What would you do with $900? Most people would spend it, worsen inflation and have nothing to show for it in a year. In his amusing analysis, Texas Monthly’s Russell Gold suggests a Caribbean cruise for every Texan. Can we trust our lawmakers to invest it more wisely?
Texas lawmakers are often poor with money. They overestimate revenues and underestimate expenses when they meet in Austin for the 140-day session every two years. Almost every time, they underfund Medicaid, the state’s stingy health care program for the impoverished.
Then, in the opening days of the next legislative session, they tap the state’s Rainy Day fund to cover any shortfall. But not this year.
Remember when gasoline cost $4 a gallon and natural gas was double the current price? Exxon Mobil, Chevron and the other oil companies were not the only beneficiaries. Texas charges a severance tax on the extraction of our natural resources, so when commodity prices spike, so does the state’s income.
Energy boom-and-bust cycles are common enough that lawmakers use flush times to make up for underfunding necessities during the downturns. Schools, colleges, health care, roads and water infrastructure seldom get the money they need unless there is a surplus.
This year, those priorities will compete with two much higher-profile issues: property taxes and the electric grid.
Two facts are important to remember about the $27 billion. First, that’s a lot of money when you consider lawmakers only had $115 billion in discretionary spending for 2022-23. Most of Texas’s two-year, $245.3 billion budget goes to programs that lawmakers do not control.
The second fact is this is not a continuing windfall. Oil and gas prices have dropped and demand is shrinking, as are the underground reservoirs from which this wealth bubbles. Recessions crush energy consumption, and Texas has often struggled with revenue shortfalls immediately following surpluses.
In short, the $27 billion is a one-time, 23 percent bonus lawmakers should spend wisely.
A chorus of conservatives will demand the state give the money to Texans since the revenue arises from taxes on their collective mineral wealth. The state could write a check to every Texan for $900, but injecting that much money into the Texas economy will send inflation skyrocketing.
Gov. Greg Abbott wants to return half the money through property tax rate cuts. Because Texas does not have an income tax, the state has among the country’s highest property taxes, which makes housing expensive for renters and fixed-income seniors.
“I want to return at least half of that money to you with the largest property tax cut ever in the history of Texas,” Abbott told supporters during a campaign speech in September. But with property values also soaring, many owners will likely see their taxes flat line, not go down, and only for one year.
As Karen Brooks at the Texas Tribune explained, the bigger challenge is whether conservative lawmakers can bring themselves to spend the money at all. They passed a law in 2021 limiting increases in state spending to a rate equal to the inflation rate plus the population growth rate.
If the Legislature wants to increase spending by more than $12.5 billion, lawmakers will have to suspend the law they just passed last session. Lt. Gov. Dan Patrick, the measure’s biggest proponent, said he would increase the Rainy Day Fund or property tax exemptions rather than lift the spending cap.
One of Patrick’s top priorities this year is fixing the electric grid, and one area in desperate need of improvement is the transmission network. But Patrick is obsessed with adding more natural gas plants while punishing renewable energy facilities, which is the opposite of what Texans need.
In the meantime, state agencies, school districts, hospitals, and universities have put together a $20 billion wish list. Lobbyists will swarm the Capitol with begging bowls for expanded mental health programs, better care for pregnant women, new campus facilities and higher reimbursement for charity care.
Two agencies that never need to beg are the state police and the Texas National Guard. Showy deployments of uniformed people with guns to the border are Abbott’s calling card in seeking higher office.
While the troops and troopers don’t accomplish much in terms of border protection, they boost Abbott’s image among Republican primary voters nationwide. For our ambitious governor, the best way to spend $27 billion is in ways that increase his profile.
Chris Tomlinson, named 2021 columnist of the year by the Texas Managing Editors, writes commentary about money, politics and life in Texas. Sign up for his “Tomlinson’s Take” newsletter at HoustonChronicle.com/TomlinsonNewsletter.
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