June 30, 2021

Quote of the Week - "Never Waste a Good Crisis"

Quote of the Week - "Never Waste a Good Crisis"

City of Houston Water Rates to Nearly Double Over the Next Five Years

Most people today will remember this well-known quote being using by President Obama’s chief of staff, Rahm Emanuel during the Great Recession to justify that administration’s agenda.  However, most attribute the original use to Winston Churchill shortly after the end of World War II.  But whatever its origin, the adage was on full display in last week’s Houston City Council meeting.

You have probably seen that the Council approved a massive increase in water and sewer rates that will result in most Houstonians’ water bills nearly doubling over the next five years.  The mayor and council blamed the increase on decades of under-investment in the utility system and a federal lawsuit settlement requiring the City to make improvements to its wastewater system.

Let me say at the outset that the City has under-invested in the system for decades.  Also, earlier administrations allowed a helter-skelter development of our wastewater system that has left us a very decentralized and inefficient system that has chronically discharged untreated sewerage in violation of the Clean Water Act.  So, it is undoubtedly true that the current administration inherited a mess, or if you will, a “crisis.”

However, we have, and City Council had when it approved this increase, no information to indicate whether the rate increase that was adopted bears any relationship to the actual need.  The basis of the rate increase was this consultant’s study, which is yet another of the City’s “made-as-instructed” consultant reports to justify what they have already decided to do.

If you can stand the tedium of reading this report, you will see there is nothing that even vaguely resembles the kind of due diligence which would be required to make an investment of this magnitude in the private sector.  And there is not a single comment about how costs might be controlled.  Former City of Houston Public Works Director Dan Krueger had this blunt assessment of the report:  “The report was inadequate for Council to fulfill its duty under the Texas Water Code to ensure rates are just and reasonable for consumers.”

One obvious flaw in the “Feds-made-us-do-this” justification is that the federal lawsuit only deals with the wastewater system, not the freshwater system.  So, there is nothing in that suit that required a nearly 50% increase in water rates.  I suspect that increase is mostly needed to cover the massive cost overruns at the water plant being built by the City on Lake Houston.  The last I heard that project was running about 50% over the original cost estimate.

It is also important to note that this increase comes on top of another “one-time” increase in 2010 of about 16% and automatic annual increases of approximately 1.5-3.0%.  Once the new increases are fully implemented, Houston will be paying about 2.5 times as much as they were before the 2010 increases.  That works out to nearly a 10% increase annual increase.  Dan Krueger described the situation perfectly: “We are literally throwing money at a problem we have not defined, rather than meaningfully investing in our water and sewer systems.”1

In 2006, Houstonians approved a charter amendment that would have limited water rate increases to the total of population growth and inflation without voter approval.  However, the City has ignored that charter amendment based on, in my opinion, a convoluted legal argument that it was superseded by another amendment passed on the same ballot that limited property taxes.

I have always sort of marveled at the hypocrisy of the “progressives” at City Hall that howl about voter suppression and how the rich do not pay enough taxes while routinely ignoring the results of citizen referendums and sticking it to low-income Houstonians by assessing draconianly regressive taxes and fees.  Of course, partisan hypocrisy is so common today, no one is even embarrassed by it anymore.

Except for the handful of members that pushed back on the rate increase, City Council has once again proven itself to be a feckless and ineffective watchdog.  Honestly, I don’t know why we don’t just disband it at this point and let city administrations do whatever they want to do.  At least that would save a few million dollars per year.  By the way, for all of those of you who favor term limits, the Houston City Council is a counterfactual you may want to consider.

This administration and Council do not seem to understand that people vote not only at the ballot box.  They also vote with their feet.  Houston has experienced a net out-migration for several years now.  It is likely that the population will decline when the census numbers are released later this year.  That will be the first time Houston has lost population since the 1980s and comes after three years of very minimal growth.

Unless the City starts finding ways to improve the value proposition of living in Houston, as opposed to new ways to get their hands into residents’ pockets, the situation is only going to get worse.

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