March 21, 2020
Texas House Braces for Bad News on Budget Crush
from Plummeting Oil Amid Texas Coronavirus Invasion
By Mike Hailey
Capitol Inside Editor
Comptroller Glenn Hegar is planning to give Texas House members a progress report on Sunday in a conference call on the potential devastation that the coronavirus could wrought on state finances at a time when a global price war over oil could send revenues plunging simultaneously.
GOP Speaker Dennis Bonnen and the representatives who participate in the conversation with Hegar can expect to confronting the most pressing question on whether a special session might be needed at some point before the general election to patch a massive leak in the state budget for the current fiscal year.
Hegar's office has the ability to calculate an estimate of the vast sums of money that the state can expect to lose as a consequence of plunging oil prices that are a product of a worldwide glut that Russia and Saudi Arabia have engineered. The price of the benchmark West Texas Intermediate crude sunk below $20 a barrel on Saturday - a horrible sign of a fiscal disaster in the making in a state where spending in the second year of the current biennium is based on WTI at $53.
But Hegar will be shooting in the dark in an attempt to project the astronomical costs of Texas' part in the fight to survive COVID-19 in a state that got a relatively slow start without any prodding from President Donald Trump and the federal government. The probable devastation that the one-two punch that the coronavirus and the oil price collapse could have could make an election-year special session inevitable as a last ditch measure to keep Texas from going broke.
Lawmakers would be forced in such an event to make the choice between potentially draconian spending cuts or a significant increase in state taxes or a mix of both at a time when a substantial number of them are running for re-election in swing districts that Democrats are targeting in a chamber where they'd reclaim the majority with a net gain of nine seats or more in November.
The coronavirus and its uncertain outcome poses an unprecedented challenge for Hegar's staff that has the task of projecting the flow of revenues into state coffers. But the outgoing speaker and his colleagues probably are preparing to be told that they could be facing a budget crisis of unrivaled magnitude in Texas when they develop a two-year spending plan for the next biennium.
Governor Greg Abbott has to make the ultimate call on whether to summon legislators back to Austin to keep the state in business when several dozen could be putting political careers in serious jeopardy at the polls this fall as a result of unpopular votes that the would feel compelled to make in a special legislative gathering. But Abbott's decision on the timing of a special session would be complicated severely by the monstrous uncertainty that the outbreak has created with no apparent end in sight.
more to come ...