HOUSTON — A new report from Rice University's Kinder Institute shows that the city of Houston will be the hardest hit city in Texas by the coronavirus pandemic. That means city leaders will need to make tough choices in the future that could ultimately affect city services and pensions.
The Bayou City could find itself in some troubled financial times due to the loss of revenue related to COVID-19. That’s according to a 28-page report by the Kinder Institute at Rice University.
"I think it will be much more difficult for Houston to balance the budget and maintain services than other large cities in Texas. Even though other large cities will be affected by COVID," said Bill Fulton, with the Kinder Institute.
Why Houston will likely be hit the hardest
First, other cities make additional revenue from a trash collection fee, Houston does not.
"Dallas and San Antonio each have a trash pickup fee trash collection fee of about $25 to $30 a month. That raises in each city about $120 million. Houston, until recently, charged property owners nothing," said Fulton.
Second, the city of Houston has a revenue cap and can’t temporarily increase taxes past that cap. This was approved by voters in 2004.
"If the city is projected to receive more than that amount of property tax revenue it is required under this voter initiative to reduce the property tax value," said Fulton.
And less tax money coming into the city means services will ultimately be cut.
"Usually parks and libraries are the first things cut. Police and fire are the last things cut," said Fulton.
Experts believe, in the short run, the mayor will have to furlough employees and even make pay cuts. They say the city might have difficulty paying down those unfunded pension liabilities. And will face the difficult choice whether they commit to paying pensions.
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