Texas House Speaker Dennis Bonnen has reached out to fellow state leaders to initiate conversations about the state’s economic fallout from the coronavirus pandemic, suggesting that the lower chamber would like to discuss a directive to all state agencies “to immediately identify and execute 5% budgetary savings.”
“It has become apparent that the time to engage in long-term economic planning is now,” the Angleton Republican wrote in an April 9 memo to Gov. Greg Abbott and Lt. Gov. Dan Patrick, which was obtained Wednesday by The Texas Tribune. “While it is true that we do not have an immediate funding need or a lack of COVID-related emergency funding, all indications are that we will most certainly have a future state revenue concern due to lagging economic conditions statewide.”
In the memo, Bonnen also wrote that he would like to begin conversations about settling on instructions for legislative appropriations requests for budget planning for the 2022-23 cycle. The memo was shared last week with the House Appropriations Committee and its staff.
It’s unclear whether Bonnen’s fellow Republican leaders responded to the letter. Spokespeople for Abbott and Patrick did not immediately return requests for comment Wednesday.
The state's economy has been reeling for the past several weeks over the virus. In Texas, oil prices have plummeted, more than 1 million people have filed for unemployment relief over the past month and businesses across the state have shuttered in an attempt to slow the spread of the virus. Those shutdowns will be reflected in sales tax revenue, the state's largest source of funding, that is collected in the coming months.
Bonnen, who will retire at the end of his term, wrote that “a small 5% course correction now, with nearly 17 months for implementation … is a far more achievable goal than having to attempt a much larger cut with a much shorter window for execution.”
“In pursuing this course of action, it would be imperative that we give agencies maximum flexibility,” he wrote. “Enabling agencies flexibility to enact a 5% reduction gives them the opportunity to identify savings they view as the most prudent and efficient while allowing them to safeguard mission-critical functions."
Bonnen also noted that “additional cuts may be warranted” after Comptroller Glenn Hegar provides his revised fiscal forecast, which is expected to happen in July. Hegar has said that the state is in a recession due to the pandemic — but that he does not yet “know how deep or how wide it’s going to be” and that it will be at least a couple of months before his agency has a good idea of the data from the economic fallout.
Still, Hegar said during an interview with the Tribune earlier this month that his agency had already told other agencies to begin considering cuts and that the comptroller's office was working on providing recommendations to state leadership about it.
"It's better to ask agencies to reduce their budgets for a longer duration than a shorter duration," Hegar said, "so you're better to go shallow for long and still attain a significant savings for this biennium and next biennium than waiting six more months and [having] to go deeper."
Hegar also said that some state agencies were having to increase their spending due to the pandemic and that the comptroller's office was working with those entities "to track those dollars."
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.