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Congressional COVID relief package could help Texas bolster pension funds for teachers, state workers



Texas – With President Joe Biden and a Democratic-controlled Congress moving ahead on a coronavirus relief package, Texas budget writers are beginning to look at how they might use federal funds for one-time “investments,” such as bolstering pension funds for retired teachers and state workers.

At a hearing Monday that kicked off the Senate Finance Committee’s deliberations on the next two-year state budget, Brenham Republican Lois Kolkhorst was one of several senators probing the future after the COVID-19 pandemic, including whether changes in how Texans shop and drive will become permanent.

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That’s only one way state coffers could be altered now that the federal government is led by Democrats. Unlike Republicans who controlled the U.S. Senate during former President Donald Trump’s administration, the Democrats and Biden want to send money to aid state and local governments. Of a $1.9 trillion package, some $350 billion would go to states and localities.

Kolkhorst and other of her colleagues recalled that after former President Barack Obama took office in 2009, Texas budget writers received so many federal stimulus dollars that the Great Recession didn’t crash their state fiscal situation until the 2011 session.

“Those won’t be recurring dollars most likely?” Kolkhorst asked Comptroller Glenn Hegar, the state’s chief tax collector and revenue estimator. He was the panel’s first witness of the session.

“Most likely,” Hegar replied.

In 2009, Texas lawmakers were “very careful” not to use $12.5 billion of Obama stimulus money to increase ongoing spending commitments, Kolkhorst noted.

This year, the Legislature may want to do the same, by trying to selectively use the coronavirus aid to avoid long-term commitments, she said.

“Those investments may be made in our retirement funds or one-time plugs or capital investments,” Kolkhorst said. She referred to lawmakers’ ongoing efforts to make the Teacher Retirement System and the Employees Retirement System more actuarially sound, and to deteriorating buildings used as state offices and at state mental hospital campuses.

Hegar said he’s already discussed the idea of using federal aid for single-instance purposes with Senate Finance Chairwoman Jane Nelson, R-Flower Mound; newly appointed House Appropriations Chairman Greg Bonnen, R-Friendswood; and Gov. Greg Abbott.

“Those are probably one-time dollars and you cannot count on them again,” he said.

Hegar explained how the $4.6 billion shortfall he was predicting for the 2022-23 cycle last summer shrank to $946 million in his official revenue estimate last month. Instead of sales tax receipts dipping by 10% from 2019, they only decreased by 4% in the final three months of last year, as Texans bought “items for in and around their homes, workout equipment, electronic equipment” to work remotely, he said.