Happy New Year, city employees.
Thousands of city of Houston employees will have to take six unpaid days off in the coming six months, one of a series of actions Mayor Annise Parker is taking to close a $29 million budget gap.
“This is a step that I didn’t want to take,” Parker said on Thursday. Furloughs send “the wrong message to hard-working city employees who get up and pick up our trash, fix our roads, keep our libraries open, mow our parks.”
The furloughs will save the city $5 million and will apply only to civilian employees, with a few exceptions in such areas as trash pickup and other positions that generate revenue, Parker said. Employees who make less than $24,000 a year also will be exempt, she said.
I guess it’s still better than layoffs, but that’s likely small comfort for the people that will be taking what amounts to about a 2.3% pay cut. The main issue I have with this is where do you go from here? It’s a one-time fix, and the problems exist beyond this year. Obviously, you can hope that the economy improves and that property values begin to rebound – there’s at least some reason to be optimistic, or at least not pessimistic, about that nationally – but what’s the plan beyond that?
I’m sure you know where I’m going with this, so let’s get to it.
City Controller Ronald Green painted a more dire picture of the city’s budget situation through fiscal 2011.
The Parker administration has estimated the city will garner $36 million by selling city-owned property, but Green projects that figure will only reach $20 million at best. The added gap could make more layoffs necessary, he said.
“Most of our budget is in salaries, so where you make the cuts is with personnel,” he said. “Furlough days obviously will help with the bottom line, but it’s still not the ultimate solution.”
[…]
City Councilman Mike Sullivan, who has emerged in recent weeks as a sharp critic of the mayor, said the furloughs won’t go nearly far enough. Freezing spending at its 2009 level and deferring contractual 3 percent pay increases for city employees would save far more, he said.
“These are just one-time savings,” he said. “We’ve got to trim millions and tens of millions of dollars from the budget.”
I’m going to ask again, when will rolling back the property tax rate cuts that were adopted in recent years going to be on the table? It’s easy to beat your chest about making cuts when it’s primarily other people – city employees – who will feel the brunt of it. What’s your own skin in the game?
At a more fundamental level, to focus exclusively on cuts is dishonest and I believe ultimately destructive. Saying “we can’t raise taxes when times are bad” is little more than a shibboleth. If that’s really the case, then we shouldn’t have cut them when times were better, because the revenue we willingly forsook in years past would be mighty handy right about now. The same is true for Harris County, the state of Texas, and the federal government, which is filled with people (mostly but not exclusively Republicans) that scream about the deficit at every opportunity while also never missing a chance to increase it for the benefit of the wealthy. For some people, times haven’t been bad at all. When are these folks going to be called on to sacrifice for the greater good?
My wife works for the City. She’s firmly in the I’ll take six days off rather than having a coworker lose their job camp.
Still, it’s rather a shame their trying to balance the budget on the backs of city employees rather than having the political cajones to actually do something on the revenue side of the equation.
Kuff
regarding your point “The same is true for Harris County, the state of Texas, and the federal government, which is filled with people (mostly but not exclusively Republicans) that scream about the deficit at every opportunity while also never missing a chance to increase it for the benefit of the wealthy.”
I thought the Federal government has been Democrat controlled which has done all of the deficit increases over the past 2 yrs?
and why do you include Harris County but not the city of Houston which has been increasing debt? Is it just because the City is Democrat controlled?
also based on the following link it does not appear as if the State of Texas has much debt relative to other large states
http://www.brb.state.tx.us/pub/bfo/AR/AR2010.pdf
Also Annise is balancing the 2011 city budget with a $55-60mm transfer from the General Fund surplus. Yet that fund will be at the 7.5% threshold at the end of fiscal year 2011, so she can’t use that to balance 2012. I agree raise property taxes but Mayor Parker will only announce that once it is clear that nobody is going to run against her in 2011.
“I thought the Federal government has been Democrat controlled which has done all of the deficit increases over the past 2 yrs?”
ROTFL. Are you trying to imply that only the Democratic party is responsible for the deficit?
http://www.cbpp.org/cms/index.cfm?fa=view&id=3036
John,
Democrats were not exluded from deficit spending blame.
Deficit spending in the federal government has been going on longer than the past two years–gee, I wonder how it started? Possibly unfunded wars and tax vacations pushed for by Republicans?
And the city of Houston was included, thus the phrase beginning “The same is true for. . .”
John,
I am specifically referring to budget deficits, not debt. As for your other questions, I think MATX and TexasChick have addressed them.
Kuff
but excessive debt is allowing some to cover budget deficits. Basic accounting, debit cash, credit LT liability. Look at COH operating budget they include sale of capital assets (which are one time not recurring) in the yearly budget.
D’s and R’s are all to blame just never understand why it seems impossible to criticize Parker. She will never raise property taxes, and the current city budget is a total joke and it will be funny to see how much in unidentified cuts she uses in the 2012 one
Mr. Kuffner,
Do you pay property taxes?
I do and do not object to property taxes being increased. They should have never been cut but increasing property taxes should not be the only solution to increasing revenue IMO.
TexasChick – Yes, I do, and I live in Houston. I would definitely be affected by this. I agree that it’s not the only solution to raising revenue, but 1) the city has already just increased a bunch of fees, and 2) right now it’s not even part of the conversation. My purpose is to point out that wherever you look, the “solution” to budget shortfalls is being defined as “we’ve got to make cuts and more cuts”, and I say that’s wrong.
Thank you for response. I agree with you 100% especially when only the poor and working class are the target of these budget cuts.
Kuff
I agree we need some combo, but Parker has been mute on property tax increases so I am just going under the assumption of department cuts/layoffs
Also I think we are forgetting about these so called huge property tax cuts.
1) we are talking about city of Houston budget so that is roughly 25% of your property tax bill.
2) in 2004 that rate was $0.65/$100
3) today that number is $0.63875/$100, roughly 2.5% reduction.
4) the COH gets $850mm a year from property taxes
5) that return to $0.65 would result in roughly $21mm of increased revenue
6) we are still going to need at least $80mm more of revenue to make our 2012 budget work
What does everyone think of these numbers? If you think my numbers are wrong etc please show me yours.
John, I think your numbers are correct, and I thank you for providing them. And they clearly demonstrate what I’ve been saying all along. To go back to the 2004 rates would mean an increase of $12.25 on a $100,000 house in annual taxes, and would have four times the impact of the involuntary furlough plan. I am at a loss to understand why more people aren’t talking about this.
To clarify about something: When talk about “ginormous unaffordable property tax cuts”, I’m referring to the action of the Legislature in 2006, when it reduced the maximum evaluation from $1.50 to $1.00 per $100 of assessed value. This is what school districts use, and is a big part of the current state budget deficit. The City of Houston and Harris County have added their own tiny cuts to what they collect in addition to that. The city and the county could go a long way towards solving their own problems by rolling back those small cuts, which would mean little to a homeowner’s annual bill but would bring in millions to their coffers.
Kuff
I am guessing once it is clear in May or so that nobody will run against Annise (I mean a serious candidate, just don’t think there is one who will run against her) then I am guessing she would raise the property tax level back to the $0.65 number. But as I said for 2012 budget, we can’t keep selling capital assets and transferring money from the general fund balance (we will be at 7.5% of total expenditures by end of fiscal yr end 2011) to make the numbers work
Austin will be an interesting place in January, when does the Comptroller have to announce her revenue estimates so the lege can figure out their shortfall/how much they have to spend?
But I think frustration about many people yelling for budget cuts (specifically firing) is when one enters a city (and federal) building and observes all of the employees who are just hanging out doing absolutely nothing. In the city hall annex why have two entrances that require a guard to sign you in and another to scan your stuff (when they are not busy looking at facebook at the main entrance)? I have been to plenty of office buildings that have multiple entrances for those with an employee badge and then only one entrance for guests. I think that is what disappoints me and others is just how overstaffed many parts of the city government appear to be. The number of administrative assistants etc is just nutty.
I have been saying how bad the city’s finances are and no one wanted to listen back then, I was told I was being negative…. I was just being realistic.
I also believe that the city will/must file bankruptcy before 2021, there is no avoiding it.
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Tax rates may have gone down, but increases in valuation have more than made up for the rate changes. My taxes have gone up 30% since 2005 (on the same house), so I don’t really feel like paying yet more, especially since my income hasn’t kept pace. Perhaps the City should consider cutting about 10% of the work force, much like many businesses have had to do. Surely there is something the City does that isn’t really necessary.
I think increasing real estate values were supposed to offset tax decreases (and in the 13 years we’ve owned our home our tax bill has almost tripled), yet I don’t feel like services have increased, although there is more efficiency. An example of a city service is the Houston Public Library: hours and staff are decreasing at branches everywhere, yet I can go online at any time of day or night and request to get any book delivered to the branch of my choice for pickup without a fee. I report a missing stop sign to 311 and in less than 24 hours it’s replaced. I think the city has followed private business practices in increasing efficiency. However, I don’t think that running a government like a business is always the answer.