HURRICANE HARVEY: Disaster reignites debate over Texas rainy day fund

3:15 p.m Thursday, Aug. 31, 2017 Texas News & Politics
Nick Wagner
Texas Department of Transportation crews install the final portion of a surge wall on Texas 361 leading to the Port Aransas ferry in Aransas Pass last month. NICK WAGNER/AMERICAN-STATESMAN

Texas Department of Transportation workers from around the state have descended on the coastal area, sleeping on cots and eating MREs while working overtime to reopen roads and fix sinkholes.

The General Land Office’s Storm Team is helping remove debris and clean up oil spills.

About 12,000 members of the Texas National Guard have been activated.

The Department of Criminal Justice evacuated 6,000 inmates from five state prisons along the Brazos River to facilities in South and East Texas.

In the aftermath of Hurricane Harvey’s deadly march through Texas, state agencies have sprung into action. Although the price tag for the unbudgeted expenses of the response — and for the damage sustained by state offices and infrastructure — won’t be known for weeks or even months, the disaster has reignited a debate from the legislative session about when to use the state’s $10.3 billion Economic Stabilization Fund, known as the rainy day fund.

House Speaker Joe Straus, R-San Antonio, this spring pushed for taking $2.5 billion from the fund, the largest of its kind in the country, to plug holes in the state budget during a lackluster revenue year, which was the original intent of the savings account when it was created in the late 1980s. But the Senate, led by Lt. Gov. Dan Patrick, sought to avoid using the fund, arguing it should be tapped only for one-time expenses and natural disasters.

READ: Harvey’s economic impact will be felt statewide, but so will recovery

In the end, lawmakers approved taking $990 million from the fund in the $216.8 billion state budget for fiscal years 2018 and 2019, which took effect Friday.

As Harvey pummelled Texas, state Rep. Ron Simmons, R-Grand Prairie, posted a tweet lauding the Legislature’s conservative approach. He deleted the tweet, he said, after being criticized by some of his colleagues for scoring political points during the disaster, which has claimed the lives of more than 40 Texans.

“I pulled it down. There were a few people that took it the wrong way and thought it was politicizing,” said Simmons, a conservative who sits on the budget-writing Appropriations Committee. “The intent was: It’s very important to have a rainy day fund, and we have to be very careful what we go in and use it for because of events such as this.”

Rep. Donna Howard, D-Austin, said the House’s initial plan to use $2.5 billion for the budget would still have left ample reserves to pay for the Harvey response.

“The amount we were talking about … was still a conservative amount and would have left a substantial amount that could have been used for disaster relief,” said Howard, who also sits on the Appropriations Committee.

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The storm’s impact on the state budget, Howard said, will be greater than the cost of agencies’ responses to it because it will depress economic activity overall and could cause a substantial slowdown in oil and gas production in Texas.

“We already have holes to fill, and now we’ve got the impacts on our state budget that are going to come as a result of Harvey,” she said. “To me, it makes the most sense of anything we’ve talked about in recent times that we would use the (rainy day fund) to help with the disaster relief but also to deal with the effects on the budget that will happen because of Harvey.”

Despite its unofficial name, the rainy day fund has never been used to pay for hurricane relief. The fund is primarily used to help the state government weather ups and downs in the economy. The only time lawmakers used the fund to pay for recovery costs after a natural disaster was for the 2011 wildfires in Bastrop County.

Disaster funding options

Much of the damage and disruption caused by Harvey, which could end up being the most expensive disaster in U.S. history, will be covered by private insurance and the federal government, which will probably end up paying for some of the expenses initially incurred by state agencies. The Federal Emergency Management Agency, for instance, will reimburse local governments and TxDOT for projects related to the disaster, and the U.S. military might pick up the tab for Abbott’s activation of the National Guard.

Still, with virtually every agency incurring unexpected costs or changing its spending plans, the impact on state finances could be substantial.

Under state law, agencies are allowed to spend as much of their money as necessary to respond to an emergency once Gov. Greg Abbott issues a disaster declaration, as he did Aug. 23. The declaration also gave agencies the green light to accept federal aid that was not accounted for in the state budget, said R.J. DeSilva, a spokesman for the Legislative Budget Board.

They cannot, however, get new money, including transfers from the rainy day fund, without the Legislature’s approval, said Phillip Ashley, associate deputy comptroller for fiscal matters.

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But that doesn’t mean there will be a special legislative session dedicated to paying for Harvey-related aid because agencies probably won’t run out of cash before the next regular session begins in January 2019, when lawmakers can shore them up with a stopgap budget measure.

Abbott on Friday told reporters there is “no need” for another special session this year, adding that the state has enough money to “address the needs between now and the next session.”

Abbott also controls a disaster relief fund — which has $110 million for the budget cycle that began Friday plus any leftover money from the 2017 budget year — for which lawmakers used a transfer from the rainy day fund. He can distribute that money to state agencies or local governments and school districts affected by the storm, Ashley said.

Abbott’s office did not respond to a request for comment.

Health agency faces myriad problems

The sprawling Department of Health and Human Services had to close more than 100 offices in affected areas and evacuate a state-supported living center in Corpus Christi while trying to provide services to flood victims such as “delivering water and ice to affected areas, offering lactation/infant support through WIC and answering questions through 211 about benefits, shelters, food pantries and other services,” agency spokeswoman Carrie Williams said in an email.

The department’s Port Aransas office was severely damaged and might be a total loss, she said.

Hurricane Harvey has displaced nearly a thousand of the state’s foster children, said Patrick Crimmins, spokesman for the Texas Department of Family and Protective Services. About 900 foster children and youths have been moved out of 21 residential facilities in the affected areas.

For the most part, the children, who remain with their foster care providers, have moved to other residential facilities. A small number have moved to camps, churches and large private residences, Crimmins said.

WATCH: Our video coverage of Hurricane Harvey

“We have a handle on every location and are in touch with the facility operators regularly,” Crimmins said. “We know they are safe.”

Keri Cooper, clinical director of A World for Children, a foster care provider with a dozen offices across the state in cities including Round Rock, Corpus Christi and Houston, said two of agency’s children were moved temporarily from their foster home in Rockport to a foster home in Georgetown before the hurricane.

“They don’t know where they’re going to start school; they don’t know if their foster home still exists,” Cooper said. “Any time there’s an unknown for our kiddos, it’s really nerve-racking. Situations like this are very stressful for them because their coping skills may be taxed already. For our kiddos, this is a very stressful event.”

TxDOT to be reimbursed

Though TxDOT has 1,500 employees from across the state working on the storm, is unlikely to bear the financial brunt.

James Bass, TxDOT’s executive director, said when a disaster has been declared by the president — as is the case here — TxDOT’s costs for clearing and repairing roads are covered 100 percent. Already the department has been officially promised a $25 million grant by the Federal Highway Administration, Gov. Greg Abbott’s office announced last week, a down payment on reimbursing TxDOT.

The department’s tab began well before Hurricane Harvey made landfall near Rockport on the night of Aug. 24. Bass said the agency had stationed workers and equipment in Bryan and San Antonio, waiting to see where the storm hit. Other TxDOT workers did storm preparations, including closing off roads and the ferry system in the Coastal Bend area.

Since the storm began dumping torrential rains throughout Central Texas, TxDOT workers have followed in its wake to clear mud, vegetation and other debris, replace signs and guardrails, find and repair sinkholes and other road damage, and inspect bridges. Bass said that as of Tuesday those inspectors had detected no significant bridge damage.

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