The 88th session of the Texas Legislature began this week with the re-election of Speaker Dade Phelan, a spirited rules debate, and a fat wallet.
On Monday, conservative Republican Comptroller Glenn Hegar announced the Lone Star State has an estimated $33 billion surplus on hand. The state is projected to have a record $188.2 billion in revenue available for general-purpose spending during the 2024-25 biennium, a 26.3 percent increase from 2022-23.
Observers have called the increase “eye-popping” and “once in a lifetime,” but no surprise as the Texodus continues from more states than just Louisiana. Oil and natural gas is competitive again amid fluctuating-high gasoline prices, thus feeding state coffers.
As The Hayride publisher and editor Scott McKay wrote this week, “Let’s see what they do with it.” Following up on that, and predictably, the scenario is looking like apex predators making their claim on a freshly downed carcass.
But first, the conservatives called for returning a large portion of the money to the taxpayers (though exactly how has yet to be determined).
Biggest. Tax Cut. In TX History. #txlege @TPPF https://t.co/lOfDoZmlmK
— James Quintero (@JamesQuinteroTX) January 9, 2023
It may only be that $15 billion of that surplus ends up dedicated to tax relief according to Sen. Joan Huffman, Texas Senate Finance Chairman, echoing the Governor’s office (see bottom).
Tx Comptroller @Glenn_Hegar confirms state’s budget surplus has grown to a massive $33 Billion Advises lawmakers to deliver Prop Tax relief, Infrastructure upgrades as major investments. St. Sen. @joanhuffman says target for prop tax rebate $15B #Fox26 https://t.co/S6n4ykOwTu
— Greg Groogan (@GrooganFox26) January 10, 2023
A lobbyist for one of three major teachers unions in Texas, is ready to “do things” with the money.
The 88th #txlege will start out with a $32.7 billion surplus. Unprecedented. Mind-boggling.
Important to note however that the legislature is (mostly) constrained by constitutional spending caps. Still, hard to argue now that we can't afford to do things. #txed https://t.co/6OSSVfDxHW
— Mark Wiggins (@MarkWigginsTX) January 9, 2023
Higher ed is already weighing in, with talks of one-time “investments” in state-funded colleges and universities, and …
New: Leaders of Texas' six largest public university systems are asking lawmakers to allocate $1 billion of the state's surplus toward higher education.
In exchange, university chancellors pledge to hold tuition flat for undergraduates for two years. https://t.co/socdytLmMd
— Texas Tribune (@TexasTribune) January 10, 2023
(That’s the same promise they made after tuition de-regulation, by the way.)
Then you have transportation:
Transportation leaders suggest Texas lawmakers plan for continued growth amid budget surplushttps://t.co/x4DZO5B4hU
— 1080 KRLD (@KRLD) January 11, 2023
Plenty of talk about interstate expansion, rail, and green energy, but no talk of buying down excessive tolls or reducing statewide dependence on them.
The healthcare lobby and bureaucracy has been relatively silent, but so-called “women’s healthcare” is already lining up at the trough to fund abortion-related services.
With a $32.69B surplus, we must prioritize ensuring every Texan has access to low cost quality healthcare services. In addition, we must fully fund our state’s women’s health programs and ensure all Family Planning providers receive a full reimbursement for services rendered.
— Texas Women's Health Caucus (@TXHouseWHC) January 9, 2023
Comptroller Hegar, while advocating strongly for tax relief following the announcement, was also using words like “investing” prior to the revised estimate release.
Texas should prioritize investing in infrastructure, expanding broadband and raising teacher pay with its historic budget surplus, Texas Comptroller Glenn Hegar said Monday at a Texas Tribune event. https://t.co/uwm3xg0zng
— Texas Tribune (@TexasTribune) January 10, 2023
Somewhere in the middle is Gov. Greg Abbott, who although promoting a historic tax cut, is calling for about half of the sum to be spent on taxes. According to Bloomberg:
Abbott wants half of the $32.7 billion to go to reducing the burden on homeowners, a centerpiece of his re-election campaign. Lieutenant Governor Dan Patrick says Abbott’s plan would bust the state’s spending cap and would rather prioritize shoring up the state’s troubled electric grid — which Abbott thinks is in good condition after fixes were made last year. And House Speaker Dade Phelan has emphasized the need to improve other infrastructure like roads and broadband.
From the hip: Oh right, the grid. Which held up during a record-breaking cold-snap and a dry-hot summer. But to the LiteGuv’s credit, this may be a creative way to avoid busting the cap on revenue-spending.
And broadband expansion? Not sure what the Speaker and the Comptroller are thinking there, except that this could attract much in the way of federal funding. The market could provide a lot more broadband with some business tax cuts. And isn’t Starlink on the way thanks to newly-minted Texan Elon Musk?
While a $33 billion blank check seems like a dream come true, leave it to the lege to spend it before taxpayers can even blink an eye. Remember that it appears Texas is on track to spend about half of it on tax relief, some of the surplus will have to be retained to keep the Rainy Day Fund intact (which may come in handy should there be a prolonged recession), and the Big 3 already have dibs on some big-ticket items. And this is all before HB 1, the budget bill, is debated.
And what kind of tax relief are we talking about? A rebate check? A sales tax buy-down? A school tax buy-down? If that, then is it the entire tax bill including M&O and facilities? Will it be a tax compression favored lately by many conservative economists? Will businesses see any relief? Roughly $15 billion can go away quickly, with taxpayers left licking the ribs as usual.
With all that said, Hegar leaves us with a cautionary tale from the Golden State:
Yesterday I announced the revenues available for lawmakers as they kick off the 88th Legislature today. I know conservatives won't repeat the mistakes of California and assume this kind of money will always be available. #txlegehttps://t.co/SDMvwk3XZF
— Glenn Hegar (@Glenn_Hegar) January 10, 2023