Frequently Asked Questions - Q22


Question:

Why is the airport system included in the total revenues subjected to the cap? We need to keep expanding our airport facilities if we are going to continue to grow and be a world-class city. Won’t the proposed charter amendment prevent that, or at least significantly interfere with plans of the airline companies and federal airport grant requirements? Besides, the City’s airport revenues consist principally of fees charged to the airline companies, parking and concession franchise fees. How do those fees possibly impact Houstonians?

Answer:

Houstonians generate a significant percentage of the passenger traffic at both airports and, therefore, pay a significant portion of the (passed-through to passengers) fees charged to the airline companies and concessionaires, as well as probably the majority of parking fees. Accordingly, Houstonians have as much interest in controlling the rate of growth in the airport “hidden taxes” as they do regarding other “hidden taxes” such as water and sewer rates, and property taxes. If the City and the tenant airline companies decide that airport expansion is needed, the amendment merely forces the City to merge airport needs into the process of prioritizing the overall needs of the City. All the City needs to do is convince the voters of the airport needs and its place in the City’s overall priorities. Since Houstonians shoulder a great deal of the cost of operating the airport system, we believe it reasonable to require the voters a place at the table when considering City wide priorities. There are other serious reasons to place airport system revenues under the proposed total revenue cap and give Houstonians a say in airport system matters. State law grants the City the right to assess supplemental property taxes (subject to any city charter cap) to operate the airport system. Also, state law states that airport construction contracts for cities with a population of over 1,200,000 (i.e., Houston) do not have to be competitively bid. Therefore, it really behooves Houstonians to bring the airport system under the financial controls of this proposed charter amendment. Incidentally, we hardly think that the major airlines are going to pull out of serving Houston, the fourth largest US city. Matter of fact, better controlling of revenues would lessen the City’s charges to the airline companies and perhaps give Houston a competitive edge versus other cities. As to federal grants, the proposed charter amendment specifically excludes grant revenues from the cap computation. Finally, the airport system’s operating expenses (excluding depreciation and interest) are only about 61% of its operating revenues. This leaves a huge 39% of operating revenues to service airport system debt.



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