UPDATED: Harris County Commissioners Court approves effective tax rates, resulting in tax cut for FY 2019-20

Harris County Commissioners Court was slated to vote on a property tax rate hike Oct. 8.

Harris County Commissioners Court was slated to vote on a property tax rate hike Oct. 8.

Updated Oct. 14 at 11:24 p.m.
Harris County Commissioners Court unanimously approved the effective tax rates for Harris County, the Harris County Flood Control District, Harris Health System and the Port of Houston Authority for fiscal year 2019-20 during a special meeting Oct. 14.

The total combined tax rate for the four county entities is $0.61170 per $100 valuation—down from $0.62998 in FY 2018-19. The total combined tax rate is broken down into the following rates:

Harris County:
$0.40713 per $100 valuation
Flood Control District: $0.02792 per $100 valuation
Harris Health System: $0.16591 per $100 valuation
Port of Houston Authority: $0.01074 per $100 valuation

The tax rate approval comes less than a week after the court was unable to approve a proposed tax rate increase during the regular Oct. 8 commissioners court meeting due to the absence of two commissioners.

Posted Oct. 8, 2019 at 12:08 p.m.
Harris County Precinct 3 and 4 commissioners Steve Radack and Jack Cagle were absent during an Oct. 8 commissioners court meeting—a move that denies the court a quorum as defined by the Texas Government Code and prohibits the remaining court members from voting on a proposed countywide property tax rate hike. Instead, the court will be forced to adopt the effective tax rate, resulting in a tax rate cut.

County Judge Lina Hidalgo and commissioners Rodney Ellis and Adrian Garcia proposed a fiscal year 2019-20 county tax rate based on the rollback tax rates—or the maximum rate allowed by law without voter approval—during a Sept. 10 meeting. The proposed rate would have increased the county’s total combined property tax rate from $0.62998 per $100 valuation in FY 2018-19 to $0.65260 per $100 valuation—a $0.02262 increase.

The Democrats said the tax rate increase would provide additional funding needed to support the county’s Economic Stabilization Fund—or Rainy Day Fund—as well as provide funding for Harris Health System.

Hidalgo said the proposed tax rate increase would have come before Senate Bill 2 goes into effect on Jan. 1. SB 2 will limit how much a city or county can increase property tax revenue—voter approval will be required to authorize an increase of more than 3.5% from the previous year.

"Starting next year, we’re hamstrung at a level of growth that doesn’t keep up with the real growth of the county," Hidalgo said during the Oct. 8 meeting. "Nobody likes to propose a tax increase. This [has] sprung up from the fact that the state has passed this law that is really taking advantage of folks saying that it does one thing when ultimately, what it does is keeps us from being able to provide the services folks have come to expect ... we’ll be feeling this."

If approved, the property tax rate would have been the county's first across-the-board property tax rate increase since 1996, according to Frank Bruce, senior director of finance and budget with the Harris County Budget Management Department.

Radack and Cagle both previously stated a preference for the effective tax rate, which would lower the tax rate to $0.61170 per $100 valuation in FY 2019-20—a decrease of $0.01828 from FY 2018-19. The Republicans said because a tax rate decrease was not approved in FY 2018-19 following Hurricane Harvey in August 2017, it was now the time to provide some property tax relief to homeowners.

The proposed tax rate decrease failed 2-3 and the proposed tax rate increase passed 3-2 at the Sept. 10 meeting with both votes split along party lines. While the proposed tax rate does not require voter approval, the commissioners held two subsequent public hearings on Sept. 20 and Sept. 24. A third public hearing was scheduled for Oct. 8 before a final vote.

In most instances three commissioners court members constitute a quorum allowing for action to be taken on agenda items. However, due to an idiosyncrasy in the Texas Government Code, four court members must be present when levying a county tax.

With the absence of Cagle and Radack from the Oct. 8 meeting, the court does not have a quorum in accordance with The Texas Government Code and will not be allowed to take action on the proposed tax rate increase.

“One of our most basic duties as public servants is to show up to work," Hidalgo said in a statement. "Unfortunately, today Commissioners Cagle and Radack chose to hide rather than face the tough reality of the impact that extreme revenue caps will have on our county ... Now, because of their decision to play politics rather than to govern, we’re left with the consequences. Consequences that will have potential catastrophic impacts on our ability to provide services our residents expect.”

According to an Oct. 8 press release from Cagle's office, the lack of a quorum forces the county to adopt the effective rate.

"The residents of Precinct 4 elected me to represent them," Cagle said in the statement. "They did not elect me to lord over them or repress them. This is the taxpayers' money, not the government's."

According to the release, the nearly 4% tax rate hike would have collected an additional $222 million in taxes from county residents. Cagle called the tax rate increase "unwise, unfair and unjustified" in the release.

"Although proponents of this tax increase tried to couch it in terms of public safety and flood prevention, the truth is that only 5.5% of that revenue would have gone toward flood control," Cagle said in the statement. "Most of it would have drained into the county's general fund for members of the court majority to spend as they like. I believe we owe our constituents better transparency."

State Sen. Paul Bettencourt, R-Houston, who authored SB 2, said he supported Cagle and Raddack's move and that the implementation of SB 2 will give voters more of a voice when it comes to tax rates.

"I want to commend Commissioners Cagle and Radack for standing for taxpayers, preventing Harris County residents from being taxed to the max," Bettencourt said in a statement. "Going forward, Harris County taxpayers will be able to vote on these type of tax increase proposals due to the bipartisan passage of SB 2. The bottom line is what I have been saying for 20-plus years that as appraised values go up, property tax rates should come down."

However, Garcia said he believes the move is cause for concern regarding the county's ability to keep up with future growth and the services needed to accommodate growth.

"You hear these conversations about the state of health, pollution, mobility, drainage—all of these things cost money," Garcia said. "It looks like—by virtue of the unwillingness [by Raddack and Cagle] to sit here and have a debate on this and work through the issues and talk about our future, that we will be hamstrung—as the judge said—toward the growth of our future, the ability to manage that growth. And I’ve always been concerned that if we are unable to manage for our growth, we may not get it—and that’s not a good thing."

At the Sept. 20 meeting, Harris County Budget Officer Bill Jackson said the effective tax rate would raise about $15 million in additional funding for the county's general fund compared to the previous year, an additional $3.3 million for the flood control district and an additional $19 million for the hospital district. The rollback rate, if adopted, would have raised $132 million in additional funding for the general fund from the previous year, an additional $12.3 million for the flood control district and an additional $78 million for the hospital district.

Due the lack of quorum, the court took no action on the item Oct. 8 and will reconvene in a special meeting to adopt the effective tax rates for Harris County, the Harris Health System, the Port of Houston and the Flood Control District, sometime between Oct. 11-16.

This story will be updated with additional information and comments from county officials as the Oct. 8 meeting continues.
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