Texas Comptroller Glenn Hegar says Texans should elect him to another four-year term because of how the Texas economy has grown and because he has a plan to change how the state invests the more than $10 billion in its Rainy Day Fund. His opponent, Joi Chevalier, says voters should back her because of her private-sector experience and because Hegar has not wielded the power of the bully pulpit properly to draw attention to what’s at stake for the economy amid Republican-dominated debates over health care and immigration policy.
With early voting underway this week, the Republican and Democratic candidates answered questions from The Texas Tribune about why they’re best-suited to serve as the state official responsible for collecting taxes, overseeing the state treasury and forecasting the amount of money that’s available for the state’s two-year budget.
Read their responses, which have been edited and condensed.
Texas Tribune: Why are you the best person for the job?
Glenn Hegar: First and foremost, I’m the guy who’s been doing the job for the last four years. I also served in the Legislature. Obviously, serving in the Legislature doesn’t qualify you to serve as comptroller; however, with that being said, it certainly gives me the perspective and the understanding that what goes on in the Capitol, how things go on. I also understand how this office operates. We have 26 divisions, 2,900 employees, but my three constitutional duties are running the treasury, tax collection and estimating the revenues for the state. And that’s what I spend an inordinate amount of my time on, because I understand what information policymakers and taxpayers need.
Joi Chevalier: I have a very clear vision about what Texas can do with all of her resources. I approach handling something as large as a state budget with the expectation that there is a win-win possible, and within the financial structure that we’re obviously obligated to and our fiduciary responsibility, how do we achieve that? I’ve spent more than 20 years doing exactly that for very large organizations, teams, and I believe I can do so for the state of Texas. Yes, it is a non-legislative role, and our legislators have that responsibility to write the budget, but there are still ways to do stuff effectively, efficiently and with good outcomes that can be just as important as getting the item appropriated in the first place.
TT: What should be the comptroller’s No. 1 priority in 2019?
GH: The most important thing that I’m trying to focus the Legislature on is changing the way we handle and focus on the Economic Stabilization Fund. I’ve talked a lot about that for two years, and I’ll continue to talk about it. Because when I make a transfer into the fund next month, I will send an amount of almost $1.4 billion into that account, which will have a record amount of $11.9 billion. And it is not prudent, nor is it responsible, to have that kind of money sitting in ordinary cash where it doesn’t even cover inflationary pressure from year to year. And we need to make sure we adjust the way we handle that fund and invest that fund, so therefore we’re not only able to cover inflation but also to be able to cover issues such as pensions and long-term liabilities that typically get ignored from budget cycle to budget cycle.
JC: Some things that I’d like to see done in the first 120 days is a restoration of auditing. If we’re going to talk about finding efficiency and finding revenue, finding dollars and finding where the opportunities still lie, and also do good government at the same time, we need to go back to that. Additionally, I think we need a couple of special reports on the Affordable Care Act Medicaid expansion and a real representation of those dollars that are missing. What would it mean to Texans, to the actual citizenry that would benefit, or not benefit — so we can have a real conversation about it as they go into session. I would also say the same thing about immigration: What is the bottom line on who, how much to our economy, and what programs and structures would be effective? So we can go in with real data and real information and the Legislature can make real decisions.
TT: Do you support using the Rainy Day Fund next session?
GH: I don’t see a significant shortfall in this upcoming budget. Revenues have increased every month. We had 10 percent increase in revenues last fiscal and the fiscal year before. Each month, sales tax revenues have continued to be positive. Therefore it appears pretty clear that the bulk of the supplemental appropriation to shore up the previous budget can be paid for out of funds we already have in the Treasury. However, I have said it is more than responsible to take money out of the Rainy Day Fund to spend on Hurricane Harvey recovery. We’re in the longest economic recovery in modern history since the end of the great financial crisis a decade ago. When you’re in the longest economic recovery, that also means every day you wake up, you’re getting one day closer to the next recession. And so when we do have that recession, we do have that downturn, that’s what the Economic Stabilization Fund is for, is to smooth out the budgeting cycle and help the Legislature from one cycle to the next.
JC: If we’re talking about in relation to Harvey and continuing Harvey support, whether that’s infrastructure, absolutely, I would love to have that conversation. I don’t know how lawmakers can go into session and not have some conversation about some partial use of the Rainy Day Fund toward continuing Harvey relief or where there might be gaps that have not been addressed. [I would also be in favor of using the fund] if they’re still having the conversation around Child Protective Services and some of the gaps there, potentially, or if they still have not addressed the artificial caps in special needs in our schools and coming up to the federal expectations.
TT: The latest revenue estimate shows the state has about $2.8 billion more in the bank than originally expected. In that climate, do you support cutting taxes?
GH: Obviously the Legislature is gonna talk about, more than anything, property taxes and school finance next session. So that’s probably going to be one of the top issues that is on their agenda next cycle. However they decide to move forward on school finance, property taxes or any other tax system, they’re gonna vet all that out. We’re here to support them with data and information that they need, as we see how revenues are impacted by any of the decisions they make. I firmly believe that the founders in the state and the nation put three separate branches of government for a reason. I’m in the executive branch; I’m not in the legislative branch.
JC: I think there are ways to increase revenue and allow for tax cuts, yes. If we’re talking about individual residential property taxes, yes, I think that’s distinctly possible. I think the revenue could be made up elsewhere. I think the challenge we’ve had is we’ve given tax cuts, corporate, in 2009 and 2015. We should be in the position to cut taxes for individual property owners. I don’t want to say we should undo the cut on the franchise tax. If we think about our oil and gas leases and with appropriate audit and review, have we really seen efficient and maximum dollars out of the General Land Office? In short, I think the revenue would be made up from elsewhere. I don’t think you’d have to roll back the franchise tax cut to do that. We’re not talking about zero sum here.
TT: What’s the biggest threat to Texas’ fiscal health?
GH: Right now, it’s pensions. The fact is, when both the state’s Employee Retirement System and Teacher Retirement System are in the processes of lowering their assumptions about how much they expect to earn on their investments. Once they lower those assumptions, which is the right thing to do because they have not been hitting those rate of returns, that’s going to move it out even further. Texas is not in the situation of the state of Illinois, the state of Connecticut, or some of the other states that are in extremely dire position with their pensions being heavily unfunded. Yet if we continue on that path, we will get there. That’s the reason that I’ve come up with the solution to solve that problem, with the legacy fund [investing a portion of the state’s Rainy Day Fund].
JC: I would think it is the amount of debt that we’re carrying that we’re not really talking about or addressing. We’re carrying approximately $50 billion in debt, and we have problems with our pensions system. Between those two items, for a long-term conversation, I think that’s one of the reasons the credit agencies would continue to look at how we continue to be upside down in those areas with no plan on how to deal with them. How are you going to reduce that debt? You haven’t really answered your long-term pension problem. As long as those stay on the books with no plan and no obvious conversation about them, I think that’s a problem.
TT: What is your single biggest criticism of the incumbent?
JC: I think it really is the conversation on health care. I think the conversation on health care is a massive miss across the board, and I think in particular the comptroller’s office had the clear ability to make business cases around how the dollars are being spent. An honorable mention is watching a bathroom bill go to session and not make a business case about the negative downside of a bathroom bill. That would have been an easy conversation to have from a financial standpoint. What would it mean to the economy, what would it mean for business, what would it mean to those individuals and citizens in our state? What has happened in other states, why was that pushed away? What were the challenges in North Carolina?
TT: Your opponent has criticized you for not using your position as more of a bully pulpit. What do you say to that?
GH: Somebody said to me not too long ago that I didn’t speak up or write a letter of protest when the federal government essentially changed the CHIP program, sending less money to the state of Texas. Well one, if you think that by writing a letter or calling legislators in Washington, D.C., that they’re actually going to listen to exactly what the comptroller says on every single issue, that’s either extremely naive or, even more dangerous, that’s extremely arrogant. What I try to focus on is what are the most pressing issues for the state and my office that I deal with. As the state’s chief financial officer, I want to make sure that the Legislature knows, yes, in this upcoming cycle, the state of Texas is probably going to have to put in another $600 million-plus to make sure they keep the current CHIP program running. I could be writing letters every single day and spend all of my time having an entire division dedicated to just what goes on in Washington, D.C. But I’m not Health and Human Services. We do have a state agency, the Texas Health and Human Services Commission, and I think they’re very capable of communicating with their federal partners, much like Parks and Wildlife is able to do, or the Texas Department of Transportation is able to do. We are not those agencies, and they are much more equipped to talk with their federal partners than the comptroller’s office is.