City of Houston

Houston City Council approves hearing for new lower property tax rate for 2023

Mayor Sylvester Turner said that lowering the tax rate would cause the city to lose $332.7 million.

Lucio Vasquez / Houston Public Media

Houston City Council voted on Wednesday to schedule a public hearing for September 28 at 9:00 a.m. for the proposed property tax rate for fiscal year 2022-2023.

This gives residents an opportunity to weigh in on the new lower tax rate.

If approved, this will be the eighth time in nine years that the city has lowered the tax rate below the Voter-Approval Tax Rate.

The proposed property tax rate is $0.533640 per each $100, a decrease from the current rate of $0.55083.

The city operates under two revenue caps that limit the amount of property revenue the city can collect each year.

In 2004, voters approved to limit the city's revenue by combining the prior year's cap, plus population growth and inflation; or the prior year's revenue plus 4.5% to determine the lower of the two.

The second cap was enacted in 2019, which limited the city's revenue growth from 8% to 3.5%.

Mayor Sylvester Turner said the proposed rate is needed to collect the 2023 budgeted amount of property tax, which is $1.27 billion. But Turner also said that lowering the tax rate would cause the city to lose $332.7 million. He said that the city has been losing money since it hit its revenue cap in 2015. The tax rate prior to fiscal year 2015 was $0.638750.

"So because of our self-imposed revenue cap, since 2015 we have not been able to utilize approximately $1.489 billion," he said. " For every one cent of tax rate … that’s $23.7 million of revenue that’s generated."

The city will get an estimated $27 million more of property tax revenue for 2022 compared to 2021, but Mayor Turner says the revenue cap prevents the city from spending the necessary funds to maintain the city.

“The point is that yes, we’ll have more coming in from property tax, but let me tell you we’re going to eat that up real soon.”

Mayor Turner said the city is growing and he wants to meet city needs, but the property tax revenue cap is preventing that from happening.

"I want you to know it costs to pay first responders, police, fire and it costs to pay solid waste workers, ” he said.

Mayor Turner said every year since he's been in office, the funding for HPD has gone up every year as he states public safety is his top priority.

For residents, City of Houston Interim Finance Director William Jones said homeowners would see real benefits from the lower tax rate.

“Once we lower the tax rate it would provide some relief where the residents feel the impact is the growth and evaluation on their assessed values," he said.

Jones said although the city's property rate is decreasing some residents may pay more if the value of their home is higher.

Councilmember Mike Knox said the county increasing their property values is why the city's property tax has to decrease.

"The property values continue to increase which causes our tax rate to go down, so we don't bust that 3.5% increase that we have every year," he said.

Councilmember Robert Gallegos said the state has the mends to do something about the tax rate cap, and that blame should not be placed on the city or county – but the state.

"It's the state we are having to listen to, it's the state that's actually controlling our property taxes," he said. "If they want to do something about it, they can do something about it."

Gallegos said residents should be informed about the amount of money the city is losing due to the revenue cap.

"We have residents asking why we are not hiring more police, why their trash is not being picked up on time, why we can't fill the potholes on our street, why their sidewalks are busted and we have not been able to repair those sidewalks.....it's the revenue cap."

Mayor Turner said suburban communities are not operating on a cap and it's unfair to Houstonians in the city.

"They want the same amenities, they want quality neighborhoods and Houstonians deserve the same.”

This story was updated at 10:33 a.m. on 9/16/22 to clarify that the vote was to approve a public hearing on the proposed tax rate.

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