August and Everything After

Well, it is officially August!

We are 90 days away from statewide elections and right after, bill filing for the next Regular Session of the Texas Legislature begins.

The summer headlines have focused on school shootings and the resulting investigations, the electric grid capacity with historic Texas heat indexes, the Texas Border, abortion rights, and the upcoming mid-term national elections.

Despite the larger-than-life headlines, the Texas Legislature has been at work on additional issues, which do not always make the news.

At LLK LLC, we wanted to give you a look at the ongoing interim discussions that are occurring currently in Texas. Our first instalment is below.

Texas State Budget Update

The one “must pass” bill for the Texas Legislature is the State Budget.  With one year into our two-year biennium budget, the Legislature is already busy crafting the next two years.  All budget committees and the Executive agencies have been working all summer on the federal covid funding outcomes as well as future forecasting.

On June 30^th, the Legislative Budget Board (LBB) sent a letter to state agencies with detailed instructions for the submission of legislative appropriations requests (LAR’s) for the 2024-25 biennium. A staggered schedule of submission due dates was included in the instructions. Under these instructions, an agency’s baseline request for General Revenue Funds and General Revenue-Dedicated Funds may not exceed the sum of those amounts expended in fiscal year 2022 and budgeted in fiscal year 2023. There are some exceptions to the baseline request limitation that includes amounts necessary, and Medicaid and public safety, as it often does.

The instructions letter was specific that state agencies remain fiscally and operationally efficient with state resources.  “Budget requests should reflect conservative values and be mindful that we are experiencing a time of world and national economic uncertainty that could have an impact on our state. While these instructions do not require a reduction to baseline amounts, agencies and institutions should be mindful the legislature may make reductions to their 2024-25 appropriations, and these entities will be expected to fully justify maintaining baseline spending amounts”.

Agencies will submit the usual paperwork. Budget hearings on each agency will be staggered.  Even with a huge surplus expected, the Texas Legislature is sure to be as conservative as always, even with “astounding growth.”

State of Texas Economy Update

“Astounding growth” is the term that Comptroller Glenn Hegar has used to discuss Texas’ current economic situation.

When the Comptroller released his update to the Revenue Estimate in July, he announced a $26.9 billion expected budget surplus, an unprecedented windfall for the Texas economy.  In a hearing before the House Appropriations Committee, Hegar maintained that the challenge the Legislature will face next year will not be the revenue, it will be the constitutional spending limits.

In his response, Lt. Governor Dan Patrick said he believes a budget surplus should go to the taxpayers and particularly Texas homeowners receiving tax relief before money is spent elsewhere. He also proposed increasing the homestead exemption and suspending the state’s gas tax through the end of 2022.

Texas By the Numbers

• Employment is up over the pre-pandemic levels.
• Military installations contributed at least $114 billion to the Texas economy in 2021.
• Oil and gas severance taxes are $3.1 billion higher than expected. June severance tax collection was the highest on record, up 89.7 percent up over the previous year.
• State sales tax revenue totaled $3.68 billion in June, 16.4 percent more than in June 2021.
• Texas Workforce Commission (TWC) announced that Texas added 82,500 total non-farm jobs in June 2022, the largest over-the-month job gain yet in 2022.
• Job postings in the healthcare industry increased by 90.9 percent from 2017 to 2021.
• Just before school starts again, Texas shoppers will save $112 million in state and local sales tax during this sales tax holiday that occurs this coming weekend!

Texas Politics by the Numbers

As we gear up for the post Labor Day Texas campaign season, a new poll has shown the following:

Governor’s Race:

• Republican Greg Abbott leads Democrat Beto O’Rourke by 5 percent among likely voters, 49 percent to 44 percent, with 5 percent undecided and 2 percent intending to vote for Libertarian Mark Tippetts.
• More than nine out of 10 Abbott (95 percent) and O’Rourke (92 percent) voters are certain about their vote choice, while 5 percent and 8 percent indicate they might change their mind between now and November.
• O’Rourke has a 6 percent (49 percent to 43 percent) lead over Abbott among women, while Abbott enjoys an 18 percent (56 percent to 38 percent) lead over O’Rourke among men.
• Older Texans belonging to the Silent Generation/Baby Boomer cohort and to the Generation X favor Abbott over O’Rourke by margins of 18 percent (57 percent to 39 percent) and 9 percent (52 percent to 43 percent) respectively, while O’Rourke is the candidate of choice among younger Texans belonging to the Millennial/Generation Z group, with a 15 percent (51 percent to 36 percent) advantage over Abbott.
• Virtually every Texas Democrat (96 percent) intends to vote for O’Rourke compared to 1 percent who intend to vote for Abbott, and virtually every Texas Republican (91 percent) intends to vote for Abbott, compared to 2 percent who intend to vote for O’Rourke.
• Texas Independents are more evenly divided, with 48 percent intending to vote for Abbott and 32 percent for O’Rourke
• When asked, more than three-fourths of Texas voters listed these five policies as being extremely or very important:
  • inflation (84 percent),
  • crime and public safety (83 percent),
  • economic growth (78 percent),
  • government spending and taxes (78 percent), and
  • health care costs (76 percent).

• Four issues are extremely or very important to more than nine out of ten Abbott voters when making their gubernatorial vote decision:
  • inflation (96 percent),
  • immigration and border security (94 percent),
  • crime and public safety (92 percent), and
  • government spending and taxes (91 percent).

• Three issues are extremely or very important to more than nine out of ten O’Rourke voters when making their gubernatorial vote decision:
  • voting rights (94 percent),
  • gun control (92 percent), and
  • health care costs (90 percent).

Lt. Governor’s Race:

• Republican Dan Patrick leads Democrat Mike Collier by 5 percent among likely voters, 48 percent to 43 percent, with 9 percent undecided.
• More than nine out of 10 Patrick (96 percent) and Collier (92 percent) voters are certain about their vote choice, while 4 percent and 8 percent indicate they might change their mind between now and November.

Attorney General’s Race:

• Republican Ken Paxton leads Democrat Rochelle Mercedes Garza by 5 percent among likely voters (46 percent to 41 percent), with 9 percent undecided and 4 percent intending to vote for Libertarian Mark Ash.
• More than nine out of 10 Paxton (94 percent) and Garza (91 percent) voters are certain about their vote choice, while 6 percent and 9 percent indicate they might change their mind between now and November.

In Summation, these are the numbers now. What it shows overall is that a lot of Texans’ minds are made up as we look towards November.  It also shows that the Texas economy is doing better than the national economy.

However, as we say about Texas weather,” if you don’t like it today, see what it does tomorrow…..”  Stay Tuned!

And stay safe out there.  It’s a crazy world.  B
est – Lara Laneri Keel