It’s better to be safe than sorry, that is a lesson everyone has learned during the ongoing coronavirus pandemic. State leaders have been so cautious about spending, and are more aware of the importance of having a “rainy day fund”.
Texas’ economic rebound has been so robust, that in 22 months the treasury should have nearly $25 billion parked on the sidelines, Comptroller Glenn Hegar said Thursday, according to The Dallas Morning News.
Hegar urged away from investments that in the past he would have splurged on, such as renovating sagging state buildings or repairing aging infrastructure, citing uncertainties and a need for fiscal caution.
“It’s not as though we just ended the legislative session with $24 billion in the bank,” he told The Dallas Morning News, “This is an expectation, not a guarantee of what may be in the treasury. It’s important to always leave a little money in the bank because you never know what the economy’s going to do.”
Hegar cited uncertainties over inflation, energy prices, labor availability and global supply chain bottlenecks as grounds for caution.
In the two-year cycle that began Sept. 1, $123.3 billion of state general-purpose revenue was approved for spending measures, but now Hegar foresees $135.32 billion, which is a 15.1% increase from the previous cycle in which he predicted $112.5 billion of such discretionary revenue.
We can give thanks to this increase as the Texas economy returns to health, after last year’s plummet to unemployment and business closures due to COVID-19.
Hegar broke down his $22.8 billion boost in expected general revenue, saying more than $11 billion went unspent; $3.8 billion thanks to swaps of federal COVID-19 relief dollars, $1 billion from a reduction on the state’s obligation to public schools due to higher property values and federal COVID aid, $800 million in savings after a 5% spending cut – from GOP leaders – of some programs in the spring, and $1.7 billion of anticipated expenses, such as expiration of extra federal matching money for the Medicaid program, didn’t happen, as reported by The Dallas Morning News.
“The state treasury obviously is in a significant, better position,” he said.
Last month, $3 billion of President Joe Biden’s American Recovery Plan Act was put aside to study how it might be used for future property-tax relief. That money plus reimbursements expected from the Federal Emergency Management Agency for Texas’ COVID-19 response costs, is not reflected in Hegar’s estimate, the state will have $24.61 billion of unspent general-purpose revenue.
“Though we remain optimistic, this is a conservative estimate,” Hegar wrote to Abbott, Lt. Gov. Dan Patrick and House Speaker Dade Phelan, R-Beaumont.
“Risks impacting this estimate include continued global supply chain disruptions and bottlenecks affecting a range of products. Labor shortages and inflationary pressures could impact both business and consumer demand. Volatile energy prices and the potential spread of coronavirus variants also remain uncertainties for Texas’ economic outlook.”