Where did the money go? (Houston, Parker: fit in, sales, real estate)

[TVC15]

City Of Houston Lays Off HPD, HFD Employees - Local News - Houston, TX - msnbc.com (http://www.msnbc.msn.com/id/42991703/ns/local_news-houston_tx/ - broken link)

I wonder what caused this budget deficit? They never tell us that. But only that we have X amount of budget deficit and must lay off city workers to close the budget deficit. Why does the city have that much of a deficit?

[DrLizardo]

The same problem as is plaguing many other cities, counties and states. Reduced sales tax and real estate tax revenues against increased costs.

[Zhang Fei]

Originally Posted by TVC15

City Of Houston Lays Off HPD, HFD Employees - Local News - Houston, TX - msnbc.com (http://www.msnbc.msn.com/id/42991703/ns/local_news-houston_tx/ - broken link)

I wonder what caused this budget deficit? They never tell us that. But only that we have X amount of budget deficit and must lay off city workers to close the budget deficit. Why does the city have that much of a deficit?

Huge spike in property tax revenues during the housing bubble which was spent (and then some) on salary and benefit increases. The deflation of the property tax bubble led, not to a reversal of salary and benefit increases, but to service cuts. Public employees have friends and relatives, and they vote. Far less costly in votes to fire small numbers of people than to cut the compensation of the entire work force. (This is why I think public employees and their immediate family should be denied the franchise for as long as they remain public employees. Ditto with anyone who receives net dollars from the taxpayer).

[DrLizardo]

Originally Posted by Zhang Fei

Huge spike in property tax revenues during the housing bubble which was spent (and then some) on salary and benefit increases. The deflation of the property tax bubble led, not to a reversal of salary and benefit increases, but to service cuts.

Everything I heard said that Houston was one of the few places that did not participate in the housing bubble. Home values have fallen here, which reduces valuation that translates into lowered tax revenue, but nothing like many other large cities across the country. I'm not how much of the problem is caused by reduced sales tax revenue, but I was at a meeting where the mayor spoke budget issues and she said that it was a significant factor.

As for blaming it on increases in salary for city employees, I'll just point out that HPD is the biggest payroll on the city's budget, and that just a few years ago the city was throwing money at that department because the city was desperate to retain employees and get new hires. The city was paying new cadets hiring bonuses of $17,000 apiece. You can't blame the employees for the city's reaction to a tough job market. Nobody saw the great recession coming back then, but the news media was screaming every day about how undermanned the police department was.

As for pensions, in the case of HPD and HFD, that is a matter of serious contention. In my opinion the past administrations have seriously screwed later administrations by playing kick the can down the road. Starting with Lee Brown, the city has been consistently under-contributing to the pension plans. But Brown overburdened the plans by 1) creating the first binding contract ever with the police employees, 2) being overly generous to try and retain employees rather than spend loads of money hiring new ones in a competitive market, and 3) pushing most of the expense off onto what would be the White administration.

HFD's union is saying that Parker is kicking the can down the road again: Mayor wants to cut $14M from HPD, HFD pension payments | Houston & Texas News | Chron.com - Houston Chronicle

It's politics, and Houston politicians play the game as well as anyone. And Houston politicians helped create this mess. If they were being blackmailed by employee groups and their familial voters, where were the screams of outrage back then?

The answer is there were none, because there was no blackmail. The politicians wanted the vote of not only the employees, but all of the voters who they were conning when they balanced the budget by kicking cans down the road.

[crone]

I'll second Dr. Lizardo. That is my understanding of the situation.
People think they have done their job when they vote. We need to be mindful of the situation facing all of our elected officials and the solutions, so that WE can understand the commitments they make that we are going to have to pay for.

[Dopo]

Originally Posted by TVC15

City Of Houston Lays Off HPD, HFD Employees - Local News - Houston, TX - msnbc.com (http://www.msnbc.msn.com/id/42991703/ns/local_news-houston_tx/ - broken link)

I wonder what caused this budget deficit? They never tell us that. But only that we have X amount of budget deficit and must lay off city workers to close the budget deficit. Why does the city have that much of a deficit?

Why doesn't anybody ever propose to stop fixing roads?
That will get people to start paying higher taxes very fast.... believe me, I've had to deal with that in another country.

[testmo]

it is funny that houston has many offices of major corporations who are so bloated with money partially due to our lax tax requirements for them in Texas and on top of that at the federal level.

i swear they are laughing at us. but the majority of texans like it that way. so dont complain!

[westres1]

Perry's cronnies pockets!

[TheEconomist]

Originally Posted by Dopo

Why doesn't anybody ever propose to stop fixing roads?
That will get people to start paying higher taxes very fast.... believe me, I've had to deal with that in another country.

That's a great idea. Take the ONE thing the government can accomplish with relatively minimal incompetence (pouring concrete) and hold it hostage until the people agree to hand over their bank accounts. No thanks. Starve the beast.

[TheEconomist]

Originally Posted by testmo

it is funny that houston has many offices of major corporations who are so bloated with money partially due to our lax tax requirements for them in Texas and on top of that at the federal level.

i swear they are laughing at us. but the majority of texans like it that way. so dont complain!

Yes, we enjoy having those jobs located here and the CEO's and executives who live in Houston all pay property tax and buy local goods and services.