Houston Mayor, Texas Governor Battle Over Harvey Costs

A clash over Houston’s mounting expenses from Hurricane Harvey escalated on Sept. 25 when Gov. Greg Abbott accused the mayor of holding the state “hostage” by pushing a local tax increase unless an emergency Texas piggybank of nearly $10 billion is cracked open.

Abbott fired back at Democrat Sylvester Turner after the mayor sent him a letter saying the fourth-largest city in the U.S. is facing bills “at a scale beyond our savings.” He wrote that damage from Harvey would reach the maximum of the city’s $100 million flood insurance coverage limit and that a new policy would cost $10 million, in addition to other expenses.

Turner has proposed a one-time property tax rate increase of 3.6 percent but says that wouldn’t be necessary if Texas taps into its rainy day fund, which has the biggest balance of any similar fund in the U.S.

“It raises a concern that the mayor seems to be using this as hostage to raise taxes, when in reality, the city of Houston is sitting on hundreds of millions of taxpayer dollars that he’s not tapping into,” Abbott said.

He went on to say that Turner has all the money he needs, referring to money in special tax reinvestment zones. But a Turner spokesman Alan Bernstein said the city cannot raid those funds, which he said are largely for drainage projects to prevent future flooding.

“Mayor Turner is asking the governor to do what other governors, such as Florida’s, are doing. It’s the Texas governor’s right to say no,” Bernstein said in an email.

It’s not the first time that Abbott, a Republican, and Turner have clashed over Harvey. Before the storm made landfall last month, Abbott urged Houston residents to flee the coming disaster, while Turner told people they were safer staying put and not jamming flood-prone roads with a major downpour imminent.

Harvey dumped a record 50-plus inches of rain around Houston, putting highways under water and killing more than 70 people along the Texas coast. In Harris County, which includes Houston, at least 136,000 homes and other structures were flooded

Abbott has said the total damage to Texas from Harvey could top $150 billion. He says Texas will need to tap into the rainy day fund eventually but not until 2019, when the Texas Legislature returns to work, saying now isn’t the time “for financial panic.”

Turner had initially proposed an 8.9 percent increase that would have generated about $118 million. But he said last week that improved reimbursement rates from the federal government allowed the city to cut the proposal to 3.6 percent, which would generate about $50 million.

The city council is set to vote on the tax hike Oct. 18, but it’s unclear if the proposal has enough support to pass.