December 2018 newsletter

Around the Texas Capitol: Austin shifts gears from politics to policy as 2018 ends

By Shayne Woodard and J Pete Laney, TAD Governmental Affairs

The upcoming holidays will be one last chance for R&R for elected officials, their staffs and others with Capitol business before the legislative session starts full steam on Tuesday, Jan. 8. 

Money and moving at the Capitol

The last day to make political contributions to certain legislators, statewide elected officials and political committees was Dec. 8. This deadline always causes a flurry of activity, and the past six weeks have been one of the busiest as folks scurry around to meet new faces as well as interact with politicians prior to the start of the legislative session.

Inside the Capitol, members of the Texas House of Representatives and Senate are in the process of moving offices. During this period between the election and the start of the legislative session on Jan. 8, the Capitol becomes a mover’s delight as boxes and dollies line the hallways. The 86th Legislature will welcome five new senators and 27 new House members who are busy getting settled and hiring staff as opening day approaches.

Money matters: Rainy Day Fund growth & the next state budget

Texas Comptroller Glenn Hegar announced on Nov. 29 that he has transferred $2.77 billion into the State Highway Fund (SHF) and the Economic Stabilization Fund (aka “Rainy Day Fund”). Each fund received more than $1.38 billion, or half of the total transfer.

Hegar said, “Texas’ Rainy Day Fund is an important tool established to help our state weather difficult economic circumstances. This transfer pushes the balance in the fund to more than $12 billion. The transfer amounts are based on crude oil and natural gas production tax revenues in excess of 1987 collections. If either tax generates more revenue than the 1987 threshold, an amount equal to 75 percent of the excess is transferred. In November 2014, voters approved a constitutional amendment allocating at least half of these severance taxes to the ESF, with the remainder going to the SHF for use on non-toll highway construction, maintenance and right-of-way acquisition.”

Following Hegar’s announcement, the Select Committee on the Joint Economic Stabilization Fund Balance met and unanimously agreed to set the minimum balance in the Rainy Day Fund at $7.5 billion, the same amount as last session. Sen. Jane Nelson (R-Flower Mound), co-chair of the committee, said, “This sufficient balance will ensure the maximum transfer of resources to transportation and allow a greater return on our investment for a significant portion of the Rainy Day Fund. It also protects our credit rating by demonstrating Texas’ commitment to keeping sufficient reserves on hand to address financial challenges.”

Phillip Ashley, associate deputy comptroller, told the committee that the Rainy Day Fund balance will be $11.8 billion next year, after deductions for projects approved by the Legislature. It appears that the Legislature could use as much as $4.5 billion of the Rainy Day Fund for various legislative issues. At the top of the list may be Hurricane Harvey and property tax reform/public education.

At the beginning of each regular session of the Texas Legislature, the Texas Constitution requires the Comptroller of Public Accounts to submit a statement showing the state’s financial condition and estimating the revenue it can expect to receive during the next two-year budget period.Comptroller Hegar is expected to provide a budget estimate in January that will guide the Legislature as it crafts a biennial budget to cover fiscal years 2020-2021.