“There are things that we will be able to point to the public when we say, ‘We've done everything we can.’ They're not there yet, folks. I know it,” Mayor John Whitmire said at the meeting. “When we build up that trust, credibility, we'll change the revenue stream.”
What you need to know
City Council approved a tax rate of $0.5191 per $100 home valuation, the same as last fiscal year's tax rate.
However, the approved rate is lower than the tax rate used to calculate the FY 2025-26 city budget council adopted in June.
According to previous Community Impact reporting, City Finance Director Melissa Dubowski said the budget was created using a rate of $0.5378 per $100 home valuation, which is the maximum rate the city could adopt without voter approval due to local revenue cap laws.
The city will see an estimated $53 million decrease in revenue with the tax rate adopted at the Oct. 15 meeting, according to Dubowski’s Oct. 7 presentation to the Budget and Fiscal Affairs Committee.
The debate
Before voting on the FY 2025-26 tax rate, council members had a back-and-forth discussion about the idea of keeping the tax rate unchanged. While some council members expressed worries about the $53 million dip in revenue, others saw the benefits in saving money for homeowners.
Council member Edward Pollard expressed concerns about transparency since a higher tax rate was used to calculate the budget. He said he wanted an explanation on how the city would fill the revenue gap left behind with the approved tax rate.
“Someone's going to have to deal with all of these decisions that we are making today, and we're putting ourselves in a deeper and deeper hole without any real explanation on how we're going to get out of it,” Pollard said.
Council members Fred Flickinger and Amy Peck, who voted for the tax rate approval, suggested gaining voter trust before raising the tax rate. Flickinger said that by cutting expenses in other areas, such as saving $3,000 by declining to paint garbage trucks blue, the city can gain enough voter trust to be open to the idea of raising taxes in the future.
“I think the voters and the residents of Houston are willing to pay what has to be paid as long as they're convinced that we're doing the right thing with their money,” Peck said.
Council member Abbie Kamin suggested the city adjust its budget adoption calendar so the council can work with the most up-to-date valuations.
Something to note
The city calculates its property tax cap each year based on three different laws, Dubowski said. The city’s cap is partly determined by revenues from the previous year, according to a presentation. Dubowski said the city has to calculate its annual cap based on each of the three laws and comply with the lowest calculation.
A one-penny increase to Houston’s property tax rate would impact the average homeowner by about $2.85 per month and generate approximately $28 million in additional revenue for the city, Dubowski said.
