New potential burden for Houston homeowners: higher taxes
HOUSTON.- As Houston recovers from Harvey’s devastating flooding, many homeowners could be asked to shoulder an added financial burden: higher taxes on the same houses they are struggling to rebuild.
Mayor Sylvester Turner has proposed a one-time increase in the city’s property tax rate to help pay for mounting hurricane expenses, particularly the cost of cleaning up debris and replenishing an emergency fund.
Turner said he was «very, very sensitive» to the plight of homeowners and that the city was «trying to minimize» its request.
The mayor initially proposed an 8.9 percent increase that would have generated about $118 million. But Turner said Wednesday that improved reimbursement rates from the federal government allowed the city to cut the proposal to 3.6 percent, which would generate about $50 million.
The city council is set to vote on the tax hike Oct. 18, but it’s unclear if the proposal has enough support to pass. In Harris County, which includes Houston, at least 136,000 homes and other structures were flooded.
Some Houston homeowners say the proposal is like being kicked after being knocked down.
«Not a good idea. I think it sucks,» Bob Cantrell said as he sat in his garage, surrounded by the few pieces of furniture and personal items he was able to salvage from the floodwaters.
Cantrell, 57, said if the city wants to raise his property taxes, it should do so based on the value of his home after the flooding. He estimates that the value of his house in the Meyerland neighborhood dropped from $650,000 to less than $200,000 after it took in 29 inches of water.
City officials say the proposed tax hike would be based on home values before Harvey’s flooding. Three public hearings on the idea have been scheduled, with the first one set for Monday.
Aside from property taxes, Texas cities have few other options to raise money for emergency needs. Most local governments are funded mainly through a combination of property and sales taxes. Texas is one of seven states with no state income tax.
In Houston, a revenue cap approved by voters in 2004 restricts the amount of annual property tax increases. The emergency declaration for Harvey would help the city get around the cap.
Tax hikes after natural disasters are rare. It’s far more common to get a tax break, said Valrie Chambers, an associate accounting professor at Stetson University in Florida.
In 2015, voters in St. Bernard Parish, southeast of New Orleans, rejected for a second time a proposed tax hike to pay for post-Hurricane Katrina levee upkeep and storm drainage. After Hurricane Sandy in 2012, some communities in New Jersey that considered raising taxes were able to make up for losses through federal community development block grants.
Houston isn’t the only local government considering a property tax hike after Harvey. The Houston suburb of Pearland is debating a 2.8 percent tax increase. Nueces County in South Texas had considered a 1 cent increase in its tax rate but last week voted to keep its rates unchanged.
Chambers said Houston should consider offering a hardship exemption for residents whose homes were flooded.
«This process would add additional cost to the city, but may be more humane,» she said.
During Wednesday’s city council meeting, some council members called on the state to use its $10 billion rainy day fund to help Houston and other Texas cities recover from Harvey.
«If the state is willing to join with us and tap into their rainy day fund … then there will be no need to impose any burden on people that are already burdened enough,» Turner said.
Gov. Greg Abbott has said he has no plans to call state lawmakers into special legislative session to help cover Harvey’s expenses, but he has suggested that Texas will draw from the rainy day fund. How much money would come out of the fund — and how it might be spent — remain unclear.
Brad Linder, 61, one of Cantrell’s neighbors, said he’s OK with the tax increase, but it should be based on the current value of his home, which took in a foot of water.
«The mess has got to be cleaned up. You can’t make money,» he said. The mayor has «got to get it somewhere.»