March 25, 2020

Doomsday Tax

Coronavirus Confrontation at Texas Capitol Will Likely Prompt Blend
of Deep Cuts and Higher Levies with Income Tax Fight Resurrection

MIKE HAILEY

Conservative hard-liners could be in for a real shock when Texas lawmakers are forced to explore the possibility of a massive tax increase in a summer special session that will be required to keep state government from drowning in a sea of red ink that will be deeper than anyone could have imagined until now.

The cost of the coronavirus in tandem with collapsing oil prices will revive the debate on the potential personal income tax in Texas where voters were led to believe less than a year ago that such a levy had been banned.

Republicans who think that the state budget can be balanced with spending cuts alone might not realize the depth of the disaster that legislators will be facing when Governor Greg Abbott summons them back to Austin at some point before the new fiscal year begins on September 1.

But it's a safe bet that the budget deficits that the Legislature has tackled in the past will have been a drop in the bucket compared to the revenue shortage that its current members will have to confront in an election-year special session that will make and break re-election bids in districts that the rival parties have shots at flipping this fall.

Republicans who control the House and Senate found a way to avoid a tax hike in the face of the last major state fiscal emergency here in 2011. GOP leaders and lawmakers helped bridge a record budget gap with more than $5 billion in public education spending reductions.

The backlash that the Republicans encountered then could seem miniscule in light of what they might expect if they took that approach now just one year after they approved a $12 billion boost in state outlays on public schools in a regular session that hailed as historic.

What would Republican House Speaker Dennis Bonnen have to say now if the Legislature retracts that commitment after declaring the biennial gathering of 2019 as the Super Bowl of sessions? But Bonnen's opinion wouldn't carry as much weight if his colleagues vote to oust him from the leadership post in the aftermath of a targeting scandal as the House's first act of business in a special session in the next few months.

Lieutenant Governor Dan Patrick and Abbott have taken their fair share of credit as well for the monumental school funding plan that wouldn't have passed without their muscle behind it. The good news for Abbott and Patrick is that they are not on the ballot again this year after surviving a blue wave in 2018 when Democrats wrestled a dozen House seats and two more in the Senate away from the GOP. But a coronavirus special session will be a lose-lose event that could destroy whatever hopes they have for re-election campaigns two years from now.

Bonnen is not seeking a new term in 2020 and will be gone as a result when the Legislature finds itself back in the same basic boat in January when Democrats could have a majority in the west wing of the Capitol by then. But the Republican representatives who are running again this year in swing districts that Democrats are targeting could find themselves in far greater danger than could have ever anticipated amid the fallout from a special session that the coronavirus is going to trigger.

It might be possible for the Republicans who've been running the show on both sides of the rotunda since 2003 to put a band-aid on the bleeding long enough to keep the state from shutting down before the November general election. That would be postponing the inevitable, however, at a Capitol where a politically toxic mix of higher taxes and drastic spending cuts could be in store for the 2021 regular session when lawmakers will be warring over redistricting as well.

The timing of the COVID-19 invasion that has Texans hiding out in their homes couldn't be worse for the GOP here from a public relations perspective in light of the constitutional amendment that was pitched last year as an income tax prohibition. Some voters could be disappointed to learn that the measure that the Legislature endorsed known as House Joint Resolution 38 isn't exactly a ban because it simply makes a personal income tax harder to pass than it had been before the statewide vote six months ago.

The Democrats had employed the same misleading rhetoric when they controlled both chambers in 1993 with the passage of a plan that voters would ratify in a move that made such a levy contingent on its adoption in a statewide referendum. But the so-called ban 27 years ago would have only first required majority votes in the House and Senate to get a personal income tax on the ballot. HJR 38 raised the bar by preventing the imposition of an income tax without a thumbs up from voters in a constitutional amendment election that couldn't be held without two-third votes in both chambers.

The income tax limitation amendment that Republicans envisioned as re-election campaign advertising gold wouldn't be worth much if lawmakers feel compelled to raise the sales tax and other state levies and fees at the same time they slice spending by record amounts to avoid the doomsday scenario for which they'd be blamed if the state goes out of business.

There's no reason to think that the actions that the Legislature eventually takes as a consequence of the coronavirus alone will be just as dramatic as the effect that the deadly disease is having on civilization now in America and beyond.

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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