HOUSTON — A lawsuit filed in Harris County District Court claims that the city officials, in their successful push to pass a $1 billion pension bond referendum last month, were “materially misleading to Houston taxpayers,” and the suit challenges the validity of the vote.
“Enough is enough,” said James Noteware, who filed the suit. “Fool me once, shame on you. Fool me twice, shame on me.”
The suit calls for the pension bond vote — known as Proposition A — to be thrown out or be voted on again.
Noteware, a businessman and former Houston director of Housing and Community Development, said that he believes that the Nov. 7 pension bond wording was misleading to voters, just like the ballot language for the 2010 drainage fee measure, as well as the language for the 2015 ‘HERO’ referendum election, promoted as an equal rights ordinance.
Both, also, were “materially misleading,” he said.
The drainage fee, which won at the ballot box, and called a “rain tax” by critics was declared void by the Texas Supreme Court, and a lower court is in the process of scheduling a new election.
The ‘HERO’ ordinance, which opponents of the law alleged would allow men dressed as women, including sexual predators, to enter women’s restrooms, won passage by City Council, but the Texas Supreme Court stepped in, saying the ordinance needed to go before Houston voters.
The issue went before voters “with language corrected as directed by the Supreme Court,” Noteware said.
The pension bond vote was pushed by Mayor Sylvester Turner. The ‘HERO’ and ‘Rain Tax’ issues were promoted by the previous mayor, Annise Parker.
But something they all had in common was “deceptive ballot language,” according to Noteware.
The Houston Chronicle said that Turner rebuffed any notion that the pension ballot language was misleading.
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.
Turner said after the overwhelming Election Day passage of the pension bond referendum, that the city is in a far better position and will be able to place $750 million into the police pension and $250 million into the municipal workers’ pension. Without the pension deal passing, there would have been budget problems and city layoffs, the mayor said at the time.
Noteware’s suit describes a very different scenario.
“Proposition A concerns the Pension Obligation Bonds; specifically, it seeks to plug a massive unfunded liability the City has created by issuing more than a billion dollars in new bond debt, and levying taxes to pay for it, with such taxes to be excepted from the otherwise-applicable limitation in the Houston Charter on the annual growth of property taxes,” the suit reads.
“What is the rationale of the deceptive ballot language here?” Noteware asked.
The ballot description crafted by the City informed the voters that the Proposition would approve the issuance of bonds and levying of taxes to pay for them, but conveniently omitted the last fact: that those taxes would be unrestrained by the Charter’s normal limitations.
The Mayor and City Council certainly have the prerogative to call on the goodwill of Houstonians, and ask Houston taxpayers to take on another billion-plus dollars in debt to bail the City out of the consequences of decades of poor decisions by elected officials who refused to constrain spending. But if they do so, the common law — not to mention common decency — requires that they be upfront with the voters about the impact on their tax liability.
“Prop A asked Houstonians to shoulder another billion-plus dollars in bond debt, but hid from voters the fact that the Proposition gives the City new taxing authority — outside the limitation on the growth of property tax revenue, which voters added to the Charter in 2004 — to pay off this debt,” said Noteware.
City Hall scoffed at Noteware’s interpretation of the ballot language — particularly that there are some secret intent to raise taxes on Houstonians.
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.
“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.
Legal rules say that a Harris County judge cannot hear the suit, because it deals with the city of Houston.
A preliminary hearing before a judge in Galveston County may be heard as early as Wednesday.
Trent Seibert can be reached at [email protected] or at 832-258-6119.