October 22, 2018

Closing Argument on Proposition A - Rebuild Houston

Closing Argument on Proposition A - Rebuild Houston

Early voting on the City’s proposition A, which would reauthorize the failed Rebuild Houston program, begins tomorrow. Since no one at the City had the intestinal fortitude to debate Proposition A, I am left to make the closing argument directly to Houston voters.

In 2010 the proponents of Rebuild Houston promised us if we would agree to a $100 million per year tax increase, the City would increase its spending on streets and drainage and reduce its debt. These promises were supposedly guaranteed because the drainage fees would be placed in a “lockbox” and because the City would go to “pay-as-you-go” financing. Neither has happened primarily because the “lockbox” turned out to be illusory.

Thanks to Ted Oberg at Channel 13, we now know that in the five years prior to the adoption of Rebuild Houston the City spent more on streets and drainage than in the seven years after Rebuild’s adoption. Here are numbers that Ted got from his open records request to the City:

So, how is it possible that after we have paid an additional $800 million spending on streets and drainage has decreased? When Oberg posed this question to Sylvester Turner, he claimed spending has gone down because the City instead spent the money on “paying down” over a billion dollars of its bond debt. This is a blatant lie.

In 2011, the City owed $2.4 billion in “public improvement bonds.” (PIBs)[i]According to the City’s latest audit, its PIB debt as of the end of the last fiscal year was still $2.4 billion. And the debt will rise over the next several years as the City begins to issue bonds that were approved by voters in 2017.

Turner’s claim that Rebuild has paid down the City’s debt (instead of increasing street and drainage spending) is based on the fact that the City has made about a billion dollars of payments on the PIBs that were outstanding when Rebuild was implemented. His claim is completely bogus for two reasons.

First, those payments were made from the General Fund, not from the Rebuild fund. In fact, the Rebuild charter amendment specifically prohibits debt payments from the Rebuild Fund.  [Click here to see the prohibition.]  So, the bond payments in no way reduced the $100 million in new funds from the drainage fee that should have been available to increase spending on streets and drainage.

Second, the debt has not been reduced because (i) about $400 million of those payments were interest and (ii) because the City has issued new PIBs since Rebuild was implemented in almost exactly the same amount of the principal payments it made during that period.

This is one of the giant loopholes in the Rebuild program. While it prohibits the City from issuing bonds for streets and drainage, there is no prohibition for issuing bonds for other purposes. Since Rebuild was implemented the City has continued to issue new bonds for other purposes. For example, the 2012 and 2017 bond elections authorized just under $300 million for public safety, most of which has gone or will go to finance vehicles (which, by the way, is a really dumb idea).

Here’s the bottom line: We have paid $800 million to the City in new taxes yet spending on streets and drainage has gone down by 6% and the City has not reduced its debt.

Fortunately, the Texas Supreme Court ordered a do-over of the 2010 election because if found the City’s ballot language egregiously mislead Houston voters.  The City is now asking us to recommit to this debacle for another thirteen years notwithstanding that it has totally failed to deliver on any of its promises.

Einstein famously said that the definition of insanity is doing the same thing and expecting different results. Reauthorizing a program that has been such a spectacular failure would indeed be insane.

Voting down Proposition A is the first step in bringing real reform to Houston’s broken flooding policies. The next step will be to mount a petition drive to establish a real lockbox for the drainage fees. But first, we must jettison the faux lockbox.

PS: Don’t forget. Proposition A is near the bottom of the ballot. If you straight-party vote and stop, you will not cast a ballot on Proposition A.

[i] Public Improvement Bonds (PIBs) are long-term bonds that are issued for general municipal improvements, primarily streets, bridges, drainage, city facilities such as police and fire stations, parks and libraries. It is important to understand that PIBs are a small part of what the City owes in total. As of the end of FY2016-2017, PIB debt was only 10% the City’s total liabilities.

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