Houston City Council adopts nominal tax rate hike

October 10, 2018

Houston City Council approved a nominal increase in the city’s property tax rate, the first rate hike at City Hall in two decades.

The increase of less than 1 percent, which passed by a vote of 13-3, complies with the voter-imposed cap on property tax collections. The rate will shift from about 58.4 cents per $100 in assessed value to about 58.8 cents.

Voters OK’d the revenue cap in 2004, amending the city charter to limit the annual growth of property tax revenue to the combined rates of inflation and population growth, or 4.5 percent, whichever is lower. Voters tweaked the cap in 2006, allowing the city to raise an additional $90 million for public safety spending.

Houston exhausted that breathing room in 2014, and, with property values still on the rise, typically has had to trim its tax rate each fall to avoid collecting more revenue than allowed.

The rate was able to rise this year because property values rose by only 1.1 percent while inflation and population growth combined to record an increase of 2.4 percent.

Council members Mike Knox, Brenda Stardig and Michael Kubosh opposed the rate hike Wednesday, suggesting the rate could have been left flat. That would have meant the city would collect about $8 million less in property taxes.

The owner of the average Houston house with a homestead exemption has saved a cumulative $436 thanks to the rate adjustments driven by the revenue cap since 2014, an average of $87 per year. The average Houston home increase in value by about 1 percent from last year, and, with the rate increase adopted Wednesday, will have a city tax bill of $1,342 on Jan. 1, about $9 more than this year.

The same rate adjustments have prevented the city from collecting $533 million than it otherwise would have.



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