Texas Officials Consider New Sources Of Revenue As State Faces Budget Shortfalls
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Coronavirus shutdowns have resulted in crippling budget shortfalls for state legislatures across the country. It's no different in Texas, where the decline in oil prices has added to the economic misery. As NPR's Wade Goodwyn reports, Republicans have been in charge of the Texas state legislature for nearly 20 years, but they're facing challenges to party dogma that has stood for decades longer.
WADE GOODWYN, BYLINE: The cause of Texas' budget challenges can almost be summed up in one sentence. Sales taxes are nearly 60% of the state's revenue, and collections were down a whopping 9% for March when closures only had just started toward the end of the month. The unemployment rate has gone from under 4% to nearly 13%, the highest ever in Texas. The man who will be looking between his fingers at the bloody horror show of red numbers from April and May as they come in is Glenn Hegar, the Texas comptroller.
GLENN HEGAR: Obviously, we look at 1.9 million people have filed for unemployment in Texas. And, I mean, that's a significant drop in economic activity from individuals, businesses being closed because of COVID pandemic, as well as Texas having an additional headwind, really, because of the downturn in oil prices.
GOODWYN: Out of $120 billion two-year state budget, estimates as to the size of the shortfall are simply guesses at this point. The comptroller knows whatever the first one or two numbers turn out to be, they're going to be followed by nine zeros.
HEGAR: It's too early to tell from how deep it's going to be. You know, the point that I'm trying to continue to stress is that this downturn is very significant. I've instructed my agency. We froze hiring right now. We're not doing pay increases. I think that the next legislative session for the legislature is going to be an extremely difficult session.
GOODWYN: But the state does have what's called a rainy day fund. This fund has been financed by booming oil and gas revenue over the last two decades. It currently has $8.5 billion the legislature could use to help bridge the shortfall, there's an additional $6.2 billion stimulus coming from the federal government and, finally, $3.5 billion in previously unallocated state revenue. That's roughly $18 billion - a lot of rescue money. Historically, the state's Republican leadership has been reluctant to dip into the rainy day fund. The legislature has already signaled it's not intending to tap the fund until after January. And there's one other thing Republicans refuse to do.
BILL MILLER: You will not see Republicans running on a position that we're going - they're going to raise taxes. And I don't care what happens out there in the future in the next 90 and 120 days. They will not be saying that.
GOODWYN: Bill Miller is a veteran Republican political consultant in Texas. Democrats need to flip nine seats to win control of the Texas House of Representatives. Miller believes the Republican leadership, even while saying no to taxes, must demonstrate some openness to at least consider new sources of revenue that were previously off the table - legalize marijuana, raise fees, gambling. He warns they simply can't say no to every proffered solution to the state budget gap.
MILLER: Many of them are in competitive races that were decided by small margins two years ago, at least in the state House. They've got to be flexible. They've got to stay on their toes. And they've got to be mindful that this is a challenging time. And if you just say no to everything, you're going to be viewed as an obstructionist.
GOODWYN: For conservative lobbyists and foundations in Texas, the pandemic is an opportunity to further shrink government, ease regulations on businesses and at least hold the line on taxes. Vance Ginn is the chief economist at the influential Texas Public Policy Foundation. Ginn says Republicans should continue to cut state government just as they always have.
VANCE GINN: And a big part of that is, for one, to make sure that we're not increasing taxes. No. 2 is any of the regulations that have been suspended during this time, we argue that they should be eliminated. If they weren't good during a crisis, why should they be good during a normal time? And No. 3, we called for a 15% cut by agencies. You know, you could include some of the health related like Medicaid and some other areas.
GENE WU: Yeah. No, of course, I'm sure the millionaires and billionaires want no part in helping save the state. And that's not unexpected.
GOODWYN: Gene Wu is one of the up-and-coming Democrats in the Texas House from Houston. He serves on the House Committee on Appropriations.
WU: If we're going to keep the state afloat and we're not going to dissolve into "Mad Max" territory, somebody's got to help pay this. If there can be said to be a silver lining in this impending budget apocalypse, we will now have to consider things that in the past we had the luxury of not thinking about - legalization of marijuana and taxing the hell out of it, talking about gambling, another is talking about maybe we should end our war on drugs so we don't have 150,000 people in prisons costing us billions of dollars a year when they don't have to be.
GOODWYN: While legalizing marijuana and gambling seem far-fetched for Texas' Evangelical Republican leadership, if the state is not going to gut its public schools and universities, legislators must find new sources of revenue. And they're not going to fall off the apple tree. Twenty-five years of balancing the Texas budget by cutting funding to education, health care, unemployment and nutrition will be a tough tradition to continue in a pandemic economy.
Wade Goodwyn, NPR News, Dallas. Transcript provided by NPR, Copyright NPR.