When the economic damage from the coronavirus and Texas’ shutdown is finally calculated, state, city and county budgets will be listed as casualties.
Texas Comptroller Glenn Hegar plans to update the state’s revenue forecast by July, and he’s signaled that he’ll lower his estimate by several billion dollars. And since no one knows how quickly businesses and consumer spending will rebound, it is clear that tough times are ahead for the state. As Gov. Greg Abbott takes the next steps to reopen the Texas economy, he must also begin a frank, public conversation about the state’s looming budget challenges.
Even when Texans are back to work, public budgets will be upside down, with more demands for services than money to pay for them. The next legislative session is expected to be especially austere. Lawmakers will be tasked with filling a sizable hole in the current state budget before they even begin planning for the next two fiscal years.
Just a few months ago, the Texas economy was growing at rates that outpaced those nationally. Lawmakers last session approved a quarter-trillion-dollar budget, and state income was projected to grow faster than previously expected. The comptroller’s office even estimated that lawmakers would have about $2.9 billion in hand upon their return to session. And that would be an important head start for lawmakers who would need to find new sources of state revenue to support the state’s increased commitment to funding public schools, among other things.
Gov. Greg Abbott announced a strike force in charge of laying steps to reopen the Texas economy in the wake of shutdowns to flatten the curve of the new coronavirus, at a press conference in Austin.
The virus, however, effectively wiped out that $2.9 billion surplus and then some. The choice now is pretty basic: Find new revenue or make significant cuts in basic state services. House Speaker Dennis Bonnen recently suggested that all state agencies cut their budgets by 5% now, rather than wait closer to the start of the next session when budget cuts could be draconian, less strategic and made under greater duress. This echoes Hegar, who has advised agencies to cut spending before lawmakers start deciding what will stay and what will go. (cont)