Harris County Proposes 11.5% Budget Increase

Harris County’s Office of Management and Budget proposed an 11.5% budget increase during the Commissioners Court special meeting held on September 12, 2023. See below.

*Proposed on 9/12/2023, but not yet approved.*

Flood Control Maintenance Increase

If adopted, Harris County Flood Control District (HCFCD) would receive an $11.8 million increase from tax revenue for Maintenance and Operations spending – up 10.4% from FY2022.

Given the number of new capital projects, such as stormwater detention basins that Flood Control has created in the last year, that increase seems reasonable. The number of acres that HCFCD needs to maintain steadily increases as it builds new assets.

*Acres of infrastructure needing maintenance has almost doubled since 2000. Source: HCFCD Asset Management Presentation*

HCFCD now manages 2,500 miles of channels, more than 260 detention basins, 2 levee systems, 3 mitigation banks, and more than 3,200 buyout lots.

Two-thirds of Flood Control’s infrastructure was constructed before 1984 and much of it needs rehabilitation. The District has identified 160 assets with defects, 117 with blockages or conveyance issues, and 215 where vegetation requires serious attention.

As with anything, deferring maintenance too long can lead to failure. Then reconstruction costs can greatly exceed repair costs.

Flood Control Debt-Service Increase

Flood Control also shows an increase in its proposed tax rate to handle debt service – 8.2%. This makes sense as we keep borrowing more and more money against the $2.5 billion bond that voters authorized in 2018.

It could take decades to pay off the interest on money borrowed this year. And next year, we’ll borrow more. The total interest payments increase over time as borrowing accumulates. High interest rates like we have now can increase the total need even more.

Partner Contributions Help Offset Debt-Service, But Are Dropping

The $2.5 billion bond actually identified $5 billion worth of projects. A portion of the original $2.5 B was designated as local-match money to attract partner funding. So for every project, roughly half of the total cost was supposed to be local dollars (tax revenue and/or borrowing). The other half was supposed to have come from partners, such as FEMA, HUD, and the State.

That said, partner funding never has come close to 50%. Q2 of 2020 came the closest at 41%. But the percentage has also dipped as low as 14% recently. Since the start of the bond, partner dollars have comprised 30% of all spending.

Partner spending in recent quarters has declined significantly. Through 22Q1, partner spending averaged $28.4 million per quarter. Since then, the quarterly total has averaged only $11.5 million. That’s a 59% decrease.

*Through 22Q1, partner funding ranged between $20-45 million. Since then it hasn’t exceeded $20 million.*

To make up for the lack of projected partner funds, HCFCD has had to spend more County/Bond dollars to keep projects moving. And it has done so in a period of high interest rates.

*Note how drops in partner spending often trigger spikes in County spending.*

As partner funds have fallen off in recent months, so has the overall level of HCFCD spending.

*Data for this and all tables/graphs obtained from HCFCD via multiple FOIA requests.*

Here’s the data which these graphs reflect. This particular series starts with the approval of the flood bond in late 2018.

Is It a Fair Budget Increase?

That depends on whether you see any flood-mitigation efforts that benefit you. If your area is getting projects, the answer is yes. But if not, you probably wouldn’t be happy with a 1% increase. And out of the $1.5 billion spent to date, precious little has been spent in the San Jacinto watershed.

Regardless, when setting budgets, we must consider dozens of different factors, not the least of which is partner funding. It can extend bond dollars. And consider this.

The $750 million in HUD funds recently received by the County come with “use-it-or-lose-it” deadlines attached. HCFCD had a giant meeting with contractors last week to discuss such issues.

If we can use the HUD money to accelerate construction and preserve bond dollars, we might have enough money to complete all the projects in the bond.

Conversely, with a shortfall in the partnership percentage, more county dollars will go toward projects in low income neighborhoods. That may leave no money for projects in affluent neighborhoods before we burn through the bond funds.

At the very least, I say we need to beef up the HCFCD staff applying for grants. I’ll bet we can all agree on that.

Posted by Bob Rehak on 9/14/2023

2207 Days since Hurricane Harvey.