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Tuesday’s a big day: The circus better known as the Texas Legislature is coming back to Austin for its biennial 20-week session.
Lawmakers have big plans for property taxes, bathroom regulations, ride-hailing services, public schools, open records, college tuition and more. If you’re not careful, you’ll run into one of them and get a long, impassioned explanation of their next big idea.
That show starts on Tuesday. But Monday is when lawmakers find out how long their financial leash will be. That morning, Texas Comptroller Glenn Hegar will reveal the dryly titled “Biennial Revenue Estimate” — his official forecast of how much money lawmakers will have to spend over the next two years.
The foreshadowing has not been encouraging.
“I expect that he will lay out a number that scares the hell out of them,” said Dale Craymer, a former state revenue estimator and budgeteer who now heads the Texas Taxpayer and Research Association.
Craymer, like everyone outside of a small circle of people in Hegar’s agency, is guessing at this. But he’s pretty specific about where he sees trouble. Hegar initially thought the state would close the current two-year budget with $4.2 billion left in surplus; that’s probably an overshot, and Craymer is expecting something under $2 billion. By comparison, the 2015 Legislature started with an $8 billion surplus.
The declines of the oil and gas business — and the related declines in state sales taxes and other revenue — mean the state’s income is not increasing as quickly as its expenses. A new dedication of state sales taxes for transportation, approved by voters in the form of a constitutional amendment, will eat up a good portion of new money that does come in.
“The state has a shortfall — they don’t have a deficit,” Craymer says. There’s a decent chance budget-writers won’t have the money they’re legally required to spend, given current laws for education, health and human services, transportation and so on.
Analysts at the Center for Public Policy Priorities, a left-leaning think tank based in Austin, pulled together what they call a “ballpark estimate” of what it would take to keep current services in the budget as they are, given inflating costs, growth in the population and so on. Here’s the quick version: They think the state will need about 3 percent more in general revenue than the current budget.
Hegar himself has been carefully managing expectations, with some effect: It’s hard to find anyone in high office who thinks he will bring champagne and roses to Monday’s announcement.
More than a year ago, he pointed to oil and gas troubles and lowered his estimates for the current budget period. It’s a sucker’s game, predicting the future. Hegar said as much at the time: “I think we read the tea leaves that we were given at the time,” Hegar said in October 2015. “The numbers are the numbers, and that was the data that we had at the time, and this is the data we had as of Thursday.”
By September of last year, he was still tamping down the numbers, cutting another $1 billion from his estimated surplus. The culprit? Oil and gas again. The bright spot, such as it is, is that he continues to say there is enough money to cover the current budget.
Lawmakers expect to write a supplemental appropriations bill early in this year’s session to cover current expenses they didn’t include in the original 2016-17 budget. One hanging question — a thing to watch on Monday — is whether the surplus for the current budget is big enough to cover that extra spending.
Another is to take what’s left after that, if anything, and add it to what the comptroller believes the state will collect in taxes, fees and other revenues during the next two years.
That bottom-line number will tell budget-writers how hard the session will be. Can they keep current programs, taking growth into account, or will this be a year that requires some combination of cuts and finance tricks to balance the budget?
Anyone looking for financial support for a program or service is going to get used to hearing that Hegar’s estimate is the reason they’re getting a “no” or a “probably not” this year.
Expect a lot of conversation about the so-called Rainy Day Fund if cuts are under consideration. That’s the $10 billion-plus account that’s available to the state when other revenues fall short — the state’s version of a savings account. Lawmakers have been very reluctant to tap that fund in recent years, but it’s there if the alternative is to cut something they find dear.
Hegar has not been presenting a dire outlook, but it’s a muted one. Lawmakers started the 2011 legislative session with a shortfall — a difference between what they had to spend and what it would take to keep current programs and services — of $27 billion.
Nothing like that is expected this time, but until Monday, only Hegar knows what’s coming.
More columns from Ross Ramsey:
- The judges overseeing litigation on Texas redistricting haven't done anything public for two years. The lawyers who sued the state over its political maps are trying to get the judges to chirp or get off the perch.
- Some Texas lawmakers were in a hurry to require transgender Texans to use the restrooms that match the genders listed on their birth certificates. But the policy and politics are complicated enough to prompt the governor to tap the brakes.
- Rick Perry has become the unsinkable Molly Brown of Texas politics — seemingly at the end of his career time after time, and now on his way to the biggest government job of his career.
Disclosure: The Center for Public Policy Priorities has been a financial supporter of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here.