The current Texas budget operates on the assumption that oil will be sold in the $50-60+ range per barrel through next year. Today, oil prices are hovering in the mid-20s and even hit a low of $19 per barrel briefly last week.
Though there is crossover, the oil and gas issue is largely a separate crisis from the coronavirus catastrophe we are witnessing. The significant hit our economy is taking will not normalize in May even if our economy reopens immediately. It will take time, and each day that the economy underperforms indicates a larger shortfall for the 2021 legislative session next year.
Of course, this is not just a problem for the state. Our local governments will face the same issue. While they don’t rely as heavily on oil and gas tax revenue, property tax receipts are crucial for our schools and local governments. There is no doubt that properties are about to see a decline in value—a help for taxpayers who are already paying entirely too much in property taxes, but a problem for any governments who budgeted under the presumption that property taxes would most likely increase and provide revenue.
Therefore, at a time when the average American is evaluating their personal budget for any unnecessary spending, so should our governments of Texas. In an effort to promote public health, many governments are closing down businesses they do not deem “essential.” Unsurprisingly, however, I have yet to see more than a handful of wasteful government programs or employees cease due to their “non-essential” nature. This double standard is worrisome and a recipe for a budget disaster in the very near future.
Core functions of government like infrastructure, public safety, and public education don’t need to, nor should they, take a hit through this hard time. However, the only way we can ensure the money is there for the most important programs (which are admittedly expensive) is to immediately begin slowing the rate of spending on other fronts. I will not support any form of tax increase, and this is the time we prevent that discussion from ever taking hold.
The good news is that we still have time. I look forward to working with state and local officials to find the unessential government spending, of which there is plenty, to ensure we take the same prudent steps elected officials are encouraging our constituents and neighbors across Texas to take.
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