Do property taxpayers inside the City of Houston subsidize Harris County services? It’s a question that comes up a lot, given the fact that city residents—like their counterparts in the county—pay separate property taxes to the county, but the county provides many services only to the unincorporated areas.
The answer to that question appears to be yes: property taxes paid to the county by those inside the city do subsidize services out in the county—at least so far as general county services are concerned. (On the hospital front, city residents appear to receive more in services than they pay in taxes to the county.)
The overall picture might look different; for example, residents outside the city make many purchases inside the city, and the resulting sales tax goes to the city, not the county. But at least according to a new analysis from the Kinder Institute, with the assistance of the fiscal analysis firm TischlerBise, the county gets more in property tax revenue from city taxpayers than it provides in services.
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Although much of the unincorporated area is served by municipal utility districts, the county government is responsible for providing many services, such as law enforcement and road maintenance, that are typically provided by cities. For this reason, the question of whether city taxpayers subsidize services outside the city has long been debated. At the same time, it should be noted that the county provides many services, such as justice administration and hospital care, to all residents of the county no matter where they live.
The Harris County government collects and spends about $2 billion per year in property tax revenue. The Harris County Hospital District collects and spends about $700 million per year in property tax revenue. A little more than half of the county’s property tax comes from inside the city.
But the amount of money that the county spends on services to city residents varies. For example, we estimate that almost 60% of all county flood control expenditures benefit the city. At the same time, however, almost 90% of county road and bridges expenditures occur outside the city limits.
I have definitely complained in this space about all of the roadbuilding in empty parts of the county as the primary development planning strategy. It’s worked in that the county’s population has boomed, but it has also led to the paving over of a lot of prairie land that had been a key component of flood control, and it has had the feel of leaving the inner core behind to fend for itself. I have felt that a little less in recent years, as the county has kicked in on various city road and bike projects, as well as contributing to Metro for bus shelters and other repairs. I give Commissioner Rodney Ellis a lot of the credit for that. I’d still like to see more done, but at least the disparity is not as glaring.
As this article points out, there are county services that provide a lot of benefit to Houston, and services that are widely used by everyone, so the picture is more nuanced than I might have given it credit in the past. The city also benefits from sales taxes from people who work in the city or travel into the city for business and entertainment. The cited study did not go into that aspect of the finances, though they say more study will be forthcoming. I’m just glad to see this issue get some attention.
The hospital tax is a separate tax, from the county property tax.
The hospital district, flood control district, port, etc are all separate taxes.
I find it annoying that I can’t call the Sheriff for service when I pay the same taxes as someone in the unincorporated county.
DUBIOUS NEXUS AND STOKING CITY-COUNTY CONFLICT
Re: “I find it annoying that I can’t call the Sheriff for service when I pay the same taxes.”
Do you ever have occasion to call the IRS to get your money’s worth of service from them? And what do you need the Sheriff for when you have municipal police?
So, what service are you missing out on?
AND SOME VALID WHATABOUTISM, FOR GOOD MEASURE
Isn’t it even more annoying when you contract for residential electric service, and you don’t get it when you most need it? As during an arctic spell such as a year ago. In that case, you have a particularized need and a related particularized grievance.
The other gripes are just general taxpayer gripes, which are properly aired and resolved in the political arena, and through elections. Note also that the question of revenue source and tax burdens is just part of the discussion. How the available money is spent involves policy choices, and those are controlled by Commissioners Court, which is accountable to the voters of the county, including residents of municipalities within the county perimter.
An alternative may be to relocate to the most-favored-by-you jurisdiction. Unfortunately, that’s not as easy when dependent on the ERCOT-run grid.
HPD has a history of not showing up when called. We pay for HCSO, we should be able to get them when needed, even if we live in the City. WTF does the IRS have to do with this? WTF does electric service have to do with this? Focus, dude.
If I can’t call HCSO, then I want a rebate on my taxes.
We also pay for constables. You may only see them do anything if you are not paying extra for constable service when they are issuing traffic citations.
Pothole, try calling the county.
I had an occasion to call HPD, a burglary in progress. They caught the people. So HPD does respond. But too few of them and so large an area.
Poly wonk, this has to do with property taxes that we pay.
Do you pay property taxes to the Federal Government?
TAXES AND SERVICES (RESPONSE)
Unlike electrical service, taxes are not a fee for service, except broadly speaking in the aggregate. Tax burdens and what services the taxes fund are subject to political decisionmaking by the relevant governing bodies, which are politically accountable. So, if public money is not well spent, services are shoddy, or the budget allocation should be modified, the remedy is also political. Stuff to talk about in connection with elections and re-election campaigns. Grid reliability is also a matter of public policy, of course, but of a regulatory nature and primarily at the state level.
Yes, of course, local taxes are property taxes (ad valorem) and sales tax, but the analogy of federal and state/local taxes is not so far fetched, even though different types of taxes are involved.
County Revenue Service
The IRS is an agency of the federal government that collects federal (income) tax. Harris County does the collecting (of property taxes) itself through the County Tax Assessor-Collector and brings suit on delinquencies in its own name. Difference duly noted, but functionally it’s similar.
Harris County typically sues for itself and for other countywide taxing authorities, which are also named in its tax suit petitions: Harris County Department of Education, the Port of Houston Authority of Harris County, the Harris County Flood Control District, and the Harris County Hospital District. Other taxing entities, such as school districts and special districts, may be joined as intervenors.
These suits are filed in Harris County District Courts, though technically they are state courts. The territorial jurisdiction of these courts (and other county-level courts) is co-extensive with the county (except for JP courts, which have a smaller footprint).
And speaking of judicial services generally, local court systems (civil, criminal, family, juvenile, probate) also provide a countywide government service which is not duplicated by the municipalities within its territory. This should also be part of the discussion about who pays for and gets what at the local county/city level, assuming the discussion is worth having.
Poly wonk, the county collects sales tax? When was that approved?
Plaudits to Manny for keeping a keen lookout for potential errors and opportunities for clarification. Policywonqueria endeavors to provide hopefully useful info and disclaims special expertise on local tax laws. Corrections always welcome.
The city sales tax rates are here:
https://comptroller.texas.gov/taxes/sales/city.php
(Couty ID in parenthesis for location info, e.g. Alief, Bellaire, Jersey Village, )