Texas Governor Refuses Houston's Request to Use Rainy Day Fund for Harvey Recovery

by | September 27, 2017

By Mike Ward

Gov. Greg Abbott on Tuesday strongly rejected suggestions from Houston Mayor Sylvester Turner and other city officials that they could avoid raising local property taxes to pay for damage from Hurricane Harvey if the state would immediately tap its reserve funds.

"In times like these, it's important to have fiscal responsibility as opposed to financial panic," Abbott said following an afternoon briefing on Harvey recovery efforts with FEMA officials.

Added Abbott: "The mayor seems to be using [Harvey recovery] as hostage to raise taxes."

In response, Houston officials said they still think the ball is in Abbott's court.

"Mayor Turner is asking the governor to do what other governors, such as Florida's, are doing. It's the Texas governor's right to say no," said Turner spokesman Alan Bernstein.

On Monday, Turner wrote to Abbott asking state officials to tap into the $10 billion Rainy Day Fund, the state's savings account, saying he would not have proposed a $50 million tax hike if the state would kick in its share now.

Turner said Monday the city has already exhausted its own $20 million reserve fund, and is now facing a $26 million bill for debris cleanup alone.

Abbott countered that the state has already approved almost $100 million for debris removal in Houston and has implemented an "accelerated reimbursement program" for recovery efforts.

Abbott said he would pay any invoice the city submits to the state within 10 days.

Turner "has all the money that he needs," the governor said. "He just needs to tap into it."

In addition, Abbott said city officials in Houston are "sitting on hundreds of millions of dollars" in funds held by Tax Increment Reinvestment Zones that could be used in the cleanup and recovery efforts from Harvey

Lt. Gov. Dan Patrick, who attended Tuesday's briefing with Abbott and several Houston-area lawmakers, said as much as $300 million could be available in those funds, which are collected by four special-use taxing districts established by the City of Houston.

City officials have said those funds cannot be spent for Harvey costs, and can only be used in the districts in which they were collected.

"We cannot raid funds that the state has indicated cannot be raided -- and which are largely for drainage projects to prevent future flooding anyway," Bernstein said.

Turner is currently asking for a temporary tax-rate increase that would amount to an extra $48 annually for the owner of a $225,000 home. The roughly $50 million raised from that increase would then be used for debris cleanup, and building and equipment repairs, among other things.

State Sen. Paul Bettencourt, chairman of the GOP caucus and a confidant of Patrick, has called Turner's proposal "beyond tone deaf" and has said Houston city officials can afford to fund short-term repair expenses without raising property taxes.

While Turner has suggested that Abbott needs to call the Legislature into special session soon to approve tapping the Rainy Day Fund, Abbott said Tuesday he has no plans to do so -- and believes lawmakers can make those decisions after they reconvene in regular session in 2019.

He said he and legislative leaders agree that the Rainy Day Fund will be used to pay Harvey bills.

Since shortly after Harvey made landfall in Texas on Aug. 25, Abbott and state leaders said Texas has enough available resources to address hurricane recovery needs without calling the Legislature into special session.

The storm is now ranked as the worst hurricane disaster ever in terms of damage. The 200-mile-long swath of destruction stretched from Corpus Christi through Houston to the Beaumont area. Total damage is expected to top $150 billion by initial estimates.

(c)2017 the Houston Chronicle