March 23, 2020

Fiscal Hemorrhage

Summer Special Session Inescapable Barring Fast Virus Taming
as Texas Plunges into Recession with State on Track to Go Broke

Abbott Asks Trump for Major Disaster Nod

MIKE HAILEY

The prospects for an election-year special session are skyrocketing with the coronavirus case count in Texas where a state budget crisis of an unfathomable magnitude appears to be all but inevitable.

Texas House Speaker Dennis Bonnen - a Republican who could face a full-scale mutiny in a special summer session in the aftermath of a targeting scandal - acknowledged after a briefing from Comptroller Glenn Hegar on Sunday that such an event might be necessary to keep the state in business until January.

Governor Greg Abbott seems to be setting the stage for a special session in the next few months simply by declining to rule out the possibility of summoning lawmakers back to Austin in the next few months for fiscal damage control.

Plunging oil prices might have prompted the need for a special session without the unprecedented and unpredictable drain on state coffers that COVID-19 guarantees in a state where the number of confirmed cases is pandemic is soaring exponentially every day.

Hegar indicated in a conference call with Bonnen and other representatives that he could be revising the current state revenue estimate as soon as July when Texas leaders and legislators will hope to have a better grasp on the extent of the bleeding. The Republican comptroller revealed that the Texas economy already is in a state of recession with the worst yet to come.

But the wait-and-see attitude that GOP leaders here are taking here now publicly could be a thinly-veiled attempt to delay the recognition of the inevitable long enough to start mapping out a game plan for a special session that everyone involved would want to be as short as possible if the deadly disease is still a threat.

The Legislature would need several days to approve the channeling of money from the state's Rainy Day Fund to general spending as a temporary plug for the current two-year state budget that will reach the midway point on September 1. Hegar estimated last fall that the state savings account that's known officially as the Economic Stabilization Fund would have a balance of more than $9 billion by the end of August next year.

But the ESF is fueled by energy production revenues that are going to fall short of expectations as a consequence of the worldwide oil price war that Russia and Saudi Arabia have triggered by flooding the market with crude in a move that have cost of the benchmark West Texas Intermediate crude hovering around $25 a barrel. The budget that the Legislature adopted a year ago is based on Hegar projections of oil at $50 a barrel in fiscal 2020 and $53 in the biennium's second year.

The impact of a dramatic drop in the cost of oil is a moving target for the comptroller's office. But the attempt to gauge the eventual cost of the coronavirus is all but impossible in light of the monstrous and novel nature of the worst public health emergency since the Spanish Flu killed hundreds of thousands of Americans in 1918 during the first world war.

Experts are warning that the COVID-19 death toll will be substantially higher in the U.S. where a significant number of people who are relatively young in many cases have not taken pleas for social distancing seriously. Some Republicans on the hard right have bought into President Donald Trump's initial claims that the threat had been dramatically exaggerated as a plot by Democrats and the media to undermine his re-election bid.

Abbott has come under fire for failing to act as swiftly and decisively as governors in other major states in the early stages of the pandemic. The governor up to now has rejected pleas from leaders in the state's major cities for a statewide shelter-in-place order like one that Dallas Mayor Eric Johnson announced on Sunday.

Trump applauded the Texas governor's relatively deliberate approach - saying that such an edict would effectively punish areas that haven't hit hard yet by the coronavirus.

Mike Hailey's column appears on a regular basis in Capitol Inside

CONSIDER THE SOURCE

Mike Hailey presents state politics with a personal touch. He's the only Texas Capitol journalist who's been to the dark side and back - having worked for two major newspaper bureaus before signing on as press secretary for Bob Bullock - the most powerful and legendary political leader of his time in the state. Hailey's Comment, which is published in Capitol Inside on a regular basis, is a direct reflection of that experience.

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