Houston mayor eyes smaller tax hike for hurricane costs

(Reuters) - Houston Mayor Sylvester Turner on Wednesday slashed his proposed one-year property tax increase by more than half, citing higher reimbursements from the U.S. government for cleanup costs related to Hurricane Harvey.

FILE PHOTO: A car dealership is covered by Hurricane Harvey floodwaters near Houston, Texas, U.S. on August 29, 2017. REUTERS/Rick Wilking/File Photo

Turner told the city council that the Federal Emergency Management Agency agreed to cover more expense items at a 90 percent level, compared with 75 percent, lowering Houston’s payment responsibility to 10 percent from 25 percent.

That led the mayor to cut his initial $118 million property tax hike proposal to about $50 million, with city council expected to vote on the revised plan next month.

The mayor and some council members said Houston could avoid a temporary tax increase altogether if the state of Texas would tap its reserves to help its largest city - something that might not happen until the state legislature returns to session in January 2019. Texas has nearly $10.3 billion in its rainy day fund, according to the state comptroller’s office.

“We need it now. It is raining,” said Houston city council member Jack Christie.

Last week, Governor Greg Abbott acknowledged the expectation of using reserves for hurricane relief.

“We need to first understand what obligations we’re going to have, how much they will amount to, and decide upon the best strategies to pay for that,” he told reporters.

Turner said FEMA also increased the payment rate for debris removal to $11.69 per cubic yard from $7.69, a move he said would help the city attract more haulers.

“It’s a free market and we’re competing for contractors going to Florida as well,” the mayor said.

Harvey, which made landfall in Texas on Aug. 25, causing extensive wind and flooding damage, was followed earlier this month by Hurricane Irma, which devastated parts of Florida.

The mayor said Houston needed to increase the number of trucks hauling hurricane-related debris seven days a week to 500 from the current 300 to meet a three-month goal for removal. He added that as of late Tuesday, 400,000 cubic yards of waste had been picked up from Houston streets.

Reporting by Karen Pierog in Chicago; Editing by Peter Cooney