The council passed a tax rate Oct. 21 of $0.56184 per $100 valuation for fiscal year 2020-21, a 1.07% reduction from the previous year’s tax rate of $0.56792 per $100 valuation.
Based on the city's property tax rate calculation, the rate may still result in an increase for some taxpayers with the average value for homestead properties rising about 4% to $250,355. Properties at that valuation can expect to contribute about $1,407 in city taxes, according to the estimate.
“There are two multipliers: the tax rate and your property value. The problem is with the valuations we allow the appraisal districts to do,” said Mayor Pro Tem Dave Martin, who called for more restrictions on appraisal districts from the state.
During a public hearing, council members; Mayor Sylvester Turner; and at one point, state Sen. Paul Bettencourt, R-Houston, sparred over the proposed rate.
“I am concerned about the people who are struggling now and want to do anything we can to help ease that burden on them,” said Council Member Amy Peck, who first raised the issue in a letter to constituents Oct. 13.
State Senate Bill 2 was passed in 2019 and limits total revenue from property taxes to no more than 3.5% higher than the previous year. An exception to that, however, allows cities to set a tax rate that results in up to 8% more revenue if a state of emergency is declared.
“There is a disaster exemption that allows you to do this, but it certainly is not recommended. ... It was designed for physical damage,” Bettencourt said.
The city of Houston is also subject to its own voter-approved revenue cap. It states the city cannot collect more than 4.5% more revenue year over year, or a percentage based on inflation and population growth, whichever is lower.
City Controller Chris Brown, who serves as an independent check on the administration's finance department, confirmed the adopted tax rate complies with both the state and local revenue caps.
Turner said a lower rate would result in a reduction in tax revenue that would lead to cuts to the police and fire departments, which account for 60% of the general fund, according to budget documents.
“You are paying a heck of a lot more in taxes for schools than the city of Houston, and what I am hearing on a daily basis is we want more support for police and fire,” Turner said.