Here's a look at some of Hegar’s responses to questions during the interview.
What’s happening to the state’s economy right now?
- Hegar said the Texas economy has gone from "very strong" to a being in a recession in a matter of weeks due to the novel coronavirus outbreak and the recent collapse of oil prices globally.
- “Two weeks ago, we had unemployment claims of roughly 16,000 people. ... That number went up last week to 276,000,” said Hegar, who added that the numbers of Texans filing unemployment claims from earlier in the year are now largely irrelevant.
- When asked why he has been characterizing the economic situation in the state as a recession, Hegar said that it helps the public manage expectations and plan accordingly. “I know that we are unfortunately in a recession,” Hegar continued. “I just don’t know how deep it’s going to be.”
- While Hegar pointed out that the downturn in oil prices would have hurt the state’s economy on its own, he also said that “it wouldn’t necessarily [have dragged] us into a state recession,” attributing the majority of the economic downturn to the pandemic and the resulting closures of businesses statewide so that the virus' spread could be slowed.
How does this economic downturn affect the state budget, and how are state officials responding?
- Hegar said that the outbreak of the virus has created a lag on the sales tax collection process and that his office expects to have hard numbers in terms of sales tax collections in June.
- Accounting for more than 50% of the state’s tax revenues, sales taxes are the biggest determination for the state budget. So until the data on current sales tax collections has been collected, Hegar said, the true economic effects of social distancing cannot be fully understood.
- Nevertheless, Hegar and his office have been compiling data from comparable economic periods and other “nontraditional datapoints” to offer state legislators some additional insight into how things may progress from here.
- While Hegar said that the current economic situation is fluid and that “there’s a lot of unknowns that we have,” he also said that he believes the state will be able to cover spending for at least the remainder of the year, and there is currently no reason to call a special legislative session.
- Hegar anticipates that the state’s Economic Stabilization Fund (commonly known as the rainy day fund) will only be slightly reduced as a result of the current downturn. “We’ll still have a significant amount of money,” he said, estimating that the new ESF would be in the range of $8.5 billion.
- Hegar’s office is working with other agencies in the state to help them track their spending and to ensure that agencies that will need to increase their spending (such as the Children's Health Insurance Program, Foundation School Program or Medicaid) have the resources they need. His office is also recommending agencies look into ways of reducing their spending sooner rather than later.
What effects do these larger economic trends have on local communities and local business?
- Hegar acknowledged that social distancing measures have altered the way many local officials are operating. This includes appraisal districts, which are having to balance state tax code requirements, local economic pressures and operational concerns in the midst of the outbreak.
- When asked about how local revenues would be impacted by the outbreak, Hegar said that “obviously [their] sales tax numbers are going to be reduced” along with the state’s. One reason Hegar is reluctant to issue a blanket or statewide deferral of sales tax collections for small business owners — many of whom are currently in dire need of financial assistance — is because doing so would further impact the available revenue for local jurisdictions, he said.
- On the subject of deferring sales tax collections for the hospitality sector, Hegar reiterated that “I can’t pick and choose between certain industry sectors.” Based on how his authority to defer such collections is structured by law, “it’s an all or nothing.”
- Ultimately, Hegar said, “Texas doesn’t have the ability to print money,” so in the face of a global economic downturn the state has to rely on the federal government in order to fully address the overall fallout.
- Despite the current downward trends, Hegar said that he remains hopeful for the state’s future. “Texas before this downturn was a strong economy,” Hegar said. “It’s going to take us a little while, but we’re going to return back to a strong economy. ... I don’t think you’ll see a significant decrease in property values.”
Hegar was elected as the 36th Texas comptroller in 2014, and he serves as Texas’ treasurer, check writer, tax collector, procurement officer and revenue estimator. He previously served as a member of the Texas Senate and House.
The interview was streamed on the Tribune’s website, Facebook page and Twitter, as well as by our media partners at KPRC2, KXAN and Community Impact, to a live audience of more than 4,500 viewers.
This virtual event series is presented by Blue Cross Blue Shield of Texas; Beer Alliance of Texas; CAMMACK & STRONG, P. C.; and Raise Your Hand Texas. Media support is provided by KXAN, KPRC2, Univision62 and Community Impact.
Tribune events are also supported through contributions from our founding investors and members. Though donors and corporate sponsors underwrite Texas Tribune events, they play no role in determining the content, panelists or line of questioning.
Disclosure: The Texas Comptroller of Public Accounts has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.