Mayor Annise Parker has officially proposed not raising taxes this year.
Through her finance director, the mayor is asking the City Council at its Sept. 21 meeting to adopt the existing property tax rate of 0.63875 per $100 taxable value as this year’s rate.
“It’s very hard in these times to not look for more revenue, but it’s also critical that we understand what the private sector’s going through, the taxpayers are going through. Everybody’s doing more with less, and we can’t raise taxes in this period,” Parker said Monday.
As the story notes, this is what Mayor Parker has been saying all along, so this announcement should surprise exactly no one. Property tax revenues overall are at least not declining any more, and sales tax revenues are increasing, so the city should be in an okay position for the next budget. I believe the rate rollbacks of recent years need to be revisited, but I’m okay with putting it off till times are better.
The problem is that it was when times were better that the rates were cut in the first place, because hey, times are good and we don’t need all this revenue. That view turns out to be shortsighted.
The city reduced the tax rate five times during the six years that Parker’s predecessor, Bill White, served as mayor. The cuts reduced the tax rate by nearly 2.5 percent.
The Parker administration estimates that these tax cuts now cost the city about $20 million a year in revenue it would be collecting under the pre-White tax rate.
I did not care for those rate cuts, which each amounted to pocket change for most homeowners but clearly add up for the city, when they were approved. Had we not cut our rates, we’d have been in a stronger position to withstand the downturn. We could have had millions more in the city’s reserves, thus reducing the need for cuts. We could have made bigger payments on our debt service. We could have not issued pension obligation bonds. I’m sure there are plenty of other things we could have done with it, but this is what we chose. Perhaps the next time times are good we’ll keep that in mind.
Please keep in mind that Houston’s tax rate is a factor in whether people chose to live in the limits or move outside. We are at something like 64 cents per $100. WestU is down in 40s. Some Memorial villages are in 20s. See the history of St Louis, Detroit, etc. Bill White did not want to take us there. He understood that you lose your tax base if you tax it too highly, sometimes at the richest end but also in the middle class. Houston police and firefighters live outside the city limits in shockingly high numbers.
“We could have not issued pension obligation bonds”
I think this statement completely illuminates the political considerations of cutting the tax rate (while actual taxes increased). Our leaders decided it was better to borrow money in the bond market, paying fees, distribution costs, and interest, rather than leave the rate where it was and paying the pension contribution with cash. Of course, it sounded great on an election banner, “We cut taxes (the rate) every year” blah blah… Hoorah!
But there is no doubt that the ongoing decision to kick the “pension can” down the road will make things very difficult in the future.
Jim Bigham
Charles, do you really believe what you wrote above:
“Had we not cut our rates, we’d have been in a stronger position to withstand the downturn. We could have had millions more in the city’s reserves, thus reducing the need for cuts. We could have made bigger payments on our debt service. We could have not issued pension obligation bonds. I’m sure there are plenty of other things we could have done with it, but this is what we chose.”
When has government at the city level not spent what it had in hand. Reserves are phantom and if we had higher taxes under Bill White we would have the same problems today, except we would have a higher tax rate and no money in the bank.
Having a reserve is not a bad idea, but government like most citizens finds saving money for a “rainy day” or as a reserve is very difficult. Politicians, and elected and appointed officials will always find a “need” for spending any reserve, as well as all tax revenues because telling constituents “NO” is not popular and not conducive to re-election.
Keeping government lean is in the best interest of all taxpayers. Raising taxes may be necessary to fund current and future obligations, but now is not the time for such as noted by Mayor Parker, and when Bill White was mayor it was the right time to offer tax relief. JJMB’s comment above is another reason for maintaining low tax rates if the City of Houston does not wish to repeat the mistakes many major metropolitian areas throughout the nation have made in driving taxpayers into “bedroom” communities where taxes are lower and their money goes farther.