Houston voters will not be given the option this fall of passing a property tax hike after a City Council committee on Thursday unanimously recommended leaving the city’s much-maligned revenue cap alone.
Voters passed the revenue cap in 2004, amending the city charter to limit the growth of property tax revenue to the combined rates of inflation and population growth, or 4.5 percent, whichever is lower. Voters tweaked the cap in 2006, allowing the city to raise an additional $90 million above the cap for public safety spending.
Houston now has exhausted that breathing room and sliced its tax rate slightly last fall to avoid exceeding its allowed property tax revenues.
Mayor Annise Parker initially cast the cap as a key driver of the city’s budget problems, warning that it, along with soaring pension and debt costs, could force widespread layoffs and service cuts.
The topic has received less attention recently, however, as projections show the cap will mean a projected $24 million less is available to spend in the next budget compared to the current one. That is significantly less than the $63 million deficit City Council must close by the new fiscal year July 1 and the even larger deficits projected in the following years.
City finance officials project the revenue cap will allow the city to collect $39 million more in property taxes for the upcoming budget year than it collected in the current one. However, they said, contractual costs – not including staff salaries or the delivery of services – will increase by $58 million, led by rising pension and debt payments.
Still, council members, led by C.O. Bradford, Oliver Pennington and Stephen Costello, said they cannot support asking the public to pay more when they cannot justify to voters all the ways the city spends money today. Only once the city’s budget problems push parks and libraries to close, Costello said, will voters consider a change.