Skip Navigation Links
Front Page
About GNSExpand About GNS
Business/Industry
CommunitiesExpand Communities
EducationExpand Education
Entertainment
Links Directory
Maritime
Medicine & Science
Opinion/ForumExpand Opinion/Forum
Public Safety
Transportation
Weather


GRCC Bay Area Houston Economic Partnership
Forum
Guidry News Forum
The City's Proposed Budget Continues to Divert the Drainage Fees to Other Uses
by Bill King
Tuesday, May 29, 2018

The proposed FY2018-2019 City budget will, if adopted, continue to spend most of the drainage fees paid by Houstonians on things other than drainage. Any Council Member who votes for this budget is voting to continue to siphon off the drainage fees that Houstonians were promised would be spent to reduce flooding.
  
I wish I could simply lay out the facts about how the City diverts the drainage fees but the City intentionally obfuscates how the drainage fees are spent. So, this is going to require a deep dive.

In 2012, the City began collecting drainage fees pursuant to a Texas statue that authorizes cities to establish a "drainage utility." That state statute requires that drainage fees be held in a segregated account. The City has never done this. Instead, it deposits the money into the Dedicated Drainage & Street Renewal Fund, more commonly referred to as Rebuild Houston.
 
The City uses two devices to obfuscate how the drainage fees are spent. First, they are commingled with other monies. The total income deposited in the Rebuild Houston fund has been running a little over $200 million. About half of that comes from drainage fees. The general mobility payments from Metro account for about a quarter of the money. The other big piece is a transfer from the General Funds which supposedly is equal to the amount that the City's debt has declined because of the "pay-as-you-go" feature of Rebuild Houston. (More on this topic at a later date.) Of course, once these funds are all commingled it becomes much more difficult to sort out what money is being spent where.
 
Second, the Turner administration began omitting certain critical information from the Rebuild Houston budget in FY2016-2017. The first is a listing of the employee positions that are being funded by Rebuild Houston. When this schedule was available, it was apparent that many of the positions being paid from the fund were not workers on the street but rather City Hall bureaucrats. [Click  [here] to view the last roster published in 2016.]


Notwithstanding the City's attempts to obscure how the drainage fees are being spent, there are a few things that we can glean from the reports.
 
Employees paid from Rebuild Houston
 
In the ballot language and the advocacy leading up to the 2011 referendum, no one ever mentioned that existing City employees were going to be paid from the Rebuild Houston fund.  But as soon as the City started collecting drainage fees in 2012, it moved 498 of its 507 Public Works employees to Rebuild.  Below is an excerpt from the 2012 Public Works Department budget showing the its headcount going from 507 to 9!

[ii]
 
And since we no longer have the benefit of a listing of the positions, we really have no idea what these employees will be doing.

 
 

 
Maintenance & Operations Expenses

The charter amendment which created Rebuild Houston provided "no more than 25% of each annual appropriation to the Fund may be used for maintenance and operation expense." The City has completely ignored this restriction from day one. In the first year, the M&O expenses were 58% of the total expenses. It declined to 28% in 2014 but has been trending back up ever since. The current budget calls for 43% of the budget to be spent on M&O expenses.
  
We have only sketchy information about how the M&O money is spent, especially after 2016. But there is some information in the budget notes. For example, the City has been spending $20-30 million each year on traffic signalization. In 2016, the City started using Rebuild Houston funds to pay off developer 380 agreements. This year's budget includes $6 million in litigation expenses. But probably the best indication that virtually none of this money goes for drainage is the "performance measures" included in the budget each year. You can review the list
. You will see that none refer to any activity that would reduce flooding.

 
 

Transfers to the Storm Water Fund

If the City's accounting for drainage was not complicated enough already, it also maintains a Storm Water Fund. The Storm Water Fund was set up many years ago to transfer money from the Combined Utility System, i.e. the water and ewer fund, (CUS) for drainage improvements. In 2012, the City transferred about $55 million from the CUS to the Storm Water Fund. Unlike the Rebuild fund, the Storm Water Fund is actually used for drainage.
  
In the second year of drainage fee collections, the Parker administration began to also transfer money to the Storm Water Fund from the Rebuild Houston fund, which, at least, is consistent with how the voters thought the drainage fee would be used. Between 2013-2016, the Parker administration averaged transferring $16 million annually from the Rebuild Houston fund to the Storm Water Fund. Turner reduced that to $3 million in 2017 and 2018. The 2019 budget also only calls for $3 million to be transferred. (More on the Storm Water Fund in the near future.)
  
Transfers to the Capital Improvement Plan

Final piece of the Rebuild Houston puzzle is its transfers to the City's Capital Improvement Plan (CIP). The CIP is a 5-year rolling budget for all capital projects in the City. The current budget (2018-2022) calls for the City to spend $8.3 billion on capital projects. Of this amount, $509 million is shown as budgeted for the "Storm Drainage System." Of course, the mere fact that only 6% of the CIP over the next five years is devoted to drainage tells you a lot about how serious the City is about flooding. But it is not even clear to what degree the projects included in the "Storm Water Drainage" budget would actually reduce flooding. Most are a combination of drainage and street improvements.
  
The original intent of the Rebuild organizers was that 75% of the fund would go to capital projects. If that had actually happened, about a billion dollars would have been transferred to the CIP by now. Instead, only about $790 million has been. To put that in perspective, the difference ($210 million) is about ten times the amount that was needed to complete Project Brays.
 
Even more discouraging is that the amount has been trending down since 2015.
 



In 2018 only $64 million was budgeted for storm water in the CIP, even though Rebuild Houston transferred $119 million. So, the best-case scenario is that about 25% of the Rebuild Houston money went for drainage in 2018. But here's the real kicker, even though $64 million was budgeted for storm water, the real number was probably much lower.
  
I say "probably" because amazingly the City does not produce any report that shows actual CIP expenditures compared to the budget for that year. I know that is hard to believe but in an email exchange with Controller Chris Brown he confirmed that there is no such report. He indicated that the Finance Department has promised one by the end of 2019.
  
The only indication we have of how the CIP was actually been spent in 2018 is a list of projects that exceed $10 million and that the City "anticipates" to be funded in the current year. Don't ask me how the City in 2019 can only "anticipate" how it spent money in 2018! Regardless, you can click [here] to see the list for 2018.  But the list only totals about $1.6 billion of the $2.3 billion budgeted for 2018. We have no clue how, or even if, the $700 million was spent. If fact we don't even know the $1.6 billion on the list was spent as "anticipated."
  
The list only has names of projects with no other description. So, it is difficult even to tell how the $1.6 billion was spent, assuming it was spent. But when you look through the list, there are only three projects that mention anything about drainage. Those total about $35 million. And they are combined with paving projects, so there is no way to know how much of those three were devoted to drainage.
  
The bottom line is: I really cannot tell exactly how much of the drainage fees are going to reduce flooding but I can tell you it is damn little. Certainly, how the money is being spent is nothing like what the voters were told in 2011 when they voted for the largest tax increase in the City's history.
  
Of course, the mere fact that it has taken me over 1,600 words to lay out the most basic explanation of how the drainage fees are being spent is absurd on its face.  The mere fact that the City has made the accounting for the drainage fees this complex should be a gigantic red flag. This is a system that is designed to obfuscate that the City is using the Rebuild Houston fund, not to rebuild Houston, but instead to continue to rob Peter to pay Paul and avoid truly addressing the City's structural deficit.

Any Council Member that votes for this proposed budget is voting to continue this ridiculous charade.


[i]  The City has a tool on its website that allows the users to search for particular accounts, which would allow a person to discover some of the information previously provided in the budget summaries. [Click  [here].] But it would literally take weeks to reconstruct the information.

[ii]  Interestingly, the City CAFR has a headcount list for the last ten years for all departments. It shows completely different numbers for the headcount for Rebuild Houston. In fact, it shows the headcount has declined. This is not the first I have noted substantial discrepancies between the headcounts in the budget and the CAFR.





Remembering Jim Guidry November 6, 2018 Election Returns


Guidry News Service is headquartered in Midtown Houston.
at 4001 Fannin Street, Suite 4109, Houston, TX. 77004-4077
(409) 763 NEWS(6397)         News@GuidryNews.com
© 1996, Guidry News Service. Duplication of any part of this website in any manner is prohibited.