$50 Million Peace Offering From Governor To Mayor Means Additional Property Tax 'No Longer Needed'

HOUSTON, TX — After a week where two of Texas' most powerful elected leaders traded barbs, an olive branch was extended in what felt like a cease-fire moment. Texas Gov. Greg Abbott handed Houston Mayor Sylvester Turner a $50 million check at a press conference late Friday, silencing minced words this week and slamming the door on any property tax increases to temporarily pay for debris cleanup in the aftermath of Hurricane Harvey.

Earlier in the week, Turner sent a letter to Abbott requesting the governor tap into the state's Rainy Day Fund that's at $10 billion. The Republican governor quickly wrote back that Houston has enough money in its coffers, and that its Democratic mayor doesn't need money from the deep reserves.

The letter from Turner to Abbott said that although the total amount of damage has yet to be determined at this point, the federal government will pay for 90 percent of debris removal costs. Turner stated Houston's portion could be $25 million of the state's total estimation of $250 million.

Turner added that Harvey's damage exceeds the city's $100 million flood insurance under the city's flood insurance policy despite hurricane season being slightly more than halfway complete. Turner said Houston is basically without flood insurance at this point. Any additional flood insurance to cover the city from now until April 1, 2018 would cost the city an extra $10 million. Furthermore, the city would need to spend a $15 million deductible to recover any municipal damages.

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The letter can be viewed on the city's website.

Turner added that without aid from the state fund, the city will be forced to increase its property tax rate on a temporary, emergency basis for 12 months to help pay its recovery bills. The mayor is seeking the city council's approval for an increase that would cost the owner of an average Houston dwelling $4.03 per month for a year.

In a rather quick reply to the Mayor, Abbott said the state has already allocated $100 million for debris pickup and an "accelerated reimbursement program" for recovery efforts. The governor did say Rainy Day Funds will be used for hurricane and flooding reimbursement, but that a special session would not be called and it will be decided upon in the next legislative session that begins in January 2019.

Abbott added that Houston has enough resources to take care of itself before the next state legislative session.

"In times like these it's important to have fiscal responsibility as opposed to financial panic," Abbott told reporters.

Texas legislators meet every other January right after state elections are canvassed and candidates are sworn in. Abbott has the authority to call Texas lawmakers in the interim for special session lasting up to 30 days, like he did this summer to address a 20-item agenda.

State Senator Paul Bettencourt, a Republican from Houston, predicted Abbott would call a special session sometime soon to address Harvey, which has become more costly than Hurricane Katrina and Super Storm Sandy combined.

Hurricane Harvey damaged more than just Houston and the Bayou City region. Harvey hit Rockport as a powerful category 4 storm, leveling many buildings and crippling the Texas Coastal Bend. Harvey moved east and hovered over Houston, dumping more than 50 inches of rain in many places. Harvey then battered the Golden Triangle for three days, leaving towns like Beaumont, Orange and Port Arthur as separate islands.

Texas voters approved a constitutional amendment to create the Rainy Day Fund in 1988 following an oil price plunge and economic recession that forced lawmakers to raise taxes to keep state government in the black, according to the state comptroller's website. The Legislature structured the fund to automatically set aside some tax revenues in boom years to help the state during downturns. Subsequent legislation and another constitutional amendment made further changes to its funding mechanisms.

If no funds are tapped, the reserve amount will reach $10.3 billion by the end of fiscal year 2017 and up to $11.9 billion by the end of fiscal year 2019.

Photo via City of Houston