Good morning, 

With projected budget shortfalls, will Texas lawmakers cut spending and leave money in Texans’ pockets?

This is today’s Texas Minute.

– Brandon Waltens 

Monday, December 21, 2020
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First, what one word would you use to describe 2020? Send us your answers here!

• When lawmakers return to the Texas Capitol in just a few short weeks, one of the biggest issues they will be forced to grapple with is crafting the state’s budget for the next two years—one of the Legislature’s only constitutionally-mandated responsibilities. 
   
• Economic shutdowns, lockdowns, and mandates over the past year have affected the state’s economy, which ultimately drives the budget. 
   
• Last week, Michael Quinn Sullivan sat down with Texas Comptroller Glenn Hegar to talk about sort of revenue shortfall should be expected, and how lawmakers should respond in crafting the budget

• In July, Hegar announced that his office predicted a $4.6 billion shortfall, though he he noted at the time the prediction came with “an unprecedented amount of uncertainty.”
   
• Since then, Hegar has said the revenue outlook is “not nearly as dire as we feared in July.” Hegar told Texas Scorecard that while there have been double digit decreases in tax collections in certain areas of the economy—such as the hotels and tourism—the hit hasn’t affected all industries equally.
   
• Though sales tax collections overall have been negative compared to last year, home improvement projects, “staycations”, federal stimulus dollars, and online shopping have helped keep revenue from dipping lower. Uncertainty, however, still remains.
   
• “There’s a lot of uncertainty. What’s happening in December, January, and February from a consumer confidence perspective is really critically important for the trajectory of where we go economically next year.” –Comptroller Glenn Hegar
   
• A revised revenue estimate is scheduled to be provided by Hegar on January 11, the day before the start of the legislative session.

• So what should lawmakers do given the uncertainty? Some have suggested using the Economic Stabilization Fund—commonly known as the rainy day fund.
   
• “Is it potentially used for a downturn in revenues? Yes. But you don’t spend every penny of it,” said Hegar. “You’ve got to save it for another rainy day, and those days come. You may use part of your savings, but you don’t use it all.”
   
• To that end Hegar says lawmakers should keep spending as low as possible and make sure to keep money in Texans’ pockets.
   

• “We need to be frugal and we need to make sure we mind what is going in the store.” –Comptroller Glenn Hegar
   

• If you missed the full interview, you can watch it here.

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