For a state whose leaders seem to delight at constantly thumbing their noses at Washington bureaucrats, Texas certainly seems to be comfortable living off the federal dole.
The last time a recession hit in 2009, the state used billions of dollars in federal aid to maintain government services and pay down debts, allowing Texas to years later indulge its favorite pastime: cutting taxes.
With $16 billion in federal recovery funds sitting untouched in the state’s coffers — courtesy of the American Rescue Plan, which Congress passed in March — and a surplus in general revenue, the state has an opportunity to be far more ambitious in its recovery from the pandemic.
Gov. Greg Abbott has decided to use the third special legislative session to finally decide how that money will be allocated.
He hasn’t asked ordinary Texans what they’d like the money spent on, but Dallas nonprofit Texas 2036 did in a recent poll. It found a vast majority of voters surveyed support targeting long-term, long overdue infrastructure solutions — from delivering cleaner drinking water to expanding broadband internet access to upgrading state parks.
Advocacy groups are also putting together ambitious goals for the federal aid, including housing assistance, increasing public education funding and early childhood education.
Unfortunately, anybody with lofty goals for the one-time bonanza of federal aid will likely be disappointed.
Judging by the bills that have already been filed, the Legislature appears to have far less ambitious plans, such as granting homeowners temporary property tax relief and using nearly half of the federal aid — $7.2 billion — to shore up the state’s depleted Unemployment Insurance Trust Fund.
Texans who blanche at any hint of federal overreach will be happy to know that this money comes with few strings attached. The American Rescue Plan specifically allows funds to be used for any expenditures incurred by the COVID-19 pandemic, including those involving medical treatment and public health, the economy and those “reasonably necessary to the function of government.”
Supplanting state spending is a nice accounting gimmick when the funds are available. But when the well of federal money dries up, if there’s no plan to add revenue — don’t count on a tax hike with Republicans controlling the Legislature — the state will once again be left with a yawning shortfall.
Alas, old habits die hard. The Legislature is eager to, in the words of state Sen. Paul Bettencourt, “give back to the taxpayers,” even though such a gift would ultimately be fleeting.
Bettencourt’s bill would use at least $2 billion of the state’s general revenue to buy down school districts’ “maintenance and operation” tax rates over the next two years — meaning the owner of a $300,000 home, roughly the median price in Texas, would pay, on average, $200 less in property taxes. While the bill doesn’t directly dip into the $16 billion, budget experts believe the Legislature wouldn’t be considering cutting taxes without the federal funds as a backstop.
Another bill filed last Thursday by state Sen. Jane Nelson, R-Flower Mound, would address the state’s Unemployment Insurance Trust Fund, depositing $7.2 billion of federal aid to replenish the fund after it was tapped dry when the pandemic hit. While it is critical that Texas keep the trust fund fully funded, a one-time injection of federal funds will simply enable the Legislature to continue underfunding it for years to come.
A 2020 analysis by the U.S. Department of Labor placed Texas 50th out of 53 states, districts and territories in terms of unemployment funding. The state intentionally keeps the fund at a bare minimum to avoid tough decisions on raising taxes. The Legislature even proceeded to — again — reduce the amount businesses would have had to pay in unemployment taxes this year. Using federal funds to cover for these missteps without a long-term plan to keep the fund solvent would be fiscal malpractice.
These misguided bills underscore how detached the conversations in the halls of the Capitol are from the needs of people whose tax dollars they are entrusted to spend.
If the Legislature insists on quick-hits, let it go to those who need it most while looking for long-term fixes. New York has put $100 million of federal aid toward offering loans to small businesses. Louisiana has set up a $50 million program to give one-time hazard pay bonuses to essential and front-line workers. Texas could use this money to fix its broken foster care system, where 23 children have died since 2019. The state could finally live up to its promise to repair and expand its state parks, a magnet for tourist activity. It could even bump up public education funding, as Texas is still well behind the national average for per-student funding and teacher pay.
Too often we are told by lawmakers that Texas doesn’t have the money to do these things, only to see Abbott on a whim conjure up $2 billion for border security by simply moving money around 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, to allow more Texans to share in the prosperity, and to ensure that fewer families are living on the edge when the next recession hits. We can’t let the partisans in Austin squander it. Call or write the governor and your representatives and tell them how you want the money spent.
Houston Chronicle
