Over 90 members and guests of the West Houston Association attended an update on the state of the Texas economy during a virtual forum on September 30. Texas Comptroller Glenn Hegar participated in a wide-ranging discussion moderated by Howard Cohen, Vice Chairman of the WHA Government Affairs Committee.
The event opened with a welcome message from Heath Melton, WHA Board Chair and acknowledgement of the public officials in attendance.
Alan Steinberg, WHA President and CEO, introduced the topic by describing the one-two punch to state revenues in the early months of 2020: first, from a price war between Saudi Arabia and Russia that caused oil prices to tumble, and then, Covid.
This set the stage for Comptroller Hegar to discuss how a $3 billion budget surplus forecast at the start of the year has turned into a potential $4.6 billion deficit.
Hegar stressed that this deficit is not set in stone. Sales tax revenue jumped unexpectedly in July, driven by heavy consumer spending on things like home improvement projects, exercise equipment, and electronics for telework and education in May and June. Unemployment is also down slightly.
With the Texas Legislature meeting in January 2021 for its biannual session, Hegar predicts “a very difficult budgeting session.” Legislators may have to look at tapping the $8.8 million ‘rainy day’ Economic Stabilization Fund. “[You] don’t want to use all of it,” he said. “But at the same time, you don’t want to use none of it. There’s a healthy balance.”
Depending on the economic trend lines going into the session, and what Congress decides to do regarding Federal funding, it’s possible the state may be able to “backfill some of the losses to continue to keep services.”
Asked specifically about funding directed to improving the Houston-area flood infrastructure in the post-Harvey era, Hegar said that while the state still has the commitment to make improvements, he was doubtful there would be “an opportunity for additional dollars for some type of additional layer of flood control type opportunities,” in the upcoming budget.
Hegar believes that much of the state’s economic recovery rests on rebuilding consumer confidence. “We’re a consumption economy,” he said. “We’ve seen over and over with some data and some research that people’s reluctance to engage has as much to do about concern and fear about the pandemic than of government-mandated shutdowns. Trying to overcome some of those concerns and fear will help us on a quicker trend line in the short term, [but] we think Texas is poised to continue to grow. We’re in a great position.”
Ending on a positive note, Hegar said businesses still wanted to come to Texas for its younger workforce and positive business environment, and people still wanted to come here for its affordability and quality of life. “I think those are the pieces we continue to talk about and promote,” he said. “But we also look at ways how we can do things smarter and change.”
“Flexibility and adaptability,” he said, “are my two words of 2020.”
The next forum of the West Houston Association, focusing on Federal issues, will take place on October 29th from 11:30 to 1:00. The main speaker will be Congressman Dan Crenshaw (TX-2).