HOUSTON – Houston is preparing possibly dealing with budget challenges in the next fiscal year due to the expenses from the May derecho and Hurricane Beryl, totaling $39.9M, without federal assistance.
Currently, Houston’s property tax rate stands at .519 cents per $100 of assessed value. If the city maintains this rate, Houston’s Finance Director Melissa Dubowski warns of a looming $46 million deficit for the upcoming fiscal year, potentially leading to drastic budget cuts.
Mayor John Whitmire emphasizes that such cuts could mean hundreds of layoffs.
“To not use the toolkit available would require significant cuts,” Mayor Whitmire said during Wednesday’s council meeting. “We’re running the numbers with the finance director. It would require hundreds of layoffs.”
One option under consideration is to raise the property tax rate by 3.2 cents to 55 cents per $100, which would generate an additional $40 million. This increase would help avoid job cuts and cover 25% of the disaster-related costs.
Despite this, Mayor Whitmire is hesitant about raising taxes as the first solution and stresses the need for other measures.
“I don’t agree that raising taxes should be the only option or maybe even the first option,” he said. “I do think we have a responsibility of being able to assure the public that we’re being as responsible as we can with the available funds and then go to them and be able to say, we’ve done everything we can.”
Property tax rates in Houston have decreased in nine of the past 10 years due to revenue caps approved by voters. The city’s tax rate is lower compared to other major Texas cities, according to Dubowski.
“I think we have come to the crossroads where people say, ‘yes, we’ve been paying a little less because we’ve been lowering our tax rate nine of the ten years. But geez, who’s going to pick up this debris?’ And we’ve said we’ve done the first pass. We still have neighborhoods that have not had their debris picked up because we don’t have enough contractors,” said Mayor Pro Tem Martha Castex-Tatum. “We still have neighborhoods that have not had their debris picked up because we don’t have enough contractors. We don’t have enough employees. We don’t have the trucks. We don’t have so many of the things that we need in city services as we have lowered this tax rate nine of ten years. What I want us to do is be able to put real numbers to this.”
Harris County’s Property Tax Increase
Harris County is moving forward with an 8% property tax increase, which does not require voter approval due to federal disaster declarations. This increase aims to address the budget gaps due to recent disasters.
For a homeowner with a $400,000 property, this 8% increase translates to an additional $160 on their annual tax bill. This is in addition to a proposed flood control tax increase, which adds approximately $60 to the average taxpayer’s bill. This flood control measure will be on the November ballot.
A public hearing on the overall Harris County budget is scheduled for next Wednesday, Sept. 18, at 10 a.m. at Commissioners Court.
Mayor’s statement on budget constraints
“Mayor Whitmire does not plan to raise taxes at this time and is preparing to reduce the city budget based on the first two amounts presented by Finance Director Melissa Dubowski on Monday.
The administration is making plans to enact those expenditure cuts depending on the will of the city council and depending on the tax rate that the City Council chooses to adopt. He is not proposing a tax increase, especially at a time when Harris County and HISD are proposing increases. The mayor will review, an EY audit currently being conducted and will first look at cutting waste, fraud and making city government more efficient.”