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revenue cap

We’ll have to wait a little longer for the inevitable Prop B lawsuit

It’s still coming, just not, like, today.

Mayor Sylvester Turner

Mayor Sylvester Turner on Wednesday said he would delay a City Council vote to hire a law firm to represent the city in possible litigation over Proposition B, the ballot item passed by voters to grant Houston firefighters pay parity with police.

City Council had been set to consider a contract with Norton Rose Fulbright for $1.3 million. The contract would set aside $250,000 for the firm to handle litigation over real estate purchases in connection with infrastructure projects, with the rest set aside for a court fight over the parity measure approved Tuesday.

Meanwhile, Turner said he will look to Fire Chief Samuel Peña to restructure the fire department to absorb the measure’s additional cost, which both Turner and City Controller Chris Brown say will total more than $100 million in its first full year.

Turner said Wednesday he does not know “how we’re going to pay for it,” but he made clear initial layoffs would come from the fire department. For months, Turner has warned that the city would need to make cuts if voters approved Proposition B. It passed with 59 percent of the vote.

The measure would tie firefighters’ pay to that of police of corresponding rank and seniority. City Council, which is not meeting Thanksgiving week, agreed to bring the item up at its Nov. 28 meeting.

“I don’t know the answers,” Turner said. “I don’t know how we’re going to balance the books when we have been given an added bill of $100 million each year.”

He added: “The tough decisions start now. They start right now.”

The mayor said the fire department “restructuring” would include a reduction from four shifts to three, as well as other methods of reducing costs.

See here (at the bottom) for the background. I suppose one possible path to brokering a peace treaty might include an agreement to get everyone possible on board for a push to repeal – not amend, repeal – the stupid revenue cap, which would at least prevent the city from losing revenue for no good reason. There can’t be a vote on that before May of 2021, however, so that may be too long-term for any benefit, but one way or another this needs to be tackled, and it’s in both sides’ best interests for it to go away. I’m just spitballing here. The smart money is still on a lawsuit being filed, and after that who knows.

The problem with the revenue cap, in two short paragraphs

From the Chron:

The average homeowner has saved a cumulative $436 thanks to the rate adjustments driven by the revenue cap since 2014, an average of $87 per year.

The same adjustments have prevented the city from collecting $533 million than it otherwise would have.

So in return for a negligible reduction in your property tax bill, which you almost certainly didn’t notice, the city of Houston lost over a half billion dollars in revenue over the past five years. That’s more than enough on a per-year basis to bridge all the shortfalls that have been projected, more than enough to cover even the highest-end estimate of what the firefighters’ pay parity proposal would cost, more than enough to hire however many more cops we’re supposed to need, more than enough to make all of the employee pension systems a hell of a lot more stable, more than enough to buy out a crapload of floodplain-located homes, etc etc etc. Amazing what a little thing like $500 million dollars can do, isn’t it? And don’t forget, even though the average property tax cut was small, the biggest share of it went to the people with the most expensive property. (Not to mention, if you’re a renter, you got exactly zero out of this.) This right here is why I hold self-proclaimed fiscal peacocks who favor the revenue cap like a certain former Mayoral candidate I feel no need to name in such contempt. We cannot undo this stupid, harmful policy soon enough.

Council approves Mayor’s budget

The annual ritual is observed.

Mayor Sylvester Turner

Houston City Council adopted Mayor Sylvester Turner’s $4.9 billion budget by a vote of 13-4 Wednesday, ending three hours of otherwise amiable debate with an impassioned speech from Councilman Jack Christie that concluded with the councilman resigning his post as budget committee chair and voting no.

Christie was joined in opposing the budget by council members Mike Knox, Greg Travis and Michael Kubosh, who said they wanted the mayor to make more of an effort to cut spending.

“I can keep playing politics, go along to get along, or start fighting vigorously for our tax-paying citizens and not waste their money,” Christie said, listing his past ideas for constraining costs or forming commissions to study cost-cutting that were not implemented. “As a political body, we are failing the people of Houston.”

Turner rejected the criticism. He said the budget is “sound,” and noted that Kubosh’s lone amendment would have given each council member an additional $100,000 for staff salaries. Knox submitted no amendments, and Travis submitted amendments that sought cost-cutting recommendations from the administration but listed no specific cuts.

Christie also submitted no cost-reduction amendments, and, in fact, twice admitted one of his items — earmarking $150,000 to fund an external study on the emissions of the city’s vehicle fleet — was “a waste of money” because he already knows a shift to alternative fuels is the right move.

“It’s so easy to just say to the administration, ‘Mayor, you didn’t cut enough,’” Turner said after the meeting. “Every individual that voted ‘no’ put forth no ideas, no amendment to reduce the cost. Not one. Not that they offered it and we voted them down — they didn’t offer any. To the contrary, they put forth amendments that would increase the amount that we were going to have to expend.”

[…]

The general fund budget for the fiscal year that starts July 1 is $2.5 billion. That fund 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 largely 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 that take effect July 1. 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.

See here for the background, and here for the Mayor’s press release. The story also notes the $17 million the city may wind up being short thanks to an unfriendly Census estimate and the stupid revenue cap; it’s not clear to me if that would apply to this year or next if the city’s appeal fails. I’m not surprised there were no cost-cutting amendments of any substance. Turns out that’s a hard thing to do, especially in a budget that’s mostly about public safety, trash pickup, parks, and libraries. You know, basic things that people want and need. Good thing talking about it remains free.

The revenue cap is stupid and harmful

Reason #4,739:

Mayor Sylvester Turner

In posting a sluggish population growth estimate for Houston, the U.S. Census Bureau blew a $17 million hole in the city budget.

City officials had expected the count would show Houston had added about 30,400 people by January from the year prior. The Census Bureau on Thursday, however, estimated the city grew by just 9,200 between July 2016 and last summer.

Because the revenue cap voters approved in 2004 limits the city’s annual increase in property tax collections to the combined rates of inflation and population growth, that means Mayor Sylvester Turner must adjust his proposed $2.5 billion general fund budget.

Or he will, if he is unsuccessful in challenging the Census estimate. The city’s estimates, he said, are more up to date and are “based on greater familiarity with local indicators.”

To challenge the estimate, Houston can submit data on topics such as residential building and demolition permits, mobile home placements, household sizes and apartment occupancy rates.

Houston successfully challenged its formal count in the 2010 Census, and also added 3 percent to its population estimate via an appeal in 2006, and a little more than 1 percent to its 2008 count, according to the Census website.

The city’s press release is here. Neither the rate of inflation nor the rate of population growth have anything to do with the city’s needs or its financial capacity. It also as you can see puts an awful lot of power in the hands of unelected federal bureaucrats. Who I’m sure are fine people, but they’re not accountable to the voters of Houston. I mean seriously, who thinks this makes sense? The whole stupid thing needs to be repealed.

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.

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.

The elections we may get in 2018

We know there are going to be a lot of contested elections up and down the ballot in 2018, both primaries and the November general, for state, county, and federal office. There are also at least four possible elections I can think of that we may get in addition to these. Let’s review.

1. Firefighters’ pay parity referendum

Remember that one? Petitions submitted, but it took a long time for them to get counted and certified, so the deadline to get on the ballot was missed? Yeah, that’s still out there, and barring a verdict that the petitions were insufficient, we’ll get to vote on it. Everyone I’ve talked to says that it would be in May, which would be the next uniform election date. After going a number of years without any May elections, we could have them two years in a row. This one would almost certainly be contentious.

2. Revenue cap repeal/modification

Another one that we thought would be on the November ballot was a revenue cap referendum. In the end, the plan was shelved so as not to endanger the pension obligation bonds. The strategy worked – the bonds passed – so now it’s time to finish off this piece of business. The main question is one of timing. If the firefighters’ pay parity proposal passes, then no further charter amendments can be voted on for two years. That presents Mayor Turner with a choice: Work to defeat the pay proposal, and thus vote on revenue cap reform in November, or put the rev cap issue on the ballot in May alongside this issue? I can make a case for either, but I’m sure the Mayor would prefer to have this up in November. We’ll see how that plays out.

Also, too, there’s the question of what exactly this referendum will do. Initially, Mayor Turner spoke about modifying it, to allow more revenue growth that would apply to public safety. More recently, he seemed to be talking full repeal, which is of course my preference. Again, we’ll see what happens.

3. Metro referendum

Metro Board Chair Carrin Patman has been talking about a new comprehensive Metro referendum, to fund further rail expansion and bus system upgrades. That was put off from last year, and appears to be on track for this year. Details and scope are yet to be determined.

4. Harris County flood mitigation bonds

In the immediate aftermath of Harvey, Commissioners Court discussed the possibility of a bond issue for flood mitigation projects. I presume this is still on the table, but as yet it isn’t more fully formed than that. If I had to bet, I’d say this happens, but it’s by far the least developed. Look to see what the Court does and we’ll know from there.

Finally, I should note that there is ongoing litigation related to the 2010 Renew Houston referendum and the 2015 term limits referendum. The former has been sent by the Supreme Court back to the lower courts, and I suppose it’s possible that there could be an order for a do-over election this year. It’s not clear to me what we might vote on if that happens, as it was City Council action that actually authorized and set the fee, but that would be among the things argued about in court, so we’ll see. For the latter there has not been a trial on the merits of the lawsuit as yet, so we are a long way from a resolution. I just wanted to touch on these since I’m sure someone was wondering about them.

Inevitable lawsuit over pension bond ballot language filed

Like night follows day, like flies garbage.

Mayor Sylvester Turner misled voters into approving a $1 billion pension bond referendum last month, a new lawsuit alleges, claiming that city officials plan to use the bonds’ passage to sidestep a voter-approved limit on the property tax revenue Houston can collect.

A local businessman and former Houston housing department director, James Noteware, sued the city on Friday in state district court, contesting the Nov. 7 election on the grounds that the ballot language was “materially misleading.”

The full language, rather than the summary listed for voters on the ballot, stated that the taxes levied to repay the bonds would not be “limited by any provision of the city home rule charter limiting or otherwise restricting the city’s combined ad valorem tax rates or combined revenues from all city operations.”

The suit claims that phrasing means the taxes levied to pay for the bonds will be exempted from the 13-year-old revenue cap, which limits the annual growth of property tax revenue to the combined rates of inflation and population growth, or 4.5 percent, whichever is lower.

“Omitting the fact that the proposition created a billion-dollar exception to default limits on the city’s taxing authority renders the proposition materially misleading and void,” the suit states.

More coverage from the Chron here. This is, in a word, nonsense. I mean look, Paul Bettencourt, who insisted on the pension bond referendum and who loves the revenue cap and the spotlight more than his own children, had nothing to say about this during the campaign. Nobody complained about the ballot language. At this point, this kind of lawsuit is basically pro forma, and serves as nothing more than an attempt by the losing side to get bailed out by the Supreme Court. If you have the resources to hire a lawyer to file this kind of crap, you have the resources to mount some kind of campaign against the referendum before the election, even if it’s nothing more than sending an incendiary press release to a gaggle of reporters. If James Noteware, who by the way was a Mayoral candidate for about 15 minutes in 2013, did anything like that, he failed spectacularly to get a news story out of it. If this thing goes anywhere, it can only mean that the Supreme Court is now an official part of the referendum process, and we may as well ask their opinion before we bother wasting our time voting on anything.

(Also, too: Yet another reason to kill the awful, terrible, no good, very bad revenue cap. I’m just saying.)

Council passes dumb forced tax cut

This is where we are.

Mayor Sylvester Turner

City Council rejected Mayor Sylvester Turner’s proposal to leave Houston’s tax rate unchanged from last year Wednesday, instead approving a tiny rate cut to comply with the voter-imposed cap on property tax revenues.

Turner had proposed using Hurricane Harvey to invoke a disaster exception clause in the 13-year-old revenue cap and leave the rate at 58.642 cents per $100 in assessed value. That plan would have let the city collect $7.8 million next year for storm recovery costs in addition to what the cap otherwise would allow, or about $7 next year for the typical homeowner.

It was the same process, Turner stressed, that his administration and former mayor Annise Parker’s administration had followed to collect funding above the revenue cap after floods in each of the last two years – actions that went unnoticed by council members and news media at the time.

The council nonetheless voted 15-2 to approve an amendment from Councilman Mike Knox to lower the rate by 0.221 cents – the rate City Controller Chris Brown had said the revenue cap dictated independent of Harvey-related expenses.

You can read the rest if you want to. I’ve said my piece, and I don’t have anything to add to that. If you need a little more, go read Mayor Turner’s response to Paul Bettencourt, which is exactly what needs to be said to that little toady.

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.

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.

Council to hold hearings on proposed tax rate increase

Here’s your chance to be heard.

Mayor Sylvester Turner

Houston City Council set the ball rolling Wednesday on Mayor Sylvester Turner’s proposed 8.9 percent tax rate hike to help fund Houston’s recovery from Hurricane Harvey, in what would be the first hike from City Hall in more than two decades.

The council voted to schedule three public hearings on the issue, which is expected to reach a formal vote on Oct. 18.

Those hearings will be held at City Hall on:

Sept. 25 at 6 p.m.
Oct. 2 at 6 p.m.
Oct. 11 at 9 a.m.

[…]

The mayor said his staff will work over the next two to three weeks to better estimate what the insurance policies will cover, what the Federal Emergency Management Agency will reimburse, and what the city will be left to pay itself.

After that review, Turner said, the proposed 8.9 percent increase could be reduced.

See here for the background. Campos says he wants specifics. Sounds like we ought to have them by the end of this process. I note in passing that the Harris County GOP has put out a statement opposing this proposal. I say no trash collection for them until all the Harvey debris has been carted off, too.

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.

Mayor will take revenue cap referendum off the 2017 ballot

Not gonna lie, I’m disappointed by this.

Mayor Sylvester Turner

Mayor Sylvester Turner abruptly reversed course Wednesday on his plan to ask voters to repeal Houston’s revenue cap this fall, saying it now is “unlikely” he will ask for its removal.

The politically cautious move would leave the city fiscally shackled in the hope that a lighter November ballot improves the chances voters sign off on hundreds of millions in general improvement bonds and $1 billion in pension obligation bonds, a crucial piece of the mayor’s landmark pension reform package.

“Do I believe that the needs are as much there to remove it as they were when I came into office? Absolutely,” Turner said. “Do I want to run the risk of losing the reforms that we’ve made to our pension system…? No.”

Lifting Houston’s voter-imposed cap on property tax collections had been a pillar of the mayor’s agenda, and he regularly discusses how the restriction constrains Houston’s budget, preventing the city from hiring more police officers, replacing its aging fleet and maintaining other city services, such as street repair.

Turner’s about-face came during a City Council discussion of how the cap, which has cost the city an estimated $220 million in revenue since 2014, likely will force the city to scale back the street and drainage projects budgeted in its five-year Capital Improvement Plan, or CIP.

The CIP slated for council approval later this month accounts for the revenue cap this fiscal year but was written assuming voters would remove the restriction by the start of fiscal 2019.

The finance department estimated the cap will reduce revenue for ReBuild Houston, the city’s street and drainage repair fund, by roughly $201 million in fiscal years 2019-2022, delaying roughly 16 of 90 ReBuild projects planned for the next five years.

[…]

The mayor’s new plan was met with understanding around the council table.

“It’s a strategic decision,” Councilman Larry Green said. “It probably doesn’t make sense to put (the revenue cap) on the ballot, especially when we’re trying to get pension bonds passed and we’re also putting out general revenue bonds.”

I’m not disappointed because I think Mayor Turner did anything wrong, I’m disappointed because I was chomping at the bit to get rid of the stupid and harmful revenue cap, and now I have to wait again. I understand the logic, even if the unmentioned implication of all this is that pro-revenue cap forces would be willing to sabotage both the pension reform plan and the city’s capitol improvement plan in order to keep their travesty in place, I just don’t like it. But it is what it is, and if the revenue cap has to take a back seat to these other needs, that’s politics. Nobody said I had to like it.

So, again modulo any Supreme Court interference, adjust your turnout expectations for this November downward. There will be people who will vote against the various bonds, but I doubt there will be much if any of a campaign to turn out anyone who wasn’t already going to vote. There will be a pro-bond campaign, but again I doubt it will push the numbers up by much. I’m putting the over/under for November in Houston right now at about 75,000, and I could be persuaded to go lower. What I hope is that Mayor Turner has November of 2018 in mind for the revenue cap referendum, as there will be no worries at all about turnout in that environment. Remember, over 330,000 votes were cast in the Renew Houston referendum of 2010, with over 340,000 votes for the red light camera question. He’ll need to sell the idea, which is far from a given, but at least the voters he’d like to see will be there for him in that scenario.

Bonds on the ballot

Mayor Turner has one more item to deal with this November.

Mayor Sylvester Turner

Mayor Sylvester Turner is poised ask voters to approve bonds this fall to fund improvements to city parks, community centers, fire stations and health clinics, adding hundreds of millions of dollars in debt to a crowded November ballot.

The proposed five-year capital improvement plan, unveiled at a City Council committee hearing Tuesday, calls for $6.7 billion in airport and utility projects, to be funded by user fees, as well as $538 million in improvements such as expanded police and fire stations, renovated libraries, miles of bike trails and repairs to city buildings to paid for with taxes or philanthropic gifts.

The plan relies on a November 2017 bond vote as one of its key funding sources, with about $190 million worth of projects in the five-year plan contingent on approval of new debt.

Houston’s last bond vote was in 2012, and the city’s capital spending is expected to quickly exhaust the debt voters authorized then.

“It’s not a question of going to voters with debt. We will be going to the voters with an investment proposal, a package of community improvements that are important to delivering the kind of services Houstonians expect and deserve,” Turner said. “Those improvements, whether they are police or fire stations, libraries or community centers or parks, make our city a better place for all of us to live.”

City Finance Director Kelly Dowe said Tuesday the size of the bond package has not been determined, but Houston typically seeks enough leeway to last a bit beyond any one five-year capital plan.

[…]

The mayor has pledged to ask Houstonians to repeal a voter-imposed cap that limits what the city can collect in property taxes. That rule is a lightning rod for conservatives, who spearheaded its passage 13 years ago.

Turner’s landmark pension reform bill, which takes effect Saturday, also requires voters to approve the $1 billion in bonds Turner plans to inject into the under-funded police and municipal pensions. Should voters reject it, those groups’ substantial benefit cuts could be rescinded, hiking the city’s costs overnight.

Adding a general bond issue to the ballot alongside the pension bonds and what amounts to a tax hike is risky, said Jay Aiyer, a Texas Southern University political scientist professor.

“The more measures you put on the ballot, the more confusing it becomes for voters and I think the more attention is taken away from selling the one item that absolutely must pass, and that’s the pension obligation bonds,” Aiyer said. “It would make a whole lot more sense to make the pension obligation bonds a standalone and push some of these other items off.”

First of all, “what amounts to a tax hike”? Leave the spin out, please. Four of the five bond issues in 2012, which totaled $410 million, passed with at least 62% of the vote; the fifth drew 55%. That was a very high turnout context – there were over 400K votes cast for each item – while this year will not be. Even if the Supreme Court intervenes and puts city elections on the ballot, far fewer people will vote this year. Still, bond issues usually pass. Especially if there aren’t city elections, all of these issues will come down to how successful the Mayor and his team are at getting the voters they need to come out and support him.

I would push back on the notion, as expressed by the Chron’s Rebecca Elliott, that having these bond issues makes the November ballot “ugly”. We are basically talking three items – revenue cap change, pension obligation bonds, and these bonds, though they will likely be split into multiple smaller items – in an election where there may be no city candidates on anyone’s ballot. Remember, there will be no Metro vote or Astrodome vote – what we have now is all we’re likely to get. Frankly, unless the Supreme Court sticks its nose in and orders city elections this fall, the number of votes people will be asked to cast will likely be smaller than what it usually is in an odd-numbered year. In addition, only the revenue cap vote is one that will be in any way complex – we have bond issues all the time, people understand them, and the pension obligation bonds are just a special case of that. Ugly to me will be having a bunch of campaigns put together on short notice and sprinting towards the finish line with far less time to do the sort of retail-politics outreach that most city candidates get to do. YMMV, but if what we have now is what we end up with, I’ll consider it a relaxing stroll. Campos has more.

On to the revenue cap

With one major accomplishment (basically) finished, Mayor Turner moves on to the next major challenge facing him.

Mayor Sylvester Turner

“This is the most consequential campaign of the mayor’s career,” University of Houston political scientist Brandon Rottinghaus said. “These things are more complicated and more politically fraught than either his mayoral campaign or the lobbying to get the pension bill passed to begin with, and those were both complicated.”

Turner has made his own climb steeper by pledging to ask Houstonians to repeal a voter-imposed cap that limits what the city can collect in property taxes. That rule is a lightning rod for conservatives, who spearheaded its passage 13 years ago.

[…]

Turner thanked city employees for shouldering $2.8 billion in cuts to their retirement benefits, and said it is now time for all Houstonians to join in sacrificing for the good of the city. The revenue cap, Turner said, hurts the city’s credit rating and hamstrings its ability to provide sufficient services and compete on a global scale.

Many conservatives don’t see it that way, arguing that the cap protects taxpayers and gives the city an incentive to operate more efficiently.

The Harris County Republican Party plans to campaign against Turner’s repeal effort, and is expected to have company.

Voters approved the revenue cap in 2004, limiting the annual growth of property tax revenue to the combined rates of inflation and population growth, or 4.5 percent, whichever is lower. Voters tweaked the rule in 2006, allowing the city to raise an additional $90 million for public safety spending.

Houston exhausted that breathing room in 2014, and, with property values still on the rise, has had to trim back its tax rate each fall since to avoid collecting more revenue than allowed.

Despite the cap’s complexity, conservative political strategist Denis Calabrese said he doubts there will be a shortage of voter education on the issue.

“Voters will come into that election very well informed and knowledgeable and they’ll be able to express their opinion,” he said. “The predisposition going into this is that voters don’t support the repeal of the cap, and we’ll see if that changes as a result of the education efforts on both sides.”

You know that I support repealing the cap. The question is how to sell that idea. I agree that the predisposition is likely to be to keep it, though I’d argue that most people know very little about the cap. I’d approach this primarily as a plea from Mayor Turner, as part of his overall plan to get the city’s finances in order. Have him say something like “I promised you I’d get a bill passed in the Legislature to rein in pension costs, and I did that. But the work isn’t done just yet, and I need your help to finish the job. The revenue cap limits Houston’s economic growth and lowers our city’s credit rating. To really get our finances in order, we need to repeal it.” You get the idea. Basically, the Mayor has as much credibility with the voters right now as he’ll likely ever have. That’s a huge asset, and he should leverage it.

Alternately, if the local GOP is going to oppose repealing the cap, then one might keep in mind that the city is much more Democratic than it is Republican, so if this becomes a partisan fight then the Mayor has a larger pool of voters available to him. There are also a lot of potential villains to demonize in such a campaign, from the President on down. This would almost certainly be the kind of low-information, high-heat campaign that makes newspaper columnists wring their hands about civility and discourse, but it would get people to the polls. I’d take my chances with it.

One more thing:

Meanwhile, the City Secretary is reviewing a petition that calls for a vote on giving 401(k)-style retirement plans to all city workers hired after the start of next year, which employees view as insufficient.

Conservative activist Windi Grimes, an organizer of the effort, however, said her group thinks sufficient fiscal safeguards were added to the pension bill passed in Austin, and will not mount a campaign behind the petition.

See here for the background. Is there a provision to allow for submitted petitions to be withdrawn? That would be the better option if the proponents of that idea are no longer interested in advocating for it.

Bill King wants you to lower his property taxes

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

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

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

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

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

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

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.

Revenue cap will be on the November ballot

Here it comes, assuming the pension reform bill doesn’t get mugged in a dark alley.

Mayor Sylvester Turner

Mayor Sylvester Turner plans to ask voters to lift Houston’s cap on property tax collections in November, a move that could loosen one of the city’s primary fiscal constraints as it confronts still-hefty pension and debt costs that leave little breathing room to maintain city services.

The referendum would fulfill the mayor’s pledge to try to overturn the revenue cap if he succeeded in reforming Houston’s pension systems.

“Repealing the revenue cap means a better credit rating for Houston and lower costs for taxpayers when we finance improvements to the city buildings, parks and libraries that serve our neighborhoods, aging fleet, bad streets, illegal dumping and deferred maintenance,” Turner told an audience of 1,400 Thursday at his annual State of the City address. “We must achieve sustainable structural budget balance by making sure that our recurring income is equal to or more than our recurring expenses, and in fact, we must always seek ways to reduce our expenses.”

[…]

Houston’s pension reform deal as passed by the Senate includes a requirement that voters approve the $1 billion in bonds Turner plans to inject into the under-funded police and municipal pensions. The bonds would not require a tax hike, but the bill would reverse the groups’ benefit cuts if voters reject the bonds.

Meanwhile, a petition submitted two weeks ago that is being reviewed by the City Secretary calls for a public vote to require a shift to 401(k)-style defined contribution plans for all city workers hired after the start of 2018.

Lifting the revenue cap, on the other hand, would increase homeowners’ property taxes. The owner of a $200,000 Houston home saved about $84 in taxes over the last three years, costing the city an estimated $220 million in revenue.

“You’re risking a lot by putting two potentially inflammatory items on the ballot that could stimulate an anti-Turner vote,” University of Houston political scientist Brandon Rottinghaus said, noting that he thinks the pension obligation bonds alone would pass. “But if you put in bond plus revenue cap, that’s a bitter pill that conservatives would have to swallow all at once.”

Harris County Republican Party Chair Paul Simpson said the party has not decided whether to back the issuance of pension obligation bonds, but it already has committed to campaigning against lifting the revenue cap.

“Without that cap there, there will be the inevitable pressure to solve every fiscal problem by raising taxes,” Simpson said. “It’s the best tool we have to actually impose fiscal discipline on the city.”

Turner appeared undaunted by the prospect of a financially weighty ballot.

“Protection – it’s not free. Police officers are not free. … Firefighters are not free. People who are fixing our streets – they are not free,” he told reporters after his speech at the downtown Marriott Marquis hotel. “When people have a need, they want the city to respond. Well, we want to respond.”

I’m all in on this, as you know. My preference would be to go for full repeal, though what the Mayor has generally talked about is building in an exception for public safety. Which I can live with, given that revenues tend to be fungible, but the honest and future-lawsuit-proof path is to ditch the stupid revenue cap altogether.

The likely presence of a pension obligation bond referendum on the ballot doesn’t strike me as a problem, as both items can be sold together as a package deal to get Houston’s finances on firmer ground. And if the people who are now insisting that we vote on the pension obligation bonds then show their true colors by opposing those bonds, well, now we’ve got a villain to run against. The Mayor can campaign for them by sending Greater Houston Partnership types out to the wealthy neighborhoods to talk fiscal responsibility, and he can send Democratic partisans to the clubs and other receptive audiences to tell them to send a message to the out of touch Republicans in Austin that they can’t meddle in our city. I’d feel pretty good about our chances with that kind of campaign.

It’s a different question whether Metro will want to join in and put its own referendum on the ballot as well or wait till 2018. There’s a case for waiting and a case for action, and I’m glad it’s not my decision to make.

A look ahead to Houston’s 2017 elections

I want to return to something in that story about Mayor Turner’s 2017 agenda, which was near the bottom but which is a very big deal for the coming year:

A lawsuit over the ballot language used last year to extend terms to a maximum of two four-year terms, from three two-year terms, hovers in the background.

A state district judge ruled in March that the language was “inartful” but legal, and the case now is under appeal.

At stake in the near term is whether Turner and members of City Council must run for re-election in 2017 or wait until 2019.

See here for the background. Usually around this time I’m writing about the upcoming election year and what we have to look forward to. Thanks to this lawsuit, we could have a year with no city elections, or a year in which nobody knows we have city elections until April or May and everyone operates on an insanely accelerated schedule from there. With that in mind, let’s look at our Year of Elections 2017 with a frame of The Elections We Will Have, The Elections We May Have, and The Elections We Could Have.

The Elections We Will Have

Whatever else happens with the term limits lawsuit, there will be elections in HISD and HCC. The following trustees for each board are up for election this year:

HISD – Anna Eastman (District I), Mike Lunceford (District V), Greg Meyers (District VI), Anne Sung (District VII), Wanda Adams (District IX)
HCC – Carolyn Evans-Shabazz (District 4), Robert Glaser (District 5), Chris Oliver (District 9)

Mike Lunceford is not running for re-election, so his seat will be open. Greg Meyers has already submitted his resignation, and a replacement Trustee will be selected by the Board in January. It is not clear if the Board will prefer a caretaker who will not run for election in November or if the new member will try to stake a claim. Anne Sung of course won the special election to succeed Harvin Moore a couple of weeks ago. Whatever happens in November, the Board will have three different members in the traditionally Republican districts than it had at the start of 2016. That has some negative potential, as all three were devoted to public schools in a way that is not necessarily characteristic of modern Republicans, meaning that whoever wins in November could be more antagonistic than what we are used to seeing. We’ll have a better idea when we know who is selected to replace Meyers, and who emerges to run for these seats. As for Eastman, she is my Trustee and as far as I know she is in for another term, but I haven’t spoken to her in the last few weeks, and she has not made any formal announcements. I’m not aware of any reason why Adams would not run for another term.

In HCC, both Shabazz-Evans and Glaser won elections to complete the unexpired terms for trustees who had resigned following their 2011 campaigns. Evans-Shabazz was appointed to replace Carroll Robinson in District 4 in May of 2015, and then was unopposed for election. Glaser won a contested race to succeed Richard Schechter in 2013; appointed replacement Leila Feldman did not run for the seat. Oliver is a multi-term incumbent who easily defeated a challenger in 2011. Sometimes there are interesting things to say or look forward to in these races. This is not one of those times.

There will also be some number of constitutional amendments on the ballot in November, but we won’t know what they are until May or so when the Legislature finishes its business. If the term limits lawsuit goes down, preserving the new four-year terms for city officeholders, these referenda will be the only guaranteed items on your ballot this year.

The most interesting race in the area that is not in Houston will be in Pasadena, where Mayor Johnny Isbell is term-limited out and where the City Council lines may or may not be redrawn, pending the ruling in the voting rights lawsuit that is currently in the judge’s hands. That election will be in May. Other area cities such as Bellaire, West U, Sugar Land, and Rosenberg, also have elections in May. I hope to have some more information about some of these races in a subsequent post. Also of interest in May will be the San Antonio elections, where Mayor Ivy Taylor has some competition for a second full term. I’m sure I’ll do some writing about that as well.

The Elections We May Have

In addition to the statewide ballot propositions, there are two local ones that could be on your November eSlate machine, both of which could be quite contentious. Mayor Turner has stated his intention to put a referendum about the revenue cap on the ballot this year, though one presumes that could change if his pension reform bills do not pass. You can be sure that the opposition to this, mostly from the likes of Paul Bettencourt and no doubt with the help of the statewide Republican cabal, will be ferocious and very well-funded. Which in a way will be good for Mayor Turner, because if he can successfully cast this as a partisan issue, especially a “statewide Republicans meddling in our business AGAIN” issue, he ought to at least begin with the larger share of the vote. Getting those people to vote, whether or not there are other city elections to draw them out, will be the challenge. I suspect Mayor Turner doesn’t do anything without planning out how it will go, so I sure hope he has a plan for this one.

The other possible ballot item we might have is an updated Metro Solutions plan, which may include more rail construction projects, possibly including another shot at the Universities Line. This has been floated as an option by Metro Chair Carrin Patman, but it is not yet clear that it would be on the ballot, and if it would be there this year if so, and it is not yet clear what the scope of it would be. Needless to say, any rail component would generate some opposition, with a new Universities Line plan bringing out the usual suspects, some of whom would already be fully engaged in a revenue cap fight. It’s an interesting question whether you’d rather have this item on the ballot by itself, or in the same space as a revenue cap item. I’m glad that’s not my call to make.

The Elections We Could Have

This is the one that is entirely contingent on the Supreme Court, which as we know has not hesitated to stick its collective nose in our electoral business. If the 2015 term limits referendum is thrown out for having insufficiently clear wording, then the people who will be the most affected are the Council members who are in their last terms: Brenda Stardig, Jerry Davis, Ellen Cohen, Mike Laster, Larry Green, and Jack Christie. Cohen’s District C and Laster’s District J represent challenges for Democrats, as Bill King carried both districts in the 2015 Mayoral runoff. The ideal District C candidate is in the Anne Clutterbuck-Ellen Cohen spectrum, while the low turnout District J will always be a bit of a wild card. Against that, Dems will have opportunities in both Christie’s At Large #5 and first-term CM Mike Knox’s AL #1, though as we have discussed before, cattle call races with lots of similarly-profiled Democrats have benefited Republican citywide candidates in the recent past. The ideal here is for a candidate who begins with a lot of backing to get in and largely hoover up all the support – think Melissa Noriega in 2007, or Amanda Edwards in 2015.

I don’t want to spend too much time on this, as it’s even more speculative than usual, but I do want to at least put a marker on it, since if these elections do happen they may happen all at once, with little warning and not much time to prepare. I’ll be keeping an eye on this, and will be ready for either a busier or more relaxed interview season this fall.

Year Two for Mayor Turner

Year One was busy, but a lot of what was done this year depends on what happens next year.

Mayor Sylvester Turner

Tasked last year with distinguishing himself from a crowded field of mayoral candidates, Sylvester Turner styled himself as a progressive with expansive policy goals.

He pledged to boost wages, improve educational opportunities and implement a new road repair job training program, stressing that Houston’s future depends on pairing such initiatives with core services improvements.

“I am bullish on Houston,” Turner would repeat, radiating optimism in the face of a tight budget and looming pension crisis.

A year into office, however, the mayor has set aside much of that to-do list in favor of an ambitious but moderate “back to basics” approach.

Pension reform – a topic he shied away from on the campaign circuit – now is the linchpin in Turner’s two-year plan, and he is loath to discuss much else.

That focus has paid off in the form of a reform package that he says will eliminate the underfunding of Houston’s three retirement systems in 30 years and limit the city’s exposure to market downturns.

Crucially, the plan has received buy-in from the fire, police and municipal pension boards, as well as praise from experts.

“When you look at where we were on Jan. 1, 2016, on pensions and look at where we are today,” Turner said recently, “there is no question that we have come a long, long way from where we started.”

The deal now must earn approval from the Texas Legislature, which controls Houston’s pension systems.

[…]

If Turner is successful, however, he intends to spend his political capital – earned, principally, from pension reform and closing this year’s $160 million budget gap – on campaigning to lift Houston’s limit on property tax collections.

The voter-approved revenue cap was instituted in 2004 and limits the increase in the city’s annual property tax collections to the combined rates of inflation and population growth, or 4.5 percent, whichever is lower.

Turner is not shy about pitching projects he would take on, absent the revenue cap, such as expanding the Houston Police Department by 540 officers by 2020. This plan may take on even more urgency, as HPD has seen a sharp spike in the number of officers filing papers indicating they plan to retire in the first half of 2017.

“We need more police officers. We need more equipment. We need more EMS units. We need more training,” Turner said in September, after a southwest Houston shooting wounded nine. “You can’t keep lowering the property tax rate because of this revenue cap and expect the city to be fully equipped with all of the assets that are needed.”

I’m pretty sure there’s more than one person on Team Turner who is grinding their teeth at the “back to basics” usage, since that was very much not Turner’s campaign slogan. Be that as it may, the general formulation is correct. Turner spent a lot of time this year working on a pension deal, and what he does next is tied to his success at getting the necessary legislation passed to implement that deal. And if he is successful, then the rest of 2017 will largely be focused on amending the revenue cap. If he can get both of those things done, then the sky is the limit and anything he wants to do is on the table. If not, it isn’t fatal, but it does leave him stuck. How much time can he spend on other things if he still needs to work on getting these things done? I’m sure he’d rather not have to find out.

How likely is Turner to get the pension legislation through? I have no idea, but if there’s anyone in a position to do it, it’s Turner. This is one of those times when experience really matters. No guarantees, because the Lege doesn’t work that way, but if anyone knows how to navigate these waters, it’s Turner. I should note that the pension bills aren’t the only thing on the city’s legislative wish list for 2017. Most of the specific items are pretty narrow and wonky, but the overriding principles laid out in the first few pages will keep the lobbying team busy, primarily I fear on defense. But if you want to know what the city does and doesn’t want from Austin next year, there’s your reference guide.

One more thing:

[Bill] King, last year’s mayoral runner-up, said he is considering challenging Turner, depending on his health and how pension reform plays out.

“If he ends up not solving the pension problem – which he promised he would do – then I think somebody needs to step in and save the city from going bankrupt,” King said.

King, who would like to see Houston switch from defined benefit to defined contribution plans similar to 401(k)s, has gotten under the skin of Turner and his staff by sending regular email blasts criticizing the city, including on inauguration day, and holding occasional press conferences.

“The campaign is over, and the total focus should be on meeting the needs of all Houstonians in their moment of crisis,” the mayor tweeted in April, after King criticized the city’s flood response.

I get those emails, too. You can probably guess what my level of interest in them is. King is certainly able to be the next Ben Hall if he wants to – he’s got the money for it, and apparently the lack of anything better to do. The question is, what has Turner done so far to lose anyone’s support? Based on how things have gone so far, I’d say not much. But hey, keep hope alive.

The State of Metro

Metro Chair Carrin Patman gave a “State of Metro” speech at the Greater Houston Partnership this week, and among other things she said that another referendum is in the works to finish some tasks from the 2003 vote and to address the issues we see today.

HoustonMetro

One of the projects that remains unfunded is the proposed 90A rail line that would bring commuters in from the west. And Patman says Houston still doesn’t have rail service to Bush Intercontinental and Hobby airports.

“I think there’s a lot of popular support for that,” says Patman. “Another one is some kind of connection between downtown and the Galleria.”

In her speech, Patman called for a regional plan that would link Metro’s services with other transit providers. But how much will it cost to do all this?

“Once we have the projects we want to go back with, we’ll then be able to go back with cost estimates on those and then determine from there the amount of bonding authority we need,” adds Patman.

You can see video of the speech here, and I have a copy of Chair Patman’s slideshow here; unfortunately, there is no written copy of her speech. I don’t think there’s anything in this that we didn’t already know – all of the possible rail projects are left over one way or another from 2003, though not all of them were on the referendum. The main piece of news is that the bond referendum that would be needed for any further rail construction might be next year. That would make for an interesting companion to the revenue cap-lifting proposition; at first blush, they ought to go well together, with the type of person who would vote for one probably also likely to vote for the other. It would also intensify the opposition, but I doubt there was any way around that. I’ll be keeping an eye on this. Write On Metro has more.

Now let’s take on the revenue cap

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

BagOfMoney

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

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

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

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

[…]

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

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

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

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

No bonds this year

Maybe next year.

Mayor Sylvester Turner

Mayor Sylvester Turner

Mayor Sylvester Turner likely will not ask voters to approve bonds this November to replace the nearly depleted debt residents approved in 2012, a move that may delay several projects.

[…]

Having addressed a $160 million shortfall with the unanimous passage of his first budget last month, Turner said he now is focusing on negotiating reforms that will decrease the city’s $5.6 billion pension underfunding and lower the city’s bill for retiree benefits.

Until both cost-cutting measures succeed and are checked off his list, Turner said, he would rather not ask voters to spend more. That likely will delay a bond vote, he said, until November 2017.

“I certainly am not inclined to ask people to approve any bonds or any borrowing until the city’s finances have been handled,” Turner said. “On the budget, we’ve done that. The pension issue, I want that resolved. When we go and ask for something, I simply want to let voters know that we’re doing everything we can to be fiscally sound and prudent.”

November 2017 also is when Turner has proposed asking voters to lift a 12-year-old rule that limits what the city collects in property taxes, again presuming pension reform passes during next year’s legislative session.

Of his vision for the 2017 ballot, Turner said, “I want to be able to say, ‘If you vote for this, this will take the city to the next level,’ that it will be transformative in nature.”

I agree with the Mayor’s assessment of this. He’s made clear the need to revise the stupid revenue cap we live under, but he’s packaged that as a part of an overall financial fix that includes dealing with the immediate budget issues and putting the pension funds on firmer footing. He can claim progress on the first item, but he needs to have tangible results on pensions to complete the sale. By the same token, more bond money would be a much easier ask next year, when these items can be crossed off the to-do list, and pairing a bond issue with a referendum to change the revenue cap ought to make for a compelling pitch. There are some items from the 2012 bond referendum that are still not started, and the city needs to do all it can to keep the promises that were made in that issuance. Beyond that, I think this is the right decision.

So far, so good for Mayor Turner

That’s the general consensus of his first four-plus months in office.

Mayor Sylvester Turner

Mayor Sylvester Turner

Faced with a $160 million budget shortfall that would leave some wringing their hands until deadline day, Mayor Sylvester Turner presented his plan a month ahead of schedule. The proposal being reviewed by City Council includes a few one-off gimmicks, by Turner’s own admission, but would close Houston’s budget gap without huge layoffs or service cuts.

Four months into the job he dreamed of for a quarter century, the former lawmaker has eschewed the traditional pressure to sprint into office with a laundry list of policy objectives. Instead, Turner has concentrated primarily on formulating next year’s budget, the first of several fiscal hurdles.

Turner’s bet? Hitting targets such as next-day pothole repair and balancing the budget early will earn him the political capital to take on Houston’s longer-term problems, namely rising pension and debt costs.

Eager for unity in that process, Turner has kept his goals broad – for which he has drawn some criticism – and invested in bettering mayor-City Council relations, laying the groundwork for a first term built on corralling Houstonians around the painful task of shoring up city finances.

“We resolve the pension issue, we get the revenue cap removed, we satisfy Moody, S&P and Fitch, the credit rating agencies, oil prices start to go back up, this city will take off,” Turner said during a recent interview, laughing at the apparent simplicity of his plan.

[…]

A creature of the state Legislature, which starts slowly and builds toward the end, Turner has approached the mayor’s office with a similar rhythm, Houston lobbyist Robert Miller said.

“Those who are saying he’s not moving quickly enough or are not satisfied with the progress are missing that he knows exactly what he wants to do, and he knows exactly the timing in which he wants to do it,” Miller said. “The most important issue he had to deal with was the budget, and he’s doing that. … Then you will see him begin rolling out the other initiatives and personnel changes that he thinks need to occur.”

There’s not a whole lot in the story that will come as a surprise. As I said when writing about Mayor Turner’s State of the City address, he has stuck very closely to the things he spoke about on the campaign trail. A big part of his strategy to achieve some of the goals he has laid out is to build trust by getting certain things done first so that the tougher items can be done later, when everyone feels comfortable that he’s doing what he said he would do. One of the metrics to watch for is the amount of dissent and pushback he gets from Council members. On that score, there’s so far been very little – no public criticism of his budget proposals, no challenge to his standing firm against Uber’s ultimatum, no complaints about how his office handled flooding issues. Those things will come because they always do, but until then the harmony we’ve had so far is at least an indicator that everyone feels like they’ve been listened to. Whatever else you think, that’s a big accomplishment.

Mayor Turner delivers State of the City 2016

Here’s the press release.

Mayor Sylvester Turner

Mayor Sylvester Turner

Flooding, pensions, City finances and public safety were front and center as Mayor Sylvester Turner delivered his first State of the City before the Greater Houston Partnership. In a major move designed to produce tangible results and instill confidence among residents, the mayor announced the selection of Stephen Costello to fill the new position of Chief Resilience Officer, or Flood Czar. Costello, who is a civil engineer who has worked on numerous drainage projects, will report directly to the mayor and will have the sole responsibility of developing and implementing strategies that will improve drainage and reduce the risk of flooding.

“The April 18 floods had a dramatic impact on our entire region,” said Mayor Turner. “Hundreds of people sought rescue in hastily opened shelters, hundreds more elected to stay in their flooded apartments and homes. Nearly 2,000 homes in Houston flooded and some flooded for the second, third or fourth times. Property owners throughout our area have become weary of flooding in the Bayou City, impatient with elected officials who offer explanations with no practical solutions, and some have and others are close to packing up and leaving our city unless we can convince them that we are going to do exponentially more than what they currently see.”

The mayor also announced that he will soon unveil a plan to put 175 more police officers on the street, called for repeal of the revenue cap self-imposed on the City by voters in 2004 and detailed his plan to address the City’s unfunded employee pension liabilities, a growing obligation that is stressing the City’s overall financial stability.

“There are certain realities that cannot be ignored: the increasing costs to the City simply cannot be sustained,” said Turner. “As we look to 2018, City services will be adversely affected, hundreds of employees will be laid off, and our credit rating will most likely be damaged. But this is a course we need not travel. My mom said, ‘Tomorrow will be better than today,’ and as mayor of this City, I still believe what she said.”

The mayor is already in productive discussions with the employee pension groups about reigning in costs in a way that is least burdensome to employees, reduces the City’s escalating costs and avoids unintended consequences. He has laid out three objectives for those discussions:

  • Lower unfunded pension obligations now and in the future;
  • Lower annual costs for the city now and in the future; and
  • An agreement by the end of the year to present to the legislature for consideration in the 2017 session.

The mayor noted that the revenue cap, which was cited as one of the reasons for a downgrade of the City’s credit rating, puts Houston at an unfair advantage and hinders the City’s ability to meet the needs of its growing population. No other governmental entity in Texas is under similar constraints.

“The revenue cap works against creating one Houston with opportunity for all and the ability to address pressing needs like flooding, transportation and mobility, parks and added green space, affordable/workforce housing and homelessness,” said Turner. “We are competing not just against Dallas, San Antonio and Austin; not just against New York, Los Angeles or Chicago, but against Vancouver, Berlin and Singapore. We are an international city speaking 142 languages, with 92 consulates and two international airports within our city boundaries.”

The mayor concluded his speech with a commitment to leading the nation in addressing homelessness and a personal appeal for Houston businesses to join his Hire Houston Youth summer jobs program. Information on the program is available at www.hirehoustonyouth.org.

The full text of the speech is here, and a Chron story about the additional patrol officers is here. It’s a concise reiteration of things Mayor Turner has spoken about often, with no new directions or surprises. You know what he wants to do, it’s a matter of doing it. If you’re wondering how Mayor Turner might be successful at getting the Lege to pass a pension-related bill – as you may recall, I was deeply skeptical of some other candidates’ approaches last year – the answer is that he intends to have an agreement on what changes should be made with all the relevant stakeholders. The Lege may not be interested in solving Houston’s problems, but they will ratify a solution that Houston itself comes up with. That’s the plan, anyway. As I said, the important part is doing it. If nothing else, we’ll have a pretty good idea of how it’s gone by the time of the 2017 State of the City address. The Chron and the Press have more.

Turner announces his budget

From the inbox:

Mayor Sylvester Turner

Mayor Sylvester Turner

Utilizing a shared sacrifice approach, Mayor Sylvester Turner today unveiled a proposed Fiscal Year 2017 General Fund budget that eliminates a projected $160 million shortfall that was the result of cost increases, voter imposed revenue limitations, a broken appraisal system and the economic downturn. The budget totals $2.3 billion, which is about $82 million less in spending than the current FY2016 appropriation. The decrease was accomplished while still meeting $60 million of contractual and mandated cost increases the City is forced to cover in FY2017. The mayor is unveiling his preliminary budget plan more than a month ahead of the normal schedule and has requested accelerated City Council approval in an effort to send a positive message regarding City budget management.

“This was the largest fiscal challenge the City has faced since before the Great Recession,” said Mayor Turner. “By bringing all parties to the table to engage in shared sacrifice, we have closed the budget gap and started addressing the long-standing structural imbalance between available revenues and spending. Each City department, the employee unions, the Tax Increment Reinvestment Zones, City Council and various other parties have worked together to identify cost savings and efficiencies while preserving a healthy fund balance, minimizing employee layoffs and maintaining the City services our residents rely on and deserve.”

Due to an arrangement negotiated by the mayor, the City’s tax increment reinvestment zones will send $19.6 million back to the City to help cover increased operating costs citywide. The rest of the budget gap was closed utilizing a combination of savings from debt restructuring, spending reductions, revenue from anticipated land sales and a small contribution from the City’s fund balance. Even with this fund balance contribution, the City’s savings account will remain well above the threshold necessary to satisfy the credit rating agencies.

The budget includes the elimination of 54 vacant positions and 30 to 40 layoffs, most of which the mayor hopes to accomplish through attrition. There are no significant reductions to park and library operations, which have been hit hard in the past and there will be no layoffs of police officers or fire fighters. There is funding included for an additional police cadet class, for a total of five classes and the mayor continues to look for ways to streamline operations to get more officers back on the street.

The budget was balanced using both recurring and non-recurring initiatives. If non-recurring items had been taken off the table, there would have been drastic cuts in City services and another 1,235 City employees would have lost their jobs.

The recurring initiatives mark the start of institutionalizing a new way of running City government. The elimination of redundancies and increased efficiency in operations has generated $36.2 million in recurring annual savings. In addition, the TIRZs will continue to contribute at least $19.6 million in subsequent years. Yet to come is a new approach for the City’s pension liabilities. Productive discussions are underway with stakeholders and I am committed to having an agreement ready to take to the legislature by the end of this year.

“I strongly urge City Council to resist the urge to tinker with this budget,” said Turner. “Even one small change will upset the delicate balance we’ve achieved as a result of shared sacrifice and put the City at risk for a credit rating downgrade. This plan prepares us for the additional fiscal challenges anticipated in FY18 while also improving public safety, increasing employment opportunities and meeting the critical needs of the less fortunate in our city.”

City Council is scheduled to vote on the budget May 25, 2016, nearly a month ahead of last year. The new fiscal year begins July 1, 2016.

Details are here, and the Chron story on the budget is here. I confess, I’ve only scanned the details so far – sorry, but it was a long week, and it’s been a busy weekend. I am sure there will be plenty of opportunity to discuss the details between now and May 25. Have a look for yourself and feel free to tell us what you think.

Have I mentioned lately that the revenue cap is stupid public policy?

Because it is.

BagOfMoney

Sales taxes are Houston’s second-largest source of revenue for the general fund, which pays for most core services.

Just as concerning for city officials, however, was more news about the city’s largest general fund revenue source: property taxes.

Mayor Sylvester Turner, as he did in February, criticized what he said is an unjust and inequitable system that lets commercial property owners abuse legal loopholes to successfully challenge their property appraisals and pull millions out of local governments’ budgets.

As of February, the hole created by those tax lawsuits was to be a projected $16 million for the current fiscal year, which ends June 30. By Wednesday, Turner and his finance director, Kelly Dowe, said that projection had risen to more than $32 million.

Council cut the property tax rate last fall to ensure the city would not collect more property tax revenue than is allowed under the city’s decade-old, voter-approved revenue cap, which limits growth in property tax collections to 4.5 percent or the combined rates of population growth and inflation, whichever is lower.

Companies’ successful lawsuits are pushing tax collections below the cap, however, with no way to adjust the rate back up to fill that hole.

“It’s a double hit. Last year you all lowered the tax rate based on the revenue cap. Had we known then we were going to be down another $32 million, I don’t think you would have lowered it that low. You cannot budget that way,” Turner said. “I will again ask the Legislature to remedy this situation. Taxes from hard-working homeowners should not effectively subsidize wealthy commercial property owners.”

But hey, look on the bright side: The system is working exactly as designed.

Layoffs are coming

It’s gonna suck, though hopefully not as hard as last time.

Mayor Sylvester Turner

Mayor Sylvester Turner

Mayor Sylvester Turner said Wednesday that a still undetermined number of city employees will be laid off in the coming months, making his first formal acknowledgment that Houston’s projected $126 million budget gap can’t be closed by July without personnel reductions.

Though Turner did not provide an estimate of the number of employees at risk, personnel costs comprise more than 63 percent of the city’s general fund operating budget. Because another 19 percent of that money is set aside for debt payments, spending cuts need not go deep before they touch workers.

“It’s going to be very difficult to balance the budget at the end of June without some layoffs,” Turner said. “The question will be, how many there will be. I’ve taken no departments off the table. The only thing I will not do is I will not lay off a police officer.”

[…]

Noting that job cuts inherently mean cuts to city services, Turner sought to assure that his efforts to seek concessions from the leaders of the city’s economic development zones, pension boards and other groups are progressing well. He said he also is examining other ways to cut costs, such as restructuring the city’s debt.

Never missing a chance to repeat the refrain first issued in his inaugural address last month, Turner stressed that he also has asked City Council members to join in this “shared sacrifice.”

Beginning Tuesday and continuing at Wednesday’s council meeting, Turner hand-delivered letters to the 11 district council members. The notes, which he jokingly dubbed “Valentine’s cards,” told the council members he seeks to cut funds they use to support projects in their districts from $1 million to $250,000 in the upcoming budget, saving more than $8 million, in part, to avert additional layoffs.

“My hope is that we can put forth a budget that minimizes the number of layoffs, and that’s why I’ve asked everyone to engage in shared sacrifice,” Turner said. “It’s very difficult to tell people that they’re going to be laid off if we hold on to everything that we have.”

Mayor Turner has already asked Council to clip their discretionary budgets, because a little bit here and a little bit there may make the big pain a little smaller. I assume “economic development zones” means TIRZes, so I’ll be interested to see what that entails, and if the usual suspects start screaming bloody murder about the stupid revenue cap. If Turner can negotiate a minimal cost of living increase for the firefighters’ pension and/or a larger contribution from them as was the case with last year’s pension deal, that’s all to the good as well. We can’t do anything about the revenue cap now, but it will be on the horizon. If the general consensus is that Turner has done what he can to control spending (even though that has nothing to do with the rev cap), that may make it a little easier to get a revision to the cap passed. For now, anything that can be done to minimize job losses will be appreciated. I don’t envy him the task.

Things are tough all over

HISD faces a big deficit:

BagOfMoney

Houston ISD leaders are bracing for a projected $107 million budget shortfall that, in a worst-case scenario, could prompt the district to slash jobs.

During the school board meeting Thursday, however, officials pledged to try keep cuts away from schools.

“We get it,” Ken Huewitt, the district’s deputy superintendent and chief financial officer, told the board. “We’re in the business of teaching and learning.”

Huewitt said he told central office departments to consider not filling vacant positions and asked principals to weigh spending cuts up to $275 per student. His first-draft proposal also would save $10 million by dissolving the teacher bonus program, affecting payouts in January 2018. Money for next year already is in reserve.

He cautioned, however, that the district is still early in the planning process. The board is set to approve the budget in June. District officials typically present the severest financial outlook at the outset, without, for example, using savings to plug the gap.

The looming financial problem stems from the district expecting to reach, for the first time, the revenue level that requires property-wealthy school systems to send significant funding back to the state.

Lawmakers typically change the formula to avoid the so-called Robin Hood payback scenario for the Houston Independent School District and Dallas ISD, but that did not happen in the 2015 session, according to attorney David Thompson. The Legislature is not set to reconvene until January 2017 unless a special session is called.

Which there might be, depending on how the Supreme Court rules in the school finance case. If all goes well for HISD, they would be getting more money out of it. But you can’t count your chickens before they hatch, especially when you don’t know their timetable for hatching. The board has to make a budget, and they can’t make it based on assumptions about things that may happen at some unclear time.

And then there’s Houston.

As if nosediving sales tax revenues and a looming budget deficit were not enough, a swathe of successful lawsuits from business owners protesting their property values have handed Houston City Council another fiscal headache.

Mayor Sylvester Turner lamented what his finance director projects as a $16 million drop in property tax collections during the current budget year, which ends in June.

Granted, that’s not much in a more than $2 billion operating budget. But if all other trends hold, the news means there may be $16 million less on hand to close an already daunting $126 million budget gap for the new fiscal year that starts July 1.

Finance Director Kelly Dowe used new data from the Harris County Appraisal District to make the estimate. That data, said HCAD’s chief appraiser Sands Stiefer, was drawn from November and December, when many judges are trying to clear their dockets.

Turner at Wednesday’s council meeting lashed out at what he said is an “inherently unfair” system that rewards commercial property owners who hire lawyers to argue their properties are worth less than county officials contend.

That hands a higher share of the tax burden to individual homeowners who lack the same means to fight, the mayor said.

“They’re doing it each and every year. When they’re not successful at the appraisal districts, they go to court for relief,” Turner said. “The reality is, that $16 million is a real hit to the city’s budget.”

The hit is particularly harmful, Dowe said, because the city is operating under a cap on property tax collections that voters imposed a decade ago.

So this is the usual story, one part the rigged appraisal system and one part the stupid revenue cap, which does nothing but penalize the city for having strong economic growth, while exacerbating the problem in leaner times. The city has other issues it has to deal with, and the revenue cap is only part of the problem, but if you don’t recognize that it’s part of the problem, then you’re part of the problem, too.

And on that note, a song from the 80s that captures the theme of this post:

That’s John Cafferty and the Beaver Brown Band, who clearly kept on playing after the 80s. Good for them.

Overview of the Controller runoff

It’s another one of those partisan races. Sorry, non-partisans.

Chris Brown

Chris Brown

Though the job lacks policy-making authority, the race to become Houston’s next chief financial officer has developed into a partisan proxy war over how to correct Houston’s fiscal course.

In the shadow of the first open-seat mayor’s race in six years, Republicans have lined up behind accountant Bill Frazer as Democrats back Deputy City Controller Chris Brown to replace term-limited Controller Ronald Green.

Houston is facing declining sales tax revenues and a projected $126 million deficit next fiscal year, driven by rising pension costs, a nearing spike in city debt payments and a voter-approved revenue cap.

“It’s the most important unknown office in the city,” University of Houston political scientist Brandon Rottinghaus said. “Given the kind of fiscal dangers ahead for the city, the controller is going to be front and center in the battles over how to handle the city’s coming financial problems.”

Frazer and Brown agree that municipal pensions are the city’s top financial concern, and both say experience is the distinguishing factor in the runoff.

Bill Frazer

Bill Frazer

[…]

Nearly 23 percent of those who cast a ballot in November did not vote in the controller’s race.

As in the mayor’s race, the county parties and affiliated groups have now taken sides: conservatives for Frazer and progressives for Brown.

“I suspect the party will be a very strong predictor of who people will vote for,” Rice University political scientist Bob Stein said.

Basically, it’s like the runoff for Mayor, except for an office that has a lot less power and visibility. The article is a good overview of the two candidates. If there was a similar overview for the November election, I must have missed it. There was a story about a Controller candidate forum that among other things discussed their views on how the Controller’s relationship with the Mayor should be. Of interest is that Chris Brown was singled out as the one who had the most confrontational rhetoric. Bill Frazer was not at that forum, so there isn’t a basis for comparison. I note this because it was Frazer’s promise to be a foil to the Mayor – to be the “bad cop”, in the Chron’s parlance – that gained him their endorsement. Maybe it’s in the way they say it. Anyway, good story, go read it if you need to know more about these two candidates. KUHF has more.

KHOU poll: Turner 19, King and Garcia 9

Our third poll result in the past week.

Sylvester Turner remains the front-runner, but Adrian Garcia has lost his once firm grip on second place and Bill King rises into the top tier of contenders in the race for Houston mayor.

That’s the headline from the latest poll conducted for KHOU 11 News and Houston Public Media, TV-8 and News 88.7, a survey indicating Garcia and King are now fighting it out for a chance to face Turner in a runoff.

Turner heads the pack of mayoral candidates at 19%, maintaining the lead he commanded in the same poll last May. No other candidate in this poll stands in double-digits.

Garcia and King tie for second-place, both supported by 9% of surveyed voters. Chris Bell comes in fourth at 6%, followed by Steve Costello at 5% and Ben Hall at 4%.

Still, a large number of voters haven’t made up their minds. The survey of 567 likely voters conducted between September 25 and October 6 showed 42% undecided.

[…]

“I would say that Bill King is a slight — if not strong — favorite to get into the runoff,” said Bob Stein, the Rice University political scientist and KHOU political analyst who conducted the poll. “And I think Garcia is fighting now to stay in the runoff.”

Throughout the campaign to replace term-limited Mayor Annise Parker, other candidates have generally presumed Turner – a well-financed, longtime state representative who’s run for mayor twice before — will win the most votes in November. So other candidates, most notably Bell, have gone on the offensive against Garcia in hopes of knocking him out of second place.

This poll indicates the attacks criticizing Garcia’s performance as Harris County sheriff have done their damage.

A day-by-day analysis of the phone survey results also indicates the former sheriff’s candidacy has been hurt by a series of negative news reports, like a front-page Houston Chronicle story about jail inmate abuse and a KHOU 11 News I-Team expose on a $1-million jail ministry contract awarded to one of Garcia’s friends.

“We saw his support drop in half,” Stein said. “He is now in a competitive race for the runoff slot. And it’s not obvious to us that he is a guaranteed or even a likely runoff candidate.”

King has been the chief beneficiary of Garcia’s decline, mainly because of growing support from Republican voters. King and Costello have been fighting it out for GOP hearts and minds, emphasizing financial issues like the city’s growing pension obligations.

But Costello’s backing of the drainage fee to bankroll flood control infrastructure has hurt him with many Republican voters, who consider it a poorly implemented new tax.

“Bill King has gained tremendously,” Stein said. “He was barely measurable in our May poll. He’s now at 9 percentage points. Most importantly from our May poll, his gain appears to be from Republican voters.”

Republicans polled for this survey are breaking for King over Costello by a 4-to-1 ratio, Stein said.

“And here’s the good news for Bill King, if this trend continues: 45% of Republicans still don’t know who they’re voting for,” Stein said, indicating King will gain more votes as more GOP voters make up their minds.

“Keep in mind close to half of those Republican voters who are likely to vote still haven’t picked a candidate,” he said. “If the trend continues, Bill King will get that advantage, not only with Republicans over Costello, but maybe enough to get him into the runoff.”

I’d be hesitant to say that Garcia’s decline and King’s rise are related. If I had to guess, I’d say that Garcia’s former supporters are most likely to be in the “Undecided” column now, while King’s new supporters came from those who had previously been undecided. Garcia may be able to win back some of his lost supporters – I still haven’t seen any TV ads from him, so there’s plenty of room for him to go on offense, and if one of the other candidates don’t win them over, they may fall back to him. I’m sure the bad news and the attacks have taken a toll, I just wouldn’t count him out yet.

Poll data can be found here. Compared to the previous polls, the racial/ethnic mix and age distribution are about the same, with the KHOU sample having a similar partisan mix as the HAR poll, which is considerably more Democratic than the HRBC poll. That makes it better for King and more ominous for Garcia, though again there’s still room for Garcia to move back up. Note also that the HAR poll was from September 21-24, the HRBC poll from October 5-6, and the KHOU/KUHF poll from September 25-October 6, so that also suggests there is a trend away from Garcia. I don’t know if there are other polls in the pipeline, but if there are any from after October 6, I’d love to see them.

Two other matters. First, from the Chron:

In 2009, Houston’s last open-seat mayor’s race, fewer than 180,000 people cast a ballot – about 19 percent of registered voters. Stein said he expects between 200,000 and 220,000 voters to turn out this year.

That’s the first “official” guess on turnout that I’ve seen. If that’s accurate, it suggests the HERO referendum isn’t that big a driver of turnout, certainly not compared to other years with similarly high-profile referenda. I honestly don’t know what I think about that. I truly have no idea what effect HERO will have on the number of voters.

Speaking of HERO, item #2 is that this poll also asked about that issue, though for whatever the reason neither story mentioned that. HERO leads 43-37 in this poll – click the poll data link to see. Note that the pollsters also tested the efficacy of various campaign themes on the question. The “men in women’s bathrooms” attack shifts 15% of supporters, while the “we could lose the Super Bowl” attack shifts 24% of opponents. Make of that what you will. The poll also asked about the term limits referendum (44% support, 40% oppose) and the Harris County bond issue (53% support, 22% oppose), though that was from city of Houston voters only. With no campaign in support of either of those items, and given recent performance of Harris County referenda, I feel pessimistic about their chances despite their leads in this poll. There were also questions about the revenue cap and Rebuild Houston, but I’d consider them for entertainment purposes only at this point. There’s likely to be a lot of fluidity in those issues, and once they are taken up by a Mayor (if that happens at all for the revenue cap), opinions on the Mayor will come to affect the polling on them.

Turner’s police plan

Time to look at a major policy proposal, from Mayoral candidate Sylvester Turner.

Sylvester Turner

Sylvester Turner

Mayoral candidate Sylvester Turner unveiled a plan Thursday to expand the Houston Police Department by 540 officers by 2020, an effort he said is needed to help police better engage the communities they serve and to improve trust between some neighborhoods and the department.

Turner said he would pay for the estimated $85 million “Partners in Safety” plan by seeking, “as quickly as I can,” voter approval to alter the city’s decade-old revenue cap to allow more public safety spending.

[…]

In his announcement, Turner did not criticize Police Chief Charles McClelland or term-limited Mayor Annise Parker’s management, but he said the city’s police officers are stretched too thin to exit their patrol cars and do the sort of engagement that is needed.

“In the last several years, the enemy to community policing has been the lack of resources,” Turner said. “When you have 5,300 police officers and that number has remained stagnant over the last 10 years, more people coming into the city, the city’s even more diverse, it’s very difficult to have effective and adequate community policing.”

The department employed 5,470 officers in 1998, and is projected to operate this budget year with about 5,260, despite enormous population growth during that time.

Turner’s proposal also includes fully funding the body camera initiative, the first phase of which is scheduled to launch this year, along with enhanced cultural and de-escalation training for officers, greater public input and more youth outreach efforts. Turner also backs offering police officers, as well as firefighters and municipal workers, incentives to live inside city limits. A similar proposal to lure officers to high-crime neighborhoods is being developed by the Parker administration.

You can see the full plan here. I like the community engagement and de-escalation training aspects of it, and I support the body-cameras-for-all aspect. I’m glad that it at least acknowledges the noninvestigations report, but I still want to see my questions get addressed before I get on board with any expansion of HPD. The amount of money Turner says will be needed to achieve this expansion is $20 million less than what Chief McClelland asked for, which he says can be done by eliminating reassignments, overtime, and some other costs.

As far as amending the revenue cap to help pay for this, I’ll note that the cap hit this year is $53 million, so there’s still a gap to cover, at a time when other action will be needed to deal with forthcoming budget shortfalls. (As you know, I’d like to see the revenue cap lifted entirely, but I freely admit that amending it to pay for cops is a much easier sell.) I want to see a comprehensive review of HPD’s (and HFD’s) budget to see what savings might be achieved there before we talk about any expansions there or cuts elsewhere. We greatly increased the size of HPD in the 90s under Bob Lanier because crime rates had been increasing nationally for thirty years. Since then, crime has been on a 20-year decline, and violent crime around the country is at its lowest levels in 50 years. No one could have known that was about to happen in the 90s, but we know where we are now. How many cops do we really need? What do we really want them to focus on? I appreciate Turner’s effort – there’s a lot there that I do like – but I’m still waiting for these questions to be part of the discussion.

If HERO then no other ballot items

Makes sense.

Mayor Annise Parker

Mayor Annise Parker

With her signature nondiscrimination law likely to appear on the November ballot, Mayor Annise Parker left in doubt Wednesday whether she will ask City Council to also place before voters long-discussed changes to term limits and the city’s revenue cap.

Parker said she has no interest in putting the latter two items to amend the city charter to a vote only to see them fail because they lacked robust campaigns behind them.

“It was my full expectation that I’d be spending my remaining campaign funds and my personal time advocating for these two good-government items, but because of the presence of HERO (the Houston equal rights ordinance) on the ballot, I’m going to be having to split my energy over there,” she said. “There is no – at this point – group willing to step up and advocate for the other two. I’m not going to put some things out there just to fail. It may be more timely to bring the charter amendments to next November’s electorate, and I can leave that decision to the next mayor.”

Term-limited Parker, the first openly gay mayor of a major American city, said she will discuss with council members and make a final decision in the coming days on what items to place on the agenda for the group’s Wednesday meeting.

[…]

Political observers say the divisive ordinance’s appearance on the ballot may skew the electorate by rallying conservatives to show up for what are typically extremely low-turnout municipal elections, and could undercut discussion of other issues in the mayoral and council races, such as the city budget and crumbling streets.

University of Houston political science professor Brandon Rottinghaus said Parker’s wariness of moving forward with complicated governance issues when such a clear-cut social issue will be on the ballot is well founded.

“You’ll have pro and con on HERO, and that’s going to create a politics and a set of voters that may not reflect the kind of voters that would otherwise come out for an issue of importance to city finances,” he said. “I think she’s wise in that way to push things off to make sure those issues get the kind of hearing they deserve instead of the kind of hearing they’d otherwise get in the politics of the moment.”

I don’t believe the turnout effect of having HERO repeal on the ballot is going to be entirely one-directional, but I do agree that it’s going to consume a lot of the oxygen in the campaign. It’s also going to require a lot of financial resources. Mayor Parker has $233K cash on hand as of the July finance report, which might have been enough to push the other changes she had in mind but likely isn’t enough to defend HERO and certainly isn’t enough to do both. Clearly, the first priority is defending the gains that we’ve made. It’s unfortunate that the other items will have to be left for the next Mayor to sort out – I strongly suspect the next City Council will wish they didn’t have to deal with the extra cuts that the revenue cap will impose on them – but it is where we are.