Off the Kuff Rotating Header Image

sales taxes

A more nuanced look at the finances of hosting the Final Four

Mar 28th, 2023
by Charles Kuffner.
Comments are off for this post

I’ve made fun of articles in the past that breathlessly and credulously repeated claims that various big sporting events like a Super Bowl or a Final Four would yield untold millions in sales and hotel tax revenue for the state and the host city, despite the lack of objective evidence. With that in mind, I want to give credit to this Chron story about the upcoming Final Four in Houston, which takes a much more critical view of things.

Tens of thousands of fans are expected to swamp Houston later this week for the Final Four championship and unload their wallets in the city’s hotels, restaurants and bars.

Final Four organizers and researchers say Houston has a lot to gain from hosting the four-day college basketball championship, but a stubborn question emerges in every host that lands the event: Does it bring a financial windfall for the city?

A review of sales and hotel occupancy tax data from previous years Houston hosted the Final Four does not show a notable bump compared to years the city did not stage the event. When you add in extra costs the city takes on, like additional policing, infrastructure improvements and cleanup costs, the economic benefits get more muddy, researcher said.

“Sometimes we just list this really large number of economic impact, but we don’t talk about the investment that’s required,” said Jeremy Jordan, Temple University vice provost and former dean of the School of Sport, Tourism and Hospitality Management. “Planning and executing a large event for millions to watch requires large costs.”

Event organizers, boosters and city officials insist the broader benefits of the tournament extend far beyond the numbers. College basketball’s marquee event showcases the city to thousands of visitors and millions of fans tuning into the games across the country.

“Any time that we can put Houston in the spotlight is a great opportunity for us to be able to tell our story,” said Michael Heckman, CEO of Houston First, which operates several of the city’s convention, arts and entertainment venues.

The story then goes through a lot of different numbers to show that it’s hard to find an effect. My eyes glazed over after a few paragraphs, but it’s the process more than the specifics that really matter. My point in my earlier postings, which go all the way back to Super Bowl XXXVIII, is that it’s easy to make claims and difficult to produce evidence in support of those claims. Which the claimers usually avoided by not bothering, and which the stories often left unquestioned. That wasn’t the case here.

In the end, I do think there’s benefit to hosting large sporting events, even if the dollars and cents are hard to parse out. The benefits may be more intangible – and thus even more difficult to measure – and they accrue almost entirely to the limited set of people who care about the event in question. Having big attractions – in sports, music, culture, food, the arts, and so on – are benefits of living in a city, and the people that live there expect that over time there will be a number of such events that interest them. I don’t think it has to be more complicated than that.

End the “tampon tax”

Apr 28th, 2022
by Charles Kuffner.
1 comment

I approve.

Rep. Donna Howard

A coalition of menstrual health organizations is appealing a decision by the Texas Comptroller’s Office to deny its protest against the state sales tax, which they say unfairly and unconstitutionally does not exempt tampons, pads and other hygienic products.

If the dispute isn’t resolved on the administrative level, Meghan McElvy, partner at the Houston-based international law firm Baker Botts, said she plans to take the case all the way to the Texas Supreme Court if necessary. The law firm is taking up the case pro bono on behalf of the Texas Menstrual Equity Coalition.

“It’s just kind of a no-brainer issue to me,” McElvy said. “(Male) libido enhancers are tax-exempt, but medically necessary products for women are not.”

The group, which includes a large number of youth-led advocacy organizations, has asked for a re-determination hearing from the Comptroller’s Office. It comes after the agency denied their original request for a refund of sales tax on tampons, pads and panty liners bought by a Harris County woman.

This is just the latest effort in a national movement that kicked off in the 2010s aiming to end the so-called “tampon tax.”

As of now, a slim majority, or 26 states, tax menstrual products, while the rest do not, either because they have exempted them or because they’re one of the five states that don’t levy a sales tax, according to Period Law, an advocacy and legal organization.

States with exemptions include Illinois, Maryland, Massachusetts, Minnesota, New Jersey and Pennsylvania.

In Texas, state lawmakers in recent years have attempted to pass bills on the matter without success. Rep. Donna Howard, D-Austin, who chairs the Texas Women’s Health Caucus, has filed a bill every session since 2017. In 2021, House Bill 321 got out of committee but never made it to the House floor — the most progress any such bill has ever made.

Howard credited young women in high school and college, many of whom belong to groups that run donation drives to help low-income people access the products, with moving the needle last year by showing up in Austin to testify on the bill. She said she hopes to to build on their progress in the upcoming legislative session.

“We know there are a large number of Texas girls and women who do not have enough money to afford these products,” she said. “(A sales tax exemption is) not going to go a long way, but it’s a step in right direction.”

Howard said most of the pushback at the Legislature comes from members concerned about the budget. The Comptroller’s Office estimated in 2021 that the bill would have cost the state about $42 million in lost revenue in the next two-year budget cycle.

“In the grand scheme of things, this is a very small fiscal impact,” Howard said. “I keep going back to the discriminatory part of it because at some point, you make decisions because they’re the right decisions to make.”

I say they’re necessary health products, and on those grounds they should be exempted from the sales tax, as many other items are. The amount of revenue it would cost the state is pocket change in context of the budget. Legalizing marijuana, as Oklahoma has recently done, would generate far more than that to make up for it. Don’t even get me started on the various property tax loopholes and exceptions that could be fixed as well. This is a small thing we can do to make life a little easier for a lot of people. As Ms. McElvy says, it’s a no-brainer.

Does Houston get its fair share from Harris County?

Feb 6th, 2022
by Charles Kuffner.
8 comments

It’s complicated.

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.

Metro moving forward on new BRT line

Aug 28th, 2021
by Charles Kuffner.
2 comments

As they should.

Even with fewer riders hopping aboard and a more dour financial outlook, Metro officials say the agency is full steam ahead on a host of projects aimed at adding buses to scores of routes and neighborhoods.

That includes an approval scheduled for Thursday by the Metropolitan Transit Authority board to commit $40 million to development of a planned bus rapid transit line from around Tidwell and Interstate 69 to Westchase, via Denver Harbor, downtown, Midtown, Greenway Plaza and Uptown.

The project, similar to the Silver Line along Post Oak that opened a year ago and uses dedicated bus lanes to deliver service to stations akin to light rail, is one of dozens in Metro’s $7.5 billion long-range plan. That plan, approved by voters in November 2019, relies heavily on federal grants, which could come quickly if Washington lawmakers approve budget and infrastructure bills in the coming weeks or months.

“If we can get our ducks in a row on as many corridors as we can, that is good for the agency,” said Metro board member Sanjay Ramabhadran.

Metro submitted a preliminary application for funding related to the so-called University Line bus rapid transit project to the Federal Transit Administration in late July. Houston transit officials heard back from their federal counterparts in one week, a quick turnaround for a first series of questions, said Shri Reddy, executive vice-president of planning, engineering, and construction at Metro. Among the issues raised by federal officials was more assurance that Metro had committed money for developing the project, prompting Thursday’s vote.

That story was published on Wednesday; on Thursday, the board approved the money as planned, while giving me a bizarre sense of deja vu.

Seriously, Afton Oaks? After all this time? I mean, it’s all residential on that stretch of Richmond, so I doubt any stops there would be busy, but geez. Anyway, Metro is projecting less revenue now than it had originally planned for and that could lead to some uncomfortable decisions about service levels down the line if actual revenue is in line with that, but that’s a concern for later. For now, this is a good start.

Here comes our boring budget

Jun 2nd, 2021
by Charles Kuffner.
1 comment

Save the drama for the budget amendments.

Mayor Sylvester Turner

A few months into the COVID-19 pandemic, Mayor Sylvester Turner painted a dire picture of the city’s finances as he laid out his plan to balance last year’s $5 billion city budget.

Like other cities across the country, Houston’s sales tax revenue had plunged as the public stayed home, and Turner was proposing to make up the loss by furloughing 3,000 municipal workers, deferring police cadet classes, cutting the library budget and draining the city’s emergency reserves.

“These are financially difficult times, and it’s simply unavoidable,” Turner said of the cuts.

One year later, the city is emerging from the worst of the pandemic with its finances largely unscathed. Thanks to a payout of more than $1 billion in federal aid, Turner and city finance officials avoided the projected furloughs, reinstated the police cadet classes and are heading into the next fiscal year with replenished emergency reserves and a rare budget surplus.

Still, as City Council prepares to consider Turner’s $5.1 billion annual spending plan Wednesday, not everyone agrees on how the city should use its newfound wealth. Since prior mayoral administrations, city officials have passed annual budgets that spend more than the city takes in through recurring revenue, such as taxes. They have made up the difference by selling city-owned land, deferring hundreds of millions of dollars in maintenance on city buildings, dipping into cash reserves and using other one-time fixes. Turner has attributed much of the budgetary struggles to the city’s revenue cap, which limits annual growth in property tax revenue to 4.5 percent or the combined rates of inflation and population, whichever is lower.

City Controller Chris Brown and a number of council members have urged the mayor to use the relief money to address the long-standing budget issues, warning that added costs will leave the city in a precarious position when the federal money runs out. Eventually, the thinking goes, the city will run out of land to sell, while city infrastructure will continue to deteriorate and demand for city services will keep rising faster than the revenue used to fund them.

“The challenge is when that money runs out, if we add too many of the wrong things, i.e. recurring expenditures, it’s only going to exacerbate this structural imbalance in the future and make it that much worse,” Brown said.

Houston received a $304 million haul this year from the federal stimulus package approved by Congress in March, and it is set to receive the same amount in 2022, on top of a $400 million allotment it received last year from the first round of COVID aid. Turner is asking city council on Wednesday to approve a spending plan that uses $188 million of the aid to close most of the city’s projected budget deficit, and a chunk of the remaining funds to increase pay for Houston firefighters by 6 percent when the new fiscal year begins July 1.

See here for the previous entry. I tend to lean towards what Controller Brown is saying, but we’ll see what the details of this budget are, and go from there. I know that my calls to trim the police budget while we still can went unheeded, but I’d welcome an amendment to that effect from one or more Council members. We have two years to make good use of these federal funds. Let’s do what we can to get the most out of them and put the city on a stronger financial footing going forward.

Houston gets to have a boring budget

May 12th, 2021
by Charles Kuffner.
Comments are off for this post

Thanks, President Biden and all you voters in Georgia!

Mayor Sylvester Turner

Mayor Sylvester Turner plans to use an influx of federal cash to give firefighters a “raise the city can afford,” expand the Houston Police Department and replace lost revenue from the COVID-19 pandemic, according to the mayor’s $5.1 billion annual spending plan.

Turner’s budget proposal relies on roughly $304 million in federal relief money that was set to be deposited into the city’s coffers this week. The administration would use $188 million of that money to close most of the city’s projected $201 million deficit for the upcoming fiscal year, while fully replenishing the $20 million rainy day fund ahead of hurricane season.

“Without this flexibility, the city would be facing catastrophic cuts across all services,” Turner said, a nod to the city’s estimated $178 million in lost revenue during the pandemic, mostly driven by sales tax.

The proposed spending plan largely would leave the city’s $214 million in reserves, which officials have relied on in recent years to help balance the annual budget, untouched. Turner also did not account for $112 million of the city’s stimulus funds in his initial spending plan, leaving the door open for other initiatives that he declined to detail Tuesday.

A portion of the extra federal aid likely will cover the firefighter raises, which Turner did not include in the budget as proposed Tuesday. The mayor declined to reveal the size of the firefighter pay increase, saying only that he plans to implement raises over three years, starting July 1, when the 2022 fiscal year begins.

[…]

Without the firefighter raises, Turner’s spending plan represents a 4.7 percent increase from last year’s budget. The tax- and fee-supported general fund, which pays for core city services, would total $2.58 billion next year, up 3.9 percent. The largest increase would come from the police department, which would see its budget rise to $984 million, about $33 million more than city officials expect to spend this year.

The additional police spending would fund six cadet classes instead of the usual five, and cover a 2 percent raise for officers. The city’s contract with police officers has expired and the two sides have not agreed on a new one, but an evergreen clause in that deal secured the raise. The raise accounts for $11.7 million of the added funds.

The Houston Fire Department also would see a modest budget increase, with funding for four cadet classes. The initial $515 million HFD budget includes funding for 3,648 classified firefighters, according to city finance officials, about 76 fewer than the current budget.

For now, the two public safety departments account for roughly a quarter of the mayor’s proposed budget for the next fiscal year and half the general fund costs.

Controller Chris Brown said the federal stimulus money bailed the city out of a truly dire scenario — Houston’s worst-ever deficit, which could have resulted in as many as 2,500 layoffs.

“I’d breath a sigh of relief and look at the fact that the city really dodged a bullet this budget cycle,” Brown said, adding that his biggest concern is the city’s continuing structural imbalance. Its recurring expenditures outweigh revenues, meaning the city usually has to employ stop-gap measures such as land sales and deferrals to balance its books.

See here and here for the background. It’s hard to remember now, but a year ago things were looking really bad. The CARES Act helped, but the American Rescue Plan provided more money with fewer strings attached. It also provided money for the next fiscal year, by which time hopefully the city’s sales tax revenue will have bounced back. Not having this money would have made the next budget so much worse than it was in 2010. We still have challenges ahead, but at least the hole didn’t get exponentially bigger.

(As for the increase to the police budget, well, I didn’t expect anything different. Here’s hoping the Lege fails to carry that ball across the goal line.

What the American Rescue Plan means to Houston

Mar 13th, 2021
by Charles Kuffner.
28 comments

First and foremost, no layoffs.

Mayor Sylvester Turner

Houston and Harris County are expected to receive more than $1.5 billion through the stimulus bill approved by Congress Wednesday, providing a massive cash injection that city officials say will help close a budget shortfall widened by the pandemic for the second year in a row.

The measure provides local governments with their most generous round of COVID-related funding yet, and it comes with fewer spending restrictions than last year’s aid. Houston will receive an estimated $615 million, putting the city at more than $1 billion in direct federal relief during the pandemic, while Harris County is projected to receive $914 million — more than double its allotment from the first round of local aid last March.

“I’m hopeful and optimistic that we will be able to use this money to, essentially, bail the city out of a very dire financial situation,” said City Controller Chris Brown, who monitors the spending of Houston’s more than $5 billion city budget.

[…]

Local governments will receive half their federal aid within 60 days of Friday, when President Joe Biden will sign the bill into law, according to White House press secretary Jen Psaki. They will receive the second half of the funds at least a year later.

That means Houston will receive more than $300 million to offset its revenue losses next fiscal year, along with any potential shortfall before the current fiscal year ends June 30. [COVID recovery czar Marvin] Odum said the city finance department is projecting a budget gap of between $160 and $200 million next year, while Brown — whose office generates its own estimates separate from Turner’s administration — said he expects the shortfall to be even higher.

Brown noted that while finance department projections assume the city will see a less-than-1 percent reduction in sales tax revenue this year, the actual decrease has been 7 percent.

“The (Turner) administration, I don’t think, has properly evaluated the reductions in sales and property tax,” Brown said. “There’s a $40 million variance between us and (the) finance (department) in sales tax alone.”

Brown estimated city officials will have to lay off about a dozen city employees for every $1 million trimmed from the budget, meaning Houston could have been looking at more than 2,000 layoffs without any federal aid.

Instead, Houston’s relief will far exceed its budget deficit. The city also is expected to devote a chunk of the aid to direct COVID relief, such as testing and vaccinations. Turner’s administration exhausted the previous round of aid, totaling $405 million, in December. Those funds covered contact tracing efforts, city workers whose jobs were consumed by COVID, and relief to renters and small businesses, among other areas.

As the story notes, the ARP aid comes with fewer restrictions on how the money can be used than the CARES Act did, though the city was able to plug its deficit last year with those funds as well. The need for more funding has been known for a long time, and it’s only happening now because of the Presidential election and those two Georgia Senate runoffs. Elections have consequences, y’all.

Here’s the official budget forecast

Jan 12th, 2021
by Charles Kuffner.
3 comments

“Could be worse” remains the watchword.

Texas lawmakers will enter the legislative session this week with an estimated $112.5 billion available to allocate for general purpose spending in the next two-year state budget, a number that’s down slightly from the current budget but is significantly higher than what was estimated this summer when the coronavirus began to devastate the economy.

Texas Comptroller Glenn Hegar on Monday announced that number in his biennial revenue estimate, which sets the amount lawmakers can commit to spending when they write a new budget this year. But he acknowledged that Texas’ economic future remains “clouded in uncertainty” and that numbers could change in the coming months.

Hegar also announced a nearly $1 billion deficit for the current state budget that lawmakers must make up, a significantly smaller shortfall than Hegar expected over the summer. That number, however, doesn’t account for 5% cuts to state agencies’ budgets that Gov. Greg Abbott, House Speaker Dennis Bonnen and Lt. Gov. Dan Patrick ordered this summer or any supplemental changes to the budget lawmakers will have to make.

Hegar’s estimates portend a difficult budget-writing session for lawmakers. But Hegar acknowledged that things could have been a lot worse. The $112.5 billion available is down from $112.96 billion for the current budget.

See here for the previous update. I continue to hope that Congress will throw a boatload of state and local aid our way in the coming months, which will also help, but at least we’re not in truly dire territory. And bizarrely enough, there may be a silver lining in all this.

But advocates hope the pandemic, combined with the revenue crunch, could lead to an unlikely bipartisan agreement. Before the pandemic hit, Democrats saw a takeover of the Texas House as key for advancing the prospects of Medicaid expansion in the state. But as COVID-19 has ravaged the state economy and thrown even more Texans into the ranks of the uninsured, Democrats are guardedly optimistic this could persuade enough Republicans to put aside their political hangups and support expansion—even as Republican Attorney General Ken Paxton leads a national lawsuit to eliminate the entire Affordable Care Act.

Texas is one of 12 remaining states that have refused the federally subsidized Medicaid expansion, despite having the highest rate and largest population of uninsured residents in the country. Expanding Medicaid would cover 1 million uninsured Texans and bring in as much as $5.4 billion to the state, according to a September report by researchers at Texas A&M University.

State Representative Lyle Larson, a moderate Republican, voiced his support for expanding Medicaid soon after the election, pointing to six GOP-led states that have done so in the past three years. “It is a business decision,” Larson wrote on Twitter, noting that the move would help with the revenue shortfall and COVID-19 response, address rural hospital closures, and expand access to care. Dallas County Representatives Morgan Meyer and Angie Chen Button, both Republicans, pulled out razor-thin victories to keep their House seats after voicing support for some type of Medicaid expansion in their campaigns.

Even conservative state Senator Paul Bettencourt acknowledged that the fiscal crunch will force consideration of Medicaid expansion. “My back-of-the-napkin analysis shows that’s a $1.6 billion item, like that—boom!” he told the Dallas Morning News in September. “I’m pretty sure we don’t have that falling out of trees,” he said. “You can put Medicaid expansion up at the top of the list. There will be a debate.”

But there’s still plenty of staunch opposition. “For those that promote [expansion], I haven’t heard what they’re willing to cut,” state Senator Kelly Hancock, a Republican who chairs the Business and Commerce Committee, said in November. “It’s easy to talk about it until you have to pay for it, especially going into this budget cycle.”

As with casinos and marijuana, the smart money is always to bet against Medicaid expansion happening. But this is a bigger opening than I’ve seen in a long time, and while that’s still not saying much, it’s not nothing.

Can we please not screw the schools right now?

Dec 6th, 2020
by Charles Kuffner.
13 comments

Really, we don’t have to do this.

Across the Houston region and Texas, school districts that lost enrollment during the COVID-19 pandemic are facing a drop in state funds starting in January if the Texas Education Agency or state lawmakers do not act.

Since the virus began sweeping across the state and nation last March, forcing schools to close, the TEA has given districts several grace periods in which it provided them the same funding they would have received in normal times. To date, that has provided a lifeline to districts that otherwise would have seen their state revenues plunge due to lower-than-expected student enrollments.

The current grace period, which the TEA calls a “hold harmless guarantee,” ends Dec. 31.

The Texas Legislature in 2019 allocated enough money to fund schools at their current levels until the end of the school year, but the TEA has remained mum on whether it will extend the hold harmless guarantee until then. Without another extension for the remainder of the 2020-21 school year, some local district finance officials worry they will be faced with two bad options: dip into and potentially deplete their reserve funds to keep their districts operating through spring, or lay off teachers and staff to make ends meet.

For Houston-area districts, which began the school year missing more than 20,000 students, the financial ramifications could run into the tens of millions of dollars. For example, Alief ISD could lose nearly $40 million after enrollment fell 3,500 short of initial estimates.

Cypress-Fairbanks ISD, which has 2,364 fewer students now than at the end of last year, estimates it could lose $29 million. Aldine ISD could “easily” miss out on $20 million after its enrollment fell 4,000 students shy of projections, and Pasadena ISD would face a shortfall of nearly $14 million due to a 2,261-student enrollment drop.

Houston ISD did not respond to a request for comment, but the district began the year with 13,000 fewer students than expected.

There is no one answer for why students have dropped off schools’ radars. Some may have moved with family in search of work. Parents of pre-kindergarten and kindergarten students may wait to enroll them until school operations are more normal. Others may have been kept at home by parents waiting for COVID infection levels to improve before sending their kids back to school.

Texas Education Commissioner Mike Morath told the Chronicle’s editorial board in November the agency “already provided unprecedented flexibility to offer remote learning, and with it, full funding.”

“However, we know that certain districts face challenges because of significant enrollment declines, and we are working to ensure that our schools and teachers receive the additional financial support we need,” Morath said.

The lack of a concrete assurance that districts statewide will continue to receive funding at current levels has many on edge, said Kevin Brown, executive director of the Texas Association of School Administrators.

“Everybody right now is holding their breath, hoping the state will come through with hold harmless,” Brown said. “But they’re also starting to look at what will happen if that doesn’t come through — are they going to have to do layoffs, and if so, how extensively?”

State Sen. Paul Bettencourt, R-Cypress, said while enrollments remain lower-than-predicted across the state, the situation is improving as the school year plays out and kids come back. He also said he expects more students to return as COVID-19 vaccines begin to be distributed.

Returning funding to the state’s attendance-based formula creates an incentive for districts to keep looking for students who have not shown up.

“You have to balance all these needs, because we have to keep the public school system making sure they make every effort to find students,” he said. “Otherwise children are left behind.”

I mean, look. Schools and school districts and teachers – and parents and students – are contending with a lot this year. They’re doing the best they can under extreme circumstances. While the state of Texas is also under financial constraints, this is exactly the sort of situation for which the Rainy Day Fund – also known as the Economic Stabilization Fund – was created, to smooth out unexpected downturns in revenue and tide things over till they rebound. And for the millionth time, I will note that our state Republican leadership could be loudly demanding that our two Republican Senators support a COVID relief package that gives financial support to state and local governments, including school boards, that are suffering through the effects of the pandemic. There are many things we could do that do not involve putting all the burden on the school districts. We just have to choose to do them.

State budget situation not quite as awful as feared

Dec 3rd, 2020
by Charles Kuffner.
Comments are off for this post

Still bad, but could be worse.

Despite “historic declines,” state lawmakers will have more money to work with in the upcoming legislative session than Comptroller Glenn Hegar expected over the summer, he said Monday. But Hegar did not outline specifics as state coffers continue to suffer from the economic recession spurred by the coronavirus pandemic.

Sales tax revenues, by far the largest part of the state budget, fell by 4.8% in the second half of the 2020 fiscal year compared with the same stretch last year, Hegar said. It was a much softer hit than he anticipated, thanks to Texans staying home and spending money on “staycations instead of vacations.”

Other revenue streams, such as taxes related to alcohol, hotel occupancy, and oil and gas, were down more than 40% in the same period this year compared with last, Hegar told lawmakers Monday during a Legislative Budget Board meeting at the Capitol.

“Revenues remain down significantly relative to a year ago, and well below what we expected to collect when the Legislature wrapped up work on the budget in 2019,” Hegar said.

Legislative budget writers decide how much money will be allocated for large state expenses like how much school districts get, how well health care programs are funded, which transportation projects get built and what amount state law enforcement gets based on how much the comptroller says will be available during the next two-year budget cycle, which runs from September 2021 through August 2023. Hegar will likely unveil that number as the session nears.

Hegar, whose office is in charge of collecting taxes owed to the state of Texas, last formally updated lawmakers in July, when he wrote a letter to Gov. Greg Abbott and lawmakers projecting the state’s current two-year budget to be roughly $11.5 billion less than originally estimated. That would put the state on track to end the biennium, which runs through August 2021, with a deficit of nearly $4.6 billion, Hegar wrote in July.

A few points:

– Let’s hope Hegar is a better revenue estimator than Susan Combs was. Her epic misfire in 2011 led to far more cuts being made than were needed.

– There are and will be plenty of stories written about how this is now the time that the Lege will consider marijuana legalization or casino gambling, because those things generate revenue that could be used to help stave off the deficit. The bit about gambling has been trotted out reliably every cycle since at least 2003, and it has never been true, in large part because the people who oppose expanded gambling still oppose it in deficit situations, and they remain with sufficient power to block it. I expect the same to be true for pot – it will happen when and if there is sufficient political support for it, and the budget situation will not be a factor.

– Also, too, people like Greg Abbott and especially Dan Patrick don’t want new revenue sources. They are perfectly happy to cut things out of the budget. Deficit situations are great opportunities for them.

– We could avoid all this if there is a federal COVID relief package targeted at cities and states. That’s only going to have a chance of happening if Dems win the two Georgia Senate runoffs, and even then it may be dicey. But it is a thing that Abbott et al could advocate for if they chose.

– Oh, yeah, the Rainy Day Fund. We didn’t use it in 2011 because Rick Perry decided that the fund, which was explicitly set up for the purpose of blunting the effect of economic downturns – hence the actual name “Economic Stabilization Fund” – was actually for natural disasters instead. I feel pretty confident that Greg Abbott will declare that COVID is no reason to tap the fund, and in the absence of a legislative majority to dip into it, it ain’t happening. (It’s possible some small amount may be used, if budget writers feel sufficiently desperate, and the nihilist caucus can be tamed or bought off. Don’t bet on it, that’s my advice.)

We’ll know more in January. Hope for the best. The Chron has more.

There’s a raft of pro-pot bills that have been filed so far

Nov 14th, 2020
by Charles Kuffner.
4 comments

And one formidable obstacle to them all, in the form of Lt. Gov. Dan “One Million Dollars!” Patrick.

Texas lawmakers set a record with over 60 marijuana-related bills in 2019 — and this year, they’ve already introduced 11 measures that could potentially loosen the legal restrictions on the drug, with two months to go before legislative session begins in January.

“The shift in public opinion has led to lawmakers taking more action on this issue,” said Heather Fazio, the director of the advocacy group Texans for Responsible Marijuana Policy, pointing to 2019’s legalization of hemp products containing less than 0.3 percent THC. “What we’re seeing is this huge movement where lawmakers are responding to their constituents who no longer support the status quo.”

Still, Texas is among the states with the most restrictive marijuana laws in the nation. The state counted the most total arrests for marijuana possession in the country in 2018, according to a April ACLU report on racial disparity and drug possession, making up 44 percent of all drug-related arrests statewide.

And the Texas Highway Patrol made 250 arrests for small amounts of weed between July 2019 and the end of the year, after the state’s hemp law took effect.

At the top of advocates’ list is House Bill 447, filed by state Rep. Joseph Moody, a Democrat from El Paso. If passed, it could be the most far-reaching cannabis legalization bill to come out of the House so far, allowing Texans over 21 years old to consume, transport and grow marijuana with some limitations.

The bill also opens the door for marijuana businesses, offering guidelines on proper licensure and distribution of cannabis. A portion of tax revenue from sales would contribute to public school teachers’ salaries and retirement.

In 2019, Moody unsuccessfully tried to pass a decriminalization bill. It failed in the Senate, with Lt. Gov. Dan Patrick saying the measure would have been a step toward legalization, which he would not support.

Opponents have said any steps to lessen the legal penalties for possessing, using or distributing marijuana could lead to increased crime or push users into more dangerous and more addictive drugs.

But with a pandemic-induced budget slump to handle, Moody said lawmakers from both parties are beginning to look to the marijuana industry as a potential gold mine for sales tax revenue.

There’s a quote a little farther in the article from Sen.-elect Roland Gutierrez, who has filed a companion bill in the Senate, that touts the revenue that these bills could generate. I think that would be a great pitch in a campaign to get a statewide referendum passed, but that’s not an option in Texas. It’s also the case that people like Dan Patrick don’t care about the revenue potential, because they’re not interested in generating revenue. They don’t want to pay for things (well, most things), they want to cut them. Patrick opposes legalization of pot, and anything that looks like a step towards legalization of pot. I admire and support what Rep. Moody and Sen.-elect Gutierrez are doing, but those bills will never get past Dan Patrick.

There is, as noted, bipartisan support for easing up on marijuana. Even a wingnut like Rep. Steve Toth has a bill to make marijuana possession a Class C misdemeanor, which would greatly reduce punishment for it. Dan Patrick opposed a similar bill in 2019. If we want to make progress on this, the first step has to be to get rid of Dan Patrick. The Trib has more.

Metro moving forward with its construction plans

Nov 6th, 2020
by Charles Kuffner.
Comments are off for this post

As well they should.

Carrin Patman greeted the supporter by grabbing both of his hands in a packed downtown Houston event space above a bustling sports bar. The buffet laid out for Metro’s 2019 election night watch party was thoroughly picked through and waiters and waitresses were bringing out more.

“I don’t want to jinx it, but everything is looking great. It’s going to pass,” Patman, chairwoman of the Metropolitan Transit Authority board, told the man among a throng of celebrants clinking glasses and talking about the big win for buses and trains. As she let go, Patman said she was looking forward to starting the “real work” of building Houston’s future transit system.

A year later, Metro has to work its way through a pandemic that took away more than half its ridership and still is roiling its financial outlook before it can tackle more than a decade of rail, street and transit stop construction.

Nonetheless, transit officials are moving ahead with millions of dollars in engineering and design of new lines and services, confident they can plan now for major projects that riders eventually will demand.

“We don’t want to lose that time,” said Roberto Treviño, Metro’s executive vice president for planning, engineering and construction. “We don’t want to wait. Now is the time to plan.”

After months of discussion, contracts for design oversight and preparation of the lengthy federal environmental process for a major bus rapid transit line could be solicited by the end of the year, as Metro starts the work Patman predicted.

You can read the rest. Some projects have been de-prioritized for now, which is fine. The people voted for doing this work, and it would be a dereliction of duty to not do it. Unless you think we’re never going to get back to the level of activity and traffic we had before, there’s no reason to put this off. Keep moving forward.

The economic effect of losing college football this fall

Aug 19th, 2020
by Charles Kuffner.
2 comments

I have some sympathy, but I also have some skepticism.

Texas’ five major conference football teams – Baylor University, Texas Christian University, Texas A&M University, Texas Tech University and the University of Texas at Austin — are massive economic drivers for their cities of Waco, Fort Worth, College Station, Lubbock and Austin, respectively, generating a flood of seasonal business for hotels, restaurants and bars in a typical year.

Economists and city leaders said canceling football would be devastating to local businesses that rely on the huge influxes of cash from home games.

“Forgoing even a single game costs the economy millions,” said Ray Perryman, a Waco economist and CEO of The Perryman Group. “Dealing with the health crisis is essential and must be given paramount priority, but the economic costs of restricting or eliminating college sports are very high.”

[…]

Doug Berg, an economics professor at Sam Houston State University, said towns like Lubbock and College Station would feel the impact of lost game day revenue more than larger cities like Austin with its more diversified business base.

Still, UT-Austin reported in 2015 it had a local economic impact of more than $63 million per home game.

A bigger proportion of municipal budgets in smaller towns is derived from sales and hotel occupancy taxes – both of which typically experience significant hikes during football season. For college towns, “it’s like losing Christmas,” Berg said.

The toll of losing football is “larger than we care to fathom,” said Eddie McBride, president of the Lubbock Chamber of Commerce.

One typical home game at Texas Tech, with an average attendance of about 60,000 people, pours “millions of dollars” back into the city of Lubbock, McBride said.

“We do count a lot on football,” McBride said. “It isn’t just sold seats…it’s going to people’s houses and buying food and drinks from the local grocery store and the beer store, and then going to the bars and the restaurants to watch the game.”

As we now know, the Big 12 will be playing football this fall, though what the situation with fans in the stands will be remains unclear. That’s not great for the Lubbocks and Wacos, but it’s not the worst case scenario, either. I can believe that Game Day is an economic boon in these smaller cities, but I’m way too skeptical of this type of financial forecasting to take the gloom and doom too seriously. The pattern is always big statements up front about what will or may happen, then no followup after the event in question to say what did happen. I’ve just been conditioned by too many of these in the past to take them at face value.

I mean sure, there will be fewer people visiting Lubbock and Waco on these Saturdays, and that will undoubtedly mean fewer hotel rooms rented and less beer consumed. That adds up to something, whatever it may actually be. One might speculate that the savings from fewer people catching COVID-19 as a result of this lessened activity balances this out. Maybe Ray Perryman can work up a spreadsheet on that.

The cities still need COVID relief

Jul 22nd, 2020
by Charles Kuffner.
Comments are off for this post

Just a reminder, in case you’d forgotten.

Mayor Sylvester Turner

As Congress resumes work on a new coronavirus financial relief package, nearly 100 Texas mayors are pressing the state’s congressional delegation for more funding to address revenue losses incurred due to the economic downturn brought by COVID-19.

Texas received $11 billion in funds from the Coronavirus Aid, Relief and Economic Security Act, which were distributed among the state, counties and cities. Some Texas mayors said these have to be spent before the end of the year and for expenditures related to the pandemic response — and don’t address government entities’ losses in anticipated revenues related to decreased economic activity. Others said there’s been conflicting information about how the money can be spent.

Since March, the economic slowdown has directly hit cities’ revenues. According to the state comptroller, local sales tax allocations for cities in June dropped by 11.1% compared with the same month last year.

“The budget calamity looming over local governments is real and it requires extraordinary measures,” said a letter signed by 97 Texas mayors and directed to members of Congress. “We therefore fear that state and local revenue is going to take time to rebound. We also fear that if we do not stabilize our economy, we could see a drop in property tax revenue next year.”

In the letter, which included signatures of leaders from urban, suburban and rural areas, the mayors asked for “direct and flexible fiscal assistance to all cities.”

“What we’re asking [is] for direct assistance for state and local governments. Not for things like pension measures, none of that, but as a result of lost revenue as a result of coronavirus itself,” Houston Mayor Sylvester Turner said at a press conference Monday. “We are the infrastructure that supports the public and private sector, and at this point in time, we are needing direct assistance.”

We’ve known this for awhile, and the need is still there even if the city of Houston was able to kick the can down the road with this year’s budget and existing CARES funds. The simple fact is that cities – and counties, and the state, and to a lesser extend school districts – didn’t do anything to cause the problems they’re facing now. The analogy that some have made to a natural disaster is apt, and the effect will long outlive the original cause of the problem if it isn’t addressed. The US House passed a large bill a couple of months ago that would address these needs, but of course it has to get through the Senate, and you know what that means. If we had a functional state government, it would be advocating on behalf of the cities as well, because the loss of many thousands of municipal jobs will not do anything to help the state’s economic recovery. Our state leaders don’t see it that way, unfortunately, so the cities are on their own. It doesn’t have to be this way.

On a tangential note, the Slate podcast “What Next: TBD” did a segment on this very topic last Friday, and spoke to City Controller Chris Brown as part of their reporting. Check it out.

Metro’s long road

Jun 7th, 2020
by Charles Kuffner.
1 comment

It will be awhile before bus and rail ridership returns to pre-COVID levels.

Metro officials predict it will be months, and possibly years, before bus and rail service ridership return to pre-COVID-19 levels in Houston as economic uncertainty, a lack of firm dates for schools to reopen and commuters choosing to drive dents transit use.

“We have to understand some businesses are not going to reopen, period,” said Kurt Luhrsen, vice president of planning for Metropolitan Transit Authority.

Bus and rail use in the region, always dwarfed by automobile use, faces not only lost riders in fewer workers and students, but also questions circulating among some critics about whether it is safe to ride.

[…]

Transit officials eliminated fares in mid-March to reduce contact between bus operators and riders, a roughly $6 million monthly loss for the agency.

The biggest hit to Metro’s coffers, however, is a decline in the region’s sales tax revenues. Within Metro’s coverage area that includes most of Harris County along with Houston and 14 other cities, the transit agency is funded mostly from a 1 percent sales tax. Metro’s internal finance analysts expect revenues from the sales tax to drop by $102 million, about 13 percent of what the agency had budgeted for fiscal 2020, which ends Sept. 30.

“We are making some assumptions now,” Metro CEO Tom Lambert cautioned board members last week, noting sales tax revenues take two months to assess, meaning the latest figures are from March. “The reality is, we will probably get a couple months, and won’t know the impact until June.”

In the interim, the federal financial response will supplement Metro’s losses, and appear, based on estimates, to maintain the current budget. Metro’s share of Federal Transit Administration funds is $180 million, which officials said would cover all operations and fare revenue declines in the current budget.

The long-term outlook is less certain.

Since the close of the Houston Livestock Show and Rodeo and a stay-home order in Harris County began on March 11, transit use in the region has dropped to about 40 percent of normal. Even as state officials began reopening many Texas businesses in early May, bus and rail use has continued to remain half or less of typical work days.

“Downtown is still relatively empty compared to what we have all come to expect,” Luhrsen said, noting that surveys of central business district offices by the Houston Downtown Management District found only about 10 percent of workers have returned.

Exacerbating the return is Houston’s reliance on the oil and gas industry, which remains mired in a downturn that means fewer people reporting to offices.

That uncertainty and industry furloughs, combined with a tough spring for food service workers and no students reporting to campuses, are expected to result in steep losses for Metro’s local bus service, rail lines that service the University of Houston and Texas Southern University, as well as commuter bus routes that connect many suburban dwellers to downtown white-collar jobs.

Park and ride poses the most difficult ridership to predict, Luhrsen said. Local bus and rail service already have started to tick upward, forcing Metro to gradually increase some frequency on routes to maintain buses at half-capacity.

[…]

Metro board member Lex Frieden also encouraged transit staff to consider assuring residents about the safety of the system.

“Many people will stop to think, what are the odds of being exposed,” said Frieden, an expert in disability rights and access, who often works with individuals most at risk from the virus.

In areas hit hard by the COVID pandemic, notably New York City, some studies have shown public transit packed with riders helped spread the illness because others were inhaling air fouled with the virus.

According to transit and health officials, no positive COVID diagnosis in the Houston area has been traced to exposure on a bus or train or transit stop, though 25 Metro workers or contractors — 14 of whom had contact with public — have tested positive for the virus.

In Houston, trains and buses typically are far less full than a New York subway and transit use accounts for 3 percent of trips regionally. Fewer people means fewer chances for positive cases to spread.

Metro is following Centers for Disease Control guidelines to limit riders and bus drivers being within six feet and encouraging — but not requiring — riders to wear masks. Frieden said if contact tracing and other data become available, Metro should make it public.

I feel like riding the bus or train, with everyone wearing a mask and with a brisk hand-washing afterwards (which we always should have done but for the most part never thought about), is probably fine. I wouldn’t want to be on a ride longer than 30 minutes or so, but the fact that no COVID cases have been linked to transit in Houston is encouraging.

It will take awhile for ridership to bounce back, but once there is a vaccine and the economy has stabilized, it should begin to do so. Metro needs the economy to hum again more than anything else, as that affects its revenue as well as its ridership. In the long run they’ll be fine, but it will be bumpy in spots. At least there were federal dollars to help tide things over for the short term.

There won’t be furloughs after all

Jun 4th, 2020
by Charles Kuffner.
2 comments

A slightly confusing bit of good news.

Mayor Sylvester Turner

Houston will not need to furlough roughly 3,000 city employees nor cancel its police cadet classes in the upcoming budget year, Mayor Pro Tem Dave Martin announced during a city council budget committee meeting Tuesday.

Instead, the city will use federal coronavirus relief funds to help bridge its projected $169 million shortfall in the fiscal year that begins July 1.

“No employee in the (City of Houston) will be furloughed,” Martin said.

The administration has updated Mayor Sylvester Turner’s initial budget proposal, eliminating many of the most dire consequences attributed to the revenue gap. The revised budget plan eliminates furloughs and adds back five cadet classes for police, Martin said.

It also adds another fire department cadet class, giving that department four classes. The new proposal also adds $15 million back into the city’s rainy day fund as hurricane season gets underway; Turner’s original spending plan would have exhausted that fund entirely.

The changes comes as the city has weighed how it can spend $404 million in federal funds it received through the CARES Act, part of a stimulus package approved by Congress.

The administration plans to use roughly $19 million of those funds to cover expenses for redeploying city employees from their normal duties to address the coronavirus pandemic, freeing some budgetary space. It is not clear if the city plans to use additional federal funds to cover the remaining costs of the budget revisions.

See here, here, and here for some background. I’ve said all along that the city could avoid all of the issues for this year if it could use that federal money for previously budgeted items. Apparently, they have decided that they can, or at least that there’s enough of the money available to fill other needs to make the math work. I can’t tell from this story what may have changed to go from apocalyptic warnings about layoffs and furloughs to this – maybe the city got clarity from the feds, maybe they came to this conclusion on their own, maybe there was enough wiggle room to allow for budget items to get moved around, who knows? This is the outcome that should have been from the beginning. Remember, a large part of budgeting is determined by the calendar – if these federal dollars had been allocated earlier, there wouldn’t have been so many “previously budgeted items” to worry about. I’m a little worried that someone is going to come along and try to stop the city from doing this, maybe by lawsuit or some other decree, but until then, I’m glad they worked this out. There are plenty of things to worry about going forward, like sales tax revenues, but buying a year’s time before that reckoning allows for another CARES Act or other positive development to occur. Sometimes kicking the can down the road is all you need to do.

How low can sales tax collections go?

Jun 4th, 2020
by Charles Kuffner.
1 comment

If we’re lucky, no lower than this.

Texas collected about $2.6 billion in state sales tax revenue in May, leading to the steepest year-over-year decline in over a decade, Comptroller Glenn Hegar announced Monday.

The amount is 13.2% less than the roughly $3 billion the state collected in the same month last year.

A majority of the revenue collected last month was from purchases made in April and reflect the state’s first full-month look at how the novel coronavirus impacted businesses. That is when Texans lived under a statewide stay-at-home order and Gov. Greg Abbott, like leaders across the globe, ordered businesses across several sectors to close to combat the spread of the virus.

“Significant declines in sales tax receipts were evident in all major economic sectors, with the exception of telecommunications services,” Hegar said in a news release. “The steepest decline was in collections from oil and gas mining, as energy companies cut well drilling and completion spending following the crash in oil prices.”

[…]

Monday’s numbers are also reflective of the lag in data as revenues are collected and then reported by the state. Last month, for example, Hegar announced that the sales tax revenue collections for purchases in March dropped roughly 9% — which at the time was the steepest decline since January 2010.

Other major tax collections were also down in May, Hegar said Monday. Motor fuel taxes, for example, were down 30% from May 2019, marking the steepest drop since 1989. And the hotel occupancy tax was down 86% from May 2019, marking the steepest drop on record in data since 1982.

See here for the background. The presentation here is a little confusing, so let me clarify by quoting from the Chron:

Though the revenue totals are for May, they mostly represent transactions in April, when a statewide lockdown was in place to slow the spread of the virus. March sales were down 9.3 percent, state records show.

OK, so basically retail and other activity that leads to sales tax collection was down 13.4% in April after being down 9.3% in March. March was when the shutdowns began, though people had already slowed their activity before the official orders started happening later in the month. Pretty much all of April was in lockdown, while May is when things have begun to reopen. The hope would be that while May will be down compared to last year, it will be a lesser drop from 2019 than April and March were. That’s the hope, anyway. Maybe motor fuel taxes will inch up somewhat, but I wouldn’t hold my breath on hotel occupancy taxes. Check back in a month and we’ll see.

Here come the furloughs

May 13th, 2020
by Charles Kuffner.
8 comments

We said this was gonna be bad, right?

Mayor Sylvester Turner

Houston Mayor Sylvester Turner, facing an economy hammered by the coronavirus pandemic and collapsing oil prices, on Tuesday proposed to close an upcoming budget gap by furloughing about 3,000 municipal workers, deferring all police cadet classes and exhausting the city’s entire $20 million “rainy day” fund.

The proposals are in response to an estimated $169 million revenue shortfall for the fiscal year that begins July 1.

Emptying the rainy day fund “leaves the city in a precarious state for the upcoming hurricane season,” the mayor acknowledged in a message to city council members that accompanied his budget plan. The account holds money in reserve for emergency situations, such as cash flow shortages and major disasters.

The city had just recently replenished the fund after using all $20 million in the wake of Hurricane Harvey. It will not have that option if a storm hits Houston this year.

“The dollars from the economic stabilization fund are gone,” Turner said. “There is no rainy day fund.”

Under Turner’s plan, the city also would draw $83 million from its cash reserves to balance the budget.

The city’s tax- and fee-supported general fund, which covers most basic city operations, would spend $2.53 billion under Turner’s plan, a decrease of about 1 percent from the current budget. Despite the narrow spending cut, the city would be left with a general fund balance that dips below the amount required by city ordinance.

[…]

The proposed spending plan, which is subject to approval by city council, only says that the city would furlough “thousands of municipal employees.” At a news conference Tuesday, Turner said the number would be around 3,000 of the city’s nearly 21,000 employees. The workers would forego 10 days of pay, saving the city roughly $7 million.

Turner did not specify which departments would be required to send workers home without pay, though he said the city would not place anyone on furlough from the police, fire and solid waste management departments.

The city will not implement any cuts until the new fiscal year begins July 1, Turner said.

See here and here for some background. The story mentions the $404 million Houston received in the first cornavirus stimulus package, which it can’t spend on previously budgeted expenses. Maybe the city will be allowed some leeway in that, and maybe the next relief package, which in its current form includes money for cities and states, will arrive in a timely fashion. Mayor Turner says he’d reinstate the police cadet class and un-furlough the other employees as his first priorities if the funding becomes available. In the meantime, this is our reality. All we can do is hang on and hope for the best.

Down go the sales tax receipts

May 2nd, 2020
by Charles Kuffner.
Comments are off for this post

It’s bad. Expected, but bad.

Texas collected $2.58 billion in state sales tax revenue in April — a roughly 9% drop from what the state collected the same month last year, Comptroller Glenn Hegar announced Friday. That drop, from $2.8 to $2.58 billion, marked the steepest decline since January 2010, Hegar said.

April’s revenue, which the state collected from purchases made in March, is among the first official glimpses at the dramatic blows state and local budgets will take from widespread social distancing measures first taken last month to stop the spread of the new coronavirus. And Hegar warned that the state’s largest single source of funding will continue to “show steeper declines” in the coming months compared with a year ago as the economy continues what will likely be a slow crawl out of a weekslong virtual shutdown due to the pandemic.

“The steepest declines in tax remittances were from businesses most quickly and dramatically affected by social distancing,” Hegar said in a statement. “However, those losses were, to a degree, offset by increases from big-box retailers, grocery stores and online vendors. Remittances from oil and gas-related sectors also fell significantly as oil and gas exploration and production companies slashed capital spending in response to the crash in oil price.”

Hegar’s been sounding the alarm for awhile, it was just a matter of what the exact number was. If we’re lucky, April will be no worse. Whether things get better in May and beyond, which is the intent of the reopening scheme, won’t be known for a couple of months. How the population as a whole acts, and whether or not the virus comes roaring back, will be the keys to that.

Metro will get some stimulus money

Apr 8th, 2020
by Charles Kuffner.
Comments are off for this post

Good.

Transit agencies in southeastern Texas are set to receive more than $300 million to stem revenue losses linked to COVID-19, federal officials announced Thursday, most of it coming to Houston.

As part of the first round of Congress-approved stimulus funding, $25 billion will go to transit agencies nationwide, doled out by the Federal Transit Administration. The money “will ensure our nation’s public transportation systems can continue to provide services to the millions of Americans who depend on them,” U.S. Transportation Secretary Elaine L. Chao said in a release.

Money will be distributed by urban areas, with most of Houston’s $258.6 million going to the Metropolitan Transit Authority, which has seen ridership to drop to less than half its normal workday use. Bus and rail ridership Wednesday was 129,000, a 55 percent decline from the same day last year, Metro spokesman Jerome Gray said.

[…]

Fewer riders means less money coming in from fares, but that pales in comparison to the expected drop in sales tax collections Metro relies on for most of its funding. With various businesses closed and most of the Houston area hunkered down, collections from Metro’s 1 percent sales tax are expected to nosedive.

We’ve talked about the effect of the sales tax revenue decline before. This should help a bit, and there may be more coming. Having a fully functional transit system for when everyone gets to go back to work is going to be a big deal, so this is very encouraging.

Cities and counties are going to need their own bailout

Apr 2nd, 2020
by Charles Kuffner.
6 comments

This story is about the rough financial future that the city of Houston faces as we go through the coronavirus shutdown, but it’s not just Houston that is in this position.

Mayor Sylvester Turner

As Mayor Sylvester Turner’s administration continues efforts to slow the spread of COVID-19 in Houston, another dire challenge looms for City Hall: its budget.

The economic downturn caused by the pandemic and plummeting oil prices has thrown an already cash-strapped spending plan into more arduous territory, raising the specter of the first furloughs or layoffs of city employees since 2011.

Controller Chris Brown, who recently finished a recession stress test for the city’s coffers, has said he thinks the situation is likely to rival the recession that began in 2008, approaching the test’s worst-case scenario: a budget deficit in excess of $300 million.

He told council members Tuesday they should begin dusting off the recession playbook.

“Unfortunately, they had to do some furloughs and cut some expenses and things like that, because you can’t control the revenue right now,” said Brown, the city’s independently-elected financial watchdog. “These are tough decisions that are going to have to be made, I think.”

Turner said budgeting is always difficult under a revenue cap, but the city in the past has forged its way through challenging deficits and will do so again.

The mayor would not say whether he thinks layoffs will be necessary, but he sees other actions that can help cut the deficit. Turner plans to use some of the city’s current fund balance, which is projected between $187 and $203 million. The rainy day fund, he pointed out, will also have $15 million when it comes time to adopt the budget.

Some job vacancies have already gone unfilled, he said.

“We always assume there is going to be a budget shortfall with the revenue cap,” Turner said, referring to Houston’s voter-imposed ceiling on increased property tax revenue. “There’s always some elephant in the room. The elephant here now is the coronavirus and the impact on your sales taxes.”

The city’s two largest streams of money are property and sales taxes. All eyes are on the latter, which are expected to take an unprecedented hit as most businesses have been ordered to close and the region’s residents have been told to stay home in a bid to slow the virus’ spread.

It’s not just sales tax revenue, which will hammer the state budget as well. No one’s flying into or out of the airports, no one is staying in hotels or renting cars or booking conventions. All of those things affect the enterprise fund, which is a part of the city’s budget that is largely not subject to the revenue cap. And as noted, it’s not just Houston. Every city, in Texas and elsewhere, will be facing this. Part of the solution here, very simply, needs to be a federal relief package for local and state governments, all of which would otherwise have to lay people off and drastically cut back on services, all of which would just further exacerbate the recessionary effects we are now feeling. Just as we expect business activity to more or less return to normal once everyone can leave their homes again, we should expect local tax revenues to more or less return to normal. All of that assumes that the business are still there to return to, which is why we needed the first stimulus bill, to prevent them all from suffocating in the meantime. We all want to return to normal, but we have to do everything we can to preserve what was normal until we can get back to it. That’s what the federal government can do, and what it needs to do.

But we should also recognize that forcing cities and counties and states to observe “balanced budget” requirements at a time like this is not only ridiculous, it’s self-mutilating. Mandating an artificial deadline for when one number must be shown to equal or exceed another is beyond stupid and pointless, and that’s even more so if we not-unreasonably assume that the feds will eventually come in with a check to make up for the sales taxes that did not happen. The single best thing Greg Abbott could do with his emergency powers once we’re at or near a point where we can begin to think about easing up on the stay-at-home rules is to declare that all “balanced budget” requirements are suspended for the next two budget cycles, along with the revenue cap that was passed in the last Lege. That won’t be carte blanche for cities and counties to start spending like crazy – they’ll still have to get their budgets to “balance” later on – it will just be a recognition that this was something entirely beyond their control, and they deserve a chance to recover from it. It won’t happen, of course – I’m sure Greg Abbott and the entire army of financial ghouls he has behind him are salivating at the prospect of forcing their local nemeses to slash their budgets – but it should. I will never stop beating this drum.

Coronavirus and the state budget

Mar 27th, 2020
by Charles Kuffner.
2 comments

Ain’t gonna be great. How bad, we don’t yet know.

Comptroller Glenn Hegar briefed Texas House members on the state’s economy and budget Sunday night, saying that while it was too soon for specific forecasts, both are expected to take potentially massive hits in the wake of the new coronavirus pandemic, according to multiple people who were on the conference call.

The members-only call, led by House Speaker Dennis Bonnen, R-Angleton, was one of state lawmakers’ first glimpses of the impact the virus is expected to have on multiple industries, state finances and Texas’ largely oil-fed savings account, known as the Economic Stabilization Fund or the rainy day fund.

Hegar, who referred to the state of the economy as “the current recession,” according to multiple people on the roughly hourlong call, predicted both the general revenue for the state budget and the savings account balance will be drastically lower — possibly by billions of dollars — when he makes a revised fiscal forecast. He said that update could happen in July.

Later Sunday, the comptroller’s office said that unless the Legislature spent money out of the savings account before July, the balance for the fund would be revised down, but not by more than $1 billion.

In October 2019, Hegar estimated that the state budget would have a nearly $3 billion balance for the fiscal 2020-21 biennium. The balance of the Economic Stabilization Fund, Hegar announced at the time, would be around $9.3 billion by the end of the 2021 fiscal year in August of that year.

[…]

Abbott, for his part, noted last week that he and the Legislature can tap into the state’s disaster relief fund immediately to help respond to the virus. He also said that the Economic Stabilization Fund could be used “at the appropriate time,” which he said would happen when state leaders “know the full extent of the challenge we’re dealing with.”

Before the stabilization fund could be used, Abbott would need to summon state lawmakers back to Austin for a special session before the Legislature reconvenes in January 2021. When asked at a town hall about the possibility for calling such a session, Abbott said “every option remains on the table,” while noting that there would not be any need for such an action if every Texan followed guidance to help curb the virus.

Obviously, the crash in oil prices doesn’t help the state’s financial picture, either. It’s sales tax collection that will really suffer, and that pain will be spread to the cities and counties as well. As always, the big picture here is “how long will this take” and “how many businesses and jobs will be lost in the interim”, and right now we don’t know.

I will say, situations like this are among the reasons why balanced budget requirements are such a bad idea. Let the state – and the cities – run a deficit for a year or two, rather than cut a bunch of programs and lay off a bunch of employees, both of which will exacerbate the effect of the overall downturn. I assure you, society will not crumble around us if we do that. We will see plenty of shenanigans pulled by legislators to worm their way around the balanced budget requirement, as we have always done. So why not be honest about it and just admit that the whole thing is a sham and we should just not worry about it, at least for this cycle? We can always get back to it next time. Much easier said than done of course – constitutions and charters can’t be so easily cast aside, which again goes to my point about why these things are stupid – but in a world where everything has been thrown into chaos, this just makes sense. Same for revenue caps as well – if the revenue for the state, or the city of Houston, falls ten percent this year, it will take three years under the existing 3.5% revenue cap just to get revenue back to existing levels, while forcing needless cuts in the meantime. It’s all a sham, we should seize the moment to recognize it for the sham that it is, and free ourselves once and for all from its ridiculous shackles. Won’t happen happen, but I’ll never stop pointing it out.

Worrying about the restaurants

Mar 23rd, 2020
by Charles Kuffner.
1 comment

Alison Cook laments the potential fate for her favorite part of Houston.

Depending on local or state strictures, to help stem the spread of Covid-19 restaurants in most major markets would be able to provide takeout, drive-thru or delivery rations only. Dine-in was done, for the present and — according to some epidemiologists and public health experts — very possibly in rolling closures for the next 18 months. That’s the time it will take for a vaccine to be tested, manufactured and made available.

If we’re lucky.

Even though I’ve suspected this was coming since the calamitous February business drop experienced by restaurants in Bellaire Boulevard’s Asiatown — a preview of what lay ahead for the whole market as Covid-19 spread, I feared — the reality of the closures has hit me hard.

I gasped when I saw an Open Table graph that showed restaurant bookings, already down 45 to 65% last week, plunging off the cliff to zero on Tuesday in Boston, L.A., New York, San Francisco, Seattle, Toronto and Washington, D.C. It looked like the highway to hell.

I’m in mourning daily as I read the anguished tweets from Houston chefs and restaurant owners I admire. I’m sick with worry for the servers and bartenders and bussers and line cooks whose livelihoods are in peril.

[…]

My greatest sorrow is that I see a great winnowing ahead. On the other side of this public health crisis, it seems likely that Houston’s dining landscape will be substantially altered. Restaurant profit margins are slim in the best of times, and without serious public investment at the state or federal level, we are likely to see many bankruptcies.

It’s not the big chain restaurants I’m worried about — it’s the mom-and-pops and the small independent operators who help to define the city. Those are a cultural legacy well worth saving.

Ian Froeb, the restaurant critic at the St. Louis Post-Dispatch, told a radio interviewer the following: “I have a top 100 restaurant list and somebody that’s in the industry said, ‘You could be looking at 80 of the 100 might not come back.’ I didn’t push back. That seems like a real possibility.”

I’m not quite that pessimistic, yet, but the fallout is going to be bad.

Obviously, we can all do more ordering takeout in the interim, in the hope that these places we love can weather the storm, which we also hope will be measured in weeks and not months. But let’s be clear, the state of Texas could also help.

Up against a Friday deadline, the broad base of workers in the Texas restaurant industry have asked Gov. Greg Abbott and other officials to waive monthly sales taxes due by the end of the day.

Bobby Heugel, owner of several popular bars and restaurants in Houston, said many businesses could ride out the new coronavirus’ social slowdown for months if the state waived, delayed or deferred the monthly taxes.

“We have been crushing the governor’s office for requests of deferrals,” Heugel said Thursday. “Their voicemail actually stopped working late last night.”

Comptroller Glenn Hegar said the state won’t push back Friday’s deadline, though it has done so after hurricanes and other disasters. Hegar and aides cited a couple of reasons: Hurricanes and similar disasters, unlike pandemics, can knock out the infrastructure used to calculate and pay taxes. More importantly, the state and local governments that depend on those taxes to keep hospitals and emergency services going need the money as they prepare for the number of Texans testing positive for the new coronavirus to skyrocket within weeks.

“It would be irresponsible, but more popular, to delay collections,” said Karey Barton, associate deputy comptroller for tax. “The people who paid those taxes need that money to be available to keep operating hospitals and other services.”

I understand the concern, but the state has a rainy day fund it can tap into to bridge the gap in the interim. Maybe Greg Abbott needs to use his emergency powers to make that happen, maybe he needs to call a special session to enable it, or maybe he just needs to order it and let someone file a lawsuit to stop him, I don’t know. But the effect of losing a significant portion of the hospitality industry will last a lot longer than this crisis. We need to think outside the box here, and take action as needed before it’s too late.

Back to the no-fares question

Jan 16th, 2020
by Charles Kuffner.
1 comment

I remain skeptical, but we’ll see.

As it stands right now, most of METRO’s operating funds don’t come from the fares. The transit agency gets most of its money from a one-cent sales tax, which caught the attention of Harris County Precinct 3 Commissioner Steve Radack.

Radack recently spoke before the METRO board on why the agency should consider free or reduced fares. He said that people are already paying for the transit service through the sales tax and a financial incentive for riding could get more people on board.

“And so if we just keep going the way we’re going, we’re going to build more freeways, we’re going to continue to do other forms of transportation, but at the end, it makes no sense to have buses only partially full running around,” said Radack.

[…]

METRO Chairman Carrin Patman said while fares aren’t a huge part of their budget, they’d have to figure out a way to make up that money if they stopped charging riders.

“I think what people don’t realize is there are unanticipated consequences of a free fare policy that we just need to fully consider before we went to it,” Patman told News 88.7.

And those consequences are what concern Oni Blair. She heads the transportation advocacy group LINK Houston. Blair said to get more riders, METRO needs to put its focus on other issues.

“It’s the little things we take for granted,” said Blair. “Does the bus come on time? Because if I’m trying to schedule my day I need to get there on time and know what to predict. Does the bus come frequently, so people don’t have to wait half an hour to an hour for the bus to come? Can I wait in dignity at a shelter that is accessible and safe for me?”

And Blair said that all those things cost money.

“The loss of revenue from the fares METRO currently has would undermine their other access to improving operations, improving customer service, improving all of those things,” said Blair. “If they don’t have that revenue they can’t address the things that people want.”

See here for my previously-stated concerns. Metro may not get much money from fares, but it does get some money from them, and that would have to be made up elsewhere, which is where I fear that political pressure, or interference from the state, could undermine this whole rationale. I’m of a similar mind as Oni Blair – the top priority needs to be making transit more accessible to more people. We also need to recognize that there’s a limit to how much we can grow transit ridership in this region as long as driving cars is the vastly-catered-to default. That’s a much bigger question, one that will take more than Metro to work out. For now, let’s try to make Metro the best it can be. Maybe that involves reducing or eliminating fares, but I think there are other options to work on first.

Bus service in new places

Dec 27th, 2019
by Charles Kuffner.
9 comments

This is a good first step, which I hope begets a second step.

Harris County has extended bus service to Channelview, Cloverleaf and Sheldon, using $3.8 million in Hurricane Harvey disaster recovery money to jump-start the new routes.

Service started Dec. 2, quickly getting about 500 riders in the second week along roughly 65 miles of new service.

“When you have that freedom to ride a bus, that opens up so many more services to you,” said Daphne Lamelle, executive director of the Harris County Community Services Department.

The need is especially pronounced in eastern Harris County after Harvey led to the loss of thousands of cars and trucks, Precinct 2 Commissioner Adrian Garcia said Wednesday as he and other county officials dedicated the five new routes.

“We don’t think about these things until we need them,” Garcia said, lamenting the need for cars in rangy parts of the county.

[…]

Future money to operate the service will come from federal sources, doled out locally by the Houston Galveston Area Council, said Ken Fickes, transit services director for Harris County.

The new county service operates every 30, 60 or 90 minutes, depending on the route, and many connect to Metro at the Mesa Transit Center along Tidwell and along Uvalde at Woodforest Boulevard.

Transfers to Metro, at least for the foreseeable future, will be free, said Metro Vice-chairman Jim Robinson, who represents Harris County on the transit agency board.

“We have pulled out all the stops to make this a going thing,” Robinson said of the desire to extend transit to more places.

You can view the routes for existing and new bus services here. I’ll be honest, I hadn’t realized any of this existed. I knew that Metro’s service area did not include some number of non-Houston cities within Harris County, and many of those cities are in the eastern part of the county, I just either didn’t know or had forgotten that the county provided some limited transit service for them. I guess I have mostly thought of this in terms of transit-less Pasadena, which remains a stubborn island of car-only transportation.

Commissioner Garcia and Metro are both interested in extending Metro’s services out to these cities – I touched on this in my recent interview with Metro Chair Carrin Patman, though again I was more Pasadena-focused than I might have been – which is a great idea and something that will require both legislative action and local voter approval, to add a penny to their sales tax rate. That means that even in a best-case scenario, we’re talking at least two years for such a thing to happen. The main thing to do to facilitate that in the meantime is get as many people as possible using the service, and making the case to everyone else in those cities that it benefits them as well even if they’re not riding those buses. And please, do bring Pasadena into this – there’s really no reason why Metro’s service doesn’t include all of Harris County. Houston Public Media has more.

Metro moves towards cashless fares (maybe)

Nov 23rd, 2019
by Charles Kuffner.
1 comment

We started with this.

The Metropolitan Transit Authority on Thursday will consider the first in a series of agreements to revamp its fare payment system that eventually could offer riders the option of using smartphones, credit cards and electronic wallets to hop aboard its buses and trains.

In a nod to the changing ways consumers use to pay for services, the transit agency is expected to spend nearly $100 million to remake its collection of bus and train fares for the next 15 years. That future could lead to cash being kicked off the bus as transit officials weigh whether to replace aging fareboxes.

Metro is among a handful of large American transit agencies giving some thought to how to reduce the number of riders tossing coins and convert them to tapping a card, which could help speed up bus trips.

“Metro would be in the first wave of agencies making this transition but won’t be doing it alone,” said Ben Fried, communications director for TransitCenter, a New York-based advocacy group.

The first step for Metro is a seven-year $37 million contract with INIT, Innovations in Transportation Inc., for new software and management of its fare collection system, including new validators — the cinder block-sized devices people tap with their Q cards.

Two-thirds of the initial cost, more than $24 million, would go toward equipping buses and installing computer systems in Metro offices to handle fares.

With the new gear will come new options for riders. Currently, riders can use Q cards, cash or Metro’s smartphone app to hop aboard.

The new machines will accept the current Q cards, along with such options as contactless credit cards that allow customers to pay by tapping a card reader and Apple Pay and Google Pay that store credit card info on mobile phones.

“The system will let us use mobile wallets,” said Denise Wendler, chief information officer for Metro. “It transitions very nicely with our old system and new opportunities.”

[…]

Many transit agencies are looking to reduce or avoid cash payments altogether for a variety of reasons, including speeding up transit and eliminating the cost of handling money.

“Boston has made cashless bus fare collection an explicit goal, and the (Metropolitan Transit Authority) in New York has eliminated cash payment on express buses, intimating that regular buses could go cashless in the next few years (the earliest would be 2023),” Fried said.

Paying cash typically takes a few seconds longer than tapping a Q card, with those seconds adding up along a route. The faster people can board, the faster the bus can get moving again — improving the efficiency of trips and getting people to their destinations faster.

Eliminating cash fares also could give transit agencies better use of bus space by allowing passengers to board at the front and rear doors. In Houston, Metro riders can only exit from the back door, but must enter in the front to tap their cards or pay cash.

San Francisco opened its buses and trains to all-door boarding in 2012, and checks fares now with fare inspectors, similar to Metro’s enforcement of light rail payments in Houston. A 2017 study showed San Francisco’s bus speeds increased 2 percent and ridership on buses increased 2 percent.

As the story notes, it would probably not be till 2022 when we see something like this happen. About twenty percent of Metro fares are paid in cash, so ensuring that those riders would not be left behind is a priority. The benefit for Metro is clear – better and more efficient boarding, which means buses can run on a more dependable schedule, which boosts service and ridership overall.

The story then got this reaction from Tory Gattis:


On the surface, this makes a lot of sense. Fare collection revenue is a very small part of Metro’s budget. Free fares would make boarding even more efficient, would certainly ensure that cash-paying riders are taken care of, would increase ridership further, and would free up capital for buying more buses. Seems like a win all around, right?

It appears that argument had an effect.

Metro on Thursday delayed consideration of a $37 million contract for a new fare system so transit officials can ponder how it would affect efforts to eliminate fares altogether for some riders.

The Metropolitan Transit Authority board of directors was scheduled to approve the seven-year agreement, but the item was pulled from the agenda in the morning, Chairwoman Carrin Patman said, “in light of the fact we are also doing a free fare study.”

The transit agency is researching options for eliminating fares, or eliminating them for certain groups of riders, such as schoolchildren and college students.

[…]

Though fares make up a small percentage of Metro’s budget — $67.6 million, or 11.1 percent, of its 2017 operating revenues, according to federal data — eliminating them entirely can be tricky. Transit agencies must follow federal laws, which require fares to be fair and equitable for all users, based on the type of service offered. Removing fees for bus or rail use likely would mean Metro also would have to remove fares on paratransit for disabled and elderly passengers, an increasingly costly part of the agency’s budget.

Eliminating fares also could complicate federal funding for major agency projects if officials in Washington worry that Houston is not bringing in enough money to share the costs of projects.

[…]

Though some transit agencies offer free rides in partnerships with schools or within certain fare-free zones to encourage bus use in urban areas, Chapel Hill, N.C., is the only large transit agency to entirely remove fares in the U.S. That transit system is heavily subsidized by the University of North Carolina, the main campus of which is in Chapel Hill. Several small systems in college towns offer free transit.

Free ride programs have faced ups and downs in other cities, with transit systems similar in size to Houston. Portland, Ore., offered free trips within a special zone for nearly 40 years and saw huge gains in transit ridership as a result. The free zone, however, also led to complaints of increased crime and vagrancy, and it made enforcing fares difficult in a larger region around the zone. Tri-Met, Portland’s transit agency, abolished the fare-free zone in 2012.

Metro Chair Patman said in this story that she had spoken to Gattis, and that the fare box contract would be taken up in December, after a free fare study had been conducted. I think Tory’s argument has merit, but I worry about the politics of it. If public transportation were completely fare-free, a significant portion of the population will come to see it as an entitlement, something that “poor people” get that “the rest of us” pay for with our taxes. Once that happens, there will be political pressure to cut funding for transit, since after all it only “benefits” a small number of people. Republican legislators in Texas are already scheming to siphon off city sales tax revenues. Don’t think for a minute that making Metro rides free wouldn’t increase their incentive to do that. And yes, I am fully aware that this is a factually inaccurate and morally bankrupt way of thinking about transit. But it’s there, and it will be even more there if we eliminate fares. Which is a shame, but this is the world we live in. We’ll see what the result of Metro’s study is.

Someone is opposing the Metro referendum

Sep 27th, 2019
by Charles Kuffner.
7 comments

I suppose it was too optimistic to hope that the Metro referendum would not get any organized opposition.

Opponents of Metro’s $3.5 billion bond referendum have formed a political action committee to lead a grass-roots campaign to curtail what they say is wasteful spending by the regional transit agency.

“To ask for $3.5 billion is irresponsible,” said Bill Frazer, one of the organizers of the Responsible Houston PAC and a former Houston city controller candidate.

[…]

Opponents used the Post Oak project as the backdrop for their announcement Tuesday, noting that Metro is asking for money to build 75 miles of bus rapid transit in the region despite having nothing to show Houstonians are eager to hop aboard. Critics also noted Metro’s newest light rail lines have never delivered the ridership officials promised when they started construction and failed to build many of the things promised voters in 2003 — as they used the $640 million voters approved to build three rail lines and did not add the park and ride locations and increased bus service promised by the ballot item.

“Before we do another blank check, someone needs to hold someone accountable for the past,” said Wayne Dolcefino, a media consultant that helped organize Tuesday’s announcement.

With so many areas in need of improved street drainage, Frazer said transit officials should invest their money there — something he said is possible because Metro’s agreement with cities promises 25 percent of the transit sales tax for street and drainage projects. Nothing, Frazer said, prohibits Metro from spending more than a quarter of the money for streets.

Note that “organized” does not mean “coherent”, or “logical”, or “sensible”. Last I checked, Houston already had a funding system in place for street and drainage improvement, which as I recall from his campaigns for Controller Bill Frazer opposed. Drainage is certainly a vital thing, but it doesn’t improve mobility. I’m also old enough to remember the 2012 election, in which there was a referendum that not only reaffirmed Metro’s one quarter share of the transit sales tax, it granted Metro a full share of the revenue growth on top of what was then being collected. The rest of this is largely unsupported claptrap, which will appeal to the kind of person who thinks any of this makes sense, and nobody else. I’ll be sure to look for their 30-day and 8-day finance reports.

The tax swap is dead

May 8th, 2019
by Charles Kuffner.
1 comment

For this session, at least. Most likely, barring anything strange.

State Rep. Dan Huberty, the top public education leader in the Texas House, postponed two items of legislation Tuesday that would pay for long-term, ongoing school district tax cuts by raising sales taxes — effectively killing any chance of passing the legislation this year.

Huberty tabled until 2021 — the next legislative session — House Joint Resolution 3 and the accompanying House Bill 4621, which would ask voters to increase the state sales tax by one penny to buy down school district property taxes. The Houston Republican’s move came the day after the Senate, headed by a lieutenant governor who had endorsed the proposal, stripped such a provision from its version of the school finance bill in what was perhaps a signal that the measure would be dead in the upper chamber anyway.

Despite Tuesday’s postponement, the idea could still be revived this session; lawmakers could use a different bill as a vehicle to fund school district tax cuts.

Huberty criticized members of the Senate on Tuesday who “have spent their whole careers calling for property tax relief” but did not vote for the school finance measure the day before. And he repeatedly affirmed questions by House colleagues that suggested state Sen. Paul Bettencourt, the Houston Republican who leads the upper chamber’s property tax committee, had failed to take responsibility for coming up with a viable mechanism for property tax cuts when he was part of a school finance commission last year and during the current legislative session.

Bettencourt has arguably been the most vocal GOP senator opposed to the tax swap proposal, a position that has caught some by surprise since he’s closely aligned — both personally and professionally — with Republican Lt. Gov. Dan Patrick, who has made clear he supports the measure. Bettencourt marked himself “present, not voting” on the school finance bill Monday, while the majority of the upper chamber approved the legislation. And on Tuesday morning, ahead of business in both chambers, Bettencourt took to Facebook to once again reiterate his opposition to the tax swap, saying there is “simply no need to raise taxes even higher.”

In response to House members’ criticisms, Bettencourt said he’s long been clear about his concern that the tax swap proposal could amount to a tax increase. When Huberty proposed that the tax swap devote 80% of the new sales tax revenue to property tax cuts and the remainder to public school funding, for example, “I immediately red-flagged that,” Bettencourt said.

“Emotions run high when bills fail,” Bettencourt said. “If you have the votes, pass your bill — don’t blame somebody in the other chamber. That’s just kind of a rule that I’ve learned.”

[…]

On Tuesday morning, before the House gaveled in for the day, Bonnen told House Republicans during a caucus meeting that there would be no point in bringing up the proposal for a vote in the lower chamber if it was considered dead in the Senate, according to multiple people who were at the gathering. Caucus members at the meeting, according to those sources, largely agreed with Bonnen, who said the Senate stripping such a provision from its version of the school finance bill Monday suggested the upper chamber couldn’t muster enough support to approve a tax swap proposal.

After Huberty postponed the tax swap legislation, a Bonnen spokesperson said in a statement that the proposal had been “an opportunity for lawmakers to further reduce property taxes” and sustain tax relief found in the lower chamber’s school finance bill.

“Speaker Bonnen believes it is in the House’s best interest to devote the limited time left in session to our Day One priorities — passing legislation to provide meaningful school finance and property tax reform for all Texans,” the statement read.

See here for some background. To an extent, I agree with Bettencourt, in that a sales tax increase is a terrible idea. Of course, Bettencourt sees no need to pay for tax cuts. He just wants to cut them, and nothing else really matters as far as he’s concerned. The tax swap is a terrible idea that deserved to die, but at least Huberty was trying to pay for what he wanted to do. What happens next, with school finance and everything else, we’ll see.

Where goes the tax swap plan from here?

May 7th, 2019
by Charles Kuffner.
2 comments

We start with the double down.

Showing their usual united front, the state’s “Big Three” political leaders on Friday tried to remake their case for why the Texas Legislature should deliver on long-term, ongoing property tax relief before the session wraps up this month.

They also expressed confidence that they would get the work done — even as House Democrats said they appeared to have the votes to block the lower chamber’s current main vehicle to provide the biggest property tax cut.

“Our goal is really simple: We’re going beyond the point of hoping to reform property taxes to the point where we’re hoping to to deliver true property tax relief through property tax reductions,” Gov. Greg Abbott said at a Capitol press conference Friday afternoon, flanked by Lt. Gov. Dan Patrick and House Speaker Dennis Bonnen, the Republican leaders of the Senate and House, respectively.

The three reaffirmed their commitment to a proposal that would increase the state sales tax one percentage point, raising about $5 billion per year to lower school district tax rates — which many have seen as a long shot from the start, with lawmakers from both parties skeptical about a sales tax hike.

The proposal has been moving through the Capitol so far in the form of a joint resolution, which needs two-thirds of each chamber to pass — at least 100 votes to pass the House and 21 votes to pass the Senate. If it passed both chambers, the proposal would then land on the November ballot for voters to decide, which leaders in support of the resolution have framed as a more democratic process.

House Joint Resolution 3 — which would ask voters to approve the sales tax swap for property tax relief — and its enabling legislation, House Bill 4621, passed out of the House Ways and Means Committee on Wednesday. The tax swap is expected to head to the lower chamber for a debate Tuesday.

The original version of the bill would have used 20% of the increased sales tax revenue to fund schools and 80% for property tax relief. That changed earlier this week, when state Rep. Dan Huberty, a Houston Republican who authored the legislation, tweaked the proposal to instead funnel all new sales tax dollars into property tax relief.

The move seemed to be an effort to bring on some of the Legislature’s more conservative members who had signaled they could be on board with a proposal if the new revenue was entirely dedicated to property tax relief. But it also seemed to solidify Democrats’ opposition to it, especially since the sales tax is regressive, meaning it takes a higher percentage of income from poorer people than richer people. A sales tax swap would raise taxes overall for Texas households earning less than $100,000 and would bring tax relief for households above $100,000.

State Rep. Chris Turner, who chairs his House Democratic Caucus, told The Texas Tribune that there are more than 60 “hard no” votes from Democrats against the proposal. If that opposition sticks for Tuesday’s expected vote on House Joint Resolution 3, its chances of passing the lower chamber would seem unlikely.

Patrick said he hoped both chambers would be able to get the needed two-thirds approval for the joint resolution from each chamber, but indicated he was open to getting it passed in different ways, exclaiming, “If it doesn’t, we’ll make it happen anyway!”

Sure, Dan. If you want to know why some of us are so skeptical of this, while plutocrats like Dan Patrick love it, consider this.

The state-run Legislative Budget Board estimated that the top 40% of wealthiest Texas households would see enough property tax savings to offset their increased sales tax payments in fiscal 2021. The bottom 60% of Texas households would pay more in taxes overall.

Households that make less than $99,619 would pay a total of $171 million more in taxes under the tax swap. Households that make more than that would pay a total of $424 million less in taxes, according to the analysis.

The disparity is because poor Texans tend to spend a greater portion of their money on taxable items.

The bottom fifth of Texas household incomes — those with incomes less than $37,630 — spend about 7.3% of their income on state sales tax while households in the top fifth of incomes — those with incomes of $149,453 and more — spend 1.6% of their income on state sales tax, according to the Texas Comptroller of Public Accounts.

Of course, we’ve known this forever, but the same bad idea crops up every few years and gets beaten down by the club of the same evidence. So we go through the motions. You can catch up on reading about this at various locations – the DMN, the Chron, Better Texas Blog with a handy chart – but be sure to read the analyses of the politics of this by Ross Ramsey and Scott Braddock. The reason the Big Three are putting on such a show of bravado is because they’re holding an eight-high hand in a game of five card stud, and they know it. And as Braddock notes on Twitter, so do members of the Lege.

Which may be why in the end, we got this.

The Texas Senate on Monday approved a bill to massively overhaul public school finance, but did so while backing away from a proposal to use an increased sales tax to lower school district property taxes.

After an hours-long debate on dozens of proposed changes, the Senate voted 26-2 on House Bill 3, which under the version passed by the upper chamber would increase student funding, give teachers and librarians a $5,000 pay raise, fund full-day pre-K for low-income students, and lower tax bills.

The House and Senate will have to negotiate their significant differences over the bill — including how to offer teacher pay raises and property tax relief — in a conference committee before it can be signed into law.

“When you’re doing something as complex as this, there’s going to be something you don’t like,” said state Sen. Larry Taylor, R-Friendswood, the bill’s author, anticipating tension throughout the day’s debate.

[…]

Taylor stripped the [sales tax] increase from HB 3 and offloaded some of the more expensive property tax relief provisions in the bill. The bill no longer includes an expansion in the homestead exemption from school district taxes. It lowers property tax rates by 10 cents per $100 valuation, instead of 15 cents, saving the owner of a $250,000 home $250 instead of $375.

The legislation would still limit the growth in school districts’ revenue due to rising property values, a proposal pitched before session began by the governor. School districts that see their property values significantly increase would have their tax rates automatically reduced to keep tax revenue growth in line. That would now start next year, instead of in 2023.

“The bill before us today has no linkage to the sales tax and is not contingent upon a sales tax,” Taylor said.

Instead, the bill creates a separate “Tax Reduction and Excellence in Education Fund” to fund school district tax relief. State Sen. Kirk Watson, D-Austin, said a working group came up with a plan to get $3 billion from several sources, including the severance tax on oil and gas extraction and an online sales tax.

“This does not increase any taxes of any kind,” he said.

So does this mean that the tax swap is dead? Well…

In for a penny, in for a million pounds, I guess. Have fun taking that vote, Republicans.

More action on the school finance/property tax front

May 2nd, 2019
by Charles Kuffner.
Comments are off for this post

From Tuesday:

Rep. Dan Huberty

The Texas House gave preliminary approval to a priority property tax reform package Tuesday, teeing it up for negotiations with the Senate and impelling the upper chamber to act on an omnibus school finance measure.

Together, the education and tax overhaul bills have been the top policy issues of the 2019 legislative session, and they are ultimately expected to be ironed out behind the scenes — and perhaps simultaneously.

Tuesday’s vote marks a small milestone for House leadership, which has muscled its must-pass budget, public education and tax reform bills to passage, all before the last month of session begins. But the House and Senate will next need to reconcile notable differences among the three measures, and the upper chamber has yet to move the school finance bill out of committee.

“We have done our job in the House — and we have sent everything over to the Senate,” said state Rep. Dan Huberty, R-Houston, author of the school finance bill.

Senate Bill 2 was approved on a 107-40 margin after a half-dozen hours of debate. More than 20 Democratic lawmakers broke party ranks to support the measure, which has garnered adamant opposition from city and county officials since its introduction.

See here for the previous update. The House version of SB2 makes it contingent on the House version of school finance reform passing, namely HB3. The Senate started that process yesterday.

The Senate Education Committee held a hastily arranged hearing Wednesday morning to vote out comprehensive school finance reform legislation — accelerating the bill’s journey to the Senate floor and eventual negotiations with the lower chamber.

The fast-tracked revision and vote on House Bill 3 came the day after House lawmakers voted through a property tax reform bill, making it contingent on school finance reform passing this session. State Sen. Larry Taylor, the Senate Education Committee’s chair, had originally told The Texas Tribune on Tuesday he did not anticipate a committee vote on school finance until Thursday or next week.

The full Senate is now expected to vote Friday on the legislation, which aims to increase the base funding for each Texas student, increase teacher pay, provide money for full-day preK for low-income students, and allow for long-term property tax relief.

Many details of the bill still need to be ironed out, however, and committee members voted Wednesday without an official analysis of how their districts would fare financially. Still, the vote seemed to address concerns that the Senate was moving too slowly on school finance.

[…]

Senate Education Committee members voted out a version of the school finance legislation that differs in many ways from the version the House voted out in early April. It includes a $5,000 across-the-board raise for full-time classroom teachers and librarians, funding for districts that want to pay higher-rated teachers more, money for districts with better student academic outcomes, and a few different long-term property tax relief proposals.

The House’s version of the bill requires districts to use a portion of their additional base funding per student on raises for all school employees and designates extra money for raises to be given at districts’ discretion. It lowers school tax rates by 4 cents per $100 valuation — $100 off a tax bill for the owner of a $250,000 home — and lowers rates further for districts taxing higher. But it doesn’t include a proposal for long-term, ongoing tax relief.

As we know, the Republican plan to pay for property tax “relief” is raising the sales tax. That would require a constitutional amendment, and for the House version of the joint resolution to be voted out of committee by next Tuesday at 11:59 PM. As you know, I think that’s a terrible idea and am rooting for it to fail. The clock is ticking, but at least by next Tuesday we’ll know what parameters the conference committees will have to work with.

One more thing, from the first story:

Few attempts to make major changes to the bill were successful Tuesday.

One amendment, from state Rep. Charlie Geren, R-Fort Worth, seems to bar anyone but licensed attorneys from representing taxpayers in the property tax appeal process on a contingency fee basis. The change would likely affect the author of SB 2, state Sen. Paul Bettencourt, a Houston Republican and a property tax consultant.

“It affects a lot of people. We’ll talk about it in conference,” Geren said. He added, “I don’t believe in contingency fees, but if we have to have contingency fees to do this, then I want the lawyers to do that.”

Heh. Someone please give Charlie Geren a fist bump for me. The Chron has more.

School finance and property tax update

Apr 30th, 2019
by Charles Kuffner.
1 comment

From last week.

Rep. Dustin Burrows

Blasting the Senate for taking a symbolic approach on school district taxes, a panel of House lawmakers heavily altered then approved the upper chamber’s version of priority property tax legislation late Thursday. And committee members pointedly included a provision meant to rebut claims that they were not committed to wholesale reform.

The chair of the tax-writing Ways and Means committee, state Rep. Dustin Burrows, said the House had kept a provision in Senate Bill 2 that attempts to constrain school district property taxes. While he and finance experts have said the language needs to be addressed in the Education Code, there “is an intent in the Senate to symbolically express that they are committed to lowering school property taxes,” Burrows said.

“Well, because of that, I want to make sure that the House also expresses its full commitment to lowering people’s property tax bills related to schools,” the Lubbock Republican said.

The Senate had tried to limit schools’ tax rate increases to 2.5%, without an election.

“We actually used a 2.0 number,” Burrows said, “to show that the House is equally as committed to doing significant things this session for the property taxpayers of the state of Texas.”

The insertion of the 2.0 figure may be a dig at hardline conservatives and Senate lawmakers, who have suggested the House gutted its own property tax reform package when they removed school district language from it in March. The lower chamber’s approach, however, has earned the backing of experts who say a separate public education bill is the most feasible way to make changes to the school finance system.

“To do property tax reform for schools, you really have to do it in the Education Code. I think that all of the experts agree,” Burrows said. “This bill has never touched the Education Code. It can’t touch the Education Code, that is House Bill 3,” he said, referencing the lower chamber’s omnibus school finance package.

As adopted in a 8-3 vote Thursday, SB 2 now closely resembles House Bill 2, a companion measure passed by the House committee last month — even taking on the same name: The Texas Taxpayer Transparency Act. The Democratic vice chair of the committee, state Rep. Ryan Guillen, joined Republicans in support of SB 2’s passage Thursday.

In the latest version of the bill:

  • Cities, counties and emergency service districts must hold an election if they wish to raise 3.5% more property tax revenue than the previous year
  • Those entities can increase their property tax levies by $500,000 a year, without triggering an election
  • Other taxing units — namely, hospital districts and community colleges — remain at an 8% election trigger, with Burrows’ citing the inflation of medical and education expenses
  • Homestead exemptions offered by local municipalities can be factored into the revenue growth calculation, preventing cities and counties from being penalized if they offer their residents tax reductions
  • A five-year carry-over provision lets taxing units bank unused revenue growth

[…]

A final change Thursday makes passage of SB 2 contingent on HB 3’s approval.

“These two are tied together,” Burrows said.

See here for more about HB3, and here for more on SB2. Ross Ramsey gets into the politics of the moment, which includes the Republican leadership’s continuing fealty to the property tax for sales tax swap that isn’t going anywhere. It’s hard to compare, because each session is its own story, but it sure feels to me like not a whole lot has happened so far, with less than five weeks to go. The big ticket items dragging along and seeming to go nowhere isn’t unusual, but what else has even made it to the floor of the other chamber? Not that I’m complaining, mind you, I’m just curious. Word is that SB2 will be up in the House today, so we’ll see how it goes. There’s still a wide range of possible outcomes.

Yes, they really are now pushing a sales tax for property tax swap

Apr 11th, 2019
by Charles Kuffner.
22 comments

Some bad ideas never die.

Texas’ top three political leaders — Gov. Greg Abbott, Lt. Gov. Dan Patrick and House Speaker Dennis Bonnen — threw their support Wednesday behind a proposal to increase the sales tax by one percentage point in order to lower property taxes across the state.

But that’s only if lawmakers agree to limit future local property tax increases.

The proposal would raise the state’s sales tax from 6.25% to 7.25%, generating billions of additional dollars annually for property tax relief, if voters approve a constitutional amendment. But the idea will be a hard sell to Democrats, since the sales tax is considered regressive, meaning lower-income Texans end up paying a larger percentage of their paychecks than higher-income Texans.

“Today we are introducing a sales tax proposal to buy down property tax rates for all Texas homeowners and businesses, once Senate Bill 2 or House Bill 2 is agreed to and passed by both Chambers. If the one-cent increase in the sales tax passes, it will result in billions of dollars in revenue to help drive down property taxes in the short and long term,” said a joint statement from the three Republicans.

Neither chamber has passed HB 2 or SB 2, which would require voter approval of property tax increases over 2.5%.

The House Ways and Means Committee was scheduled to take public testimony on the House’s sales tax swap proposal this week but delayed hearing the bills. Rep. Dan Huberty, R-Houston, who authored House Joint Resolution 3 and House Bill 4621, is considering changing the legislation to use a fraction of the additional money generated by the sales tax for public schools — in order to get more Democrats on board.

The bills are intended to provide another revenue source to help significantly cut down local school property taxes, which make up more than half of the local property taxes levied in Texas.

If the Legislature approves the resolution, the constitutional amendment would go to voters to approve in November, and if voters sign on the tax rate change would apply in January 2020.

See here for the background and my opinion about this lousy idea. Given that a constitutional amendment is needed for this, it will be easy enough to prevent it from happening. The progressive case against swapping out property taxes, which will disproportionately benefit commercial real estate and wealthy homeowners, for regressive sales taxes, is clear cut, and likely to hold a lot of sway with the current Democratic caucus. There’s also polling evidence to suggest that the public doesn’t care for a sales tax increase. I’m a little skeptical of that, since the question was not asked in conjunction with a potential cut in property taxes, but that’s an argument for the Republicans to make, and given the baked in doubt about anything actually reducing property taxes (for good reason!), I’d take that bet. HB2 is up for debate today, so we’ll see how this goes. The Chron and Texas Monthly have more.

Inevitably, we come back to a sales tax/property tax swap

Mar 20th, 2019
by Charles Kuffner.
1 comment

It’s an idea we just can’t seem to quit.

Texas lawmakers are considering an infusion of $9 billion to improve public schools and lower property taxes over the next two years. The additional $6.3 billion in the classroom is being billed as a transformational effort to better educate the state’s 5.4 million students, while another $2.7 billion would stem the tide of escalating property taxes for homeowners.

“If we’re going to make some strides on these really big items, it really has to happen this session,” said Rep. John Zerwas, R-Richmond, chairman of the influential Appropriations Committee.

While lawmakers are confident the state’s booming economy will provide big bucks to spend on public schools, they are also pitching a number of plans to increase the state sales tax in the future. The proposals include hiking taxes on items such as sweet snacks, gasoline, e-cigarette fluid and heavy machinery rentals. But the proposal with the most apparent momentum is a tax swap that would allow local governments to charge a higher sales tax in exchange for reducing property tax levies.

Even raising the sales tax by one percent “contributes a lot of money” that school districts, cities and counties could use to offset reductions in property tax revenue, Zerwas said. Some estimates predict such an increase would raise more than $5 billion a year. The statewide sales tax rate is now 6.25 percent a year. Local governments can add up to two percent.

Although Republicans are leading the charge with major tax swap proposals, it’s unclear how they will fare in the GOP-led House and Senate, particularly among lawmakers who narrowly won their reelections as Texas Democrats gain ground.

Financial implications of the bills are shaky. Several tax bills were filed a week ago, just under a deadline, and have yet to be analyzed by the Legislative Budget Board which predicts financial effects.

Increasing reliance on the sales tax troubles Eva DeLuna Castro, a budget and policy expert with the left-leaning Center for Public Policy Priorities. Not only is a sales tax considered regressive for taking more money from low-income people than the rich, but its collections are more susceptible to the ups and downs of the economy, she said.

“You need to find a revenue source that doesn’t all the sudden tank on you. Or if you know that it is going to do that, you need to put most of it away for a rainy day and use it when that rainy day comes,” she said.

[…]

Rep. Drew Springer, R-Muenster, is proposing Texas increase taxes on gasoline and close tax exemptions on items like ice cream, certain baked goods, e-cigarette vapor fluid and over-the-counter medicine.

“I don’t think people realize their ibuprofen is tax-free,” said Springer. In exchange, House Bill 2915 would allow the state to lower the maintenance and operations property tax that funds schools. His bill would also increase the homestead exemption to 50 percent of a home’s value. Texans in a home valued at $274,000 would average $1,400 a year in property tax relief, he said, amounting to $6.2 billion less in property tax collections statewide.

Another bill, House Joint Resolution 3, proposes inching up the sales tax and using money from that increase exclusively for public schools. The resolution is proposed by Rep. Dan Huberty, R-Houston, the architect of the House’s $9 billion school finance plan. The measure would require a vote in November to change the state Constitution and increase the statewide sales tax, which is now 6.25 percent. Huberty emphasized that raising the sales tax is just one measure under consideration, and that it’s still too early to pencil in numbers.

“We have to put more money into the system. It’s our responsibility,” Huberty said Thursday at an event hosted by the Texas Tribune.

Rep. Chris Turner, D-Grand Prairie is proposing the state systematically examine each tax exemption every six years to decide whether it is needed. House Bill 3968 will raise revenue by expiring out-of-date tax “loopholes” over time, he said, and is a good alternative to raising sales taxes.

“It is important to note that Texas already has a high sales tax — 8.25 percent in most areas,” said Turner, who chairs the House Democratic Caucus. “The lower someone’s income, the more it hurts, so an increase in the sales tax will hurt a lot of Texas families.”

This comes up every few years – in 2005, in 2007, in the 2012 and 2014 elections – and each time we confront the fact that swapping property taxes for sales taxes greatly benefits property owners while burdening lower income folks the most. That’s a feature and not a bug, as far as its Republican advocates are concerned. I appreciate that at least this time it’s being proposed in the context of putting more money into schools, which would then have the effect of easing the pressure on local property taxes, but the same problem remains. Rep. Turner’s proposal to evaluate tax breaks also comes up whenever sales-tax-increase bills are filed, and it usually gets quietly ignored as the higher-profile swap bills eventually die. It’s still a good idea, it just never gets any momentum behind it. Rep. Springer’s idea to expand the sales tax to more things also comes up in conjunction with swap bills, and there is merit to this approach as well, though the real money is in taxing services, which is pretty much as big a taboo as an income tax is.

To review: I support requiring a process to scrutinize and sunset every tax break we have on the books, and I support at least exploring the imposition of a sales tax on selected goods and services where it is not currently imposed. If the goal of that is to put more state money into public education, and one result is that it allows local governments to ease up on property tax collections because they are no longer trying to make up for the state’s inadequacies, I would consider that a good outcome. The Trib has more.

SCOTUS and sales taxes

Jun 24th, 2018
by Charles Kuffner.
4 comments

This ruling will be good for Texas.

Texas stands to gain hundreds of millions of dollars in tax revenue after the U.S. Supreme Court on Thursday ruled that states may force online retailers to collect sales tax even when they have no physical presence in the state.

Every year, Texas loses $1.1 billion in uncollected sales tax, according to the Texas comptroller’s office — well over the $800 million the state will spend securing its southern border this year and next. That’s the result of the high court’s 1992 decision, now reversed, that retailers are responsible for collecting sales tax only in states where they had “nexus.” That decision — which predated the astronomical rise of the internet and the subsequent boom in online shopping — was outdated, argued lawyers for the state of South Dakota, who won the case this week.

That lost tax revenue is particularly meaningful in Texas, one of just a handful of states without a personal income tax. This May, for example, the state’s sales tax revenue totaled $2.76 billion.

[…]

Customers themselves owe sales tax on their purchases, but it’s sellers who are required to collect that money and send it to the government. States have little mechanism — and little incentive — to chase down sales tax on small-ticket purchases from average consumers when the retailers don’t do it themselves. Some of Texas’ largest online retailers — Amazon, for example — already remit sales tax to the state. Amazon has almost a dozen distribution centers in the state.

Texas is highly unlikely to gain back all of the $1.1 billion it’s currently losing, experts said, and any money the state gets back won’t come overnight. While the Texas comptroller has a great deal of taxing authority, some changes to the state’s tax structure might have to be carried out by the Legislature when it reconvenes in 2019, said Dale Craymer, the president of the Texas Taxpayers and Research Association. The Comptroller’s office is looking into that, a spokesman said.

“We welcome the court’s ruling in this case and are currently assessing any potential revenue impacts,” said Kevin Lyons, a spokesman for the agency.

I have long believed that the sales tax exemption for online purchases outlived its purpose years ago. This is not just for states like Texas but also for local governments that rely on sales tax revenue, and for traditional retailers who are no longer at an automatic disadvantage. Sales tax rates vary by locality, and not all items are subject to sales taxes, so this will be a challenge to set up, but that’s not our problem. Online retailers will figure it out, and life will go on. This was the right decision.

← Earlier Posts