AUSTIN — With President Joe Biden and a Democratic-controlled Congress moving ahead on a coronavirus relief package, Texas budget writers are beginning to look at how they might use federal funds for one-time “investments,” such as bolstering pension funds for retired teachers and state workers.
At a hearing Monday that kicked off the Senate Finance panel’s deliberations on the next two-year state budget, Brenham Republican Lois Kolkhorst was one of several senators probing the future after the COVID-19 pandemic, including whether changes in how Texans shop and drive will become permanent.
That’s only one way state coffers could be altered now that the federal government is led by Democrats. Unlike Republicans who controlled the U.S. Senate during former President Donald Trump’s administration, the Democrats and Biden want to send money to aid state and local governments. Of a $1.9 trillion package, some $350 billion would go to states and localities.
Kolkhorst and other of her colleagues recalled that after former President Barack Obama took office in 2009, Texas budget writers received so many federal stimulus dollars that the Great Recession didn’t crash their state fiscal situation until the 2011 session.
“Those won’t be recurring dollars most likely?” Kolkhorst asked Comptroller Glenn Hegar, the state’s chief tax collector and revenue estimator. He was the panel’s first witness of the session.
“Most likely,” Hegar replied.
In 2009, Texas lawmakers were “very careful” not to use $12.5 billion of Obama stimulus money to increase ongoing spending commitments, Kolkhorst noted.
This year, the Legislature may want to do the same, trying to selectively use the coronavirus aid to avoid long-term commitments, she said.
“Those investments may be made in our retirement funds or one time plugs or capital investments,” Kolkhorst said. She referred to lawmakers’ ongoing efforts to make the Teacher Retirement System and the Employees Retirement System more actuarially sound, as well as deteriorating buildings used as state offices and at state mental hospital campuses.
Hegar said he’s already discussed the idea of using federal aid for single-instance purposes with Senate Finance Chairwoman Jane Nelson, R-Flower Mound; newly appointed House Appropriations Chairman Greg Bonnen, R-Friendswood; and Gov. Greg Abbott.
“Those are probably one-time dollars and you cannot count on them again,” he said.
Hegar explained how the $4.6 billion shortfall he was predicting for the 2022-2023 cycle last summer shrank to $946 million in his official revenue estimate last month. Instead of sales tax receipts dipping by 10% from 2019, they only decreased by 4% in the final three months of last year, as Texans bought “items for in and around their homes, workout equipment, electronic equipment” to work remotely, he said.
Because of unexpected favorable developments, including last year’s federal COVID-19 aid, the main state aid program for public schools was less expensive. And lawmakers’ 2019 decision to capture more sales tax from out-of-state online vendors and marketplace providers yielded $1.7 billion more of tax revenue, Hegar noted. He’d only anticipated a gain of about a half-billion, he noted.
The switch to more online purchasing will be permanent to a considerable degree, he testified. Though multiple senators tried to pin him to a precise prediction, Hegar demurred.
Hegar said he’s also studying post-pandemic changes for paying for roads.
Electric cars are hurting the state highway fund because their owners don’t pay motor fuels taxes, said GOP Sens. Robert Nichols of Jacksonville and Charles Schwertner of Georgetown.
Schwertner said he, Nichols and Democrats Royce West of Dallas and Beverly Powell of Burleson “are working on a bill to try to somehow gain revenue from those vehicles that are on the road … and utilizing state highways, but not contributing to state highway construction or maintenance.”
Neither Schwertner nor Nichols offered details of how the electric vehicles might be taxed. Nichols, who heads Senate Transportation, said the proposed new levy would “create a new revenue stream” to offset lost revenues from gasoline and diesel fuel taxes.
Nichols asked Hegar if there’s a tax inequity in paying for roads.
Yes, Hegar replied. Referring to the U.S. Supreme Court’s 2018 decision that said states may collect sales tax on internet shopping, even if sellers don’t have a physical presence in the taxing state, Hegar responded:
“Same thing as the Wayfair decision. It’s a fairness issue if one taxpayer’s paying it and another is not.”
Nichols and Lubbock Republican Charles Perry complained about last year’s data breach involving Denver-based Vertafore Inc. that they said placed some 27 million Texans’ personal information in the wrong hands.
The breach, disclosed by The Dallas Morning News in November, has exposed problems with how the Department of Public Safety and Department of Motor Vehicles, respectively, sell certain data about holders of driver licenses and owners of motor vehicles, Perry and Nichols said. Affected were people’s names, addresses, dates of birth, driver’s license numbers, VINs and the make, model and color of cars, plus the lenders to whom they make car payments, The News reported.
Perry blamed the breach for a surge in spam calls about auto warranty expirations. Perry said he understands the state makes as much as $65 million a year selling residents’ personal information. Nichols said he’s drafting a bill that would largely ban such data sales.
“We’re going to see who squeals,” he said. Nichols said he plans to make current purchasers demonstrate they’re trustworthy and have legitimate uses before granting any exemptions.
— to www.dallasnews.com