A CITY OF HOUSTON CHARTER AMENDMENT TO REQUIRE VOTER APPROVAL BEFORE THE CITY CAN INCREASE TOTAL REVENUES (including property taxes, water and sewer charges) MORE THAN THE COMBINED RATES OF INCREASE OF INFLATION AND POPULATION

To the Mayor and City Council of the City of Houston (“City”): We, the undersigned registered voters of the City of Houston, Texas, under Section 9.004 of the Texas Local Government Code, hereby petition for an election to amend the Charter of the City of Houston to add the following as a separate section of the City Charter to read as follows:

SUBSECTION ONE-LIMITATION ON GROWTH IN REVENUES. City Council shall not, without the prior approval of 60% of those voting at a regular election, increase the City’s “Combined Revenues” (see SUBSECTION SIX for definition) for any fiscal year in an amount greater than the City’s Combined Revenues for the immediately preceding fiscal year, increased/decreased for: (a) the rate of change in the federal Consumer Price Index (“CPI”) in the immediately preceding full calendar year for the Houston Primary Metropolitan Statistical Area (“PMSA”); and (b) the rate of change in the City’s “Population” (see SUBSECTION SIX for the source of population data) in the last twelve months for which such data is available from the specified source. If the actual Combined Revenues in any one year result in an amount less than the amount allowed under this SUBSECTION ONE, then such reduced amount shall become that year’s Combined Revenues base amount for the following year’s computation.

If the City is included in any National Disaster Area by federal declaration, the City may immediately increase its Combined Revenues. Such emergency revenue increases must be limited to the amount of emergency expenditures specifically identified and justified in the City’s accounting records. Such emergency revenues will not be included in computing the following year allowable Combined Revenues.

SUBSECTION TWO-CERTIFICATION OF CITY COMPLIANCE. Before each year’s City budget can be officially authorized by City Council, the City Controller must furnish written verification that the budget complies with the requirements of SUBSECTION ONE of this Charter amendment. Further, within four months after the end of each fiscal year, the City’s independent accountants (firm that performs the City’s regular financial audit) shall furnish a written verification that the City complied during such complete fiscal year with SUBSECTION ONE of this Charter amendment, or specify the amount of noncompliance. If the City exceeds the Combined Revenues allowable under SUBSECTION ONE, then, within 30 days after receiving notification from the City’s independent accountants, the City shall transfer such excess amount to an interest-bearing Taxpayers Relief Fund. Monies in the Taxpayers Relief Fund cannot be used for City expenditures. Any time the Taxpayers Relief Fund balance reaches ten million dollars ($10,000,000) the entire balance shall be refunded to Houston citizens and business owners within 90 days in the manner deemed by City Council to be the most equitable and practicable. Within 30 days after the last refund check has been mailed, the City Controller shall furnish written assurance to City Council that all refunds have been mailed, in what total amount, in what manner the refunds were calculated and the total costs of calculating, preparing and mailing the refund checks. The total costs of calculating, preparing, and mailing such refund checks must be paid for out of the City’s Combined Revenues for the year in which the checks are mailed, not out of the Taxpayers Relief Fund.

SUBSECTION THREE-VOTER COVENANTS WITH BONDHOLDERS. The City shall always honor its covenants with bondholders on long-term debt. However, SUBSECTION ONE of this Charter Amendment is inviolate. Therefore, shortfalls in debt coverage on long-term debt shall be made up from reductions in other expenditures.

SUBSECTION FOUR-REQUIRED ELECTION NOTICES. Before any election required for voter approval under SUBSECTION ONE or for voter approval required for issuance of long-term debt, City Council shall: (a) have published in the major Houston newspaper, at least six weeks prior to the election date, analyses of related anticipated debt service, revenues, expenditures, cash flows, and debt service coverage for each year until final maturity; and (b) hold at least three public hearings thereon at least ten days before the election, each at least a week apart from the other hearing. Two of such required public hearings will be held in the evening and one during the day.

SUBSECTION FIVE-EFFECTIVE DATE OF THIS AMENDMENT. This Charter Amendment shall become effective with the City of Houston’s first fiscal year beginning after the date this Amendment is approved by the voters. The allowable Combined Revenues for the City for this initially effective fiscal year will be determined by using the actual Combined Revenues derived from the City’s audited Comprehensive Annual Financial Report for the fiscal year ended June 30, 2001, increased by: (a) the percentage by which the estimated population (see SUBSECTION SIX for source) of the City at the last available reportable date prior to the beginning of this first effective fiscal year exceeds or drops below the City’s population per the official 2000 Census by the United States Department of Commerce-Bureau of the Census; plus (b) the percentage by which the CPI for the City’s PMSA at the end of the calendar year immediately preceding the beginning of this initially effective fiscal year exceeds or drops below the CPI for the City’s PMSA at the end of calendar year 1999. For fiscal years ending after this initially effective fiscal year the allowable Combined Revenues shall be computed as described in SUBSECTION ONE.

SUBSECTION SIX-DEFINITIONS. Within this Charter Amendment:
     a. “REVENUES” means that term as used for cities by the Governmental Accounting Standards Board and the Government Finance Officers Association, and is to include both operating and non-operating revenues.
     b. “COMBINED REVENUES” means the combined revenues of the City’s General Fund, Enterprise Funds and Special Revenue Funds. However, “COMBINED REVENUES” shall exclude: (1) grant monies and other revenues received from other governmental entities; and (2) IntraCity (in other words, InterFund) revenues.
     c. The annual “POPULATION” data shall be obtained from the State of Texas’ State Data Center, and will be adjusted every ten years to the City’s official census per the United States Department of Commerce-Bureau of the Census.

SUBSECTION SEVEN-SEVERABILITY. If any provision or paragraph of this Charter Amendment is declared unlawful by a court of proper jurisdiction, then such portion shall be deleted from the Charter and the remainder of this Amendment will remain in effect.

SUBSECTION EIGHT-ENFORCEMENT AND SANCTIONS FOR VIOLATION. Any person who voted in a City of Houston election held on this Amendment shall have the right and standing to enforce the provisions of any Charter Amendment approved by the voters at this election by injunction, declaratory judgment, contempt and/or any other remedy provided by law, notwithstanding any other valid law of equal or lesser authority in conflict, including all of the above paragraphs of this Amendment.


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