Houston City Councilmember Michael Kubosh Calls for the Establishment of an Endowment for Houston’s Police, Fire and Infrastructure Future – – – An Interest-Only Lockbox Politicians Cannot Touch – – – Commits to Leading the Signature Gathering Effort for a Charter Amendment if Elected Houston City Controller

Houston, TX – In a “first of its kind” ground-breaking initiative for a major metropolitan city, today, Houston City Councilmember Michael Kubosh called for the establishment of an “Endowment for Houston’s Future.” “It’s time for short-sighted elected officials to stop spending critical taxpayer infrastructure and safety dollars on pork-barrel ways they believe will help them win re-election. The future of Houston remaining a world-class city is too important, and our long-term financial decisions should be placed into the hands of professional money managers, just the same as traditional retirement and 401(k) accounts.”

World-class educational institutions recognized long ago that creating endowments for their sustainability and infrastructure was a critical component of long-term planning.¹ The State of Texas’s Economic Stabilization Fund (commonly known as the “Rainy Day Fund”) was created in 1989. “In the 34 years since the Rainy Day Fund was established, it has grown to about $14 billion² – – – and the state doesn’t just live off the interest like we are proposing – – – they have spent billions of the fund’s seed money along the way as band aids and to recover from bad fiscal decisions.”

The City of Houston – – – Texas’s largest and most prosperous city – – – needs to adopt a similar strategic financial planning initiative to address the City’s increasingly dilapidated infrastructure and shortfalls in public safety funding. A conservative rate of return on investment for an endowment is 5%. More typically, endowment investment funds see average annual rates of returns in the 8% – 12% range. “Do you know what 10% of $20 billion is? It’s $2 billion! Just imagine what Houston would look like with an extra two billion dollars (or more) to spend on public safety and infrastructure every year. We would be the envy of every major metropolitan city in the world.”

The City of Houston’s 2022-2023 annual budget is $5.7 billion.³ “My proposal is to strip away 10% of the City’s fun money, make them tighten their britches, force them to make more deliberate fiscal decisions, to implement cost cutting measures where appropriate, and to set aside a relatively small portion of taxpayer dollars as an investment in our collective futures.”
The Plan

Michael Kubosh is Houston’s foremost expert on ballot initiatives and referenda. “I know how to get the signatures. We’ve done it before, and we can do it again. Even if the City’s bureaucracy tries to fight us, we know where the Courthouse is. We’ve won those battles before too.” The Kubosh for Controller Campaign will release additional details in the coming months regarding the Endowment. However, at a 30,000-foot level, here is what the plan looks like:

1. Gather the signatures;
2. Submit a charter amendment to the voters of Houston:
   • 10% of City revenues will be diverted to the endowment for the next 10 years.
     • In current dollars, this amounts to approximately $550 million per year; with increases in city revenues projected, the Endowment base funding is expected to be approximately $10 billion by 2033.
   • After year 10, the amount set aside for the fund will decrease to 5%, indefinitely, or until further base funding is repealed by the voters.
     • In current dollars, with increases in city revenues projected, the Endowment base funding is expected to be approximately $23 billion by 2043.4
   • Private sector donations will be accepted.
3. The yearly accumulated Endowment investment return (over and above the base funding) will be eligible for distribution for health, safety and infrastructure improvements in the City of Houston.

“I’m tired of politicians who spend all of their time and effort describing the oncoming financial cliff. I am bringing a plan to the voters of Houston to stop the looming financial trainwreck once and for all. With my track record on referendum and initiatives, and with the support and enduring entrepreneurial spirit of the voters who have blessed Houston for the last 186 years, I know we will continue to lead Texas by example and get this done. I am not intractable, and I fully expect our plan will be adjusted based on serious people contributing serious ideas. It is time to run our City government more responsibly. If I am elected as your Fiscal Watchdog, you have my word – – – I will have only one True North – – – and that is the long-lasting prosperity of Houston.”

Councilmember Kubosh has served as an At-Large council member since 2014. He has been a strong advocate for the City prioritizing leadership, transparency, and accountability. His goals are to focus on core city services such as public safety, emergency services, and infrastructure. Councilmember Kubosh has successfully passed budget amendments, advocated for the homeless population, and led the opposition against the Red Light Camera program. He believes in the words immortalized on the walls of City Hall: “The People are the City.” If elected as Controller, he will fight for total transparency in government and the City budget and much more.

¹ See, i.e., Rice University: Endowment Size: $7.8 billion (with a five year average annual compound return of 10.4% (https://investments.rice.edu/performance)); University of Texas/Texas A&M (UTIMCO) Endowment Size: $52.2 billion (with a five year average annual compound return of 8.3% (https://www.utimco.org/media/3977/2022-utimco-annual-report.pdf)).
² https://comptroller.texas.gov/about/media-center/news/20221129-texas-comptroller-glenn-hegar-announces-transfer-of-73-billion-to-state-highway-and-rainy-day-funds-1669741079208
³ https://www.houstontx.gov/budget/23budadopt/FY2023_Adopted_Budget.pdf