Houston is the fourth, or possibly third, largest city in the U.S., depending on how one counts, and one of two poised to assume the role of the U.S.’s most significant urban area. Joel Kotkin sees New York City continuing to exert its influence because of its history and Wall Street, but he sees the San Francisco Bay Area squaring off against Houston for significance. From Battle of the Upstarts:
Houston actually has seen far more rapid growth in both college educated and millennial population since 2000 than the Bay Area, as well as New York, Chicago, and Los Angeles….
Houston is among the fastest growing regions in the country, with rapid increases both in domestic migrants and newcomers from abroad….
Ironically, Houston’s growth has been more egalitarian than that of the notionally super-progressive San Francisco region. [Love the “ironically” there.] A recent Brookings report found that income inequality has increased most rapidly in what is probably the most left-leaning big city in America, where the wages of the poorest 20 percent of all households have actually declined amid the dot com billions….
Perhaps the biggest differences can be seen in families. Of the nation’s 52 largest metropolitan areas, the Bay Area has the lowest percentage, 11.5 percent, of people ages 5 to 14. In Houston, 23 percent of the population fits this age category. In particular San Francisco is notoriously inhospitable to families, with the lowest percentage of kids of any major city….
As its population has expanded, so too has the metropolitan area. This includes the development of many planned communities that appeal to middle class families and many immigrants. In 2013, Houston alone had more housing starts than the entire state of California.
I’m a native Houstonian, but my hunch that Houston will be the dominant city in the U.S. isn’t just hometown pride. We are the city that left the keys in the moon buggy and dug a 100-mile trench 100 years ago and turned it into the busiest and most significant foreign port in the U.S. Long term, Houston can lead other U.S. cities through their difficulties—if we get though our current problems, that is. And that will depend a great deal on today’s mayoral runoff election.
Kevin Williamson recently wrote the article “Republicans Must Save the Cities,” in which he noted that no city larger than San Diego has a Republican mayor. Tonight, if you hear that Bill King won Houston’s runoff mayoral election, then we will see what Republican fiscal leadership in a major U.S. city can do today. Because in many ways, Houston is like other distressed U.S. cities.
Lost in all of the Houston economic powerhouse stories of growth and employment are the city of Houston’s horrible finances.
Houston has odd borders complete with about half a dozen pocket cities. A true city of Houston map looks like a nibbled-on slice of Swiss cheese. It is all too difficult to explain in most urban-analysis reports, so the economic powerhouse everyone reads about is actually the greater Harris County area. The growth, the jobs happen there.
Why do businesses and residents locate outside the city limits? Taxes and regulations — the things others often moved to “Houston” to get away from.
The county is run by a county commissioner and treasurer, all fiscal Republicans. (Full disclosure, I have worked for Orlando Sanchez, currently Harris County treasurer, as a campaign and research advisor many times since 2001.) But the city of Houston has been run by Democratic mayors for decades and is on the brink of bankruptcy. Like other U.S. cities in dire financial straights, we have unfunded public pensions, poor budgeting, and tax base flight.
The Democratic mayors have not be able to get control of the pensions. Most were not willing, but our current mayor, Annise Parker, made a big promise to fix them and sent the Democratic candidate now in the runoff, Sylvester Turner, to Austin to get a fix. Their proposal wasn’t a solution, and the Lege (what we call the Texas Legislature) knew it. Parker and Turner failed.
On the budget, most casual observers think that Parker has been fiscally responsible. In fact, she has used all our savings to balance her budgets and has been fiddling with tax increment reinvestment zones to do beautification projects in the posher and touristy (to the extent Houston can pull off tourist attractions) areas of town. Now downtown to the Energy Corridor, the west side of town basically, look fabulous but we residents don’t recommend traveling on the roads in other parts of town unless one really wants to take his car in for suspension work.
Finally, with no geographic limitations, tax base flight is as simple as relocating outside of the city limits. We have plenty of land and plenty of real estate developers planning master planned communities. Get one of the many companies relocating to Houston to set up shop near your community, and presto, instant buyers.
Since we are out of savings, the city of Houston’s financial woes will show in the next budget. The Parker administration’s evasive action was to pass a shakedown law to supplement the budget with fines on local non-PC businesses. That HERO transgender bathroom law that made the news on election day? That was it.
The next mayor will have to fix our infrastructure and our pension debt with current revenue in an economy of $40 oil. The one economic metric that Houston is truly sensitive to is the price of oil. Energy companies planned better for this price drop than they had in the ’80s but still cannot weather this indefinitely. This means many things, one of which is the city of Houston’s revenues, will likely be down for the next few years.
To survive this and be the leading city it is capable of being, Houston needs strong fiscal leadership. If Bill King wins tonight, then Houston is poised to lead.