Zombie ReBuild lawsuit returns with a vengeance


Houston City Hall will have to use significantly more tax money to fight flooding with street and drainage projects, after an appeals court sided Tuesday with engineers in a years-long lawsuit over how much funding the city devotes to that purpose.

The 14th Court of Appeals’ opinion marks a victory for flood advocates who have fought for more projects, while dealing another blow to the city’s growing budget gap.

The city put about $123 million in property taxes into its drainage fund in last year’s budget to pay for street and drainage projects. That money funds an array of projects – from full street overhauls to sewer and ditch maintenance – that help maintain Houston’s drainage system.

One of the lawsuit’s plaintiffs suggested the amount allotted to drainage will have to grow by more than $100 million in this year’s budget, compounding City Hall’s already existing deficit of about $230 million. That $100 million increase is roughly the same amount the city uses to fund garbage and recycling collection for a year, or its entire parks budget.

Mayor John Whitmire said that he agrees the city needs to invest more in drainage, but said he does not believe Houstonians would elect to do so through a court order. He said the city plans to appeal the ruling.

“While I recognize and campaigned on the importance of drainage infrastructure, I don’t believe drainage infrastructure should compete with public safety funding,” Whitmire said in a statement. “This shows again the need for us to have a grown-up discussion about the short- and long-term condition of City finances, which I inherited, and we should not continue to kick this can down the road.”

The case was brought by engineers Allen Watson and Bob Jones, who, in 2010, backed a successful charter amendment to change the way the city financed street and drainage projects. Instead of issuing debt to pay for those projects, the city would use a “pay-as-you-go” plan, setting aside about a fifth of the city’s annual property taxes for that purpose. The plan also included a new monthly drainage fee of about $5 to residents’ water bills.

The city, which at the time had a tax rate of about 63.88 cents per $100 in taxable value, had to set aside 11.8 cents for streets and drainage, or “an amount equivalent,” according to the charter amendment. For years, city officials have interpreted the “equivalent” language to mean they could adjust the calculation used to allot the money, shorting the fund compared to the original calculation.

In 2015, the city bumped up against a voter-imposed revenue cap, which limits the annual growth of property taxes the city can collect via a formula that accounts for population and inflation growth. As a result, it has had to reduce its overall tax rate, which has fallen to 51.92 cents.

To free up money, in 2016, the city started interpreting 11.8 cents differently. They took the original allocation of property taxes toward streets and drainage under the measure from 2012 – $157 million – and applied the revenue cap’s formula to it, increasing it to account for population and inflation growth.

If the city had kept contributing the full 11.8-cent share to streets and drainage, it would have devoted $420 million more to streets and drainage than it has over the last decade. The ruling is not retroactive, though, and the city will not have to make up that difference, according to Watson and Jones’ attorneys.

See here and here for some background, and here for the Court’s opinion. I recommend you read the Background section, which shows what a wild ride it’s been for this litigation, which as recently as last year I thought was dead. What is dead may never die and all that.

I don’t have an opinion on the merits of the suit. The opinion is full of too much math even for me to wade through. I will say again, as I said in that post from last year, that this is yet another exhibit in the “revenue cap is stupid and harmful and should have died a messy death years ago” files. Not all of the city’s current fiscal crunch is tied to the revenue cap, but enough of it is that we’d be in a far less dire position if the cursed thing had never existed. If we don’t move to kill it now, we’ll never escape. Also, too, I have to wonder if Mayor Whitmire would have made that settlement with the firefighters such a high priority if he’d have known this was coming. It is what it is now.

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One Response to Zombie ReBuild lawsuit returns with a vengeance

  1. C.L. says:

    I’m no Nostradamus, but I see a proposal that calls for a complete closure of HPL facilities (just in time for summer reading), as well as a closure of City parks (just in time for summer swimming), City Service Centers (just in time for November’s election) , the cessation of any mowing of City-owned land, the cessation of any City ‘parties’ (July 4th at Eleanor Tinsley for example), etc. If it ain’t essential to the residents of the CoH, it gets eliminated or closed down….so we can, ya know, pay HFD firefighters and start building retention ponds.

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