Recovery from Hurricane Harvey will cost the state about $2 billion during the current two-year budget cycle, Texas Comptroller Glenn Hegar said Tuesday.
Hegar told the American-Statesman that the state’s Harvey tab, much of which is related to school spending, will be “vastly greater than any other storm that we’ve ever seen in the state of Texas.”
Lawmakers are expected to approve additional spending in early 2019, when they next meet, for hurricane recovery, among other things. Republican leaders have said they’re open to tapping the state’s $11 billion rainy day fund to cover Harvey expenses.
The state’s revenue available for general spending will total more than $107.3 billion over the next two years, $2.4 billion more than Hegar estimated in January, according to a statement from the comptroller’s office Tuesday.
The Legislature in May approved spending $107.2 billion, leaving a balance of just $94 million that can go toward the supplemental spending plan in early 2019, Hegar said.
That supplemental budget will pay for costs that the state incurred but did not allocate enough money for this year. Those include Medicaid expenses — lawmakers underfunded Medicaid last session over uncertainty about what Congress would do — and transportation funding. But the biggest piece will probably be to pay for hurricane-related needs not covered by the federal government.
Gov. Greg Abbott has estimated that the overall cost of hurricane recovery could total $180 billion.
Harvey slammed the Texas coast Aug. 25, with sustained winds of 132 mph. The storm devastated numerous coastal and rural communities and left large portions of Houston and Beaumont under several feet of water. The hurricane and related flooding killed at least 70 people.
Still, Harvey isn’t expected to have a long-term effect on revenue coming into state government, Hegar said.
“In fiscal 2017, the Texas economy returned to its normal pattern of growth in excess of the national rate of growth,” he said in a letter and revenue estimate report sent Tuesday to Abbott, Lt. Gov. Dan Patrick, House Speaker Joe Straus and members of the Legislature. “We are projecting continued modest expansion of the Texas economy in this biennium. The most likely scenario is one of steady expansion after a brief slowdown due to Hurricane Harvey. Risks to this estimate include changes in global economic conditions, turbulence in energy prices and markets and national economic policies.”
Hegar said it’s too early to say how much money will be available for the two-year budget cycle starting in 2019. Three major rising costs immediately came to his mind, though: public education, health care and college tuition.
Texas sees 80,000 new students each year in the public schools, and that affects funding for the entire system, Hegar said. Also, Texas gains 600 new residents every day, contributing to health and human services costs, he added.
The so-called Texas Tomorrow Fund, the state’s prepaid college tuition program, which no longer accepts new accounts, has about $1 billion that it can spend as students enroll in schools, but the program will have a $350 million shortfall in the next budget cycle, Hegar said.
The state also will lose sales tax revenue because of a nationwide ban on levying a state sales tax on accessing internet services, the comptroller said.
“The federal side said, ‘Nope, can’t do that,’ ” Hegar said. “Well, that’s going to cost, next session, roughly a decrease in revenues coming into the state treasury by about $450 million for the next two years.”