Revenue losses related to COVID-19 will hinder city services in Houston, San Antonio and Dallas, with Houston likely to be the hardest hit of the three, according to a new report from Rice University’s Kinder Institute for Urban Research.
“Troubled Fiscal Times: A Comparison of Revenue Sources and Service Levels for Houston, Dallas and San Antonio” examines the revenue structure and service levels for Texas’ three largest cities. The report is largely based on a Kinder Institute analysis of their 2019-2020 budgets conducted before the COVID-19 crisis, but it incorporates as much information as possible about the impact of the pandemic-related economic downturn.
“The report finds that Houston is more fiscally constrained than other Texas cities with populations over 1 million,” said Bill Fulton, director of the Kinder Institute and one of the report’s authors.
The report concludes several factors will negatively impact Houston’s ability to provide services compared to the other cities, including its locally imposed revenue cap and lack of a solid waste pickup fee (despite generating 50% more solid waste per capita than either of the other two cities, which have this fee). Houston also maintains its own health department and sequesters general fund revenues for public works under ReBuild Houston.
Texas’ 2019 property tax reform law will likely constrain Dallas and San Antonio in a similar manner as Houston in the future, the report read. However, the impact is likely to be delayed because the state-imposed property tax cap can be waived when a disaster is declared.
Based on the past experiences of major cities during recessions, the three cities likely will prioritize police and fire services, the report read. The Houston, Dallas and San Antonio police departments are funded at almost identical levels. Houston’s police-response-time performance is the best of the three cities, although its employees are paid less than those in Dallas and San Antonio. San Antonio has the best-funded fire and EMS services, followed by Dallas and Houston. Dallas has the best pay for firefighters, and the best fire and EMS response times. Houston’s fire and EMS pay ranks last.
The report also revealed that park services may be susceptible to budget cuts; Dallas provides the most park funding of the three cities, but Houston’s park service devotes the most financial resources from private and philanthropic sources. In addition, Dallas and Houston may have difficulty paying down unfunded pension liabilities.
The report was authored by Bill Fulton, director of the Kinder Institute; Kyle Shelton, the institute’s deputy director; and Carlos Villegas, a staff researcher at the institute. They received assistance from Ben Griffin and Carson Bise of TischlerBise. The full report is available online at https://kinder.rice.edu/.