Houston considers 1 percent sales tax hike

HOUSTON — Officials have proposed reductions in employment in the wake of a 5 percent reduction in funding received from the state.

A budget slated for introduction at a Thursday hearing shows city revenues have decreased roughly 12 percent from the 2015 projected budget, and as a result, city officials have had to slash spending about 14 percent. This shortfall remains despite a 4 percent property tax increase and a 3 percent sales tax increase. If everything goes according to plan, the budget reserves at the end of Fiscal Year 2016 will be exactly zero.

Chief among the reductions: the number of hours for full-time employees has been reduced from 40 to 30 hours. In addition, positions in the clerk’s office and public works have been reduced.

Seasonal and part-time on-call public works positions also have been eliminated, according to city treasurer Carolyn Grabowski.

“In the public works, we had a few seasonal on-call people working with us and we had to let go of those gentlemen because we just couldn’t handle it,” she said. “We’d love to get ‘em back, because they were great workers.”

Reductions in the state’s revenue sharing plan mean the city will face an overall 12 percent reduction in total revenues, according to budget figures published Friday. Revenue sharing from the state accounts for 22 percent of the overall revenues in the city of Houston. It’s the second largest revenue line item, after property taxes, which account for 46 percent of the overall budget. Sales tax accounts for 19 percent of the total, and together, revenue sharing and property and sales taxes represent almost 90 percent of the total overall budget. The proposed Houston mill rate is at the maximum of 3 mills, meaning the owner of a $200,000 home would pay $600 for that section of their property taxes.

As a result, city officials are considering a 1 percent increase in the sales tax, which would amount to an additional $80,000 in revenue for the city, according to a proposal submitted by city clerk Sonya Hays-Dukes.

While officials were reluctant to speculate, they said a zoning change rejected by the city council and elements of the public could potentially have allowed an industrial LED factory into the city, providing an economic shot in the arm.

Not all the news was grim. Houston officials said they were looking forward to a potential boost from marijuana sales, depending on state action to help fill city coffers in the future. They also anticipate the LED factory’s primary owners, Knikatnu Inc., which recently applied to have a large parcel of its property annexed into Houston, will try again.

Asked if anything was on the immediate horizon to prevent the cuts, Mayor Virgie Thompson was optimistic.

“I would hope so,” she said. “I don’t think anything is going to be instant. We’re looking at a year down the line or a couple years down the line.”

Contact Brian O’Connor at 352-2269, brian.oconnor@frontiersman.com, or on Twitter @reporterbriano.

Note: A calculation error in an earlier version of this story doubled the amount of property tax for taxpayers in the city of Houston.