How would you spend $ 16 billion? Probably not like Texas lawmakers would.



For a state whose leaders seem delighted to constantly thumb their noses at Washington bureaucrats, Texas certainly seems comfortable living off the federal allowance.

The last time a recession hit in 2009, the state used billions of dollars in federal aid to maintain government services and pay off debt, allowing Texas years later to indulge in its past. favorite time: reduce taxes.

With $ 16 billion in federal stimulus money left untouched in state coffers – thanks to the US bailout package, which Congress passed in March – and a general revenue surplus, the state has an opportunity to be much more ambitious in its recovery from the pandemic.

Governor Greg Abbott has decided to use the Third Special Legislative Session to finally decide how this money will be allocated.

He didn’t ask regular Texans what they’d like the money to be spent on, but the Dallas Texas 2036 nonprofit did in a recent poll. It found that a large majority of voters polled supported targeting long-term and long-awaited infrastructure solutions – from providing cleaner drinking water to extending high-speed internet access to modernization. state parks.

Advocacy groups are also setting ambitious targets for federal aid, including housing assistance, increasing public funding for education, and early childhood education.

Sadly, anyone with lofty goals for the one-time windfall of federal aid will likely be disappointed.

Judging by the bills that have already been tabled this week, the legislature appears to have much less ambitious plans, such as giving temporary property tax relief to homeowners and using nearly half of federal aid – $ 7.2 billion – to shore up the state’s exhausted unemployment insurance. Investment fund.

Texans who launder at any hint of federal overrun will be happy to know that this money comes with few strings attached. The US bailout specifically allows funds to be used for all expenses incurred by the COVID-19 pandemic, including those involving medical treatment and public health, the economy and those “reasonably necessary for the function of government “.

Such latitude is the beauty of a federalist system where the rights of states are valued.

Yet the story can be instructive. We don’t need to look too far back to understand how irresponsible it would be to just use a huge amount of free money to plug the budget holes.

After the Great Recession of 2009, Texas received $ 17 billion in aid from the American Recovery and Reinvestment Act, a bill that was the backbone of President Barack Obama’s efforts to stimulate a declining economy. The legislature used those funds to fill a $ 3.3 billion budget hole and distribute the rest to supplant state spending on struggling programs like Medicaid. While this cash injection pushed Texas forward during this time, when the legislature reconvened in 2011, lawmakers faced a budget deficit of $ 4 billion and a projected deficit of between $ 15 and $ 30. billion dollars in 2012-13. Rather than – gasp! – increase taxes to maintain state services in this growing state, the legislature adopted a budget that significantly reduced spending, including $ 4 billion for public education. The legislature reduced the franchise tax several years later, relieving businesses, but further reducing much-needed revenue.

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Bypassing government spending is a great accounting trick when funds are available. But when the well of federal money dries up, if there is no plan to add revenue – don’t count on a tax hike with Republicans in control of the legislature – the state will find itself once again. more with a gaping deficit.

Unfortunately, old habits die hard. The legislature is eager to, in the words of State Senator Paul Bettencourt, “give back to taxpayers”, even if such a gift would ultimately be fleeting.

Bettencourt’s bill would use at least $ 2 billion of state general revenues to reduce the “maintenance and operation” tax rates of school districts over the next two years – meaning that the owning a $ 300,000 home, roughly the median price in Texas, would pay, on average, $ 200 less in property taxes. While the bill does not dive straight into the $ 16 billion, budget experts believe the legislature would not consider cutting taxes without federal funds as a safety net. The bill was passed unanimously by the Senate Finance Committee on Tuesday, although even some of Bettencourt’s Republican colleagues questioned the urgency and wisdom of a temporary tax cut that should be taken into account in the next budget cycle.

“I’ve been here when we (lowered property taxes) at least twice,” State Senator Larry Taylor, R-Friendswood, said during the committee hearing. “They don’t like it when it goes back up.”

Another bill tabled Thursday by State Senator Jane Nelson, R-Flower Mound, would go to the state’s Unemployment Insurance Trust Fund, depositing $ 7.2 billion in federal aid to replenish the fund after it was depleted when the pandemic struck. While it is essential that Texas keep the trust fund fully funded, a one-time infusion of federal funds will simply allow the legislature to continue to underfund it for years to come.

A 2020 US Department of Labor analysis ranked Texas 50th out of 53 states, districts, and territories in terms of unemployment funding. The state intentionally keeps the fund to a minimum to avoid tough decisions on tax increases. The legislature even proceeded to – again – reduce the amount that businesses should have paid in unemployment taxes this year. It would be tax misconduct to use federal funds to cover these missteps without a long-term plan to maintain the fund’s solvency. In all cases, the invoice will eventually fall due.

These misguided bills underscore just how detached conversations in the halls of the Capitol are from the needs of the people they are charged with spending taxpayer money on. Huge majorities of voters, as detailed in the Texas 2036 poll, are much more anxious to see the state use federal aid to finally invest in its crumbling infrastructure than to spend it on unemployment insurance.

If the legislature insists on quick hits, let it go to those who need it most while seeking long-term solutions. New York has allocated $ 100 million in federal assistance to provide small business loans. Louisiana implemented a $ 50 million program to grant one-time risk premiums to essential and frontline workers. Texas could use the money to fix its broken foster care system, where 23 children have died since 2019. The state could finally keep its promise to repair and expand its state parks, a magnet for the nation. tourist activity. It could even increase public funding for education, as Texas is still well below the national average for per student funding and teacher compensation.

Too often, lawmakers tell us Texas doesn’t have the money to do these things, only to see Abbott on a whim to raise $ 2 billion for border security by simply moving the money and borrowing from other state agencies. Having this additional federal money is an opportunity for Texas to grow its economy beyond its pre-pandemic status, enable more Texans to share in prosperity, and ensure that fewer families are living in the country. limit when the next recession hits. This kind of surplus is a great opportunity to make a difference in Texas. We cannot let Austin fans waste it. Call or write the governor and your representatives and tell them how you want the money to be spent.


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