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.
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.