Turner Tragedy Tax Falls as Governor Questions Resources in Houston TIRZ Accounts

Turner Tragedy tax hearingPhoto: Houston Chronicle

It’s been a busy few weeks as Mayor Turner worked to take advantage of the Hurricane Harvey tragedy by placing a tax hike on the agenda for City Council to consider next month. At the last possible date permitted under state law, Turner placed a proposed increase on the table for the city’s property tax rate,  a rate not normally permitted by the voter approved revenue cap.  The City Charter allows for such a change given a disaster declaration, and although he had called off any vote this November to repeal the cap, Turner saw an opportunity to get the money anyway.

With barbs thrown at Gov. Abbott about the State’s resources via the so-called rainy day fund, by last Friday both sides had reached an agreement with the State providing immediate cash, and the Mayor calling off any emergency tax hike.

Could it be that Abbott and others hit the soft underbelly of Houston, with questions about hundreds of millions of dollars bottled up in the both loved and scorned Tax Increment Reinvestment Zones?

I think so.

To be fair I was slightly deflated as I watched the joint press conference with Gov. Abbott holding up a $50 million check, handing it to the Mayor, who reportedly went days during Harvey without returning the Governor’s calls. At least one reporter did try to query Abbott as to the rationale behind the number on the check, but we’ve yet to see any detailed reporting on actual losses, such as early estimates of damaged city vehicles and personnel overtime, all easily compiled and reported.

We also heard about an insurance premium due, hmmm…., and deductibles that need to be met. So this information helps us build a picture of our current financial situation, that is mostly desperate.

Yet as I considered the political strategy of both leaders, it became clear to me why Turner folded, accepting state funds that were coming anyway, and cancelling the tax hike. More hearings were sure to uncover TIRZ dirty laundry. I know from  many citizens who messaged me, they planned to hammer Council and Mayor at the next events about this “siloed” money as the Guv describes it.

Turner wanted a quick strike at the tax hike so in twelve months he could ask voters to make it permanent. Remember the Governor had just delivered $135 million in advances from FEMA to Houston and Harris County in the days before Congress began developing a $15 Billion aid package. Abbott, informed as to how perilous Houston finances actually are at the moment, rightly rejected the blank check demand by Turner and wanted an idea about how the resources would be used. Then the politicos started the drumbeat about the “rainy day fund” and “well, it’s raining”.

Then something happened, that as far as I know is unprecedented.  Lt. Gov. Patrick and Gov. Abbott started ringing the bell about Houston’s broken financial structure.  Top State Officials began to describe how Houston has as much as $300 million bottled up in Tax Zones, while the core finances and operations are at the brink of failure. Unbelievable!

Post Harvey, the Mayor had depleted the modest $20 million city reserve almost on day one. Senior Houston Fire commanders reported how additional staff went uncalled, saving the city millions in overtime, while placing untold lives at risk. Some HFD leaders have told me on background that they felt it was just payback, that Turner didn’t want to pay them anything extra. But I think there is a simpler answer. We just didn’t have the money, and for the City to miss a payroll ballooned by both Police and Fire OT, well, you could say goodbye to a one-term Turner. Outside agencies would almost surely be funded through FEMA, and reimbursed later, but short term cash flow had to be of great concern.

The Mayor’s usual suspects began banging the drum about the rainy day fund, hammering Abbott in stories widely reported across the country, knowing full well, that Texas would be sending some resources and soon, maybe just not from the ESF.

See, Houston is the Big Daddy of TIRZ. Sure other places have them too, but Houston is TIRZ central in Texas. (We pale next to Chicago but that’s another story). With Abbott and Patrick’s kick start, the questions began, as reporters on long deadlines and enterprise reporting budgets started inquiring about these TIRZ. (I know because I’ve talked with them.)

The Mayor transferred $20 million, from the TIRZ accounts last year to the general fund, to balance the books. Why not $50 million now?

Uptown TIRZ is building Bus Rapid Transit for hundreds of millions $?

Midtown has $40 million in land bank assets, five million square feet or more, outside their boundaries for affordable housing (allegedly)?

Houston First, local govt. corp generates over $100 million a year in revenue and expenses but has no employees?

The Westchase District has a $500 million Chapter 380 agreement, funded with City of Houston Ad Valorem revenue. How much do they have on hand right now?

There were certainly many factors in Turner’s decision to drop the tax hike but a key part was this, the Mayor gets to avoid prying eyes on the TIRZ (and other off book buckets) which have some of the worst fiscal accountability in the country. The TIRZ entities (and Districts) which  have no assigned local media reporters are generally a black box, with most information collected and posted by citizen activists.

Turner got his $50 million for immediate needs and there will be no further hearings at which citizens would get the chance to spill any dirty business. Oh, and those regional and national reporters in town would have been all ears. Don’t worry though, they’re still here, digging, asking, and soon enough publishing stories.

 

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