Houston, Dallas, San Antonio Face Sharp Revenue Shortfalls Due To COVID-19

A new report says Texas’ three largest cities will probably be forced to furlough workers and cut services to make ends meet.

By Jill AmentJune 2, 2020 10:40 am, , ,

A new report says Texas’ three largest cities, Houston, Dallas and San Antonio, are expected to see a 10% to 15% decline in city revenues because of the COVID-19 pandemic.

Bill Fulton is director of the Kinder Institute at Rice University in Houston, which published the study. He told Texas Standard host David Brown that each of Texas’ three largest cities could lose $100-$200 million in revenue because of coronavirus impacts. In March alone, Houston saw a $25 million drop in sales tax receipts.

Of the three cities, Houston is at greatest risk, Fulton said. 

“Houston has a much lower property tax rate than Dallas,” he said. “That’s because the voters created a cap on property tax revenue in 2004.”

Some 20% of Houston’s property tax money is also sequestered – dedicated to public works projects by law. Dallas and San Antonio, on the other hand, have more flexibility in choosing how tax revenues are spent.

Even with options for moving money around, San Antonio and Dallas, like Houston, will spend the majority of available funds on police, fire, pension payments and debt service.

“Those four things will consume most of the budget of each of these three cities, and it will be hard for any of those cities to come up with much additional money for anything else,” Fulton said.

Parks and libraries are usually among the city services most vulnerable to budget cuts, and that’s true now. But Fulton said parks, in particular, may become more important to residents who can’t attend public gatherings because of the pandemic.

Dallas and Houston will also struggle to continue paying down unfunded pension liabilities. 

“Houston, in the last recession, cut way down what they paid for the pensions, and just piled up a future liability,” Fulton said.

City employees may also face furloughs, as Houston Mayor Sylvester Turner has already announced, or even layoffs.

Fulton said big cities need to find ways to “reinvent service delivery” to make it more efficient, even after the pandemic.

Web story by Shelly Brisbin.


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