Friday, May 27, 2022
Bill King Blog
No Result
View All Result
  • Home
  • About Bill
  • Policy Discussion
  • Categories
  • Tune in
  • Home
  • About Bill
  • Policy Discussion
  • Categories
  • Tune in
No Result
View All Result
Bill King Blog
No Result
View All Result
Home City Of Houston Finances

Reform TIRZs, Don’t Repeal Property Tax Cap

by Bill King Policy
November 17, 2017
in City Of Houston Finances, TIRZ, Uptown
1
Quote of the Week – Will Rogers on the Democratic Party
Share this article
  

My former colleagues at the Houston Chronicle editorial board opined this week that the City’s property tax cap should be repealed and that the tax increment reinvestment zones (TIRZs) need to be reformed.  [Click here to read.]  They are wrong on the first count but right on the second one.

To begin, let’s get some facts straight that were mangled in the editorial.

First, the City does not have a revenue cap; it has a property tax cap.  Property taxes make up about 25% of the City’s total revenue.  That is the only source of revenue that is limited under the City charter amendment that was approved by voters in 2004.  The other 75% of revenue is not restricted.   There is a cap on all revenues in the charter that was also approved by the voters in 2004, but because the property tax cap got more votes, the City only enforces the property tax cap.

Repeal advocates insist on mischaracterizing the limitation as a “revenue” cap to mislead the public into believing that the City’s ability to raise any form of revenue is impaired by the restriction.  But since the charter amendment was enacted, City revenues have increased by a whopping $2 billion (67%), including the enactment of the drainage fee, which was the largest single tax increase in the City’s history.

Second, the increase in taxes is not “constrained by an arbitrary algorithm.”  The limit is the lesser of population growth and inflation or 4.5%.  Limiting Council’s ability to increase property taxes to population growth and inflation is a reasonable limitation and should be a rough estimate of the need to increase taxes.  If the City’s population and inflation were growing by more than 4.5%, I would have to agree that the limitation is arbitrary.  But because the City’s population has been growing at a very slow pace and inflation has been low since 2004, the 4.5% limitation normally does not come into play.

Third, and most importantly, the property tax cap repeal advocates always omit that the charter amendment begins with this clause: “The City Council shall not, without voter approval . . .”  In other words, in any year that the Mayor and Council believe that the City needs more tax revenue than the limitation allows, all they need to do is ask for the voters’ approval.  If they feel handcuffed by the charter amendment it can only be because they believe they cannot make a credible case to the taxpayers to pay more.

My former colleagues are right about the detrimental effect the TIRZs are having on the City’s finances.  Last year, the TIRZs collected $132 million in property taxes, nearly 14% of the City’s total property taxes.  That is more money than the drainage fee brought in last year.

They are also correct that the taxes collected by the TIRZs are excluded from the property tax cap.  As a result, TIRZ tax receipts have soared.  Last year the property taxes collected by all TIRZs increased 13%.  The receipts for the six richest TIRZs went up by an astonishing 27%!

Of course, the City has devised a number of clever ways to claw back more and more of this revenue over time and subvert the voters’ intention as expressed in the cap.  Each TIRZ pays the City an administrative fee and most make other contributions toward “shared” expenses.  But there is no question that if the City had all of this revenue back, it would go a long way toward solving its long-term structural deficit.

One of the challenges in bringing any of this revenue back to the City is that the TIRZs have been on a debt binge in recent years.  They currently owe around half a billion dollars.  So, much of their revenue is committed to repaying that debt.  Of course, voters had no say in the creation of this debt, notwithstanding that property taxes will be used to repay it.

There are certainly some good projects that are undertaken by the TIRZs.  But increasingly they are grasping for projects on which to spend their largess; witness the idiotic $200 million bus lane project in Uptown.

Of course, our benevolent State Legislature has its finger in all of this.  All of the TIRZs were created by state statute.  So, the State will have to be involved in any restructuring.  Given numerous conflicts of interests between our local delegation and the TIRZs and their first cousins, the management districts, good luck with that.

If you would like to receive our blog post by email, send your email address to weking@weking.net and we will add you to our distribution list.
ShareTweet

Bill King Policy

Related Posts

City’s 2021 Pension Reports
City Of Houston Finances

City’s 2021 Pension Reports

January 3, 2022
The Cost of Nationalizing Local Elections
City Of Houston Finances

The Cost of Nationalizing Local Elections

September 24, 2021
Quote of the Week – “Never Waste a Good Crisis”
City Of Houston Finances

Quote of the Week – “Never Waste a Good Crisis”

June 30, 2021
“Highlights” from the City’s Audit
City Of Houston Finances

“Highlights” from the City’s Audit

January 13, 2021
City and County Should Approve Purchase of Land to Protect Elm Grove
City Of Houston Finances

City and County Should Approve Purchase of Land to Protect Elm Grove

December 8, 2020
Update on City of Houston Finances
City Of Houston Finances

Update on City of Houston Finances

November 19, 2020
Load More
Next Post
Quote of the Week – Will Rogers on the Democratic Party

Judging Administrations by the Stock Market

Comments 1

  1. Pingback: Weekend brunch for 7 April 2019 - blogHOUSTON

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

By Categories

  • Book Review
  • City Of Houston Finances
  • Climate Change
  • COVID-19
  • Crime
  • Demographics
  • Economics
  • Election Reform
  • Environment
  • Ethics
  • Faith
  • Federal Government Finances
  • Flooding
  • Harris County
  • Harvey Recovery
  • homeblog
  • Human Trafficking
  • Hurricane Preparation
  • Ike Dike
  • Immigration
  • Kingwood
  • Management Districts
  • Media
  • Mobility
  • Montrose Management District
  • National Economy
  • National Economy
  • National Politics
  • Pensions
  • Police Polices & Procedures
  • Police Policies & Procedures
  • Political Parties
  • Property Taxes
  • Public Health
  • Quote of the Week
  • Race
  • Rebuild Houston
  • Rebuild Houston – Drainage Fee
  • SAM Party
  • Social Security
  • State of Texas
  • State of Texas Finances
  • TIRZ
  • Uncategorized
  • Uptown
  • Utility Grid
Bill King Blog

Posts range from local to national issues and focus on fact-based analysis, avoiding hyperbole and partisanship. The site is intended to be an open, respectful discussion of the critical issues of our day. Contact Bill directly and let him know what matters to you - weking@weking.net

Recent News

  • “The lady doth protest too much, methinks”
  • Poll:  58% of Voters Would Consider Moderate Independent in 2024 And Utah Democrats Make a Surprise Move

Our Social Media

No Result
View All Result
  • Home
  • About Bill
  • Policy Discussion
  • Categories
  • Tune in