Houston Mayor Calls Off Tax Hike After Texas Delivers $50 Million for Harvey Recovery

by | October 2, 2017

By Mike Morris

Mayor Sylvester Turner on Friday said he would withdraw a proposed property tax rate hike after Gov. Greg Abbott handed him a check for $50 million to help fund the city's recovery from Hurricane Harvey.

The exchange came as the mayor and governor held a joint City Hall news conference, a sharp departure from the last several days when the pair had traded letters and criticism over each other's response to the historic storm.

Turner had tried to pin his proposed tax hike on the state's unwillingness to tap its $10 billion savings account, while state officials viewed the city as seeking a blank check rather than targeting requests for specific emergency funds.

Ultimately, Abbott said he would draw upon a disaster fund within the discretion of his office, producing the $50 million amount Turner had intended to collect from raising residents' property taxes. That fund is one of several the state will replenish using its so-called Rainy Day Fund when the Legislature next convenes in 2019, the governor said.

"The city of Houston has some urgent needs they need to have addressed and part of it is debris and some other things, and it totaled $50 million," Abbott said of his talks with Turner. "And I said, 'This is what the state of Texas is for and what we can do. We are here to help you and help you rebuild because we are one team together.' This is what you call a common-sense case of helping a flooded town."

It was unclear whether the amount was based on a specific tally of needs, but both men noted needed repairs to public infrastructure and the city's need to reinstate its exhausted flood insurance policy, in addition to the costly removal of millions of cubic yards of debris.

Turner listed the liabilities the city has projected thus far: An estimated $26 million for debris removal, a $15 million insurance deductible, $75 million in damage to city buildings beyond what insurance will cover, and $9.7 million to reinstate flood insurance coverage.

"I want to thank you for this check of $50 million because it does address some of those immediate concerns that I would have been asking people in this city -- many of whom have been directly impacted and are having now to get back into their homes or to purchase furniture -- to assume some of the sacrifice in order to rebuild this city," Turner said to Abbott. "Because of what you've given today, let me say there will be no need for me to do that."

Turner initially had announced plans to enact an 8.9 percent tax rate hike, noting that a voter-imposed cap on property tax collections allowed him to propose a one-year exemption in the event of a federally declared disaster. Such a hike would produce about $113 million in additional revenue. On Wednesday, he cut that proposal roughly in half after federal officials agreed to increase their contribution to the Harvey recovery.

Friday's announcement eliminated the proposal, as well as a political headache.

Some council members opposed to the increase said they believed the mayor lacked the votes to pass it. Before the mayor and governor spoke, William-Paul Thomas, the mayoral aide charged with counting votes, had smiled and said he was "prayerful" that the governor would produce a check and make his life a bit easier.

Passage of Turner's proposed rate hike could have threatened the city's plans to issue $495 million in general obligation bonds in November, in addition to $1 billion in bonds tied to Turner's landmark pension reform plan. Rejection of the pension bonds could unravel the complicated reform plan and thrust the city back into a fiscal crisis leaders had spent years trying to fix.

Councilman Dave Martin, who opposed the tax increase, said he always thought the state should step up with of its own funds, rather than simply funnel federal money to the city.

"I think they showed they're doing the right thing," Martin said of state officials. "I still believe we could have found the money, I didn't think you needed to go to the taxpayers, but it would have been tough. This is a better solution."

Councilman David Robinson, who had said he was open to a supporting the rate hike, also cheered Friday's announcement.

"We're grateful for the governor to come home anytime he wants," Robinson said. "Today was a great day for the unifying forces of -- as he said and the mayor said -- our state, our local and, we're hoping, our federal partners in relief."

Both Turner and Abbott made oblique references to their public spat earlier in the week, speaking at length about unity and teamwork.

Asked why he had made funds available after appearing reluctant to do so earlier in the week, Abbott said, "After looking at all the options, this looked like the best solution at this point in time."

Achieving such costly goals as building a coastal spine to protect against storm surge, a third local reservoir or other flood mitigation projects, Turner noted, is going to require "wearing the same jersey, running the same direction, tackling others and not ourselves," a comment that prompted smiles from both. "Plus," the mayor added, "he found out this was my birthday week."

Abbott stressed that state officials always have known they will tap the Rainy Day Fund, but would do so after drawing on flexible emergency funds first.

If recovery needs deplete those funds before the Legislature's next scheduled gathering in 2019, Abbott said, it is possible he could call the body into a special session. Another reason to do so would be if a state role in contributing to large flood mitigation projects comes into focus, he added.

(c)2017 the Houston Chronicle