Though Democratic early vote totals appeared promising, they fell short of Republicans

The early vote among Democrats in Texas' 10 counties with the largest number of registered voters looked promising, but Democrats fell short when the early vote totals from all counties were counted. Here's how turnout compares to prior midterm primaries.

Four years earlier, Republicans out voted Democrats in early voting so going into Tuesday night, it seemed like the Democrats might be on track to hustle more people to the polls. Election night returns told a different story. Republicans turned out in droves.

So as history tells us At no point in a nonpresidential election year has one party cast more primary votes and the other party won more House seats. Republicans cast 500,000 more votes in the Primariesthen the DEMS.

The Blue Wave never hit shore.

Texas is a solidly red state, and voting totals confirmed that again. 


Lawsuit claims Houston misled voters on $1B pension bonds
Ex-housing official claims Nov. 7 ballot omitted key facts

By Mike Morris
December 18, 2017 Updated: December 18, 2017 7:18pm

Mayor Sylvester Turner misled voters into approving a $1 billion pension bond referendum last month, a new lawsuit alleges, claiming that city officials plan to use the bonds' passage to sidestep a voter-approved limit on the property tax revenue Houston can collect.

Turner's office flatly denied that reading of the Proposition A ballot language, calling the wording "boilerplate" and saying the city has not and will not sidestep the revenue cap as a result of the vote on the mayor's landmark pension reform package or any of the prior bond issuances that included the same phrasing.

A local businessman and former Houston housing department director, James Noteware, sued the city Friday in state district court, contesting the Nov. 7 election on the grounds that the ballot language was "materially misleading."

The full language, rather than the summary listed for voters on the ballot, stated that the taxes levied to repay the bonds would not be "limited by any provision of the city home rule charter limiting or otherwise restricting the city's combined ad valorem tax rates or combined revenues from all city operations."

The suit claims that phrasing means the taxes levied to pay for the bonds will be exempted from the 13-year-old revenue cap, which limits the annual growth of property tax revenue to the combined rates of inflation and population growth, or 4.5 percent, whichever is lower.

"Omitting the fact that the proposition created a billion-dollar exception to default limits on the city's taxing authority renders the proposition materially misleading and void," the suit states.

"If the intent is to have more flexibility to raise property tax revenues, they should have just come right out and asked for it," Noteware said Monday.

Turner's spokesman, Alan Bernstein, said that is not the city's intent. Moreover, he said, the city charter requires Houston to pay its debts first before allocating any funds to operations.

'Baseless bombs'

"The suit is factually and legally baseless and from a taxpayer policy viewpoint completely illogical, as disrupting the pension reform will cost taxpayers more money," Bernstein said. "There was never any intent to avoid the revenue cap nor are there any facts indicating that we would. It is easy to throw baseless bombs. The price of doing so for the plaintiff and his lawyer is far less than the harm he is trying to inflict on taxpayers."

The language in question simply is intended to assure potential bondholders that the city will meet its obligations, Bernstein said.

Benefit cuts at stake

Regardless of whether Turner intends to step outside the revenue cap, Noteware's attorney, Jerad Najvar, said, the phrasing of the ballot language would let a future mayor do so.

If this is true as Mr. Najar said above Turner may not intend to raise Property Taxes although he has tried to do it twice already the next Mayor might. We need to let the courts rule on this stop the sale of Bonds until we are sure this is not true.

"I see why the mayor is saying, 'Don't worry, we're never going to use this,' but nonetheless it's there," Najvar said Monday. "If this election was valid, then this builds in the authority that the city did not have before to go around that revenue limitation. If the election is going to be challenged, it has to be done right now."

Noteware said he views the pension reform package as inadequate and would not be concerned if his lawsuit winds up scuttling the deal.

The legislation that enacted the reforms requires the city to send the bond proceeds to the police and municipal pension funds this spring. If it does not, up to $1.8 billion of the $2.8 billion in benefit cuts in the reform package will be rescinded, adding tens of millions of dollars in costs to the city budget overnight.

The pension bonds are scheduled to be sold this week in New York; Bernstein said as of Monday it did not appear that process would be disrupted by the lawsuit.

Najvar said selling the bonds when a judge may decide Houston lacks the authority to do so would be "the height of irresponsibility."

Voters tweaked the revenue limitation in 2006, allowing the city to raise an additional $90 million for public safety spending, but Houston exhausted that breathing room in 2014. With property values continuing to rise, the city has trimmed its tax rate each fall since then to avoid collecting more revenue than allowed.

City officials tweaked the cap in 2015 and 2016, invoking flooding disaster declarations to collect a combined $22 million in those two years on top of what the revenue limit otherwise would have dictated, in keeping with an exception clause in the cap's wording. City Council voted down Turner's attempt to do so again this fall after Hurricane Harvey.

Meant as incentive

The bonds are part of Turner's landmark pension reform plan, which recalculates the city's payments to erase a debt of more than $8 billion debt over three decades, cuts benefits by $2.8 billion and includes a mechanism to cap Houston's future pension costs.

Turner offered to issue the $1 billion in bonds as an incentive to get the police and municipal pension systems to agree to another round of benefit cuts and to bolster both plans' funding levels. The police plan would get $750 million of the bonds and the municipal fund would get $250 million.

Courts twice ruled the city had used misleading ballot language under Turner's predecessor, Annise Parker, in connection with elections in 2010 and 2015..

City's Sales Taxes Continue to Stagnate


City's Sales Taxes Continue to Stagnate

by Bill King

The Texas Comptroller reported yesterday that the City's sales tax receipts for November (which reflect September sales) were up by 2.3%.  This followed a decline of 3.9% in October.  The October decline was to be anticipated because of Harvey.  However, I had expected to see more of a rebound in November from storm repair purchases.  Perhaps delays from receiving insurance payments have pushed some of those sales out a bit further.

 The City had a bump in sales tax receipts early this year from the Super Bowl, with month-over-month increases in March and April of 6.5% and 5.3%, respectively.  But longer term trend appears to be that precipitous decline when oil prices fell has leveled out.



The current City budget projects a 1% increase in sales taxes and it is running only slightly behind that through the first four months of the fiscal year.  

Houston continues to  be significantly outperformed by its suburban neighbors.  I have been tracking six cities nearby cities.  Their sales tax receipts were up 9% this month.  I am working on a longer term comparison which I will be sharing with you soon.




State of Texas Debt Has Nearly Doubled in the Last Seven Years


By Bill King

Want a killer Trivial Pursuit question?  How about this?

 While Barack Obama was President, did the debt of the Federal government or the State of Texas increase more on a percentage basis?

 Republicans quick to point out that while Obama was president the federal debt increased far more than under any other president.  But what they rarely share is that during that same period, the debt of the State of Texas rose even faster, at least, on a percentage basis.

 At the end of 2009, the Federal government was just under $12 trillion in debt.  By the end of 2016, the number had grown to $19.5 trillion, a 64% increase.  For the same period, the State's debt went from $62 billion to $121 billion, a 92% increase.*

You may be tempted to explain this unfavorable comparison away by noting that Texas is growing faster than the rest of the country and, therefore, a larger increase is to be expected.  There is some validity to these argument, but even if we look at the growth of the debt on a per capita basis, Texas still comes out ahead, 70% versus 54%.  And these numbers do not count the billions in debt incurred by local governments.  We'll be looking at that in the coming weeks.

To be fair, the State was starting at a much lower base.  Its per capita debt as of 2016 was about $4,300 compared to over $39,000 for the Federal government.  And as a percentage of GDP, the State's debt is also much lower, although I am not sure the comparison of that metric means much in this context.

The lion's share of the increase in the State debt has come from an explosion of its unfunded pension liability.**  I will be writing more on this issue soon, but the State's pension debt, based on its own accounting, has gone from zero in 2000, to over $60 billion at the end of 2016.  In other words, according to the State Comptroller's numbers, the Legislature has "borrowed" over $60 billion from the State's pension plans by not contributing enough to fund the benefits they have promised.

 It is important to note that both the Federal government and the State dramatically understate their liabilities associated with future retirement payments.  A recent Moody's report has calculated that the State's true pension liability is over $100 billion and, of course, the Federal government has never included a realistic estimate of the future cost of Social Security or Medicare in its accounting.

 Please do not misunderstand.  I am not a debt-phobe.  Every businessperson knows that there is a time and place to use debt.  Some of you will recall that during the 2015 mayoral campaign I was the only candidate who advocated using pension bonds as tool in solving the pension crisis. 

 But the reality is that government at every level and both of our political parties are drunk on debt.  The Democrats gorge on debt to increase expenses; the Republicans to cut taxes, or to keep from increasing them.  Neither want to have an adult conversation with their constituents about what services do we really want government to provide and what does it costs to provide those services.  Instead, one party demagogues social issues and the other engages in class warfare and identity politics to distract the public from the fact that both are bankrupting future generations.


 *  This graph begins with the increase in debt from 2009 to 2010.  Those who argue the Federal debt doubled during the Obama administration begin from the time he was sworn into office.  However, since the federal budget fiscal year ends in September, the incoming administration has a limited impact on the financial results for its first year.  It would probably be fairer to included FY2017, but those numbers are not yet available.  It is interesting to note that the rate of increase did not slow down when the Republicans took control of the House of Representatives in 2010 or the Senate in 2014.

 **   Much of the increase in the pension debt was realized when the accounting rules changed in 2015 forcing governmental entities to more realistically report their pension liabilities.









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