Houston's Rain Tax A Questionable Revenue Stream after Court Ruling

This past week, the Texas Supreme Court declared Houston’s controversial “rain tax” unconstitutional. As you might recall, the “ReBuild Houston” initiative was brought to city voters as “Proposition 1” during the 2010 election. The city of Houston’s official website explains the implementation of the tax in this way:

“A 10‐year planning cycle will identify new projects based on need, prioritizing the worst needs first. ReBuild Houston will help: reduce street flooding, improve mobility, and reduce structural flooding.  Ultimately, it means better streets, better drainage.”

This is interesting, because it doesn’t seem as if any Houstonian today would argue that our drainage systems have improved in recent years. 

Concerned citizens who knew these promises lacked substance and felt that Houston voters were given inadequate information when this proposal was brought before the voters filed suit against the tax shortly after it passed into law. They claimed that the language was unclear and citizens were being misled about the nature of the drainage fees. Five years later, the Texas Supreme Court agreed with their assessment.

As the Texas Supreme Court concluded:

“The city did not adequately describe the chief features — the character and purpose — of the charter amendment on the ballot. By omitting the drainage charges, it failed to substantially submit the measure with such definiteness and certainty that voters would not be misled."

What does this mean for Houstonians moving forward? It would appear the city may owe residents that paid this unconstitutional and misleading tax a full refund. The question now is not just whether citizens deserve their money back, but also how precisely this will be executed. As this case moves to trial court, my campaign will be following the issue and keeping you updated.

While we watch this matter progress, it’s important to keep the entire issue in perspective. One of the fundamental problems this situation brings to light is just how fiscally irresponsible the city has been when it comes to allocating newly acquired funds. When we break it down, there are several red flags.

First, as was touched upon above, the rain tax was originally proposed for the purpose of improving drainage in our flood prone city. Sadly, we were reminded very recently just how devastating a flood can be to the city of Houston. Assessing the damage, which so many of our neighbors have not yet recovered from, one cannot reasonably conclude that the city’s drainage system has improved over the past five years. This begs the question: Where has the money gone?

Rather than utilizing the new revenue stream for its stated purpose, city officials used much of the revenue to make up some of the balance in the budget deficit when they should have made responsible cuts. They also spent rain tax revenue, which they promised would be allocated to drainage, on other projects. As Don Hooper, who ran the “Problem with Prop 1” campaign against the rain tax recently explained

“One of the big issues and fears is that, once the tax was passed, the city of Houston (COH) would simply reshuffle the deck chairs on the Titanic. The money would be used for things other than the stated purpose, flood control and street improvements. Of course, like all things financial with the COH salaries, benefits, and overtime are the true diversion. The COH has now moved over 500 public employees from public works to the Renew Houston Enterprise Fund. So the money you once paid for streets and drainage is now being used to pay for salaries, pensions, and overtime, just as we predicted. Very few if any flood improvements have been done at all with Prop1 funds and it is hard to tell for sure because the COH refuses to release hard data. The whole thing is a joke and now is the time to hold the bad actors responsible.”

It is flatly irresponsible to divert funds vaguely sold to Houstonians as allocated for drainage improvement under questionable pretenses to begin with.The entire point of the “fee” was to prevent this kind of corruption! It is now clear that Prop 1’s language was not only misleading, unaccountable politicians raided its revenue stream for surface-level projects while ignoring not only the drainage issues the money should have gone to, but our unfunded pension liabilities, and crumbling infrastructure.

As a political outsider and community leader, I look at issues such as this and am reminded of exactly why I’m running for city council. For too long, career politicians have gotten away with proposing new ways to raid Houston’s hardworking taxpayers, all while refusing to tighten their own belts. 

There is so little accountability in city politics, and there is only one way to change that: community engagement. It’s why I’m committed to my “Know your Neighbor” initiative. It’s incumbent upon those who are informed about these issues to educate our fellow Houstonians and unite for change.

While we don’t know how the lower trial court will rule, we do know that Houstonians who were made to pay this misleading fee deserve recompense. With enough grassroots pressure, council will be forced to do the right thing in a responsible fashion. 

Those who represent us in City Hall will have ample time to formulate a fiscally responsible plan that pays back the people owed, and sets a path to fiscal solvency. Councilors and the Mayor have gotten away with diverting $375 million away from its intended purpose in just five years, and this is just one example of similar systemic behavior. This is ridiculous, and it’s encouraging that the courts have put a brake on this behavior. The next step is coming to a resolution that is fair and equitable for all Houstonians. I look forward to being a part of that solution.