Around the Texas Capitol: Revenue drops, budget cuts & summer elections

By Shayne Woodard, J Pete Laney and Lauren Spreen
TAD Governmental Affairs

 With the halls of the Texas Capitol all but empty, it might look like the summertime slowdown has hit. But the building remains quiet only because it’s still closed to the public (and vacated by many staffers who are working remotely) because of the continuing COVID-19 pandemic. In fact, there’s a lot going on, as we discuss below.

Comptroller releases latest sales tax revenue

Texas Comptroller Glenn Hegar announced state sales tax revenue totaled $2.61 billion for sales made in April and remitted to the agency in May, 13.2% less than in May 2019 and the steepest year-over-year decline since January 2010. During April, widespread social distancing requirements were in place across much of the state.

“Significant declines in sales tax receipts were evident in all major economic sectors, with the exception of telecommunications services,” Hegar said. “The steepest decline was in collections from oil and gas mining, as energy companies cut well drilling and completion spending following the crash in oil prices.

“The business closures and restrictions and stay-at-home orders due to the COVID-19 pandemic spurred deep drops in collections from restaurants, amusement and recreation services, and physical retail stores. These declines were offset in part by increases from big box retailers and grocery stores that remained open as essential businesses, online retailers and restaurants that could readily pivot to takeout and delivery service.

As a result of the drop in sales tax revenue remitted to the state, the Comptroller sent cities, counties, transit systems and special purpose taxing districts 11.7% percent less based on sales made in April than a year ago, the steepest year-over-year decline in allocations since September 2009. This will have a huge impact on local government budgets moving forward.

Governor, Lt. Governor and Speaker ask state agencies for budget cuts

On May 20, Gov. Greg Abbott, Lt. Gov. Dan Patrick and Speaker Dennis Bonnen sent a letter to state agencies, judicial agencies and institutions of higher education asking them to engage in prudent fiscal management and institute immediate cost saving strategies by submitting a plan for a 5% budget cut for their current biennial budget to the Legislative Budget Board and the governor by June 15.

The letter said:

“As you have no doubt seen, there is significant economic uncertainty not only in this state but across the country and around the world. We are confident that Texas will get back to work and continue leading the nation in job growth, economic innovation, and business creation. However, it will take months until we know the true extent of the economic ramifications of COVID-19, and how combating this virus will impact state finances.

“To prepare for this economic shock, we must take action today to ensure that the state can continue providing the essential government services that Texans expect. To achieve that goal, every state agency and institution of higher education must engage in prudent fiscal management efforts. Savings achieved in the current biennium are not only necessary to offset current year revenue losses, the savings will provide for the smoothest path toward recovery as you provide necessary services to Texans.

“Some cost saving strategies that agencies should pursue that will not affect the state’s response to COVID-19 include foregoing any capital expenditures that can be deferred, any avoidable travel expenditures, any administrative expenses that are not mission critical, and keeping unfilled any open positions that are not essential to the COVID-19 response.

“Additionally, we request each state agency and institution of higher education to submit a plan identifying savings that will reduce your general and general revenue related appropriations by five percent for the 2020-2021 biennium. Please submit this plan to the Legislative Budget Board and the Office of the Governor by June 15, 2020.”

The following are excluded from the 5% reduction:

The letter also noted that when the state revenue picture becomes clearer in the coming months, it may become necessary to make additional budget adjustments.

Ag Commissioner Miller announces 10% TDA cut

Following state leadership’s request for agencies to cut their budgets by 5%, Texas Agriculture Commissioner Sid Miller has ordered his staff to deepen that cut to 10%.

Commissioner Miller said, “This is going to be a tough year for Texas families, and state government needs to tighten its belt along with everyone else. While TDA is already a lean, efficient agency that pays its own way, I’ve directed my staff to cut 10% without affecting our farmers and ranchers or our rural communities.”

Texas Sunset Commission: Texas has a continuing need for the Texas Department of Agriculture and the Texas Animal Health Commission

The Texas Sunset Advisory Commission has issued its reports to the Texas Legislature on two of the agencies it is reviewing during this legislative interim, the Texas Department of Agriculture (TDA) and the Texas Animal Health Commission (TAHC).

The Commission was created in 1977 to address inefficient, intrusive, burdensome and outdated policies in government, and also to limit government expansion by questioning the need for and the effectiveness of state agencies and their programs. State agencies are, in general, reviewed by the Commission every 12 years (on a staggered basis). The Commission can recommend to the Texas Legislature (which has the final say) that an agency be abolished or continued with changes.

Regarding the Texas Department of Agriculture, the report stated, “Sunset staff concluded TDA is well-managed, and found the department’s day-to-day responsibilities are largely removed from the politics and public attention focused on the commissioner, and recommends the department continue for 12 years. However, Sunset staff identified several opportunities to provide a firmer foundation for staff to successfully perform TDA’s multitude of functions regardless of any shifting focus at the top.”

The Legislature created the Texas Department of Agriculture (TDA) in 1907 to foster the development of the state’s agriculture industry by researching plant diseases and pests, gathering statistical information on agricultural production, and promoting agricultural products.

Today, the department supports and promotes the state’s nearly $25 billion agriculture industry while overseeing more than 124,000 licensees to protect the public and regulate the industry. As the third-largest agricultural producer in the United States, Texas has a vested interest in regulating and promoting the state’s agriculture industry, which includes a wide range of commodities. The services provided by the department support the state’s nearly 250,000 farms covering over 127 million acres, as well as Texas’ rural population of approximately 3.8 million.

View the Sunset Commission staff report on the Texas Department of Agriculture.

Reviewers of the Texas Animal Health Commission wrote in the agency’s review, “Sunset staff found TAHC remains necessary and recommends continuing it for 12 years as an independent, standalone agency. However, in examining the agency’s ability to prevent, control, and eradicate animal diseases in Texas, the review found TAHC has not fully kept up with Texas’ shifting disease landscape.”

TAHC protects and enhances the health of livestock and fowl, and ensures the marketability and mobility of livestock, while minimizing risk to human health. Created in 1893 as the Texas Livestock Sanitary Commission to control cattle fever tick outbreaks in beef cattle, the Legislature has since expanded the agency’s authority.

TAHC now manages a range of animal populations including cattle, horses, poultry, goats and sheep, swine, and exotic livestock and fowl not native to the state. The agency accomplishes its mission through disease prevention, control, and eradication activities with a $16.1 million operating budget and 208 employees who work in the agency’s six regions throughout the state.

View the Sunset Commission staff report on the Texas Animal Health Commission.

Both reports must be officially adopted by the Sunset commissioners before being forwarded to the Texas Legislature to consider adopting any recommendations in the 2021 legislative session.

Learn more about the Sunset Commission and how the process works.

Early Voting in Run-Offs and Special Election Extended

On May 11, Gov. Greg Abbott issued a proclamation extending the early voting period for the July 14 primary runoff elections. The early voting period will now be June 29 thru July 10. Abbott has indicated that the early voting period for the Nov. 3 general election also will be extended.

Here’s who’s on the ballot for the July 14 primary runoff:

Democrat Runoff

Republican Runoff

May 14 was the filing deadline for the special election in Texas Senate District 14 to replace Sen. Kirk Watson (D-Austin), who resigned effective April 30 to become dean of the Hobby School of Public Affairs and the University of Houston. The special election will be held on July 14, the same date as the runoff elections. The early voting period will be June 29 through July 10, 2020.

Six candidates – two Democrats, two Republicans, a Libertarian, and an Independent – filed: