How will Texas help Harvey-ravaged communities?

In September 2017, weeks after the remnants of Hurricane Harvey ravaged his city, Houston Mayor Sylvester Turner sparked what became a high-profile spat with Republican Gov. Greg Abbott.

Facing mounting clean-up costs, Turner — a Democrat and former longtime state lawmaker — implored Abbott to call legislators back to Austin to approve a withdrawal from the state’s savings account to pay for storm recovery. But Abbott held off, saying that Turner had all the money he needed until the Legislature convened for its regular session in 2019.

Since then, Abbott — who ended up sending some money to Houston for debris removal — and the state’s two other top leaders, Lt. Gov. Dan Patrick and House Speaker Dennis Bonnen, have all said they support tapping the state’s historically flush rainy day fund to help with Harvey recovery and have repeatedly named storm recovery a top priority.

More than a month into the legislative session, though, the "Big Three" have yet to offer specifics about what that might look like. All declined through spokespeople to share specific funding-related Harvey priorities. But recently filed legislation and public discussions among top lawmakers offer some insight into what the state may ultimately pony up to help communities recover from the costliest natural disaster in Texas history.

A push by some lawmakers to funnel hundreds of millions — or even billions — of dollars of state money to local communities is sure to be met with resistance by others who point to the billions of federal recovery dollars still in the chute. It’s also sure to be complicated by a long list of other needs state leaders are hoping to address with the $11 billion-and-growing Economic Stabilization Fund.

A year and a half after Harvey, the coastal Texas communities that bore the brunt of the storm are anxiously awaiting the receipt of billions of recovery dollars they’ve been promised by the federal government. Some of it has been delayed. But with shrunken tax bases and dented economies, many are also wondering how they’re going to scrape together the money they’ll need to draw down billions more in federal funding — ideally without having to rely on other federal funds they could use for other recovery projects.

Turner is leading the charge in urging the state to help local communities with so-called matching funds and is again calling on the state to tap the rainy day fund.

In a letter early last month, Turner and newly minted Harris County Judge Lina Hidalgo implored Abbott, Patrick and Bonnen to withdraw $1.3 billion from the emergency account to cover the local matching money that communities in all 55 Harvey-hit counties must send to the federal government before it will release another $11 billion. That money would go toward debris removal costs and the repair of storm-battered government facilities, and to harden public and private structures so they can better withstand future storms.

The local match for the city of Houston alone is roughly half a billion dollars, according to officials.

“Hurricane Harvey created a significant fiscal strain on local governments,” the letter said. “Requiring a local match — on top of the financial obligations already borne by local governments since Harvey — will create an undue burden for these counties and municipalities. Some may not even be able to meet the match, leaving federal dollars earmarked for Texas unused.”

Who should pay for matching funds?

One of those communities is tiny Rockport, whose mayor, Pat Rios, ticked off a list of more than a dozen things the coastal city of 10,000 needs to fully recover, including the replacement of a vital bridge, the removal of condemned buildings and the repair of school district facilities.

“We need help in many areas; matching funds are definitely on the list,” he said, adding that the state has been "very helpful, but we have quite a bit on our plate.”

In their letter, Turner and Hidalgo criticized suggestions that local communities should use other federal Harvey recovery dollars to cover their local match; Abbott and others have said they could use disaster grants from U.S. Housing and Urban Development aimed at helping low- and moderate-income residents with home repairs and other housing needs.

A chart in a document posted to Turner’s storm recovery webpage shows that most other states recently hit by natural disasters have helped local governments with matching funds — or even covered the cost entirely — and that the federal government has said it expects locals to tap into rainy day funds.

For projects funded through the Federal Emergency Management Agency's Public Assistance Grant Program, which focuses on debris removal and public facility repairs, local communities would have to put up 10 percent of the cost; for those funded through FEMA's Hazard Mitigation Grant Program, which is aimed at boosting storm resiliency, they would have to pay 25 percent. (Houston officials note the federal government usually requires local entities to cover 25 percent of the cost of public assistance projects and give credit to the Trump administration for lowering it.)

Turner’s push apparently has paid off: Late last week, state Sen. Brandon Creighton, a Republican from Conroe, filed a bill that would withdraw $3 billion from the rainy day fund to create an “infrastructure resiliency fund.” The account would be overseen by a board that would dole out grants to cover local match, among other things. Another bill by state Sen. Charles Perry, a Republican from Lubbock, is seen as a compromise and would create a $1.2 billion revolving fund with rainy day fund money from which local communities could borrow to cover local match. It would require voter approval.

Still, other high-ranking state officials have questioned the necessity of helping communities with matching funds because it’s something the state doesn’t usually do.

In a statement to the Tribune, state Sen. Jane Nelson — who chairs the powerful, budget-writing Senate Finance Committee — said matching funds have typically been paid for by “the impacted governmental entity” and that the state helping with that “would constitute a major shift in disaster policy.”

The Flower Mound Republican noted, "Significant state resources are designated for Harvey recovery, and there are billions of federal dollars in the pipeline.”

In mid-January, Nelson filed a must-pass bill designed to plug holes in the current state budget, which lawmakers approved in 2017. It allocates about $2.5 billion from the rainy day fund for Harvey — and multiple unrelated — expenses and includes several placeholders for other possible disbursements from the emergency account. But much of it would go to assist state entities rather than local ones. More than half of the $2.5 billion is earmarked for state agencies that diverted resources for Harvey response, along with other items deemed priorities by leadership: a school safety program, college tuition assistance, teacher and state employee retirement fund contributions, and state hospitals.

The bill earmarks $905 million for Harvey-impacted schools to help with lost tax revenue that followed a drop in property values — and for per-student funding lost after many children moved away after the storm. An unknown portion of that money also would be used to reduce payments that districts considered property wealthy have to make to the state under its so-called Robin Hood school finance system to supplement poorer ones.

Rios, the Rockport mayor, said his local school district is considered property wealthy and now finds itself “in a dangerous bind” as it expects to have to send $7 million to the state.

The House has not yet proposed its own supplemental budget bill. A spokesperson for state Sen. John Zerwas — Nelson’s counterpart in the House — didn’t respond to multiple emails inquiring about the Richmond Republican’s Harvey-related funding priorities.

At a recent budget hearing, senators repeatedly expressed confusion about how many federal dollars are en route to the state and what the exact needs are among Harvey-impacted communities. Nelson noted that there is stiff competition for state funding this session — particularly with “a big expenditure” on a promised school finance overhaul.

Still, some coastal lawmakers advocated for local match assistance.

“It would be the cities having to give up something that is probably important to make the match,” said state Sen. Joan Huffman, a Republican from Houston. She was responding to information from a state General Land Office official who confirmed that communities can use federal housing recovery dollars for matching funds as long as whatever projects they fund meet the requirement that they serve low- and middle-income residents.

Earlier in the committee hearing, state Sen. Larry Taylor — a Republican from Friendswood — advocated for helping communities with local match for a different effort: a multibillion-dollar project to build and rehabilitate coastal levees on the upper Texas coast — part of an overall coastal protection system envisioned for the state. Many communities have said they also can’t afford that match, he said.

As the debate heats up, the Big Three aren’t saying much. A spokesperson for Bonnen pointed the Tribune to a video recording of a recent hearing in which he reiterated support for tapping the rainy day fund but gave no specifics. Patrick’s office did not return requests for comment.

In an interview with the Tribune in early January, Abbott described helping Harvey-impacted schools as a primary focus but said legislators would have to wait to see how much that would cost before deciding whether to make school districts whole.

“Our office will work with the legislature who will ultimately determine how money from the Rainy Day Fund will be appropriated,” Abbott spokesperson John Wittman said in a statement. “Governor Abbott has been clear that the Rainy Day Fund must be used to help Texans recover from Hurricane Harvey.”