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On cops and the revenue cap

Mayor Parker again calls attention to the city’s stupid revenue cap and the things it will prevent the city from doing if it is left in place.

Mayor Annise Parker

Mayor Annise Parker

If Houston voters do not want police pulled from the streets next year, Mayor Annise Parker says, they better think twice about a cap on city revenues they imposed a decade ago.

That is the message the mayor has pushed in the days following the release of a study on the Houston Police Department’s operations that showed the understaffed agency ignored 20,000 cases with workable leads last year.

“We need more police officers. The only way we can have more police officers is to have more tax revenue to pay for them,” Parker said. “It’s really easy to say, ‘Well, the government should spend less money.’ We’ve been funding the police department by one of the most efficient, effective uses of resources anywhere to get us to today. I can’t fund the Houston Police Department with less money.”

Unless voters adjust the revenue cap, soaring property appraisals are expected to force a cut in the property tax rate next year, carving millions of dollars from the city budget in the fiscal year that begins July 1, 2015. The cap limits the growth in city revenues to the combined rates of inflation and population growth. As a result, Houston faces a projected $142 million gap between expected revenues and expenses in its general fund next summer, a figure that tops the $137 million shortfall the city had to close during the economic recession, when Parker laid off 776 workers.

As Parker prepares to ask voters to reconsider the revenue cap next year – in May at the earliest, or perhaps November – the staffing study is an obvious tool.

See here and here for the background. I’m glad this article makes it clear that the revenue cap would mean that the city is forced to reduce the property tax rate, because so far most of the emphasis has been on spending cuts. The reason for the spending cuts is because the city is essentially forbidden from having a year in which revenue growth is especially robust. In the absence of this cap, if the city has a particularly good year – you know, because the economy is humming, new construction is on a roll, or maybe just because we’ve fully recovered from a downturn – we could invest that extra revenue in ways that would not otherwise be available to us during normal years. What the revenue cap does is it imposes a priority above all others, to roll back the property tax rate until we’re back into normal territory. And if we have any unexpected costs or unmet needs or wish list items? That’s just too bad.

So if you think we should take extra revenue and use it to help meet our pension obligations? Too bad, we can’t do that.

If you think we should take extra revenue and use it to bolster the city’s reserve fund? Too bad, we can’t do that.

If you think we should take extra revenue and use it to fix more roads? Too bad, we can’t do that.

If you think we should take extra revenue and use it to hire more cops? Too bad, we can’t do that.

Now of course, we can try to do those things from the more limited amount of revenue that the cap would allow us to have, once we’ve cut property taxes. In normal times, this might not be that big a deal other than being a lost opportunity. Unfortunately, it’s happening at a time when the city has some deferred debt payments coming due, and every dollar we reduce from available revenue means that much less is available for the city’s normal and ongoing obligations. Tax cuts come first, everything else gets in line after it. This is of course exactly what the wealthy proponents of the revenue cap, all of whom will benefit greatly from the ensuing reduction in the tax rate, had in mind from the beginning. They want to be the city’s top priority, and this is the means by which they can achieve that. You have to hand it to them, it’s a pretty clever trick.

Having said all that, I do agree with this:

City Councilman C.O. Bradford, a former police chief, said he does not support raising the cap without more work to find savings in all city departments.

“You cannot show me in that work demands analysis where it said the $5 billion operating budget for the city of Houston requires more money. It doesn’t say that,” Bradford said. “It says we need more police officers, not more money. I’m not willing to make that big hop yet because we haven’t done the necessary groundwork to support ‘more money.'”

Councilman Stephen Costello, who chairs the council’s budget committee, agreed. The police staffing study cautioned against rushing to hire more officers without ensuring no police are doing jobs civilians could do, he said, adding the study examined only part of the department.

“You can’t just use one work demands analysis that’s not totally complete to justify raising the cap to bring in more police officers,” Costello said. “There are plenty of areas of efficiency available to us.”

I too am skeptical about the need to spend more money on HPD, at least without having a much better idea about how they’re spending the money they have now. Regardless of what happens with the revenue cap or with anything else, we really need to put the Public Safety portion of the budget under closer scrutiny, in the same way we put the rest of the budget under closer scrutiny back in 2010. If you want to cite the consultant’s report as a reason to get rid of the revenue cap, that’s fine, but these are really two separate issues and should be dealt with as such.

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  1. Steven Houston says:

    Cap or not, the city will pull in a greater amount of revenue. That some administrations purposely deferred balloon payments to make life easier at the time is without question, now comes the time when the chicken little tactics will be deployed.

    Rather than demand more from the taxpayers on top of what they will have to pay from increased valuations, simply present them with a priorities list that is not contrary to state and federal law. If people are happy saving $10/month each for slower fire service, less police coverage, and fewer parks/libraries/clinics and such, so be it. There are enough police and firemen retiring that layoffs shouldn’t be needed, just don’t expect the same level of service without paying more for it (just as all other prices have increased over the years).

  2. Doris Murdock says:

    In no coverage of the situation have I heard why increased funds must come only from a property tax increase. And, that’s what removing the cap is, an increase. So, that’s the first question that should be addressed.

    The next question I have, is what did the city do with the extra money that came in for 2012 and 2013. I know those were both banner years for real estate sales.

    It’s not as though properties are stagnant. Builders are cramming houses onto every possible piece of land they can get their hands on. This means more homes, and thus, more tax income; I haven’t seen any information assessing that income. I see small homes being remodeled and expanded throughout the neighborhood which also means additional income. Again, I haven’t seen any information on that income.

    I fail to understand or agree with a $15,000 subsidy to downtown residences.

    All I’ve seen from the Mayor’s office is the threat of reduced services. I believe that’s real, but the single-minded focus on homeowners is misquided, to say the least.

    Next, homestead exemption and the over-65 exemption, and tax protest notwithstanding, our property tax bill will increase by about $481, and increase of 10%. Our income is not increasing at that rate, and is, in fact, fixed. If nothing changes except the irrational appreciation of properties, that will at least double for next year.

    Absolutely not on the table is selling our home for a profit and moving to a trailer park in Lufkin.

  3. Steven Houston says:

    Doris, most of that development was outside the city limits and those renovating their homes have no duty to report such improvements to the tax assessor’s office. Further, the Harris County Appraisal District lost a major court case in how it values commercial properties which is leading to massive lowering of commercial property values despite selling price’s soaring.

    That said, Parker made a variety of comments regarding the past few years bringing in more revenue than expected, saying it “saved the city” as tens of millions more than expected flowed into city coffers. Just as quickly though, city spending increased to absorb most of it via health care costs and the like. But in regards to your assertion regarding “irrational appreciation of properties”, I assure you that HCAD valuations have barely begun to rise as the local housing market is hot right now and will remain so for years under most likely scenarios so if you can’t afford to stay with yearly increases of 10%, make plans now to sell and move to a cheaper community as it won’t get better anytime soon. The city may have to lower the absolute rate but the amount of money it takes in will increase every year.