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Houston council weighs tax-rate options as disaster costs and revenue cap squeeze loom
Summary
Finance staff told the committee that, under several scenarios, a tax rate near 55¢ would cover the city's estimated local share of disaster costs while state voter-approval calculations range roughly 56¢ (3.5% multiplier) to 58¢ (8% disaster multiplier). Staff outlined a tentative timeline to propose a rate Sept. 25, hold a public hearing Oct. 9 and adopt by Oct. 28.
Finance Director Melissa Dubowsky told the Budget and Fiscal Affairs Committee on Sept. 9 that Houston's local revenue cap (Proposition 1) and the state's property-tax calculations (Senate Bill 2) together determine the tax-rate options the council must consider this fall.
Dubowsky summarized the mechanics: Proposition 1 (2004) sets a local cap that grows by population and inflation (or alternately by prior-year revenue growth), and Proposition H (2006) adds a fixed $90 million public-safety allowance. State law (Senate Bill 2) requires the finance office to publish a no-new-revenue tax rate and a voter-approval rate; the voter-approval calculation generally limits maintenance-and-operations growth to 3.5% (or to 8% for declared disasters).
Using certified appraisal rolls the finance office calculated several scenarios: the adopted FY24 rate of 51.919¢ would leave a revenue shortfall versus the FY25 budget; a rate of about 55¢ would collect the approximately $39.9 million estimated local share tied to general-fund disaster costs; the state's voter-approval rate would be near 56¢ under the 3.5% multiplier and about 58¢ under the 8% disaster multiplier. "If we use the current tax rate of 51.919¢, the revenue we would bring in would be about $46,000,000 below the budget," Dubowsky said, and she added that a 55¢ rate "would allow us to collect our budgeted amount of revenue and cover the 25% local share of the disaster."
Council members raised communication and equity concerns. Mayor Pro Tem Martha Castex-Tatum and others urged outreach and clear public messaging so residents understand how appraisal rolls, exemptions and the separate roles of county and school taxes affect individual bills. Several members suggested community meetings and social-media materials to explain scenarios and trade-offs.
Dubowsky outlined the timeline for council action: staff intends to bring a recommended council agenda item (RCA) on Sept. 25 to propose a tax rate and set public hearings; notices will run in local outlets and the Houston Chronicle; a public hearing is tentatively scheduled for Oct. 9 with adoption required no later than Oct. 28 under state law.
Next steps: the finance office will provide formal RCA materials, publish required state calculations, and support public engagement to explain options and fiscal trade-offs.
