This week, the Harris County Commissioner’s Court met to discuss the possibility of raising taxes next year. The reason? “People need more of us,” according to Harris County Judge Lina Hidalgo.
Judge Hidalgo is partially right—people are in need. The government lockdown and oil market chaos has unleashed a wave of human suffering. Consider that the Houston MSA’s unemployment rate is 9.9 percent today; that 400,000 people filed jobless claims from March to June; and that food banks are still under siege. What’s more, major industries specific to the region—like energy, medicine, and aviation—are struggling to turn a profit.
But while things are tough today, the problems plaguing Harris County homeowners and businesses could soon get worse.
At the aforementioned meeting, Judge Hidalgo and county commissioners were presented with four tax rate scenarios—three of which would push taxes higher next year to pay for more government.
One option was an 8% increase passed without voter approval. This is the worst possible outcome for taxpayers and it’s likely against state law, to boot. Another possibility was a 2.8% increase in county taxes, a 2.6% rise in flood control taxes, and a 6.7% bump in hospital district taxes. A third plan would raise county taxes by 2.9%, flood control taxes by 3.5%, and hospital district taxes by 2.5%.
Only one approach would protect taxpayers. Staff outlined a scenario where the court could adopt the no-new-revenue tax rate, formerly known as the effective tax rate, and keep taxes flat. At least one commissioner was openly supportive.
Speaking in favor of the no-new-revenue tax rate, Commissioner Jack Cagle said: “This is not the time to be increasing taxes on our constituents, because these are difficult times, especially coming after [Hurricane] Harvey.”
He’s right. The last thing Harris County taxpayers should be worried about right now is soaring tax bills. They need a chance to catch their breath and to recover. And the county has enough padding in its revenues to make that happen.
Harris County coffers have been stuffed with new tax money for years. From 2014 to 2018, the county’s property tax levy grew by almost 30%, according to the Texas Comptroller. By comparison, population and inflation increased by only 11% over the same time. This misalignment suggests there’s plenty of revenue in the system to pay for priorities.
It will be a good thing if commissioners hold the line on taxes. But it will be a great thing if they take things one step further.
In addition to the four scenarios they’re currently considering, commissioners should also weigh adopting a property tax rate that is lower than the no-new-revenue tax rate. That would allow Harris County taxpayers to keep even more of their own hard-earned money.
Adopting a lower tax rate and bringing in less money might scare some commissioners, even if it will help all taxpayers. Some might say that such a plan wouldn’t allow the county to balance its books. But since its current budget runs through February 2021, officials have time to take aggressive action get spending down.
For example, the county could modernize its operations by automating positions and processes. Officials could also lower payroll expenses by eliminating longevity pay, committing to a long-term hiring freeze, and suspending pay increases for a multi-year period. Finally, the county could undergo a third-party efficiency audit to ensure funds are being spent as effectively as possible.
These are tough times and bold action is necessary. Even if commissioners choose not to cut taxes sharply, officials should know that taxpayers cannot afford anything more than the no-new-revenue tax rate. People need less of a burden right now.