As we go to work tomorrow and the next day, the reality of the City of Houston’s financial condition will continue to be glossed over by city leaders. Only recently did the city’s finance director announce that the city is out of magic tricks. They have sold every city asset with any value and these one-time cash infusions used to balance the city budget are over. It took us a few years to get here; but, I am now of the opinion that it is time to file for bankruptcy.
In case you missed it, I previously wrote about the city’s financial problems when council members called a special meeting to address the fire union contract. The city’s firefighters struck a backroom deal with the mayor and a few council members objected. Other council members, like Brenda Stardig, thought the union should have received more than the negotiated amount. Therein lies the problem: Stardig either (1) is not mindful of the city’s financial condition and/or (2) pacifies the public unions to gain their endorsements. She is not alone.
I listened to the recent city budget debate and it was interesting to hear the mayor castigate Jack Christie for mentioning the “B” word – bankruptcy. The mayor said that she worried his comments could hurt the city’s credit rating. She was right when Moody’s turned the City’s outlook to negative. The pitiful financial state of the city is no secret. Anyone buying our bonds needs to have their head examined. A few years ago, we could have turned the corner, put responsible adults in charge, and attempted to rein in the city’s spending; but, we are way past that now. Houston is Greece.
During the “special” city council meeting called by three council members to discuss the firefighter union settlement, council member Jerry Davis suggested that, “We will just raise taxes to fix the debt problem.” Senator Paul Bettencourt laughed and pointed to the facts: property taxes would have to be increased by fifty percent for ten years to pay off our current pension debt, assuming the city did not spend another dime.
You have to think about the implications – what would the city look like after a fifty percent tax hike?
Many people would flee the tax increase, which, financially, might not be a bad thing – less people to be served by the city. Property values would plummet. Think Detroit.
If the city simply disappeared, the county would step in and govern. No doubt the county could do a better job. Better basic services such as police, fire, and roads. Maybe privatize ambulance services.
All city politicians are against bankruptcy because they want to control the piggy bank. Filing for bankruptcy now allows us to regain control of our city after years of reckless spending, cuts off reckless spending, and allows us to renegotiate our union contracts. A Federal Bankruptcy Judge, responsible adult, would be making spending decisions.
Tomorrow, the mayor will float the idea of raising the revenue cap and taxes. Even with record revenues in the city, politicians cannot balance their budget. Enough is enough. We can go through a decade of austerity measures with higher taxes and diminished city services or file for bankruptcy now and zero out the city budget. Chris Bell is an advocate for zero based budgeting.
Politicians, bond lawyers, financial consultants, investment bankers, and municipal securities brokers have created a heck of a mess. Who is going to get us out? The answer begins with the “B” word – file for bankruptcy now.