As Texas economy reeling from a month-long statewide trade shutdown, unprecedented unemployment and falling oil prices, some Texans are calling on authorities to tap into in the State Economic Stabilization Fund, which has billions of dollars in taxes that the authorities have saved for years.
For weeks, attempts by Texans to access unemployment benefits, food gifts and housing assistance overwhelmed government agencies and nonprofits. Kelly Hayden, who works at a San Antonio call center for a defense health agency, said state lawmakers should tap into the savings fund to provide economic relief to people struggling to stay afloat financially during the pandemic.
“Either with food banks, or to help with people’s bills, or just to make their money last another month or two,” said Hayden.
Voters in Texas set up the account, also known as a rainy day fund, after the oil crisis of the late 1980s, according to the Texas Comptroller website. Chris Bryan, spokesperson for the Texas Comptroller’s Office, told the Texas Tribune that the account balance was $ 10.2 billion.
But because some of that money is already earmarked for Hurricane Harvey relief and flood mitigation, among other things, the comptroller is expected to tell lawmakers this summer that they will start the next biennium with 8.5. billion dollars in the account. The comptroller plans to have a clearer picture of the economic impact COVID-19 has had on the state next summer, after reviewing sales tax revenue from previous months, Bryan said.
Many lawmakers agree that the fund will be needed. But Texans shouldn’t expect it to be exploited anytime soon, unless Gov. Greg Abbott calls the legislature back to Austin for a special legislative session before next year’s regular session, which many think is unlikely.
And when lawmakers meet again, they are more likely to use the fund to meet expected state budget deficits than to provide any state-level version of an economic relief plan like the ‘adopted the Congress.
At least two members of the House Appropriations Committee, the lower house’s panel of state budget drafters, said it was too early to know how the fund could potentially be used. State Representative Donna Howard, D-Austin, said it “remains to be seen” where the need is greatest. By the time the Legislature returns to session, Howard said she expects more clarity on how the rainy day fund should be used.
State Representative Oscar Longoria, D-Mission, is Vice Chairman of the Credit Committee. He said it is important to constantly monitor the situation and “see where all the dust settles” before assessing the financial constraints on the state.
First, Longoria said, the state must “maintain the status quo” with the 2020-2021 state budget. And State Senator Juan “Chuy” Hinojosa, a McAllen Democrat who is deputy chairman of the Senate finance committee, said in an email that the fund should be used to fill budget gaps.
This could mean lawmakers are using billions in the rainy day fund to pay the costs of a so-called supplementary budget, something lawmakers can create to cover unpaid bills that weren’t budgeted for. current state over two years.
Howard said she also plans to create a supplementary budget in January, which may be needed to cover acute needs for uninsured health care, strengthening rural hospitals, support for education. public and higher and modernization of information technology.
Several Republican lawmakers on the House Appropriations Committee did not respond to requests for comment.
“I have no doubt that we will be discussing the use of part of the Economic Stabilization Fund as part of the appropriation process in the next session,” said Senator Jane Nelson, a Republican from Flower. Mound who chairs the Senate finance committee, drafting the upper house budget. “Because we have been fiscally disciplined over the years, Texas is in a much better position than other states to deal with this crisis.”
“A real crisis for the future”
Lawmakers have already used the account to reduce budget deficits, invest in public education and improve water infrastructure, along with other economic development initiatives.
But taxes on oil and gas production replenish the rainy day fund. With falling prices and a sharp drop in demand for petroleum products, the legislature will not be able to replenish the fund at its normal rate, said Brandon Rottinghaus, professor of political science at the University of Houston. The collapse of the oil and gas industry will ripple through the entire budget, Rottinghaus said, but it will hit the rainy day fund hardest.
“The rainy day fund has inflated its value due to rising oil prices and stable demand,” Rottinghaus said. “With these two parties, it’s a challenge to maintain a healthy fund for funded rainy days. It will be a real crisis for the future.
The state has hidden funds for years. Its Economic Stabilization Fund was the country’s second in 2018, according to data from the State Legislative Budget Council. Some lawmakers argue that this leaves Texas in better circumstances than most.
To dip into the fund before January, Abbott must call a special legislative session. But State Representative Gene Wu, Houston Democrat on the House Appropriations Committee, said it was “highly unlikely” that Abbott would do so.
“Unless we deal with the toilet bill, the governor has no interest in holding a special session,” Wu said.
In July 2017, Abbott called a special session to deal with numerous issues, including a controversial debate over an ultimately unsuccessful attempt to dictate which bathrooms transgender Texans can use. Abbott’s office did not respond to requests for comment.
Wu said the rainy day fund should be used to meet the needs of cities, counties and municipalities waiting for federal funds. Then, once the federal funding reaches communities in Texas, they can pay off the bridging loans to go back to the rainy day fund.
But that state action must take place now, Wu said. After Hurricane Harvey in 2017, the state used the fund for rainy days, but not until the next legislative session in 2019. For many cities and counties, “it was too late,” Wu said.
His Democratic colleague and committee member Longoria said he was “optimistic” that there is enough funding in cities and counties in Texas to last until the next legislative session, but if that changes, lawmakers will have to consider all options.
“States are in a very tight fiscal position, but at least we have a little safety net,” Longoria said. “When the time comes, that will always be an option. We are very lucky.
Rottinghaus, the political science professor, said that “the ethics” over the past decade has been to not use the fund, instead of allowing it to grow. But it was created for the exact economic crisis the state is facing, he said.
“Given the current direction of politics in the Legislature, there is a desire to get things done and to advance policies that matter to people,” Rottinghaus said. “The question is not whether or not to spend it, but how much to spend. “
Rottinghaus said he expects the legislature to use at least half of the fund, and he expects much to go to public education, as the state promised in the last session.
Yet Texans are calling for help now, with many pushing for aid in the form of a state stimulus package similar to federal stimulus checks sent to individuals across the country. Hundreds of thousands of Texans are rushing to pay their rent or do their shopping.
“It looks like Texas just wants to pile the money up and never take it out,” said Van Johnson, who works in finance in Dallas. “You take money out of the economy and never put it back. If we need an economic stimulus, it’s now. “
Brian Standard, an intern pharmacist from Temple, echoed that sentiment.
“If you save a few billion [dollars] on a rainy day, I don’t think there is a rainier day than a global pandemic, ”he said.
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