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Posted By ACEC Texas, Friday, October 20, 2017


With Hurricane Harvey less than two months in the past and the next legislative session 14 months away, state political leaders have started discussing policy responses to the event.  There is at least a glimmer of possibility that the storm event has changed the conversation about infrastructure funding in Texas.

One of the biggest issues will be whether and how to use the state's Rainy Day Fund (Economic Stabilization Fund), which has a balance of over $10 billion.   Early on, some pushed for a quick special session to appropriate funds for recovery, since Hurricane Harvey was the ultimate "rainy day."  Governor Abbott quickly ruled that out but suggested it will be an early order of business for the Legislature in 2019.  The biggest question will be how much to allocate for repayment of direct recovery cleanup costs versus investment in new infrastructure that will help mitigate damage from future events.

Disasters typically have a mixed impact on the state budget.  Sales tax collections drop off when business activity stops during an event, but can spike after with an increased level of spending for repairs.   In this case, however, several smaller towns were devastated and face recovery costs and loss of property tax base.  The Texas Education Agency has moved forward with a package of relief for school districts with lower attendance because of the storm, an effort that could cost $400 million over the biennium.  Comptroller Glenn Hegar has loosely estimated that direct costs to the current state budget could be $2 billion dollars.

There is a strong argument that a portion of the Rainy Day Fund should be invested in flood control projects to help mitigate future events.  Six years ago, the Legislature and voters approved Proposition 6 which used $2 billion from the ESF to create the State Water Implementation Fund for Texas (SWIFT).  However, these funds go primarily to water supply and water quality projects.  Flood control projects can fall between the cracks; they do not generate revenue as water and sewer projects do and typically overlap multiple governmental jurisdictions.  The Legislature should consider a similar allocation from the Rainy Day Fund specifically to fund investment in stormwater management infrastructure.

Fortuitously, the Texas Water Development Board had been making plans even before the storm to develop a state flood plan in order to better understand the magnitude of funding needs.  The report is expected to be completed prior to the next session.

House and Senate committees meeting during the last month have discussed a number of other ideas - building additional reservoirs, dredging existing reservoirs, and better early warning systems and communication of information.  Some, of course, want the federal government to pick up these costs (perhaps prefiguring an argument against using state funds).   House Natural Resources Committee chairman Lyle Larson has said that the storm made the case for expanded state efforts for aquifer storage and recovery projects which could have captured a portion of the momentous rainfall for future use.  Senate Agriculture, Water, and Rural Affairs Committee chairman Charles Perry has said that upgrading dams should be a priority, noting $93 million in needs.

The hurricane may also provide some impetus for the idea of a local option sales tax to fund infrastructure projects.  In California, for example, voters in counties (so-called "self help counties") can adopt a half-cent sales tax with revenues going to pre-determined transportation projects, with the taxes expiring in ten years and the voters having the ability to renew them.  This is a model Texas should consider.  With considerable pressure on local property taxes, it is not feasible to rely on them as a source for rebuilding.   A local option would allow voters in a region to fund specific projects for themselves, without relying on a statewide solution or imposing costs on other areas.  Potentially, this could allow voters to prioritize stormwater management in one area, transportation improvements in another, and water supply in another. 

The bad news is that the next legislative session in still 14 months away.  Just as the memories of droughts fade away after a rain, the memory of flood events - and the urgency to address them with policy solutions - can pass with time.  Local officials and the engineering community must work to maintain a political commitment to address this problem.



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