Out of Control Policy Blog

District Court Sides With Houston's TABOR

Some great news today on Houston's Proposition 2, a local tax and expenditure limitation modeled after Colorado's Taxpayer Bill of Rights (TABOR):

    In a defeat for Mayor Bill White's administration, a district court has ruled that the city of Houston must operate under two revenue-cap initiatives approved by voters in 2004.

    The city had argued that a limited cap backed by the mayor, called Proposition 1, took precedence because it received more votes. Backers of Proposition 2, put on the ballot by resident petition, said the city had to put both caps into effect, and sought a court order.

    In a summary judgment issued late Monday, state District Judge Tad Halbach agreed with the Proposition 2 plaintiffs.

    The city will appeal the ruling, which the mayor and controller say has no immediate practical effect on city revenues since this year's budget was written to allow for both revenue caps.

    . . . .

    Under Proposition 1, the city caps annual increases in property tax revenue and water and sewer rates to the combined rates of population growth and inflation. Proposition 2 would limit annual revenue increases from all sources – including aviation and convention money – to the combined rates of population growth and inflation.

    . . . .

    Bruce Hotze, a plaintiff in the case, said he was pleased by the ruling.

    "I'm extremely disappointed that the mayor continues to fight the will of the voters at the ballot box," he said.

    Harris County Tax Assessor-Collector Paul Bettencourt said he hopes the city does not appeal the decision.

    "All you are doing is throwing taxpayer dollars away. A summary judgment is a pretty strong statement," he said.

For background, Prop 2 is designed to reduce the cost of city government each year by limiting the growth of city revenue to the combined rates of inflation and population growth. If the city exceeds this limit, the excess revenue must be refunded to the taxpayers or be subjected to voter approval before the city could spend it. It covers all city revenues collected in a fiscal year, including property taxes, sales taxes, water and sewer fees, airport revenues, and pollution fines.

For more background on Prop 2 from the initiative's backers, see here.

Leonard Gilroy is Director of Government Reform


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