Pearland fires city manager Clay Pearson in wake of budgeting miscalculation

Trent Epperson has been named interim city manager for Pearland, which is trying to make up for a $10.3 million budgeting shortfall as a result of a miscalculation of its taxable property values.

Pearland Water Tower
Lucio Vasquez/Houston Public Media
The Pearland City Council on Monday voted to fire Clay Pearson, who had been city manager since 2014.

Pearland’s city manager has been fired after a billion-dollar miscalculation left the Houston-area suburb with a $10 million budgeting shortfall for the fiscal year 2023.

The Pearland City Council voted unanimously Monday night to terminate the employment of Clay Pearson, who had served as city manager since 2014. The council also voted to appoint Trent Epperson, the deputy city manager, as interim city manager.

When asked if Pearson’s firing was related to the budgeting snafu, which city leaders discovered early this month, city spokesperson Joe Calderon said, “This discussion was in the closed executive session. What it was directly related to, I can’t assume on that.”

Pearland Mayor Kevin Cole said Monday that city officials have been working on a budget amendment and seeking other funding sources after learning they would receive about $10.3 million less than expected in tax revenue during the current fiscal year. The city set a tax rate and approved a budget in late September based upon a calculation of its taxable property values, subsequently learning that calculation had been erroneously inflated by about $1.3 billion, Cole said.

Pearland sits at the convergence of three counties – Brazoria, Fort Bend and Harris – and Cole said the miscalculation was related to taxable property value information provided by Harris County, which includes Houston and is the most populous county in Texas. The information from the Harris County Appraisal District was incorrectly inputted on a tax rate calculation worksheet by the Brazoria County Tax Assessor-Collector’s office, and Pearland city officials used the worksheet to create a budget and set a tax rate, according to Cole.

Cole said he thinks “there’s culpability on three different agencies” – on the Brazoria County tax office for erroneously completing the worksheet, on the Harris County Appraisal District for not providing clearer instructions on how to use the numbers it provided and on Pearland leaders for not catching the mistake before they approved a tax rate and adopted a budget. Cole added that the tax calculations are “very, very complicated” and that the Brazoria County tax office has a “very difficult job putting all that together.”

Kristin Bulanek, the tax assessor-collector for Brazoria County, did not respond to a message seeking comment Monday. The Harris County Appraisal District (HCAD) said in a statement that the information it provided for Pearland “was correct.”

“HCAD provides value information to all – over 600 – the taxing jurisdictions in the county and that information is required by the Tax Code and done in accordance with state law,” the agency added. “However, the Truth-In-Taxation calculation the jurisdictions must do is very complex.”

Calderon said the Pearland City Council also voted Monday to authorize the procurement of an independent third-party firm to audit its budgeting processes and the roles played by each of the aforementioned entities, along with authorizing the refunding of some of its debt service and the issuance of permanent improvement refunding bonds. There is expected to be a $5.6 million revenue shortfall in Pearland’s debt service fund, along with a $4.7 million shortfall in Pearland’s general fund.

Cole said Monday the city council is expected to finalize budget amendments within the next few weeks. He also said he does not expect there to be a disruption or reduction in core city services as a result of the mistake.

“The good news for us is we’ve got strong liquidity and strong fund balances to be able to absorb it,” Cole said. “My goal, and I hope it's the council’s goal, is that any dollar we take in above our sales tax budget amount, we use to replenish those funds over the course of the year.”