Mike Collier here, Texas Certified Public Accountant. As you know, I’m not on the ballot, but I remain in this fight!
Flipping the Texas House in 90 days will result in the kind of political competition in Texas that we’ve been striving for for years. Everything from public education excellence to gerrymandering to healthcare is at stake.
While I wish I could be out campaigning shoulder-to-shoulder with my friends who are fighting hard to win, I thought I could at least share my thoughts on the issues in this campaign, offered in the form of a stump speech.
If you believe any of this will resonate in your districts, I hope you liberally repeat/plagiarize what I have to say. It’s not plagiarism when everyone is speaking with one voice, the voice of Texans!
Your Republican opponent will no doubt hear what I have to say. That’s GOOD! Maybe they’ll learn something along the way! Maybe they’ll figure out what a horrific job Republicans have done since they grabbed control two decades ago and drove our state into the financial ditch.
I don’t intend to cover the waterfront. I’m only going to focus on finance and budgeting. Since I’m an accountant, I’m sure this won’t surprise you.
So, here goes:
The next legislative session is going to be a financial nightmare.
Comptroller Hegar already told us that we start $4.6 billion in the hole due to COVID-19 and the Great Republican Depression.1 After the last Great Republican Recession, Comptroller Combs said we would start $4.3 billion in the hole.2 And we know what they did next: they fired 11,500 teachers.3 They will do the exact same thing this time, unless Democrats take back the State House.
But it will be much worse this time, because Republicans wrote a hot check that is about to come due. They bragged about putting $11.5 billion into education, but they did not come up with the money to pay for it. Republicans tried to raise sales taxes by $5 billion, but we Texans wisely told the Tax Raisin’ Republicans no.
So, where did they get the money? It’s simple: they stole it from healthcare. The healthcare budget is at least $5 billion too low which means the budget will run out long before the end of the biennium, which is next August.4 They will then use the next budget to pay for this budget. And that means less money for the next budget. I’ll bet we’re $10 billion in the hole, absent a massive federal bailout.5
So, Republicans are going to say there’s NOT ENOUGH MONEY for public education, or teacher retirement, and they are going to blame COVID. It’s way more than COVID, my friends.
The fact is, we can’t borrow money, because the state is already deeply in debt. We owe $57 billion in bonds outstanding and we’ve borrowed another $49.5 billion from teachers by refusing to fund TRS.6
We can only use about half of the $7.8 billion in the Rainy Day Fund, because we need something like $4 billion in reserves because of all of our debt.7
If Republicans control the legislature, they will immediately start whining that we have to “tighten our belt”, which is Republican code for slashing education.
The problem that Republicans gave us, which refuse to address, and the reason the state ALWAYS short-changes us, is Republicans refuse to collect money from the corporations like we use to. They are weak. And they give in to the demands of corporate special interest who dominate Republican politics.
Back in 2006 Republicans threw out the old business franchise tax and created a Margin Tax that came up $5 billion per year short.8 Then, when Greg Abbott became Governor, he gave them another $1 billion per year tax cut.9 The folks that get that money are shareholders, and shareholders live all over the world. Corporate shareholders are hauling Texas wealth out of the state by the truckload, thanks to Republicans, which is why our property taxes are so high and we never have enough money for schools!
By the way, when a Republican tells you cutting corporate taxes is good, remind them that the top 10% of American taxpayers own 84% of all corporate stock.10
Speaking of property taxes…
Did you know that the Republican State Budget has a paragraph in Article III, every year, that mandates how much property taxes are going to increase? Look at past budgets and you’ll read “property values, and the estimate of local taxes on which they are based, shall be increased…”. And it’s a big number. Since 2010, Republicans have allowed property taxes to increase 60%.11 They let property taxes explode, so that our property tax money would pay for services the state could no longer afford, like education, and like mental health services, to name just two.
By the way, they watered down the language in the current budget, but that was just to get me off their back. But nothing has changed.12
The way property taxes work is this: the state send out economists to estimate how much higher property taxes will be, and we know that property taxes are purely local. But when the state sees how much property taxes are pouring into schools, they put less state money in. We pay higher school taxes, but schools don’t ever see that money.
Republicans will say they reformed property taxes. That is complete rubbish. They put $5 billion in tax relief into the education budget, but they are counting on rising property taxes to throw off the cash to pay for it.13
Using higher taxes to pay for lower taxes is cool! A distinctly Republican mathematical principle.
And by the way, did you see the Comptroller’s revised revenue estimate, just published? It has this gem: state money needed for schools has decreased because—wait for it—of an increased projection of local funding from property tax revenues! School property taxes are pouring in $3 billion faster than planned, and the schools don’t get to keep the money.14 The state keeps it, by cutting back on state aid.
Tax Raisin’ Republicans give us higher property taxes, and we get nothing for it!
If your opponent says Republicans cut taxes, make them tell you FOR WHOM! Because it’s not for Texans. Just show him your property tax bill, which keeps going up.
If your opponent says Republicans always balance the budget, show him our state’s financial statements and they’ll see that debt is exploding.
If your opponent says Republicans are for transparency, ask them why they haven’t replaced that State Auditor even though the last one quit five years ago and Republicans refuse to replace him.15
If you hear your opponent say Republicans know what they are doing, ask them why they refuse to expand Medicaid, making Texas one of only ten states too stupid to know it’s a good financial deal.16
Your opponent, no doubt, won’t be able to grasp that expanding Medicaid is a money maker, and that the state will bring in more money than it will pay out. That’s what all the studies have shown. Instead your opponent will tell people it will bankrupt us, like Greg Abbott wrongly says.
So just explain it this this way: Texans pay ALL of the cost of OUR healthcare, and we pay SOME of the cost for other states. Meanwhile other states pay SOME of their costs, but they pay NONE of our costs in Texas.
Stupid is as stupid does!
And there is one more thing I’m blue in the face talking about, and that’s the big corporate property tax loophole. The owners of large commercial and industrial properties are cheating us! They are not paying the taxes that are due under the Texas Constitution because they are taking advantage of a property tax law that goes back to 1997 and that’s costing us as much as, if not more than, $5 billion per year.17 I’ve been campaigning on this for seven years and never once has ANYONE said I’m wrong. But if you still don’t believe me, go read the Legislative Budget Board’s Government Effectiveness and Efficiency Report issued back in 2015.18 It’s confirms that Texans are getting ripped off.
Republicans fired the LBB director, by the way, not long after I started showing Texans the incriminating report.
Your opponent is going to brand you as a socialist. Of course, you’re not, and you need only point out that Democrats support a living wage. Because we know that allowing companies to rake in profits on the backs of workers KEPT ALIVE by taxpayer support is the purest form of socialism.
And the most audaciously false thing your opponent will say, is that Republicans are fiscally responsible.
When you have shown that your opponent, and your opponent’s political party, do only the bidding of the special interests, and they’re doing a hideous job running the state, your opponent will scramble and say, “But I’m fiscally responsible!” It will give his base a thrill.
Just tell them,
• Drowning Texans in debt is not fiscally responsible.
• Letting Property taxes soar is not fiscally responsible.
• Trying to raise the sales tax is not fiscally responsible.
• Refusing to hire a State Auditor is NOT fiscally responsible.
• Losing a bunch of money on Medicaid is not fiscally responsible.
• Giving tax breaks for out-of-state investors is not fiscally responsible.
• Keeping big corporate loopholes wide open is not fiscally responsible.
• Wringing profits out of workers you don’t pay enough to survive us not fiscally responsible.
• And lying that you are fiscally responsible, when you are decidedly not fiscally responsible, does not make you fiscally responsible either.
• And it doesn’t make you good for Texas either.
So, that’s what I would say if I were running for Texas House.
I’ve provided some notes with source information, in case anyone asks. I also hope your opponent sees this, let them try to tear it down. They can’t—not honestly, anyway.
1. Comptroller Hegar’s recently published revised Certification Revenue Estimate
2. Comptroller Comb’s 2010 Biennial Revenue Estimate
3. The Legislature cut public education by $5.4 billion, resulting in the loss of 11,500 teaching positions based on an estimate prepared by Texas Taxpayers and Research Associates
4. If the budget for Health and Human Services had been increase by an amount equal to population plus inflation, it would have been budgeted $90.1 billion. Instead the 2020-2021 budget was $84.4 billion.
5. Comptroller Hegar’s $4.6 billion hole is revenue only; at $5 billion cost overrun which I call the Hot Check and the hole could be $10 billion. COVID could make this worse, federal relief could improve the situation.
6. Both bonded indebtedness and TRS fund deficit derived from 2019 Comprehensive Annual Financial Report for the State of Texas and TRS.
7. Governor Rick Perry suggested in an interview many years ago that we need to keep 7.5% of annual revenues in reserve to protect our credit rating. No such specificity has been offered since, but Comptroller Hegar and others talk about the need to keep cash in reserve to support our debt balances.
8. See letter from Comptroller Carol Strayhorn to Governor Rick Perry dated May 15, 2006.
9. Governor Abbott demanded, and Lt Governor happily agreed to, a 25% reduction in the margin tax in 2015 which was estimated to reduce corporate revenues by at least $2 billion per budget cycle. Because it was a permanent percentage reduction, the impact today is actually much higher.
10. Center for Public Integrity, January 24, 2020, Peter Carey. Also, see PolitiFact.
11. From 2010 until 2018, Article III (Education) of the state budget read “Property values, and the estimate of local taxes on which they are based, shall be increase…” by 3.34% for tax year (“TY”) 2010, .97% TY 2011, .53% TY 2012, 4.77% TY 2013, 4.03% TY 2014, 4.56% TY 2015, 6.18% TY 2016, 7.04% TY 2017, 6.77% TY 2018.
12. After several of us read the Article III language in public settings, sending Republicans into spasms, the legislature changed the language to, “assumed increases in property values, as estimated by the Comptroller of Public Accounts…”. The latest increase was 5.76% in TY 2019 and 4.01% in TY 2020.
13. The $5 billion in relief was estimated to produce a 7% decline in should property taxes (per the Legislative Budget Board), or 3.5% per year across the two-year budget cycle. Note that the budget called for property taxes increases of 5.76% and 4.01%, for a net increase of 2%+/-.
14. Comptroller Hegar’s revised revenue estimate shows revenues down $11.6 billion due to COVID, offset by $1.1 billion CARES Act money meant for public schools, and $3 billion more in property taxes than originally estimated in Article III. This drove a net change in ending fund balance from $2.89 surplus to $4.58 deficit.
15. Former State Auditor John Keel resigned in December 2015, effective January 2016. The legislative Audit Committee has refused to replace him. We have an assistant Auditor, but not a formal State Auditor, which just isn’t right.
16. See page 85 of “Out of Comptrol: A Converted Democrat’s Improbable Quest to Save Texas Politics” by Mike Collier. Several studies have shown that for every dollar of additional Medicaid funding from the state, more than a dollar will come back to the state in terms of new taxes on increased level of healthcare service, lower cost of uncompensated care, lower services.
17. Brenda Ball, “Appeals Shift the Tax Burden,” Austin American-Statesman, September 28, 2013.
18. Legislative Budget Board staff, January 2015: Texas State Government Effectiveness and Efficiency, page 61.