The city of Houston likely will keep its existing property tax rate after receiving notice Wednesday that the state will deliver $50 million in disaster relief funds to southeast Texas communities affected by the May derecho and Hurricane Beryl. 

The announcement by the governor’s office prompted a quartet of City Council members to withdraw their proposal to raise the city’s property tax rate 5 percent to avoid a pending deficit that is expected to be worsened by storm cleanup costs. 

Mayor John Whitmire said he spoke with Texas Gov. Greg Abbott last week in Austin, resulting in a state contribution of $50 million for debris removal.

The governor’s announcement states the $50 million will be spread among several southeast Texas communities. Houston’s share was unknown Wednesday, a mayoral spokesperson said.

Whitmire’s proposal to keep the existing property tax rate had been in competition with the council members’ pitch to raise the rate.

At-Large Councilmember Sallie Alcorn, one of the council members proposing the increase, said they withdrew the measure because of the state announcement. The city still faces financial questions from upcoming police, fire and municipal workers union contracts.

“I believed that when you find yourself in a hole, it’s best to stop digging,” Alcorn said. “I believe that this rate increase was the right thing to do, absent the information that came today.”

City Council is expected to consider the tax rate at its Oct. 16 meeting.

Alcorn, along with councilmembers Letitia Plummer, Mario Castillo and Jaoquin Martinez, proposed the rate hike because of a projected $230 million deficit in next year’s budget, which includes $40 million in disaster recovery. 

Whitmire repeatedly has spoken against a property tax increase as Harris County and Houston ISD approved rate raises last month. He anticipates future cuts to the budget once the city receives the completed Ernest and Young audit of existing expenses, he said Wednesday.

Whitmire’s proposal will keep the city’s tax rate at its current level of 51.9 cents per $100 of assessed value. The council members’ proposal would have raised it to 55.2 cents, which would have resulted in a difference of around $79 for the owner of a home valued at $300,000 with a standard 20 percent homestead exemption.

The disaster declarations from the two storms cleared the way for the potential property tax increase council discussed Wednesday. 

The city cannot increase its property tax collections more than 4.5 percent a year under a 2004 voter-approved revenue cap. The Texas Legislature in 2019 passed a law imposing a cap of 3.5 percent. The state cap can be lifted without voter approval during periods of declared disasters to as high as 8 percent. 

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