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Texas governor rejects immediate use of reserve fund for Houston

Reuters

(Reuters) - Texas will not immediately tap into its $10 billion budget reserve fund to help Houston pay for Hurricane Harvey recovery costs, the governor said on Tuesday, citing the need for "fiscal responsibility."

In a letter to Governor Greg Abbott dated Monday, Houston's mayor, Sylvester Turner, requested the move, saying it would allow the city to avoid a temporary property tax increase to raise about $50 million for its share of debris removal costs and for insurance-related payments.

Abbott said while the state's so-called rainy day fund will eventually be tapped to help cover hurricane-related costs, he and other state officials agree the appropriate time to take up the request is during the next legislative session, which does not start until January 2019.

"In times like these it's important to have fiscal responsibility as opposed to financial panic," the Republican governor told reporters.

He said that the mayor "has all the money that he needs" in terms of Federal Emergency Management Agency (FEMA) reimbursements and other city funds that could be used.

Alan Bernstein, spokesman for Houston's Democratic mayor, said there are state restrictions against raiding those city funds, which are largely for drainage projects to prevent future flooding.

"Mayor Turner is asking the governor to do what other governors, such as Florida’s, are doing," Bernstein said.

Parts of Houston suffered severe wind and flood damage after Hurricane Harvey made landfall on Aug. 25. It was the strongest hurricane to hit Texas in more than 50 years.

Higher FEMA reimbursements led Turner last week to slash his original one-year property tax hike proposal by more than half. The city council was scheduled to vote on the tax increase next month.

(Reporting by Karen Pierog in Chicago; Editing by Matthew Lewis and Leslie Adler)