Last week, Texas Comptroller Glenn Hegar raised concerns about the future of our state’s AAA-credit rating to members of the Senate’s budget writing committee.
During the hearing, Hegar said, “I am actually very concerned…that in the very near future, if we don’t find creative ways to address these very real pressure issues, Texas can be downgraded. I want to make sure we avoid that because that is a black eye on Texas.”
What will a change to our credit rating mean for Texas? It will cost our state more to borrow money and sends a message that we have a fiscally irresponsible government.
The concerns stem from mounting liabilities — expenses that the Legislature has pushed off by using accounting tricks such as postponing payments and low-balling budget projections. Our credit rating is at risk because we have obligations that the Legislature is ignoring, including healthcare, education and transportation. Last session:
- The Legislature postponed a constitutionally-mandated transfer of $1.58 billion in sales tax revenue to the Texas Department of Transportation
- Thanks to Dan Patrick, the Legislature continues to under-fund our public education system and didn’t fully address the Teachers Retirement System’s funding shortfall, estimated at $700 million
- The Legislature intentionally low-balled the Medicaid caseload projection, resulting in a likely $2.5 billion budget shortfall next year
- The Legislature did nothing to address the Texas Tomorrow Fund shortage of $240 million
These accounting tricks and gimmicks are not sustainable. The Legislature is digging a fiscal hole that is increasingly difficult to climb out of. According to the Texas Taxpayers and Research Association, we will begin the next session about $7.9 billion in the hole, and that’s before we spend a dime to help the Gulf Coast recover from Hurricane Harvey. To top all that off, the Comptroller projects that we’ll have a lot less money to start with than in past years.
Despite all this, there is continued resistance by the state Republican leadership to use the Economic Stabilization Fund, also known as the Rainy Day Fund, — projected to be $12 billion next year — to help address critical health, transportation and education needs. By the way, that’s your money the state’s Republican leadership is hoarding for political reasons.
This isn’t fiscally conservative budgeting; it’s smoke and mirrors. It’s time our state’s leaders start being honest with the people of Texas.
P.S. If you have questions about our state’s budget or the Rainy Day Fund, join me on Saturday, April 14th from 10:00 to 11:30 am at the Arlington Municipal Airport for our Town Hall. Click here to RSVP.