harvey before federal and insurance reimbursements.

“Since he can’t independently validate them, he’s not counting them,” Bernstein said. “Well, we’re counting them, and we feel like he’s not interpreting this all correctly. We’re certainly not busting the tax cap. The mayor disagrees with the controller’s conclusion.”

1. Let’s get one thing straight up front: This is not in any way an “increase”. This is because leaving something the same as it was before is not an increase, in the same way that my remaining the same height does not mean that I have gotten taller even if for some reason I was supposed to shrink. One of the Council members quoted in the story referred to this as an “increase”, and you can be sure others will echo him. Don’t fall for it.

2. I don’t know what was going on in the Mayor’s office with this, in particular with the peculiar lack of communication followed by the about-face on their rationale, but this was handled badly. They should have been up front about the fact that all their calculations were based on leaving the tax rate the same. Which, let’s be clear, in a sane non-revenue-cap world is exactly what would have happened without anyone even noticing that it was a thing that was happening. Bring it up early on, during the (successful) standoff with Greg Abbott, and there would be nothing more to it by now. Like I said, I don’t know what they were thinking, but this is a mess of their own making, and they need to clean it up.

3. More to the point, this was a missed opportunity to drive home the message that the revenue cap is stupid, harmful policy. If we didn’t have a revenue cap forcing this on us, would anyone have proposed a tax rate cut right now? Can you imagine it: “Hey, let’s make a tiny little cut to the tax rate that will have no effect at all on anyone but will cost the city eight million dollars at a time when we’re up to our necks in hurricane recovery expenses”? It’s stupid policy that forces us to make stupid choices. The revenue cap needs to go.

4. All that said, I think CM Robinson has the right answer. If this were the Lege, as Mayor Turner surely knows, they’d have solved this by delaying payment of an invoice or two from this accounting cycle to the next one, thus making the “deficit” disappear in a puff of magic pixie dust. I have to believe that the city can do something similar if it comes down to it.

The lost Harvey tax break

I have mixed feelings about this.

Rep. Sarah Davis

Owners of nearly 300,000 homes damaged by Hurricane Harvey in Texas won’t see any break in their property taxes because of political wrangling this year in the state Legislature over completely unrelated issues – including, one Houston Republican says, the bathroom bill.

A property tax reform bill that would have required all local governments to reappraise damaged homes and businesses and lower the tax bills came within a single round of votes on four different occasions. If the mandatory reappraisal proposal had become law, it would have all but assured that the tens of thousands of homes and businesses damaged or destroyed statewide because of Harvey would have received a reduction in property taxes this year.

But it never passed, and according to the state lawmaker who came up with the idea, it’s because of the bathroom bill. Rep. Sarah Davis, R-Houston, lays the blame on Lt. Gov. Dan Patrick, who she contends was trying to blackball her bills.

“I have little doubt its slow death in the Senate is because of social issues like the bathroom bill,” said Davis, whose district flooded badly during the 2015 Memorial Day storms and the 2016 tax day storms.

Currently, reappraisals after natural disasters are optional for local governments and most are like Harris County and Aransas County in saying they won’t do it because they cannot afford it.

A home in Houston that was valued at $200,000 before the hurricane, but worth just $30,000 after, would have seen a $700 cut just in school taxes, according to the Texas Taxpayers and Research Association, which strongly backed the Davis proposal.

“It was really one of my No. 1 priorities,” said Davis, whose original bill would have taken effect Sept. 1.

But that is likely why the bill never cleared the Senate, she said. Davis was a vocal opponent of the so-called bathroom bill that was a top priority in the Texas Senate.

[…]

Texas law already allows counties, cities and other local governments to reappraise properties after a storm, but few ever do because of the lost revenues that it could result in and because of how expensive and time consuming the reappraisal process could be during a time governments are trying to finalize their budgets. If governments do the reappraisals, the full cost is on the local governments.

“It’s not a very workable solution,” Harris County Judge Ed Emmett, a Republican, said about why he has not voluntarily called for the reappraisals in Harris. “It’s not that I don’t have sympathy for people and what they’ve lost.”

He said the problem is the reappraisals would cost $10 million in a county as big and urban as Harris County. Plus the county would lose revenue from tax collections at a time it most needs the money to address the natural disaster recovery.

He added that property owners still will get the benefit of the Jan. 1 appraisals for the next year’s taxes. That almost certainly will result in lower tax bills for homeowners with damaged properties next year.

Similarly, in Aransas County – where Harvey made landfall as a Category 4 and demolished 36 percent of all homes and businesses – there will be no reappraisal. Aransas County Judge C.H. “Burt” Mills Jr. said there isn’t time or money to get it done and said it would only hurt tax revenues at a time when every source of funding the county relies on is in jeopardy.

“All of our income is in the toilet,” Mills said of a county that relies heavily on tourists to generate sales taxes and fill rental properties.

Let’s start with the obvious. Of course the bathroom bill was the reason why this bill never got a vote in the Senate. This is how Dan Patrick operates. You can admire his hard-nosed tactical consistency, or you can bemoan his willingness to sacrifice the greater good in service of his narrow partisan interests, but you can’t deny the premise.

I certainly get the impetus for Rep. Davis’ bill. Though all the activity on this came before Harvey, Davis represents neighborhoods that were hard hit by the floods of 2015 and 2016. Giving people whose houses have been greatly damaged or destroyed a break on their property taxes has a lot of obvious appeal. That said, I agree with Judges Emmett and Mills. The counties – and cities and school districts – that these houses are in will be facing large extra expenses as a result of the disaster in question, and they’ve built their budgets for the year based in part on the original values of those houses. When the houses are reappraised for the next year, everyone can plan their budgets based on the expected lower values. Is the benefit of an extra year’s lower tax bill for affected homeowners worth the cost?

There is, of course, a simple enough way to resolve this: Have the state cover the difference. We agree that homeowners whose houses have been devastated deserve a break. We agree (I hope) that the cost of that break should not be a burden on counties and school districts that are themselves recovering from the damage of the natural disaster. The amount in question would be a relative pittance for the state. Why not let the state budget make the affected local government entities whole? Because that’s not what we do. Dan Patrick and his buddies take from the locals, they don’t give back. They’d be more than willing to take the credit for the cut, but it’ll be a cold day in August before they’d be willing to bear the cost. I appreciate what Rep. Davis was trying to do with her bill, but without this I can’t quite support it.

HFD and disaster preparedness

There’s a lot here to think about, and to do something about.

The Houston Fire Department’s limitations quickly became clear as Harvey’s floodwaters rose.

Just one high-water rescue vehicle. Decades-old evacuation boats. Sparse training for swift-water rescues. And limited staffing after an 11th-hour decision not to call in major reinforcements to face the catastrophic storm.

The department had been warned. Lethal flooding two years ago exposed shortcomings and prompted sweeping recommendations to improve future responses.

And yet, when firefighters rushed fearlessly into Harvey’s currents in late August, they were again hobbled by a lack of resources, old equipment and a shortage of manpower ready to go when the storm hit, according to a Chronicle review of internal reports and emails, and dozens of interviews with firefighters and other officials.

The review found a department – and a city – that failed to follow the hard-earned lessons of previous storms, even as one of the worst in U.S. history descended on the region.

“Civilians had to step up – which was a great thing – but that’s not their job,” one high-ranking fire official said. “It’s our job to protect and serve the public. We couldn’t do that because we didn’t have what we needed.”

Fire Chief Samuel Peña, who stepped in to lead the department in December, defended the response and commended his firefighters, who performed 7,000 rescues and answered more than 15,000 calls for help during the first five days of the storm.

But he acknowledged that Harvey exposed shortcomings in the department’s fleet and training.

“Harvey punched us in the mouth,” Peña said. “No municipality is ever going to have the number of resources to be able to respond to a catastrophic incident the size of Harvey. But we know the anticipated risk in this community. We know that the 500-year flood is going to come again next year … We don’t have the adequate resources to address even the expected risk in this community.”

Critics, however, say the department’s response suffered from more than neglect.

“Anyone with common sense could see with relative certainty there was going to be an enormous rescue effort that was going to be required following the impact of Hurricane Harvey,” said Jim Brinkley, director of occupational health and safety for the International Association of Fire Fighters. “It’s expected a department would allocate enough resources – in terms of staffing alone – to make sure they’re capable of responding.”

There are a lot of reasons why HFD’s ability to deal with mass flooding events isn’t any more advanced now than it was a few years ago, before such things had become annual occurrences. You can come to your own conclusions about who shoulders how much of the responsibility for that. I would just point out that any effective solution to this is going to cost money. Equipment costs money. Training costs money. Firefighters who have better training can earn more money, if not here then elsewhere. We can and should review how HFD uses the resources it has now – as we know, most of the demands on the department are for emergency medical services and not for fire, and HFD has a track record of being profligate with overtime – but there’s only so far you can squeeze before you start displacing things you’d rather keep. If we want HFD to be better at responding to these events, we’re going to have to make an investment in them, and not just a one-time investment. That means we the voters are going to have to come to grips with the need to spend more money, or with the reality that we’re going to keep getting what we’re already paying for. If there are hard choices to be made by our leaders, we have to be prepared for what that means to us.

Harris County considers its budget post-Harvey

They have some choices, and some constraints.

Harris County government departments could see their budgets reduced by up to 5 percent as property taxes take an expected dip due to Hurricane Harvey’s widespread destruction.

The estimate is preliminary, County Budget Officer Bill Jackson said Friday. The extent of an anticipated decrease in property tax revenues will be determined after properties are appraised Jan. 1.

Jackson said the county plans to keep budgets flat, if possible. Most departments have received increases every year since the 2008 recession.

[…]

It is not clear yet how much the storm has affected Harris County’s tax base as the extent of damage to property still is being determined.

Damaged homes will be worth less, and those owners can expect smaller property tax bills. In other cases, repairs to homes or other buildings could bring them back up to their original value. Properties unaffected by floodwaters could see a jump in value.

Jackson said the county’s public contingency fund – roughly $100 million – has helped pay for Harvey-related expenses, such as debris cleanup and overtime for county personnel who worked during and immediately after the storm. Jackson said Harvey-related overtime has totaled some $12 million, so far.

The county still is assessing what is likely to be hundreds of millions of dollars of damage to infrastructure, but most of that will be covered by insurance and some repairs can be reimbursed by the federal government.

Harvey’s impact on the county’s budget likely will come from a dip in property tax revenues, Jackson said. The county relies on property taxes for most of its revenue. Unlike the city, it does not collect a sales tax.

The possible property tax rate hike would come in the event the county does float bonds to rebuild and fortify its flood mitigation infrastructure. For now, the tax rate remains the same. The county also spent some money to buy out 200 homes in the more flood-prone areas. Needless to say, there would need to be a lot more of that to really make a difference, but it’s a start.

Mayor Turner lowers tax rate hike amount

I’m sure we’re all glad to see this.

Mayor Sylvester Turner

Mayor Sylvester Turner on Wednesday said the temporary property tax rate hike he has proposed would be cut in half after federal officials approved his request to increase reimbursement for the city’s Hurricane Harvey recovery efforts.

Turner earlier this month had pitched an 8.9 percent increase for one year, but said it would not be enough to cover all of the city’s cost of recovering from the unprecedented storm and flooding. It would be the first rate hike in two decades.

On Wednesday, he said that increase could be halved – to an extra $50 next yearfor the owner of a $225,000 home with a standard homestead exemption – thanks to a White House decision to boost reimbursement of many of the city’s recovery costs from 75 to 90 percent.

“We’re going to do everything we can to hold our line. We’re trying to minimize our request,” Turner said. “I understand what people’s concerns are with what they’re going through in their homes, and we don’t want to add to the burden.”

[…]

No tax hike would be necessary, Turner said, if state leaders agree to tap their roughly $10 billion rainy day fund. That suggestion drew support from council members.

“We need it now. It’s raining,” said Councilman Jack Christie, who has spoken against a tax rate hike. “We’re behind you to do that to where we don’t have to raise taxes.”

Several times in recent days, Gov. Greg Abbott has said he expects funds will be tapped to pay for Harvey costs, but said damage estimates must be completed before dollars are withdrawn. The latest tally Wednesday projected $574 million in damage to public infrastructure, including $177 million in Harris County.

“I think most people understand that Texas will be tapping into the rainy day fund,” he said in San Antonio last week. “The important thing, though, is that we address the economic issues appropriately. We need to first understand what obligations we’re going to have, how much they will amount to, and decide upon the best strategies to pay for that.”

See here and here for the background. You know what could eliminate the need for any tax hike whatsoever? If the state of Texas, which has some $10 billion sitting around doing nothing, were to cover the remaining costs that insurance and the feds won’t. I wonder if anyone has briefed Paul Bettencourt about this possibility, since he seems to be so entirely bereft of constructive ideas. To be sure, even Dan Patrick has been talking about using the Rainy Day Fund to help Houston and everywhere else recover from Harvey. That’s both good and necessary. But the city of Houston has to pay for things now, and it has to make sure it has the financial wherewithal to pay for those things now since it is not allowed to carry expenses over from one accounting year to another (this is another way of saying the city must “balance” its budget), so unless there’s a firm commitment in place from the state that the city can rely on, it’s got to make its own plans to pay for any uncovered expenses. If Paul Bettencourt and the usual suspects on City Council don’t like that, they are welcome to direct their concerns to Greg Abbott and Dan Patrick. The Press has more.

Mayor seeks one-year tax hike for Harvey cleanup

This stuff isn’t going to pay for itself, you know.

Mayor Sylvester Turner

Mayor Sylvester Turner will ask City Council to approve an 8.9 percent hike in the city’s tax rate this fall to help Houston recover from Tropical Storm Harvey, in what would be the first tax rate hike from City Hall in more than two decades.

The average Houston homeowner would pay $118 more in property taxes next year under the proposal, which will begin a series of public hearings later this month and reach a formal vote in mid-October.

The tax rate would rise from 58.64 cents per $100 of appraised value – the lowest city tax rate since the late 1980s – to 63.87 cents. That was the rate from 2009 through 2013, when a 13-year-old voter-imposed limit on Houston’s property tax collections first began forcing City Council to cut the rate each year to avoid bringing in more revenue than was allowed.

Turner is able to propose an increase beyond the strictures of the revenue cap – allowing the city to collect an extra $113 million for one year – because Harvey placed Houston under a federal disaster declaration.

“If this is not an emergency, I don’t know what is. What we’re able to recoup from one year, the $113 million, will not even be enough to cover the expenses we will have incurred,” Turner said Monday. “What we don’t get from the feds we’ll have to come up with ourselves. I would be not doing my job if I did not advance it.”

Debris removal could cost more than $200 million and will require Houston to foot 10 percent of the bill without being reimbursed. The city also lost 334 vehicles to floodwaters and saw its municipal courts complex, city hall and its adjacent annex and two wastewater treatment plants knocked offline.

[…]

If adopted, the higher rate would take effect only for homeowners’ January 2018 tax bills. Come the following January, the emergency period would end and the city’s tax rate again would be dictated by the voter-imposed cap, which limits the annual growth of Houston’s property tax revenue to the combined rates of inflation and population growth, or 4.5 percent, whichever is lower.

State Sen. Paul Bettencourt, R-Houston and key revenue cap proponent, said he wants to speak with the mayor to remind him that homeowners’ assessed values are rising, meaning a tax rate hike would amount to a double increase.

Bettencourt refrained from outright criticism of the proposal and praised much of the mayor’s response to the storm. He urged caution on the tax proposal, however.

“The rate is just one half of the equation. The other half is how much the value has gone up,” he said. “This is a delicate public policy issue because we’ve got Houstonians that are literally flooded out of their homes and many people have been affected so they’re not in a position to pay the bill easily, much less if it increases.”

The average Houstonian in a $225,000 home with a standard homestead exemption sends $1,321 to City Hall annually. Turner’s proposal would see that bill rise by $117.86 next year.

Let’s be clear about a couple of things. Thanks to the revenue cap charter amendment, this can only be a one-year increase. The rate will be what we had from 2008 to 2013, so it’s not like this is some unprecedented assessment. The city can’t run a deficit, and it can’t borrow money without getting authorization from the voters. The property tax rate is basically the only mechanism the city has to raise this kind of money. The city will get some federal funds, but it may not have control over their appropriation, and some of those funds as noted in the story are contingent on the city putting up money as well. Lord only knows what the state will pay for, and the county will do its own thing.

The point here is that the city has some big unexpected bills to pay. It has to pay for a lot of overtime for police officers and firefighters who were rescuing people during the floods and who are dealing with aftereffects like traffic control. It has to pay for a lot of overtime to Solid Waste employees who are working to pick up the enormous piles of trash around the city. Your taxes are going up by a couple hundred bucks to pay for this. If you have a problem with that, I don’t know what to tell you, other than I can’t abide that kind of thinking.

Some people will say that we should find costs to cut instead. I will remind you that the vast majority of the city’s expenses are for personnel, and in this particular case the extra unbudgeted expenses are largely for overtime pay. Unless you think all these people should have worked for free, this argument is nonsense. Every time a government entity faces a budget shortfall, I hear people justify cutting programs and services as “shared sacrifice”. In my experience, most of the people who say that aren’t themselves sacrificing much of anything. The difference between those cuts and this rate increase is that this time the bulk of the sacrifice is being felt by a different crowd. If you don’t like it, maybe keep that in mind for the next time.

To address Sen. Bettencourt’s concern, I’m fine with exempting the people who were flooded out from the rate increase. If you filed a FEMA claim, you get to be assessed at the current rate. As for the Council members quoted in the story who say they can’t go along with this, I say no trash gets collected in their neighborhoods until every last piece of Harvey debris has been carted off. There’s a little shared sacrifice for you. The Press has more.

The case for calling a Harvey special session

Rep. Gene Wu disagrees with Greg Abbott’s decision.

Rep. Gene Wu

The historic level of damage and suffering caused by Harvey requires that we tap into our state’s Rainy Day Fund. Gov. Greg Abbott’s decision to not call a special session of the Texas Legislature to access emergency funding will worsen the long-term economic effects of one of the most powerful storms to ever land on our shores.

Abbott has stated that there is no need for a special session, implicitly saying that there is no need to tap into the Economic Stabilization Fund — our state’s savings account, commonly known as the Rainy Day Fund — and that existing resources are sufficient to deal with the widespread devastation caused by Harvey.

However, if there has been one lesson that I’ve learned in my three terms in the Legislature, it’s that existing resources are never adequate in Texas. Our schools continue to be some of the worst funded in the nation, half of our rural hospitals are on the verge of closing, and we barely maintain our existing infrastructure. Texas mostly skates by on a combination of luck and creative accounting. But more importantly, what we have budgeted for are common occurrences and normal disasters. The historic level of damage from Harvey is anything but common.

[…]

The Rainy Day Fund is available right now. The Texas Legislature needs to only meet for a few days and send a bill to the governor to access the funds. There is strong bipartisan support because members understand the desperate need for a quick response. In this past legislative session, conservative members argued that the fund should not be used for “reoccurring” expenses because we needed to save it for one-time emergencies. This is that emergency.

The state could provide immediate, low-interest or no-interest small loans to help businesses rebuild quickly. The money could go to help Houston ISD to repair the more than 200 schools that suffered flood damage, including 53 with critical damage. Harris County could use the funds to expedite repairs so that courts and the jury assembly center are not closed for the next three months. Outside of the Houston area, entire cities need to be rebuilt. Simply leaving local counties and municipalities on their own to rebuild means a slower recovery — possibly causing businesses to close or leave our state, and taking jobs with them.

See here for the background. I guess I’m not fully clear on what the Legislative Budget Board can and cannot do, and what gaps there would be if only the LBB gets to act. I do think Rep. Wu is right on about appropriating money to the schools and school districts that have been heavily damaged by Harvey. I can’t think of a better use of Rainy Day Fund money than to make schools safe and available for students again. Again, if the LBB can do this, great. It will be a lot less messy that way – I mean, if you think the jackasses of the Freedom Caucus won’t try to screw with an emergency appropriations bill for school repairs, I have to ask what Legislature you’ve been watching – but if the LBB can’t do that, then a special session it needs to be.

No special session needed to address Harvey flooding

So says Greg Abbott.

Gov. Greg Abbott said Friday another special session of the Texas Legislature won’t be necessary to deal with the response to Hurricane Harvey.

“We won’t need a special session for this,” Abbott told reporters, noting that the state has enough resources to “address the needs between now and the next session.”

[…]

In recent days, some members of the Texas Legislature have speculated that a special session to address the recovery seemed likely. They included state Sen. Paul Bettencourt, R-Houston, an ally of Lt. Gov. Dan Patrick and the chairman of the Senate GOP caucus.

“My personal assumption right now is that we will probably be back in Austin at work no later than January,” Bettencourt told the Houston Chronicle on Thursday.

Here’s that Chron story. A few details from it to help clarify:

“My personal assumption right now is that we will probably be back in Austin at work no later than January,” said Senate Republican Caucus Chair Paul Bettencourt, R-Houston, echoing the sentiments of other House and Senate members.

“The governor and the Legislative Budget Board have the ability to move around quite a bit of money in current appropriations, but it probably won’t be enough when all the bills come in. This storm is going to cost more than (hurricanes) Katrina and Sandy put together, and I’m thinking we’ll be breaking the $200 billion mark before this over.”

While the state would be liable for only a fraction of that amount, after insurance and federal payments come in, but whatever that (remaining) amount is will be something the Legislature will probably have to address.”

That, say other lawmakers, will most likely involve a politically charged debate over tapping the state’s so-called Rainy Day Fund — a $10 billion account officially known as the Economic Stabilization Fund — to pay for some of the storm-damage tab.

[…]

In a Thursday letter to House members, House Speaker Joe Straus said he will be issuing selective interim charges — directives for legislative recommendations — “in the near future to address these challenges” resulting from the massive destruction caused by Harvey, especially to schools.

“The House Appropriations Committee will identify state resources that can be applied toward the recovery and relief efforts being incurred today, as well as long-term investments the state can make to minimize future storms,” the San Antonio Republican said in his letter. “When the appropriate time comes, other committees will review the state’s response and delivery of services.”

The Legislative Budget Board, jointly headed by Lt. Gov. Dan Patrick and Straus, can make key decisions on reallocating state funds to meet emergency needs — up to a point, officials said. Half of its members — three senators and two House members — represent areas devastated by Harvey.

My guess is that Abbott is probably right and the LBB can cover this for now. Tapping the Rainy Day Fund, which I will point out again was created for the purpose of helping to cover budget shortfalls in times of economic downturn before being bizarrely recast as in-case-of-disaster savings by Rick Perry in 2011, may require the Lege, but that may be done in a way as to defer that action until 2019. My wonk skillz are limited in this particular area. Point being, if Congress can manage to allocate relief funding without tripping over their ideologies, there shouldn’t be that much for the state to have to pick up. We’ll see.

This is why you don’t politicize disaster relief, Senator

It’s pretty simple, really. People come before politics.

Not Ted Cruz

Many New Yorkers and New Jerseyans serving in Congress have, for nearly five years now, kept a list of names handy to roll out at a moment’s notice. They call it “the Comeuppance Caucus.”

For some, the list is on a physical paper or bookmarked on a computer. For others, it’s merely tattooed into their brains. It consists of which colleagues voted against Hurricane Sandy funding back in 2013, and it’s chock full of Texas Republicans.

In fact, nearly every Texas Republican who was serving in Congress at the time voted against the $50.5 billion aid bill. And now their own constituents are facing the biggest natural disaster in state history.

“There is deep and lingering resentment by members of Congress who needed help in their districts when Sandy just ravaged their constituents,” said former U.S. Rep. Steve Israel, a Democrat who represented Long Island until he retired last January. “[U.S. Sen] Ted Cruz and others led the fight against that aid, and a lot of people said there would be a day of reckoning.”

[…]

U.S. Rep Peter King, a Long Island Republican, took the biggest shot at the delegation on Saturday, tweeting, “Ted Cruz & Texas cohorts voted vs NY/NJ aid after Sandy but I’ll vote 4 Harvey aid. NY wont abandon Texas. 1 bad turn doesnt deserve another.”

Democratic U.S. Rep. Kathleen Rice, concurred with her Long Island neighbor an hour later on Twitter.

[…]

Congress returns on Tuesday and will have a whole host of new problems to sort out, on top of a slew of budget deadlines barreling toward the two chambers. Is there a chance that the Sandy vote will come back to haunt Texas?

The bipartisan message blowing in from the Northeast: Congress will deliver the funds to Texas. While there is no interest in punishing fellow Americans, these members do want those in Congress from Texas to know just how personally they took those “no” vote when their own constituents were in trouble four and a half years ago.

“New Yorkers made the argument that when a storm strikes, it’s not striking one region, it’s striking the whole country, and I think my colleagues will be faithful to put their [voting] cards in and pushing the button,” said Israel.

“Until then, I think they’re enjoying making a point.”

Rep. Israel speaks for me. Cruz had, in his typical grandstanding way, railed against what he claimed was “wasteful” spending included in the Sandy relief bill. Which was bullshit, for the reasons articulated above. Any problems he had with the bill could have been dealt with after the immediate issue had been handled. It is to their lasting credit that the delegations from New York and New Jersey recognize this, and to the eternal shame of the Texas Republican caucus (of which, it must be noted, Rep. John Culberson was an honorable exception; he voted for the Sandy relief bill) that they didn’t. Cruz deserves every one of the rhetorical ass-kickings he’s getting. May he remember them all for the rest of his miserable life.

Firefighters turn in their petitions

Good for them, but boy is this thing a train wreck.

Houston firefighters delivered over 32,000 signatures to City Hall Monday in support of putting a ballot initiative on the November election mandating parity in pay between firefighter and police-officer ranks.

[…]

“This petition drive was necessary because Houston firefighters are at a breaking point,” said Marty Lancton, president of the Houston Professional Fire Fighters Association at a press conference Monday morning. “We now are asking the voters to help Houston fire fighters because the city refuses to do so.”

Former Houston City Attorney Dave Feldman, who is advising the petition effort, said a formal cost estimate of the initiative if approved in November has not been determined.

Using average figures for the cost of police and fire personnel without regard to rank, increasing fire base pay to match that of police would cost roughly $40 million in the current fiscal year. The city finance department projects annual budget deficits of more than $100 million for the next five years.

See here for the background, and a long comment thread. I mean look, this isn’t a proposal right now, it’s an idea. There are literally no details. If one were to run for office on this idea, one would expect to be questioned about basic things, like how much will this cost, and how will the city match job titles across two differently-structured departments. Anyone who provided the answers the firefighters are giving now would not be taken seriously, to put it mildly. In addition, while a candidate for office would have until November to come up with satisfying responses, the firefighters have until the end of August, at which time referendum language would have to be written and approved by City Council.

And what do you think that referendum language might say, based on what we know so far? Think of the recent history of ballot referenda and all the ensuing litigation over said language, and ask yourself if there is any possible wording that will satisfy both the proponents and opponents of this idea. The ballot language lawsuit practically writes itself – it will just be a matter of finding the right taxpayers to serve as plaintiffs. If it is written with sufficient detail to explain how it will be done it will be attacked as too complicated for anyone to understand, and if it is stated simply it will be derided as vague to the point of meaninglessness. This is a bad idea on so many levels, and you can take it to the bank that it will be tied up in court for years to come. The Press has more.

UPDATE: Here’s the full Chron story. I’ll have more to say about this tomorrow.

What West Texas can do to improve their schools

Here’s an op-ed from the Statesman about one educator in West Texas who has had enough.

My hero this week is Graydon Hicks, Fort Davis superintendent of schools.

A West Texas publication published his open letter to Gov. Greg Abbott and Lt. Gov. Dan Patrick raking them over the coals for “the lack of positive legislative action for public schools in Texas” at the most recent session, which adjourned at the end of May without passing a school finance bill.

Hicks is a West Point graduate and an experienced school administrator. He is no-nonsense guy who does not mince words. After detailing the effect of shrinking state financial support for public schools on Fort Davis schools over the past 10 years — combined with an increasing number of unfunded mandates and requirements — Hicks wrote, “How much more do you want to harm our children?

“If your intent is to dissolve public education (and your actions are more than a clear signal of such), then simply go on the record with that statement and remove the state’s authority to further overburden us without financial support. Quit pontificating about bathrooms. Quit hiding your intentions behind righteous statements about school vouchers and choice.”

Hicks accompanied his letter with a chart showing the annually declining amount of state funding available to the Fort Davis school district and the increasing burden on local taxpayers since 2008. That year, state funding amounted to $3.9 million, or 68 percent of the school district’s budget. Local property taxes provided $1.8 million, or 32 percent. In 2017, the state will contribute $378,000 — about one-tenth of its 2008 commitment, or 15 percent of the total budget. Local taxes this year will provide $2.2 million, or 85 percent.

“The Fort Davis ISD has 226 students,” Hicks wrote. “It has no cafeteria, has no bus routes, has dropped our band program, has eliminated (or not filled) 15 staff positions, has cut stipends for extra-curricular activities, has frozen (or reduced) staff pay for one year, has cut extra-curricular programs, has no debt, and has increased our local tax rate to the maximum allowed by the law.

“We have nothing left to cut.”

I agree that Superintendent Hicks sounds like a fine fellow who is speaking truth to power. That said, I feel compelled to point out how Jeff Davis County (*), which is where Fort Davis ISD, voted in the last gubernatorial election:


Governor
			
Greg Abbott             623  60.54%
Wendy R. Davis          366  35.57%
Kathie Glass             31   3.01%
Brandon Parmer            9   0.87%


Lieutenant Governor
			
Dan Patrick             560  56.62%
Leticia Van de Putte    375  37.92%
Robert D. Butler         48   4.85%
Chandrakantha Courtney    6   0.61%

Hold that thought. Now here’s a similar story about the school funding woes in West Texas:

Educators were excited to hear Gov. Greg Abbott announce he would call lawmakers back to Austin for a special legislative session to consider $1,000 teacher pay raises.

But Donna Hale, superintendent at 200-student Miami ISD in rural Roberts County, is wondering where the money is going to come from. An unfunded mandate, she said, could throw a wrench into their already difficult budgeting process.

“That’s the last thing we really need – the state saying you’ve got to do this when they’re not offering any support for us,” said Hale, who already doubles as the district’s librarian and said she was considering taking over as principal to cut payroll costs.

A wind farm and a sea of oil and natural gas wells in Roberts County has been good to Miami ISD, giving the district a flush tax base to pay for teachers and buildings. But its $1 billion dollar tax roll was cut in half this last year amid tumbling oil and gas prices. A state aid provision that it has relied on in recent years to guard against economic downturns expires in September and will take more than a third of the district’s budget with it.

Many rural schools like Miami ISD, the only school district in the county, are facing a similar dilemma and pleading with the State Legislature to act. Lawmakers return to the Capitol next month for a legislative overtime period, but school finance reform has taken a back seat to bills regulating bathroom use and creating a school choice program.

Again, I sympathize, and again, I wonder how did Roberts County vote in 2014?


Governor
			
Greg Abbott             324  93.91%
Wendy R. Davis           15   4.35%
Kathie Glass              5   1.45%
Brandon Parmer            1   0.29%


Lieutenant Governor			

Dan Patrick             320  93.29%
Leticia Van de Putte     12   3.50%
Robert D. Butler         10   2.92%
Chandrakantha Courtney    1   0.29%

I think you get where I’m going with this. Now, I will stipulate that in 2014, one might have been able to believe that Greg Abbott, who was touting an expansion of pre-K, and Dan Patrick, who had served as the Senate Education Committee chair and had passed some bipartisan bills during that time, could at least have been okay on education and school finance issues. Here in June of 2017, after a session that included the Senate refusing to consider HB21 and a special session that includes vouchers on the agenda, it’s really hard to believe that now. Further, both counties are represented in the Lege by pro-education members. Roberts County is served by Sen. Kel Seliger, who was the only Senate Republican to oppose the main voucher bill, and by Rep. Ken King, who was endorsed by Texas Parent PAC in the 2012 primary. Jeff Davis County has two Democrats, Sen. Jose Rodriguez and Rep. Cesar Blanco, in the Lege. Both were unopposed in 2016, and Blanco was unopposed in 2014, but in all three cases they drew a comparable number of votes to Republicans on the ballot. In addition, former Rep. Pete Gallego carried Jeff Davis County in 2010, even as Rick Perry and the rest of the Republicans were also winning it. The voters there do vote for pro-education candidates. Will they – and other counties like them – recognize in 2018 that “pro-education” does not describe Abbott or Patrick? I for one will have a lot more sympathy for their plight if they do.

(*) Yeah, I know.

The DPS two-step

First, there was this.

Despite a two-year budget of $2.4 billion, the Texas Department of Public Safety, with little notice, has reduced office hours at 11 of the state’s busiest driver’s license offices and plans to lay off more than 100 full-time employees to deal with a $21 million funding crunch.

The statewide police agency’s primary function is to patrol state highways and issue driver’s licenses, but in recent years has spent hundreds of millions on security operations along the 1,200-mile border with Mexico.

The effects of the reduced driver’s license office hours were apparent on Monday morning, where nearly 200 customers formed a long, snaking line outside the large DPS facility at 12220 South Gessner. On June 5, the DPS abruptly scaled back operating hours from 7:30 a.m. to 6 p.m. to 8 a.m. to 5 p.m. at the large centers. The offices are still open after 5 p.m. on Tuesdays.

[…]

DPS spokesman Tom Vinger said Monday the department is not allowed to use funds set aside for border security to offset shortfalls in other areas of operation, like the driver’s license division. The cuts were necessary after DPS was instructed by state legislators to reduce 2018-2019 funding for the division by 4 percent.

DPS management of the driver license operation has not only angered customers, it is being criticized by elected officials.

State Sen. John Whitmire, D-Houston, said DPS did not notify lawmakers of the reductions in driver’s license operations until after the Legislature adjourned late last month.

“We’re stuck now with a severe reduction in service hours and employees at multiple centers around the state, including two here in Houston in my district, that we know are already overcrowded,” Whitmire said.

“It’s pretty alarming – we leave after sine die (adjournment), and leave (DPS) a budget of $800 million for border security, which involves essentially two border counties, and we leave $11 billion in the rainy day fund, and we have to tell people they’re going to have to stand in longer lines to get a driver license.”

But Sen. Whitmire, just think of all those speeding tickets being handed out in South Texas as a result of our sacrifice. Would that not make it all worthwhile? Perhaps someone realized how bad this all looked, and also considered the voter ID implications, as people who lacked drivers licenses had to get approved state election IDs from DPS offices. If the state of Texas was hoping that its slightly modified voter ID law would be enough to counter a motion to pitch the whole discriminatory thing, then maybe DPS needed to reconsider. And indeed, they did.

The Texas Department of Public Safety has reversed a controversial cutback in staffing hours at 11 of the state’s largest driver’s license offices including those in Houston, Dallas, and El Paso, according to a veteran Houston lawmaker who protested the reductions.

St. Sen. John Whitmire, D-Houston, said he spoke early Tuesday with the chief of staff for Texas Gov. Greg Abbott, and at the end of the conversation he was told the schedule reductions were reversed.

Whitmire added that he received an e-mail from Col. Steven McCraw, the DPS director, who confirmed the office hour reductions which were instituted June 5 would be restored.

[…]

“I talked to the Governor’s chief of staff, who totally agreed it was unacceptable. At the end of the conversation, it was reversed,” Whitmire said. “And then I heard from McCraw that it had been reversed, and he looked forward to visiting me with any further changes.”

Funny how these thing work. It all worked out in the end, but only because someone noticed. Had that not been the case, this could have gone on indefinitely. Always pay attention to the details.

Council passes the 2017-18 budget

With a bit of drama along the way.

Mayor Sylvester Turner

City Council voted to boost funding for a controversial program that helps district council members tackle neighborhood projects Wednesday, even as it approved an annual budget from which one police cadet class and up to 75 employees’ jobs already had been trimmed.

Mayor Sylvester Turner blasted the 10-7 vote to amend his budget for the fiscal year that starts July 1 as “irresponsible.” He warned that increasing the 11 district council members’ project funds could imperil the city’s ability in the coming months to find the money to restore a fifth police cadet class, offer a sufficient raise to firefighters or address long-term challenges such as an aging vehicle fleet or accumulated building maintenance.

“They passed that amendment without specifying where the money is coming from, and that’s almost like pulling it out of thin air,” Turner said after the meeting. “Quite frankly that’s not the way I choose to budget.”

Though the day was tense at times, Turner praised the ultimately unanimous vote to pass his $5.2 billion budget, $2.4 billion of which comes from the general fund that is supported mainly by residents’ taxes and funds most basic services like police, fire, trash pickup, parks and libraries.

The general fund budget aims to spend about $35 million more than the current one, due partly to a $51 million rise in debt costs. For the first time in about 15 years, the budget fully funds the city’s pension costs, thanks to the reform bill Turner successfully pushed through Austin and that Gov. Greg Abbott signed Wednesday while the council was in session.

The budget also closed a $123 million deficit with departmental cuts (largely to police and fire overtime) one-time fixes (such as selling city land), deferred payments (such as to the Houston Zoo) and a dip into city reserves.

Though staffers for Turner and for some council members were abuzz late Wednesday with speculation that a long honeymoon period may finally have ended, the mayor seemed to head off such thinking after the meeting.

“Like any marriage, sometimes there’s disagreement,” he said, wearing a modest grin. “I’m going to get some roses and I’ll send it to all 16 of them. We’ve done a lot of great things together.”

See here for the background. Those Council district funds were first added into the budget under Mayor Parker, and it would seem they are here to stay. They don’t change the size of the budget, just how the money is allocated. I get why Mayor Turner is annoyed, but it’s not that big a deal. I seriously doubt this will change how he and Council deal with each other.

Budget passes

The Legislature’s one mandated duty has been completed.

Both chambers of the Texas Legislature voted Saturday evening to approve a $217 billion, two-year budget that would boost funding for the state’s beleaguered child welfare agency, increase the number of state troopers on the Texas-Mexico border and avoid serious reforms to the state’s much-criticized school finance system.

The final vote in the House was 135-14. The vote in the Senate was 30-1.

Scrounging for cash in a tight-fisted legislative session, budget leaders from both chambers agreed to a compromise that settled a bitter debate over how to finance the state budget. The two-year budget is shored up by both $1 billion taken from the state’s savings account, often referred to as the Rainy Day Fund, and an accounting trick that would use nearly $2 billion from a pot of funding intended for highway projects. The House had favored tapping the Rainy Day Fund and leaving the transportation funding alone. The Senate had taken the opposite position.

[…]

The compromise proposal was skimpier than the original budget draft that the House voted out in April. In the House, the final version won the approval of Tea Party Republicans who had originally opposed the House version, while losing the support of almost one-third of the chamber’s Democrats.

State Sen. Sylvia Garcia, D-Houston, was the lone no vote in the upper chamber.

“This budget is more of the same and fails Texas families,” Garcia said in a statement. “There’s no new money for pre-k, there’s continued spending on more border militarization, and it continues to shortchange education and healthcare.”

The budget includes funding to cover growing enrollment at public schools, but it reduces state funding for schools by about $1.1 billion. That funding is offset primarily by growth in local property taxes.

See here for some background, and read the rest for the details if you want. The thing I want to focus on is in that last paragraph, and for that let me quote from a post Deece Eckstein wrote on Facebook:

The state budget adopted today relies on school property taxes increasing by 7% annually to balance the State budget. In other words, the Legislature is reducing its aid to schools because it assumes your taxes will increase by at least 7% a year.

So, when you’re frustrated by rising property taxes and someone tells you to blame your local school board, just read them the language below. School property taxes now exceed 55% of the average person’s property tax bill. We will not get property tax relief until the Legislature fixes school finance!

Kudos to Kirk Watson and Donna Howard, who have been calling out their colleagues on this hypocrisy. Jeers to Dan Patrick and Paul Bettencourt, who insist on manufacturing villains at the local level to blame for rising property taxes.

It’s an effective con, you have to admit. But if you’ve paying attention, now you know the real story. Don’t be a sucker.

So the big remaining question is whether this will herald the end of the legislative season, as it normally does, or whether Dan Patrick will succeed in strong-arming Greg Abbott into calling a special session to try and force through a bathroom bill. Patrick’s gonna do what Patrick’s gonna do, so do what you can do and call Abbott’s office at 512 463 2000 and tell him no special session. There’s no reason to go down without a fight. RG Ratcliffe has more.

No changes to HISD magnet programs

Not this year, anyway.

Houston ISD Superintendent Richard Carranza this week withdrew a plan to deeply cut funding for the district’s magnet programs over the next three years, shelving a proposal that had angered parents and some school board members who consider the specialized academic programs to be jewels in an oft-troubled school system.

The proposed cuts, outlined in a presentation to the HISD board last week, would have eliminated all extra funding per student to many of the district’s 121 magnet programs by the 2019-2020 school year while cutting funding to many of the other programs by hundreds of dollars per student. Only funding for secondary-language and early-college programs were spared.

But after the plan triggered a backlash from magnet school supporters, Carranza and district officials pulled back the proposal and said they instead planned to conduct a review of the district’s magnet funding and programs.

HISD spokeswoman Lila Hollin said in a written statement on Wednesday that the district had no plans to cut funding or make changes to magnet schools for the coming 2017-2018 school year.

“HISD magnet programs are reviewed annually. Discussions about the equitable funding of schools – both magnet and neighborhood campuses – are part of that review process,” Hollin wrote.

She added that a comprehensive review of the magnet program would likely be completed by January.

[…]

Magnet schools and programs have been a touchy subject in Houston ISD as their prevalence and prominence has grown. While some are more diverse both in terms of race and economic status than many other district schools, critics have argued that they accept a much larger percentage of white and Asian students than those groups account for district-wide.

Only 8 percent of HISD’s students are white, according to TEA data, yet they make up about 36 percent of students at Carnegie Vanguard High. At DeBakey High, about 50 percent of the students are Asian, even though only about 4.7 percent of students district-wide belong to that ethnic group.

But the district’s demographics don’t match those of the city overall, largely because more-affluent white families have generally opted to send their children to private schools or to other districts. About 15 percent of those 18 and under in the city of Houston are white, according to Census data.

Houston ISD Trustee Anna Eastman said she’s glad the proposed cuts to magnet schools and programs appear to be off the table for next year, but she worries that any future cuts along the lines of the recent proposal would be “incredibly drastic.” She said cutting extra funding to the magnet programs is not the way to bring more diversity to those campuses.

“I think our goal should always be to create schools that draw the diversity of Houston into them and spread it across and throughout the district,” Eastman said. “I don’t think the problems in our other schools is the fault of kids in our magnet programs.”

I haven’t been paying close attention to this, but nothing that happened here surprises me. As the story notes, there have been reviews of the magnet program going on for some time, and they usually don’t get very far because the stakeholders really don’t like the proposals. The last section I quoted above captures the conflict succinctly – this program and its schools are very successful and desirable, but there’s limited space and the schools’ demographics don’t come close to mirroring the district as a whole, and they draw students away from their neighborhood schools, which can suffer as a result. It would be best to have more magnet-style programs in more schools all around the district, but that’s a hard thing to do when resources are scarce. I don’t see anything about this dynamic changing much in the near future.

Budget deal reached

The one bill that must get passed is on its way.

After months of private squabbling and public threats of a legislative overtime session, the Texas House and Senate finally compromised to unveil a joint budget late Saturday.

Lawmakers, scrounging for cash in a tight-fisted legislative session, agreed to dip into the state’s savings account and to make use of an accounting trick using funds set aside last session for highway projects.

“We have reached a consensus on what I believe is a responsible, compassionate and smart budget for the people of Texas,” said state Sen. Jane Nelson, R-Flower Mound and the upper chamber’s top budget writer, at a committee hearing that lasted late into Saturday night.

“This has been a laborious process, I have to say,” said state Rep. John Zerwas, a Republican from Richmond and Nelson’s counterpart on the House Appropriations Committee. He called the budget “fiscally conservative” during “a time when it’s a little bit more lean.”

Budget documents indicated around $1 billion would come from the state’s Rainy Day Fund, a $10 billion savings account available to shore up the budget in difficult years. That money would pay for priorities such as repairs to the state’s aging mental health hospitals and bulletproof vests for police officers.

Nearly $2 billion more would come from an accounting trick related to transportation funding approved in 2015. The proposed budget would delay a payment to the state highway fund in order to free up that funding for other needs in the current two-year budget. The House had previously been critical of the possibility.

Though lawmakers were creative in tapping alternative money sources to avoid steep cuts this budget cycle, some high-dollar expenditures, notably Medicaid, the federal-state health insurance program for the poor and disabled, were not fully funded. That means lawmakers will almost certainly need to address those underfunded parts of the budget in 2019 — their next legislative session — in the form of a supplemental budget.

The House had originally intended to use $1.4 billion from the Rainy Day Fund, then considered upping it to $2.4 billion, while the Senate aimed for $2.5 billion in pay-delay gimmickry. Nice to see everyone can give a little to get a little, I guess. No budget is ever going to be good under our current political circumstances, but this one could have been worse, and that’s about all you can hope for.

In other business from Saturday:

On property taxes, the lower chamber unanimously approved an amendment that contained key language from Senate Bill 2 — which, among other things, requires local governments to give constituents more information about proposed property tax increases — and attached it to Senate Bill 669.

The House sponsor of the bill, state Rep. Dennis Bonnen, R-Angleton, had been trying to move the legislation for weeks, and it wasn’t scheduled to come to the House floor until early next week.

The Senate bill is an item Lt. Gov. Dan Patrick has deemed must-pass legislation — he threatened on Wednesday to ask Gov. Greg Abbott to call lawmakers back for a special session if that and other measures didn’t pass. Whether Bonnen’s amendment is enough for Patrick and the more conservative Senate is still unclear: Bonnen’s amendment lacked a key provision that would require voter approval for some tax rate increases, something Patrick stated repeatedly he wanted included.

[…]

An amendment by state Rep. Four Price, R-Amarillo, would extend the lives of several state agencies that were scheduled to “sunset” – or expire. A separate measure that dealt with that specific issue didn’t survive last week’s deadline for the House to pass bills on second reading.

But Price added his language to Senate Bill 80, a measure that seeks to streamline reporting requirements for state agencies. The Senate must now concur with the changes to SB 80 in order for Price’s amendment to survive.

“The goal of the amendment originally as contemplated would not have had to extend these agencies, but for the fact they were caught up in that last night on the calendar,” he said. “It goes hand in hand [so] yes, it had the effect of extending the agencies to 2021.”

SB2 was one item on Dan Patrick’s hostage list, while the sunset bill was his leverage for it. Late last night there was a limited bathroom amendment attached to a Senate bill (I’ll have more on this tomorrow), and SB2 isn’t as Patrick wanted it, so we can’t say as yet whether his tantrum has been mollified. I’m sure he will let us know soon enough.

Mayor Turner’s second budget

It’s about what you’d expect.

Mayor Sylvester Turner

With pension reform in sight, Mayor Sylvester Turner on Tuesday proposed a combination of departmental cuts, one-time fixes, deferred payments and a dip into city reserves to close next year’s $123 million budget gap.

Turner aims to erase the deficit with $51 million in spending cuts – largely from police and fire overtime – $35 million in one-time revenues or deferred payments, and $38 million drawn from city reserves. The mayor said he anticipates eliminating vacant positions across departments and making fewer than 10 layoffs.

The proposed $2.38 billion general fund budget for the fiscal year that begins July 1 is about $35 million more than this year’s spending plan, due in part to a $51 million spike in debt costs.

“Like anything, there are limited dollars, and I think what the public expects for us to do is to operate in a very prudent fashion,” Turner said. “I think we have submitted a budget that can at least maintain our core city services.”

The city’s budget projection is predicated on the state Legislature’s passage of Houston’s pension reform deal with a two-thirds majority and Gov. Greg Abbott’s subsequent approval, which would put the changes into effect at the start of the fiscal year.

The mayor has said the budget gap would increase to roughly $234 million without pension reform, potentially requiring hundreds of employee layoffs.

The deficit also would grow if the Legislature passes the pension bill with some of the House’s amendments attached or with less than a two-thirds majority, which would delay implementation until September.

This year’s budget is similar in nature to last year’s, and I expect that the Mayor will have little tolerance for amendments that include any new spending. I assume he has a Plan B budget in his back pocket in case the Lege doesn’t fully cooperate, and I’ll be fine with never seeing it. From here, it’s on to getting the pension obligation bonds ratified and lifting the revenue cap, which if nothing else ought to make next year’s budget a little less painful. Here’s hoping.

One last look at the recapture re-vote

There’s a lot at stake here, and not a whole lot of people voting on it.

For the second time in seven months, voters within the Houston Independent School District will determine how – and if – it should pay tens of millions to help subsidize districts that collect little in property taxes.

The vote Saturday comes as some HISD trustees have reassessed a decision by voters in November not to write a $77.5 million check to the state to comply with Texas’ “recapture” policy.

While district leaders don’t think it’s fair that an urban district with many poor students and English-language learners should be slapped with such a financial penalty, they’re split over the best way to respond.

Some trustees argue that Proposition 1 will deal a blow to progress in getting state legislators to rethink Texas’ widely criticized school finance system. They believe refusing to pay will allow the district to sue the state to free HISD of its recapture obligations.

Others believe that voters should hold their nose and vote for the measure, especially with Texas Education Commissioner Mike Morath threatening that a “no” vote would prompt him to move some of Houston’s most valuable commercial properties out of the district’s taxable area.

That “detachment” scenario has never happened in Texas and could cost HISD $98.4 million in lost tax revenue this year, district officials estimate.

“Either scenario is bad,” acknowledged Glenn Reed, HISD’s general manager of budget and financial planning, adding that the district could end up losing more than 15 percent of its annual budget in a few years under either option. “You get used to living at a certain level, but now you can’t deal with cost increases. You have to start selling off furniture and only eat out once a week. It causes you to change how you do business.”

[…]

While Houston will owe $77.5 million in recapture fees this year, that number will soon balloon to $376 million owed just for the 2019-2020 school year, according to Houston ISD budget estimates. That same school year, Houston could lose as much as $413.2 million under the “detachment” scenario if property values rise (it would lose less than that amount if property values remain stagnant or decline).

Trustees including board President Wanda Adams, Rhonda Skillern-Jones and Mike Lunceford said they now fear vindictive action from the Texas Education Agency and lawmakers if the district doesn’t pay the recapture fees. But other trustees, including Jolanda Jones and Manuel Rodriguez Jr., want the district to hold steadfast in its decision not to pay the recapture fees. Jones said the district could take the state to court and argue that detachment is unconstitutional.

She contends that Houston ISD – the state’s largest school district – has the power to pressure the state to change its funding formulas.

“We can’t debate detachment until there’s an actual detachment,” Jones said. “No district has voted to detach, so that hasn’t been heard at all (in the courts).”

It should be noted that TEA Commissioner Morath isn’t “threatening” to detach properties. The TEA has already identified the properties it will detach. It’s just that the process doesn’t formally take place for another month or two, which is why HISD had the opportunity for the re-vote, which could prevent detachment from going through. Either we buy the attendance credits – i.e., vote Yes on the recapture proposition – or we experience detachment. Those are the choices.

Well, except that Trustee Jolanda Jones argues that detachment is unconstitutional. Which I suppose it could be – I Am Not A Lawyer, remember – but as Jones notes since no district has ever undergone detachment, the issues has not been litigated. I take that to mean that if the No vote wins again, someone will sue the TEA to stop detachment from happening. That does not strike me as the soundest of strategies, but I can’t say that it wouldn’t work. I can say that I personally would not choose to risk it, which is why I voted Yes.

Anyway. To get back to the matter of how many people are voting in this election, the final EV turnout document indicates about 8,500 in person early votes cast in HISD (basically, take the overall total and subtract the bottom five lines, to remove Pasadena, Humble, and Lone Star College from the amount), plus maybe 3,000 mail ballots. That suggests a final overall turnout in the 18-20K range. There’s no way to do a direct comparison to other HISD elections because the Trustees are on staggered four year terms, meaning that in a given election only some of the Trustees are on the ballot. HISD elections are also concurrent with city of Houston elections (though that will be different this year barring an order throwing out the term limits referendum), so turnout numbers in HISD districts are at least somewhat affected by that as well. To give a small amount of context, in 2013 there were 41,392 total ballots cast in three contested Trustee races (the County Clerk doesn’t provide the returns on uncontested Trustee races; state law allows for uncontested races to be skipped, which may be what happens in these cases), while in 2015 there were 76,184 voters in four contested races. Turnout rates ranged from 17 to 22 percent in the three districts in 2013, and from 21 to 28 percent in the four districts in 2015. Make of all that what you will.

House approves bill to kill margins tax

Dumb.

The Texas House on Thursday approved a proposal that would phase out an unpopular business tax that provides funding for public schools.

The proposal by state Rep. Dennis Bonnen, R-Angleton, would not reduce the state’s franchise tax during the current penny-pinching legislative session, but it would do so in future years. Under Bonnen’s bill, economic growth would trigger reductions in the tax, which currently brings in about $8 billion every two-year budget cycle, until it ultimately disappears.

About $1.8 billion in franchise tax revenue in the current two-year budget cycle goes to the Property Tax Relief Fund, which pays for public schools. Democrats, arguing that the tax cut would cause lawmakers in later years to underfund crucial public programs, railed against the proposal for nearly two hours. They offered a series of amendments that would have lessened the extent of the tax cut or redirected funds for college tuition, pre-kindergarten and other priorities, but all were defeated.

The final vote took place late Thursday evening at the end of a long day on the House floor, which followed a marathon debate Wednesday over “sanctuary” jurisdictions that lasted until roughly 3 a.m. When Bonnen’s proposal finally hit the floor, few Republicans offered any remarks in response to Democrats’ outrage; most lawmakers in the chamber appeared to be paying little attention.

[…]

Businesses dislike the franchise tax, often called a “margin tax,” because they say it’s overly complicated and can punish them in less-prosperous years. Because it’s based on a business’s gross receipts, a business can still be required to pay the tax even in years it takes a loss. Many call the tax, which was passed as a way to reform the state’s school finance system, an unnecessary burden, and high-profile Republicans including Gov. Greg Abbott have sought its demise.

Lawmakers in 2015 cut the tax rate by 25 percent, which gave them $2.6 billion less revenue to help craft a budget this year. Proponents of the tax’s elimination argue it would stimulate the state’s economy and create jobs.

In the short term, it’s difficult to say just how much revenue is at stake in Bonnen’s proposal because the tax is highly dependent on economic conditions. A fiscal note written by the state’s Legislative Budget Board estimated it could cut public school funds by up to $3.5 billion in the 2020-2021 biennium.

I mean, look, I know the margins tax was a poorly conceived kludge that everyone hates (or at least claims to) and which has been a top GOP whipping boy for a couple of sessions, but please do keep two things in mind. One, this tax, which replaced the also-hated and seldom-paid franchise tax, was created in 2006 to help fill the revenue void left by the Supreme Court school finance decision in 2005 that led to a mandated across-the-board property tax cut. It was never going to fully fill that void, and indeed its poor design and regular underperformance has been a problem, but it at least made up for some of the funding for schools that disappeared when the previous system was declared to have been an unconstitutional statewide property tax. Something is going to need to replace the revenue lost to this tax being (eventually) eliminated, and all we have right now is wishful thinking about economic growth, a continued reliance on local property taxes, and a handful of magic beans. And two, it’s probably not a coincidence that the amount of revenue lost in this biennium to the previous one’s margins tax cut is almost precisely the amount the House and Senate are arguing about in order to make this session’s budget “balance”. Cause and effect, y’all. You should have one of your interns Google it.