Lucio Vasquez/Houston Public Media
The Houston City Council voted Wednesday to lower the city’s property tax rate.
This is the eighth time in nine years that the city has lowered the tax rate below the voter approval tax rate. The proposed property tax rate is $0.533640 per $100, a decrease from the current rate of $0.55083.
The city operates under two revenue caps that limit the amount of land revenue the city can collect each year.
In 2004, voters approved limiting city revenue by combining the previous year’s cap, plus population growth and inflation; or previous year’s earnings plus 4.5% to determine whichever is less.
The second cap was enacted in 2019, which limited the city’s revenue growth from 8% to 3.5%.
Mayor Sylvester Turner said the proposed rate is needed to collect the budgeted property tax amount for 2023, which is $1.27 billion. But Turner also said the lower tax rate would result in a loss of $332.7 million for the city. He said the city has been losing money since hitting its revenue cap in 2015. The pre-fiscal 2015 tax rate was $0.638750.
“So due to our self-imposed revenue cap, since 2015 we haven’t been able to use about $1.489 billion,” he said. “For every penny in tax rate…that’s $23.7 million in revenue generated.”
The city will receive about $27 million more in property tax revenue for 2022 than in 2021, but Mayor Turner says the revenue cap prevents the city from spending the funds needed to maintain the city.
“The fact is, yes, we will have more property tax revenue, but let me tell you, we’re going to eat it very soon.”
Mayor Turner said the city is growing and he wants to meet the city’s needs, but the property tax revenue cap prevents that from happening.
âI want you to know what it costs to pay first responders, police, firefighters and what it costs to pay solid waste workers,â he said.
Mayor Turner said that each year since he has been in office, HPD funding has increased every year because he says public safety is his top priority.
For the inhabitants, The City of Houston’s acting chief financial officer, William Jones, said homeowners would see real benefits from the lower tax rate.
âOnce we lower the tax rate, it will provide some relief where residents feel the impact is growth and the assessment of their assessed values,â he said.
Jones said that while the city’s property rate is falling, some residents might pay more if their home’s value is higher.
Councilman Mike Knox said the county increasing the value of its properties is why the city’s property tax needs to go down.
“Property values ââkeep going up, which is driving our tax rate down, so we’re not taking away that 3.5% increase that we have every year,” he said.
Councilman Robert Gallegos said the state has the wherewithal to do something about the tax rate cap, and the blame shouldn’t lie with the city or county – but with the state. .
“It’s the state we have to listen to, it’s the state that actually controls our property taxes,” he said. “If they want to do something, they can do something.”
Gallegos said residents should be told how much money the city is losing because of the revenue cap.
“We have residents asking why we don’t hire more police, why their trash isn’t picked up on time, why we can’t fill potholes on our street, why their sidewalks are broken and we couldn’t fix them sidewalks…that’s the revenue cap.”
Mayor Turner said suburban communities don’t operate on a cap and that’s unfair to Houstonians in the city.
“They want the same amenities, they want quality neighborhoods, and Houstonians deserve the same.”
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