Wednesday, the Texas Senate Committee on Finance convened for the first time since the last special legislative session to consider interim charges related to the state budget.  Among the issues discussed were things like inflation, Russia, and state pension reforms. This hearing was the first of which the new committee chairman, State Sen. Joan Huffman (R-Houston) presided, and after congratulatory pleasantries from other committee members, the hearing got underway.

Hearing Summary

The hearing was open to invited testimony only. In the opening remarks from representatives of the Texas Legislative Budget Board (LBB), it was mentioned that they expect a shortfall in the Medicaid program which will need to be dealt with in the supplemental budget to be considered by lawmakers during the next legislative session beginning in January of 2023. The Comptroller’s office mentioned that it expects to have an updated Biennial Revenue Estimate (BRE) this Summer which likely will show a larger than expected revenue surplus. In response, State Sen. Charles Perry (R-Lubbock) made the point that despite the large surplus only $9 billion of it is purely from Texas state revenue (not due to federal funds).

There was then an extensive discussion about inflation on the national level and how it will affect budgetary concerns for the Senate Finance Committee and the appropriation of funds to state agencies. In the course of the discussion, many Senators mentioned the growing problem of increasing rents on taxpayers, confirming that rents in the Houston area have risen from 10%-40% in the last few years.

Sen. Perry, once again speaking of the expected budgetary surplus said, “$311 billion in revenue is significantly up, $46 billion from where we left last session, but I can safely say we are going to see $46 billion in increased cost in that.” He went on to say that, “market pressures and salaries alone” for state employees will require more revenue is spent.

This commentary was revealing and serves as a good example of the importance of interim committee hearings. These hearings are the first place that lawmakers begin to really show their hands with regard to what they deem as priorities in ways to spend your tax dollars in the next biennium. What Perry is saying, is that they seemingly have no intention to cut the size of our bloated government, but rather intend to spend every dime of revenue, which will be blamed on inflation.

In another point from the Comptroller’s office, they mentioned basing homestead exemptions on static dollar amounts (As one of the two current ballot propositions increases the current exemption from $25k to $40k) is a self-defeating policy when inflation is factored in. He suggested possibly looking at a percentage-based exemption instead to prevent repeatedly having to correct for inflation. Other than a short conversation on homestead exemptions there was no significant conversation about a plan for property tax relief during the rest of the hearing.

There was discussion about the recent insanely high property valuations and appraisals taxpayers are receiving around the state, but both State Sens. Paul Bettencourt (R-Houston) and Kelly Hancock (R-North Richland Hills) both used the opportunity to boast about the “historic property tax reform” passed in 2019. They both asked for homeowners to be patient and wait until cities have a chance to lower their tax rates with all the extra revenues they have experienced, indicating that they think homeowners will be significantly surprised at their total tax bill in the fall after rate reductions.

Forgive Texans for Fiscal Responsibility (TFR) if we don’t hold our breath on that one.

Despite the lack of interest in using surplus dollars to actually lower property tax burdens on taxpayers, there was much interest and discussion among committee members in giving Texas Capitol employees yet another raise. Texas bureaucrats (especially on the Senate side) seem to receive salary raises every time they go into legislative session. Chairman Huffman asked what it would cost to give across-the-board raises to state employees in the legislature and Sen. Perry asked for more information on state legislative salaries so that he could study how best to give employees a bump.

Bottom line…far more time was used discussing giving our “public servant” bureaucrats more money than giving money back to taxpayers.

If this hearing was any sign of what is to come, the chances of Texas taxpayers receiving any significant reform seem to be slim to none. This potential outcome can change if taxpayers dedicate themselves to engaging effectively with our financial system and state lawmakers.

TFR encourages readers to tell their friends to subscribe to our weekly email and read our articles so they can be kept up to date on all important Texas fiscal news. TFR is always here to shine a light on the actions of lawmakers who seemingly would rather they be left in the dark. You can always count on us to continue to provide transparency and education with the goal of fiscal responsibility.