Oct 6, 2022 - News

How Houston plans to fund its ARPA shortfall

Photo illustration of Houston Mayor Sylvester Turner with lines radiating from him.

Photo illustration: Brendan Lynch/Axios; Photo: Callaghan O'Hare/Bloomberg via Getty Images

Mayor Sylvester Turner signaled support for increasing the city's revenue cap through a voter referendum in 2023 as federal dollars funneled to Houston for pandemic recovery start to dry up.

Catch up quick: Houston received $607.7 million from the American Rescue Plan Act (ARPA), the majority of which went to replace lost revenue amid the pandemic.

  • Most of the leftover funds went to public safety initiatives, including overtime for police amid a public outcry over crime in the Bayou City.
  • The city spent nearly $7.8 million in ARPA funds in the second quarter of 2022 on extra patrols and millions more on other public safety measures.
  • The city has until 2024 to expend the funds.

Driving the news: During yesterday's City Council meeting, council member Michael Kubosh asked Turner to consider a referendum to help keep the additional patrols on the books.

What they're saying: "I'm ready to do it," Turner responded. "I'm willing to do it."

  • "These federal dollars are going to come to an end," Turner said. "The needs of the city, especially as it relates to public safety, will not be diminished."

Context: The city has a self-imposed revenue cap set by voters in 2004.

  • The city utilizes a special formula combining inflation and any additional population to determine how much money it can accrue through property taxes year after year.

Yes, but: There are still plenty of questions unanswered, including how much the revenue cap would be raised by the referendum and whether other city services would benefit.

State of play: Yesterday, the city set its tax rate for 2023 at 53 cents per $100 of valuation — a 3.12% decrease from the previous year's rate.

  • Despite a lower city tax rate, property owners might see an uptick in their bill due to rising property values.
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