Platform: City Budget and Finances
Sylvester Turner is the best choice to ensure responsible budgets and sound financial management for Houston.
Sylvester has worked at the state level over the last decade to write and evaluate our state budget. At the city, he will use performance-based budgets and performance audits with specific objectives (targets) and outcomes to measure progress and define success.
It’s important to make sure that we are transparent and accountable and that all our metrics are accurate, so that citizens can measure the progress of our government in real time. The recent revelations that that pothole complaints were marked “closed” after they were investigated – instead of after the potholes were repaired – is a perfect example. (The city has now changed its policy.)
Like cities across the country, Houston is facing a tough budget climate. The cycle of shortfalls and short-term fixes is unsustainable. Sylvester is open to exploring alternative sources of revenue, including potentially lifting the revenue cap for limited purposes such as improving public safety or paying down municipal debt.
Sylvester knows we must grow our tax base to keep our city thriving. This means both employing the judicious use of incentive funding to attract new businesses to Houston and making the needed investments in our infrastructure, our public safety, our education system and more, that will make businesses and their employees want to stay here. Changes to existing budget allocations should be made in a deliberative process that includes all affected stakeholders.
Houston’s debt payments will spike in 2017 and 2018, putting pressure on our city budget. Sylvester will examine options smoothing out spikes in debt service, while keeping in mind that it is in our best interests to pay our debt down as soon as possible. Our ability to manage debt is also impacted by other moving parts such as interest rate increases and pension costs.
Sylvester is opposed to proposals by his opponents to use pension obligation bonds to pay down the city’s unfunded liability.
Houston must have a secure, stable and adequate source of funding for infrastructure and – whatever the outcome of the pending litigation – the city’s funding mechanisms for infrastructure and all city services must be clear, transparent and fair.
Repealing our current funding mechanism – Rebuild Houston – without a clear plan to replace the funding would be irresponsible. Houston’s infrastructure must keep pace with our growth and development – that is essential.
ReBuild Houston represents a critical opportunity to create the strong infrastructure that Houston needs and deserves, which will lead to increased property values and facilitate our continued growth. Revenues from the ReBuild Houston fund will increase as old bonds are retired and the funds used for debt service are captured. Because of the untested and ongoing nature of the program, it is important that thorough monitoring and evaluation is in place to maintain the program’s effectiveness. One of Sylvester’s first items of business as mayor will be to undertake a top-to-bottom performance audit of the Public Works Department.
In light of the recent ruling by the Texas Supreme Court, the prospects for a secure funding source for infrastructure are in question. As we work to strengthen the program, or replace it if necessary, bringing all stakeholders to the table will be essential. Sylvester will fight to maintain a reliable and equitable revenue source for drainage and streets. The people of Houston lose if we do not have a reliable funding source for infrastructure.
The city council needs to look at some additional allocation of funding for road repair and maintenance, with the understanding that some of the money spent on streets also assists in drainage and flood resilience. The recommendations of experts in the field should inform the determination of a specific funding amount. But what is crystal clear is that this is a dedicated source of revenue that should be used specifically for its designated purpose.
Cutting Waste and Duplication
Houston residents deserve basic city services, despite our budget shortfalls. Closing that gap will require a combination of approaches. We must maximize our resources by cutting waste and inefficient spending. One potential way of achieving this is to implement performance measures with specific targets and outcomes to measure progress, and even to consider the limited implementation of zero-based budgeting for some departments.
A stable pension system is an essential protection for the economic health of the middle class. Public employees deserve the secure retirements that were promised them; our city needs to fund essential services; and taxpayers need to be protected.
Sylvester supports local control – but to achieve it, we must put our local house in order.
Sylvester has a 26-year track record of getting things done in the legislature and have occupied major positions under Democratic and Republican leadership. He knows that state legislators don’t want to be put in the position of settling local disputes. They just throw up their hands and refuse to get involved.
That’s why any meaningful reforms in Austin will require all stakeholders in Houston sitting at the table discussing the city’s financial challenges now and into the future.
Beware of politicians selling easy answers – they often have unintended consequences.
Any wholesale changes done without buy-in from local stakeholders can put the safety of the city at risk. Approximately 1,900 police officers are eligible to retire right now – when the force has fewer officers than it did ten years ago – and nearly 1,400 firefighters are eligible to retire right now. The threat of losing so many officers and firefighters is not just theoretical.
In Memphis, according to a Wall Street Journal article this spring, more than 250 police and firefighters quit after the city switched a portion of its employees out of defined benefit plans into 401(k)-style accounts. And the city is having significant challenges recruiting replacements.
Pension reform will not provide near-term budget relief.
Some of Sylvester’s opponents are basing their budget plans on reaping hundreds of millions of dollars from pension reform. We must remember that the legislature does not meet again until 2017 – and that the earliest that any pension reform law could take effect is September 2017. The city will have had to pass two balanced budgets before then – including dealing with a spike in municipal debt in 2017-2018.
Others are suggesting that we use pension bonds to reduce the unfunded liability – a proposal that ignores our current debt situation.
An all-or-nothing approach will get us nothing – except continued total gridlock – but we can work together to find a solution.
We did not reach this unfunded liability overnight and it will take a series of steps to rein in the costs. Take, for example, Texas’ Employee Retiree System, which had an unfunded liability of $7.5 billion and a cost to the state of $500 million a year. We made some design changes in a previous session of the legislature. In this legislative session, Sylvester co-authored the bill to make the plan actuarially sound. Sylvester suggests a similar approach – working with all stakeholders to reach common ground – for Houston. Good faith in communication and interaction are essential elements.
TIRZs and Management Districts
Special districts such as TIRZs and management districts are useful tools in Houston’s development arsenal, but the decision to implement them must be made based on the specific circumstances at hand. Any decision on how to spend public money should not be made in a vacuum. Sylvester believes we should bring all entities together and coordinate our efforts to ensure we are creating the best neighborhoods for our families. The city, management districts, TIRZs, local school districts and others should all have a seat at the table and work collaboratively. The next mayor will need to do a careful and thoughtful review of the city’s entire financial portfolio; everything should be on the table for discussion.
When Houston initially established the TIRZs, the yearly revenue diversion from the general fund was approximately $30 million. Today, it is approximately $135 million. That’s why it is healthy to have a thoughtful conversation on TIRZs. Whether or not they should be sunsetted, whether or not we should reduce the amount of revenue that remains within the TIRZ compared with what reverts to the city – these are important questions that should be debated, especially given the financial challenges that the city will be facing.
The next mayor will need to do a careful and thoughtful review of the city’s entire financial portfolio; everything should be on the table for discussion, but, in view of the fact that the city will continue to face major revenue challenges, including a debt service spike in 2018, Sylvester does not believe that we should create new TIRZs without engaging in a holistic discussion of their place in our overall budget strategy.