A Case for Houston's Cap - Texas Scorecard

Depending on who you speak with, Houston Mayor Sylvester Turner’s pension reform plan can draw praise or criticism. But one thing that supporters have repeated was that this plan does not call for a tax increase. While that may appear to be true on its face, it’s actually pretty dishonest.

While the plan itself doesn’t call for a tax increase, it does call to scrap the property tax cap voters imposed on the city government over ten years ago.

Critics, mostly elected officials sitting around the council table, have often derided the tax cap saying it handcuffs their ability to manage the city. They refuse to acknowledge specific aspects, which were put in place so that officials wouldn’t be handcuffed, and lead people to believe that without its repeal parks will close, garbage pickups will cease, and life in the Bayou City will come to a screeching halt.

Unlike most governmental caps which are fixed and require constant adjustment, Houston’s revenue cap is floating rather than stationary. As population and inflation increases, so does the amount of revenue allowed to be brought in under the cap. So, when elected officials claim that the city is growing and they don’t have the tax revenue to provide services because of the cap that is simply untrue.

The truth is they don’t have funds for services because of years of overspending.

Turner and Council Member Boykins often point to the State of Texas saying that with its strong “conservative” legislature they haven’t passed a cap, so it must be bad policy.

“You will not find any government entity in the State of Texas that is operating under the restraints that Houston has placed upon themselves,” said Turner.

What Turner and Boykins fail to acknowledge is that conservatives have been attempting to implement a similar cap for years only to fail, largely due to the efforts of politicians like Turner and tax-funded lobby groups like TML.

Indeed, the revenue cap is something that Houston should be proud of, not a measure they should seek to shake off. Rather than seek to lower their standard, Houstonians should advocate that the State raise its standard.

Contrary to what local officials say, Houstonians didn’t place restraint on themselves they placed it on their elected officials who, for far too long, were willing to overspend public dollars and come back to the taxpayers asking for more. Rather than allow them to continue their fiscal malfeasance, the people of Houston implemented the cap to force city hall to prioritize spending and stay within their means.

Even if the state were to pass a local tax cap bill, it wouldn’t be the first.

New Jersey has a cap called “Cap 2.5.” Passed in 2010, the Garden State’s cap limits municipal government and school district tax increases to 2.5%, unless approved by voters in a referendum.

Massachusetts and New York also have caps on municipal government and school property tax caps. Even liberal California has a cap in the form of Prop. 13, which applies a uniform 1% general tax rate to all property and limits assessed value increases to 2% (not including bond repayments and special district taxes, which vary across the state).

The only reason for Houston to lift its cap is to pay down pension debt, and in order to address the current amount, taxes would have to be raised by 50% according to the Greater Houston Partnership. And since it is highly unlikely that any local elected official will champion a 50% tax hike, the amount they would increase will be negligible compared to the city’s finances, but an unfair burden to business and home owners.

The simple fact is, when everyday Texans max out their credit card and hit their limit they don’t call the bank and ask for an increase. Instead, they look for ways to reduce spending and pay down their debt. If Texans can do that with personal finances, surely elected officials should be able to do that with taxpayer money.

Turner said he will bring a vote on the property tax cap up in 2017, the first year he can legally do so, and Boykins said if taxpayers vote it down he will not seek reelection.

Turner’s plan may not explicitly call for a tax increase, but make no mistake any support for a removal of the property tax cap is support for a tax increase on citizens.

Houston needs to #KeepTheCap.