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Volume 70, Issue 47, Wednesday, October 27, 2004


Rival proposals seek to reign in revenues

By Barrett Goldsmith
Senior Staff Writer

This is the first of a two-part series examining Props. 1 and 2, which will be sent to Harris County voters Nov. 2. Thursday, local experts will give their insight on the proposed measures.

Propositions 1 and 2 may not have the glamour of Bush or Kerry, but the choice between competing proposals on Nov. 2 may have an even greater impact on average Houstonians than the high-profile race at the top of the ticket.

The rival initiatives seek to cap revenue collected from property taxes in Houston. The differences in the details of the plans have caused an intense debate that has rivaled the presidential race in animosity, if not exposure.

Proposition 2, which took shape before Proposition 1, was formulated by a handful of Houston business leaders and received the support of Harris County Tax Assessor-Collector Paul Bettencourt. Proposition 1 is the product of City Councilman Mark Ellis and enjoys the backing of Houston Mayor Bill White.

Under Proposition 2, total city revenue for a given year could not exceed revenue from the previous year by more than the combined rate of inflation and population growth, unless a ballot initiative calling for a larger increase received more than 60 percent of the popular vote.

For example, if total revenue -- that collected from property taxes, utility fees and other funds -- was $100 million for 2004 and the inflation and population growth rates were each 1 percent, the total revenue for 2005 could not exceed $102 million without voter approval. If the city collected more than that amount, it would be forced to return it to the taxpayers.

Proposition 1 does not focus on total revenue, but on the individual revenue streams created by property taxes and by water and sewer fees. It would also extend the "homestead exemption" that softens the impact of property valuations on senior citizens. It is designed to reign in the growth of city government while facilitating the delivery of basic city services like police, fire control and utilities.

The proposal would limit property taxes in one of two ways. Total property tax revenue would increase by either 4.5 percent or by the combined rate of growth of population and inflation, whichever total was lower.

So if the population growth and inflation rate were both 1 percent, property taxes could increase by no more than 2 percent. But if the population grew by 3 percent and inflation hit 2 percent, the property taxes would increase by only 4.5 percent.

The 4.5 percent option is not included in the water and sewer rate limit. Those rates could increase by as much as the combined rate of population growth and inflation. Though some individual rates could exceed that based on need and delivery of services, the average rate of increase could not exceed the number.

The homestead exemption extension is aimed at easing the burden on senior citizens, many of whom are on fixed incomes and have difficulty keeping up with rising property valuations, which lead to higher property taxes.

For this year, the exemption will be $48,400. That sum is set to increase by 10 percent each year until fiscal year 2008. Proposition 1 would extend that by one year to include FY 2009. 

For more information on Proposition 1, go to For information on Proposition 2, visit

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