Texas Comptroller Glenn Hegar is sounding the alarm on the economic impact the Lone Star State is suffering as a result of the Chinese coronavirus and governments ordering business closings in order to fight it.
In a radio interview with Texas Standard on Tuesday, Hegar said the state would likely be forced to tap into the Economic Stabilization Fund, known colloquially as the rainy day fund, in order to make ends meet.
“We’re probably, without a doubt, going to have to use part of the Economic Stabilization Fund,” Hegar told Texas Standard.
Hegar also said he expects the state’s projected revenues to drop by several billion dollars when he revises the state’s budget estimate in July. He told as much to state legislators this past Sunday with sources telling Texas Scorecard the state’s revenues from sales taxes as well as oil and gas excise taxes were likely to be the most affected.
He’s also signaled there could be a risk right now of the state needing additional revenue (or spending cuts) in order to meet its obligations when he declined to issue a blanket extension of sales tax remittances for Texas businesses—a move that is frequently made after natural disasters to help small businesses have enough cash to recover.
On Twitter alone, Hegar took enormous political flack for the decision, leading many to speculate he wouldn’t have taken such a hit if it wasn’t necessary.
With Houston, Dallas-Fort Worth, Austin, and other major metropolitan areas largely shutting down as a result of county-issued shelter-in-place and stay-at-home ordinances, it’s likely the full economic ramifications have yet to be seen.
But what has been seen so far isn’t pretty. Hegar says projections in mid-March had the state’s unemployment rate roughly doubling to 6 percent. He now says it has likely gone beyond that already.
“By the end of the week, no, this thing is worse than that,” Hegar said, speaking on air to Texas Standard. “It’s up to probably 9 percent. And I have no doubt that people are going to start forecasting it’s going to be slightly in the low double digits.”
Unemployment that high hasn’t been seen in the Lone Star State since the oil crisis in the late ’80s. During that period, the Democrat-run Texas Legislature was forced to hold multiple special sessions to balance budgets and raise taxes on Texas taxpayers.
With Republicans currently in control, tax increases should be off the table. Instead, further tax relief must be prioritized to assist already over-taxed Texas families as many of them undergo financial hardship.
Texans for Fiscal Responsibility has already begun highlighting some potential savings that could be achieved should Gov. Greg Abbott and the Texas Legislature decide to prioritize taxpayers.
If you have ideas or suggestions of your own, please submit them to us, and we will explore their feasibility and financial effect. You can reach us at [email protected].