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From the “Grab that cash with both hands and make a stash” files

Same song, second verse.

If budget writers don’t come up with money to address a state employee pension shortfall and mounting needs for public schools, health care and transportation, credit agencies are likely to downgrade Texas’ AAA rating in the near future.

That was the warning Comptroller Glenn Hegar gave lawmakers at a Tuesday hearing of the Senate Finance Committee in Austin. Though the Texas economy is growing at a healthy pace, Hegar said, the state’s budget is riddled with enough unfunded liabilities to worry credit rating agencies such as Moody’s and Standard and Poor’s.

“We’re not at a crisis,” Hegar said, but “we’re going in the wrong direction.”

A downgrading of Texas’ credit rating would make it more expensive for the state to borrow money — and perhaps damage state leaders’ credibility when advertising Texas as “open for business.”

“I want to avoid that, because I think that’s a black eye on the state of Texas,” Hegar said.

Rebounding oil prices, natural growth and migration to Texas have led to an increase in tax collections, according to the comptroller’s office. But much of that new revenue is already dedicated to historically underfunded programs such as the state highway fund, meaning that Texas lawmakers likely won’t have more money at their disposal in 2019 when crafting the next two-year budget.

At the same time, lawmakers will need to plug holes in the pension system for state employees, and they’ll face pressure to make solvent a health insurance program for retired teachers. On top of that, big bills coming due for Medicaid, the federal-state health insurance program for the poor and disabled that is perennially underfunded by the Legislature, could put the state budget $2.5 billion in the red before lawmakers even convene in 2019. (The state’s current two-year budget is about $217 billion.)

In addition, state leaders will have to tackle the bills from Hurricane Harvey recovery.

I’ll just say again here what I said in January: The vast majority of these issues are the result of deliberate choices made by our Governor, our Lieutenant Governor, and our Republican-controlled Legislature. Instead of seriously addressing the needs of the state, current and future, our Republican leaders have been obsessed with trivia, from bathrooms to plastic bags to trees. We have gotten by and done all right because times have been good, but we are in a far more precarious position for when the economy goes south than we should be. In the meantime, we are squandering this opportunity to ensure a better future for all of us by making such cavalier and ill-advised fiscal choices. Every Democratic candidate running for state office needs to internalize and articulate that message going forward.

From the “Nothin’ but good times ahead” department

Given the good economic conditions in Texas right now, you’d think the budget outlook would be better than it is.

The Texas economy is growing healthily, but that doesn’t mean state budget writers will have more money at their disposal next year, state officials said Tuesday.

In fact, though unemployment is low and tax revenue is on the rise, big bills coming due for the state’s highways and health care programs are giving Texas lawmakers reason for concern.

“I would like to offer a few words of caution for reading too much into the positive recent economic numbers,” Texas Comptroller Glenn Hegar told lawmakers at a Senate Finance Committee hearing.

As they often do, state budget writers last year underfunded Medicaid, the federal-state insurance program for the poor and disabled, which, alongside public education, makes up one of the largest shares of the state’s $217 billion two-year budget.

Then, during a special session called by Gov. Greg Abbott over the summer, state lawmakers shifted another $500 million away from the Texas Health and Human Services Commission to pay for public education programs.

As a result, lawmakers could face a $2.5 billion Medicaid bill shortly after they reconvene in Austin in 2019. Then there are the additional drains on Texas coffers from Hurricane Harvey recovery efforts, Hegar said.

That’s bad news for lawmakers given the comptroller’s prediction that the state will only have a $94 million “beginning balance” when lawmakers convene in 2019. By comparison, lawmakers had an $880 million beginning balance in 2017, which was ultimately a tight year for the state budget. Two years before that, lawmakers enjoyed a $7.3 billion beginning balance.

[…]

Another source of heartburn for budget writers is the ravenous state highway fund. In 2015, amid complaints of a highway system in disrepair, Texans voted to amend the state Constitution to require that up to $2.5 billion in sales tax revenue be dedicated to the highway fund.

That means that even as Texas collects more money from sales taxes — Hegar testified that sales tax revenue grew by an average of 10.3 percent over the last three months — the rest of the state budget will not benefit from that revenue since it is earmarked for the highway fund.

That was also an issue for budget writers in 2017. Last year, in order to free up some of that money for other purposes, Senate lawmakers pushed for an accounting trick that delayed a payment to the state highway fund into the next two-year budget cycle. That freed up about $1.6 billion for lawmakers last year, but it means there will be another bill to pay in 2019.

“In short, despite a strong economy and positive outlook for revenue growth in this biennium, it seems likely the next budget will be much like the one crafted in 2017, having to contend with restricted revenue relative to the spending trends of the state,” Hegar said.

Just a reminder: Underfunding Medicaid was a choice. Shifting money away from HHSC was a choice. The amendment to require all that highway spending was ratified by the voters, but it was there to be ratified because the Lege chose to put it there. Deferring that payment to the highway fund was a choice. And though the story doesn’t include it in its litany, spending nearly a billion dollars on boondoggle “border security” stunts was a choice, too.

We’ll probably be fine in the 2019 session, though the potential for shenanigans is always high. But remember, winter is coming, because it always does. When it does, we’re going to have a mess to clean up, one that was caused by the Republicans in charge of our state, one that could have been mitigated in many ways. I hope we’re ready for it.

(Note: This is the inspiration for the post title.)

Republican voters are “meh” on the bathroom bill

From the inbox:

The Texas Association of Business conducted surveys in five GOP-controlled legislative districts across the state the week of July 24th.

“Texas business has long opposed the bathroom bill because it is unnecessary and will have significant negative economic impact on Texas.  The significance of these surveys, is the voice of individual Republican primary voters echoing the business perspective with over 60% of the opposing respondents saying that the bill is unnecessary and distracts from the real issues facing Texas today,” said Jeff Moseley, CEO of the Texas Association of Business.

The purpose of the surveys was to test general voter sentiments on a range of issues, including views on the so-called ‘Bathroom Bill’ legislation.

“There was remarkably little variation from district-to- district and the cumulative statewide results mirrored the individual district results. The number of interviews (1,500) was very large and we are quite confident that the combined results are a very accurate reflection of Republican Primary voter sentiments on this issue,” said political consultant and pollster Joe Counter. “The survey results were essentially the same in every region with overwhelming opposition and/or indifference to the legislation.”

The districts represented a cross-section of districts from around the state: SD8 in Collin County in North Texas, SD22 in Central Texas, HD15 in Montgomery County North of Houston, HD106 in Denton County in North Texas, and HD136 Northwest of Austin.

The surveys were conducted by Counter Consulting in Plano, Texas. Each of the legislative surveys was an n=300 with a margin of error (MOE) of +/-5.77%.

That sounds promising, but it’s also very vague. I mean, we don’t even know from this what the wording of the questions and responses were. So I emailed the person who sent out that release and asked for more data. This is what I received in response.

To: Jeff Moseley
FM: Joe Counter
DT: July 31, 2017
RE: Legislative Surveys / Bathroom Bill Results

Counter Consulting (in conjunction with Conquest Communications in Richmond, VA) conducted five surveys the Week of July 24 th in GOP-held legislative districts on behalf of the Texas Association of Business. The surveys sought the opinions of ‘likely Republican Primary voters’ on a host of issues including the so-called ‘Bathroom Bill’. Each survey was an n=300 with a MOE of +/- 5.77%.

The districts represented a cross-section from around the state: SD8 in Collin County in North Texas, SD22 in Central Texas, HD15 in Montgomery County North of Houston, HD106 in Denton County in North Texas, and HD136 Northwest of Austin.

As you will see from the results and topline/crosstab sheets related to those questions, there was very little variation in the results from district-to- district or in the cumulative totals (which included 1,500 completed interviews). While these cumulative results cannot be assigned a MOE (that would normally be around 2% for an overall sample size this large), it is safe to say given the similar results in the different districts, that these views do in fact reflect those of ‘likely GOP voters’ statewide.

Specifically, two questions were asked about the ‘bathroom bill’ legislation.

Q. The Texas Governor has called a Special Session to address issues that he felt went unresolved in the Regular Session. Among these is the so-called ‘Bathroom Bill’ for which there are a number of competing versions. Can you tell me which of the below statements comes closest to what you think will happen if this legislation is passed?

a. It will make Texas a better, more pro-family state.

b. Texas families will suffer from immediate job loss due to discrimination being legalized in the minds of many corporate leaders who will take their businesses elsewhere.

c. Nothing much will change—Texas already has laws to punish people who misbehave in bathrooms and public place.

d. I don’t really have an opinion on this.

Results:

  • a minority (25%) of likely GOP voters are in favor of a bathroom bill passing
  • a slightly smaller percentage (20%) cite ‘negative ramifications’ from job loss due to perceived discriminatory laws
  • a plurality (40%) feel ‘nothing much will change’ if some version of the bathroom bill is passed

A follow-up question was asked of the three-quarters of respondents who were NOT in favor of the legislation.

Q. What would you say is the main reason why you oppose the so-called ‘Bathroom Bill”?

a. It is a discriminatory law.

b. If passed, it will cause our economy to suffer, as there is evidence that some businesses will relocate out of Texas, some out-of-state organizations will stop coming to Texas for their conventions, and there are threats that major sporting events would be moved out of Texas.

c. This law is a distraction from the real issues that Texans face, as Texas law already punishes people who harass or assault people in bathrooms.

d. Unsure

Results:

  • only 12% cited ‘discriminatory concerns’ as the reason they are opposed to the legislation
  • only 12% cited ‘economic repercussions’ as the reason they are opposed to the legislation
  • the overwhelming percentage (61%) stated that the “law is a distraction from the real issues facing the state”

You can see the tables in the linked document. I think the key to understanding this is in how one interprets the plurality “nothing much will change” response. One could take that to mean that the respondent thinks the bathroom bill is such common sense that who could possibly find it objectionable, or that what is being proposed is so weak as to be meaningless, or that they agree with the assertion about existing laws and thus find the whole exercise to be a waste of time. Or maybe it’s just a bit of good old fashioned denial. I think the near-equal amounts of clear support and opposition, coupled with this large if muddled middle ground, suggests that if nothing else there isn’t much of a burning desire among Republican primary voters for a bathroom bill, contra Dan Patrick’s claims. But one could also say that a sizeable majority of GOP voters think either nothing bad will happen or Texas will benefit from passing a bathroom bill. There’s plenty of room for competing claims.

That said, this is a decent template for peeling away voters who are not already onboard with the idea. For some, you can play up the negative consequences, and for the others you can stress how out of touch Patrick and Abbott and their minions are. That’s a strategy that could work in a primary as well as in November. If the TAB wants a better Legislature in 2019, this is a roadmap for them on how to achieve it. The rest of us can and should take note, too.

The economic impact of SB4

It could be big.

Representatives from Texas’ business, local government and higher education sectors argued Tuesday that the state’s new immigration-enforcement law, which is slated to take effect Sept. 1, could do billions of dollars in damage to the Texas economy.

Using data from the 2015 American Community Survey and the Bureau of Economic Analysis, the Reform Immigration for Texas Alliance — a group made up of 40 state-based immigrant and civil rights groups — estimated during a Tuesday press conference that the state stands to lose roughly $223 million in state and local taxes and more than $5 billion in gross domestic product under Senate Bill 4.

The law, which was signed by Gov. Greg Abbott in May and seeks to outlaw “sanctuary” jurisdictions that don’t cooperate with federal immigration officials, would also allow local police officers to ask about a person’s immigration status when they are detained — not just when they are charged with a crime.

“We estimate those costs as they relate to jobs, earnings, taxes and GDP if 10 percent of undocumented immigrants were to leave Texas,” the group said, calling that 10 percent figure a conservative estimate. The group analyzed the top 10 industries that benefit from undocumented labor and used Harvard University economist George Borjas‘ undocumented population analysis in its research, according to the methodology outlined in the study.

[…]

The economic argument isn’t a new one for opponents of the law; several Democratic state lawmakers tried and failed to convince their colleagues of its merit during this spring’s regular legislative session. State Democrats also called for an update to a study released in 2006 by former Texas Comptroller Carole Keeton Strayhorn. That analysis showed that undocumented immigrants who lived in Texas in 2005 added $17.7 billion to the state’s economy.

In a statement Tuesday, representatives from local chambers of commerce at the news conference went after the lawmakers who championed the legislation, calling them dishonorable.

“Each of you standing with us have a big job to do,” said Ramiro Cavazos, the CEO of San Antonio’s Hispanic Chamber of Commerce. “And that it is to protect this economy for our children and our grandchildren.”

The Houston Hispanic Chamber of Commerce, the U.S. Bilateral African American Chamber, the United Chamber of Commerce Corpus Christi and the Rio Grande Valley Chamber of Commerce were among those represented at the news conference.

The Chron adds some details.

Paul Puente, executive secretary of the Houston Gulf Coast Building and Construction Trades Council, said many undocumented construction workers are already packing up and leaving with their families to neighboring states such as Oklahoma and Louisiana ahead of SB4’s implementation on Sept. 1.

An analysis of data from the U.S. Census, the Bureau of Economic Analysis and the Institute on Taxation and Economic Policy found that if 10 percent of undocumented immigrants leave Texas, the state would forfeit about $190.7 million in federal tax revenue and $223.5 million more in state and local taxes.

The disappearance of those estimated 95,000 undocumented workers would also result in nearly $2.9 billion in lost wage earnings. The analysis also found that the state would lose an additional 70,000 jobs dependent on undocumented consumers, with an estimated $2.4 billion more in lost wages.

The researchers said the ripple effect throughout the economy could reach between $9.2 billion and $13.8 billion.

That’s a lot of money, and it doesn’t include things like tourism and conferences. You can dispute the figures if you’d like, but the broader point is that maybe it’s a bad idea to pass a law like this that so many people think with justification will hurt themselves, those close to them, and the state as a whole. There was plenty of testimony to this effect in the hearings, from law enforcement and religious groups and business interests and just plain folks, and there’s the lived experience of other states who have done this. It was just that the Republican majority refused to listen. And that job that Ramiro Cavazos mentioned that we all have to do includes remembering who supported and who opposed this terrible law when the next elections roll around. The Current has more.

Still more big businesses against the bathroom bill

It’s like there’s a strong, overwhelming consensus or something.

Top executives of big oil companies and other major Houston firms and organizations on Monday weighed into the political dogfight over the controversial bathroom bill, calling on Gov. Greg Abbott to block passage of the legislation that they warned will harm Texas’ ability to grow its economy.

That stance puts the Greater Houston Partnership in direct opposition to Abbott, who has championed the legislation.

[…]

In a two-page letter that followed similar pleas from executives at several Fortune 500 companies, Houston business leaders noted that Texas has worked for decades “to establish its reputation as a great place to do business.”

[…]

“We support diversity and inclusion, and we believe that any such bill risks harming Texas’ reputation and impacting the state’s economic growth and ability to create new jobs,” the letter from Houston business leaders states. “Innovative companies are driven by their people, and winning the talent recruitment battle is key. Any bill that harms our ability to attract top talent to Houston will inhibit our growth and continued success — and ultimately the success of our great state.”

The letter asks Abbott to “avoid any actions, including the passage of any ‘bathroom bill,’ that would threaten our continued growth.”

You can see a copy of the letter here. It has a few names on it you might recognize. Everyone is from Houston, and as we know Abbott doesn’t care about Houston or other cities, except to the extent that he can meddle in their business. So, you know, don’t expect too much from this. RG Ratcliffe has more.

Abbott versus the cities

The continuing story.

If Gov. Greg Abbott has disdain for how local Texas officials govern their cities, it didn’t show in a Wednesday sit-down with three mayors who were among 18 who jointly requested a meeting to discuss legislation that aims to limit or override several municipal powers.

“Whether we changed anybody’s mind or not, you never know,” said Galveston Mayor Jim Yarbrough. “But I will say it was a healthy conversation.”

What also remained to be seen Wednesday: whether Abbott plans to meet with mayors from the state’s five largest cities — who were also among those who requested to meet with the governor. So far, Abbott hasn’t responded to the requests from the mayors of Austin, Dallas, Fort Worth, Houston and San Antonio.

[…]

Houston Mayor Sylvester Turner said at a press conference Wednesday that when he was a member of the Texas House, Republican lawmakers repeatedly complained about government growing and overstepping its bounds.

“And now we find that the state government is really reaching down and telling local governments what they can or cannot do and pretty much trying to treat all cities as if we are all the same,” Turner said.

During invited testimony to the House Urban Affairs committee on Tuesday, several city officials and at least one lawmaker denounced what they said were overreaching and undemocratic attempts to subvert local governance.

“If people don’t like what you’re doing, then there are things called elections. I don’t see it as our job to overreach and try to govern your city,” said State Rep. Carol Alvarado, D-Houston.

San Antonio Mayor Ron Nirenberg testified that it felt like the state was waging a war on Texas cities.

“The fundamental truth about the whole debate over local control is that taking authority away from cities — preventing us from carrying out the wishes of our constituents — is subverting the will of the voter,” Nirenberg said.

At Wednesday’s meeting with Abbott, Yarbrough said he and his counterparts from Corpus Christi and San Marcos told the governor that local officials have a better finger on the pulse of city residents’ expectations and demands.

“We wanted to make sure we preserved the ability for local municipalities to be able to adjust and react to the needs of their community,” he said.

See here for some background. It’s mighty nice of Abbott to take a few minutes out of his busy schedule of threatening legislators to meet with these concerned constituents, but they shouldn’t have had to take time out of their busy schedules to try to persuade the Governor to leave over a century of accepted governance in place and butt out of their business. And not for nothing, but the cities whose Mayors Abbott has been ignoring are the reason he can make elaborate claims about how awesome the Texas economy is.

Let’s begin with population. The five counties that contain the state’s five largest cities have a combined 12,309,787 residents, which is 44 percent of the state’s total. If you want to talk about elections, the registered voters in those counties make up 42 percent of Texas’ electorate.

Those counties out-perform the rest of the state economically. Texas’ five biggest urban counties constitute 53.5 percent of total Texas employment. If you broaden it out to the metropolitan statistical areas, which include the suburbs as well, the proportion becomes 75.8 percent — and growth in those regions has outpaced growth in the state overall since the recession.

Not convinced Texas’ cities drive the state? Let’s look at gross domestic product: The state’s five biggest MSAs contribute 71 percent of the state’s economic output, a proportion that has increased by two percentage points over the past decade. Focusing just on counties again, workers in the ones that contain Texas’ largest cities earn 60 percent of the state’s wages.

If you look at the embedded chart in that story, you’ll see that the metro area that is doing the best economically is the Austin-Round Rock MSA, and it’s not close. It’s even more impressive when you take into account how busy the city of Austin has been systematically destroying Texas with its regulations and liberalness and what have you.

As I said in my previous post on this subject, quite a few of the Mayors that are pleading with Abbott to back off are themselves Republicans, and represent Republican turf. It’s good that they are trying to talk some sense into him, but I’d advise them to temper their expectations. Abbott and Dan Patrick and a squadron of Republican legislators, especially in the Senate, don’t seem to have any interest in listening. The one thing that will get their attention is losing some elections. What action do these Mayors plan to take next year when they will have a chance to deliver that message?

Texas’ climate change future

Gonna be awesome.

The Texas economy could face some of the costliest consequences of climate change as temperatures continue to increase over the next several decades, according to a new study.

In the study published last week in the journal Science, researchers found that the economic burden of climate change will hit states along the Gulf Coast – including Texas – harder than the colder, northern states that will profit from warmer weather.

[…]

The study estimates that the U.S. economy will lose about 0.7 percent of GDP per year by 2080 for each degree Fahrenheit rise in global temperatures.

Texas, however, will likely see a loss of 3.4 to 9.5 percent per year beginning in 2080. And Harris County could face median damages worth up to 6 percent of GDP a year beginning in 2080. Some counties in Texas could fare much worse, facing damages up to 20 percent of GDP – ranking them among the worst hit counties in the nation.

Much of the costs for Texas come from higher heat-related deaths, said James Rising, a postdoctoral fellow at University of California at Berkeley who coauthored the study. By the end of the century, mortality rates in the state likely will increase by between 16 to 45 death for every 100,000 people due to the extreme heat. For perspective, Texas currently experiences about 13 motor vehicle deaths for every 100,000.

Researchers also were able to measure the economic impact climate change would have along the coast, with Texas ranking among the five states impacted most. With rising sea levels and stronger hurricanes, the study analyzed the potential cost of damage faced by Gulf Coast properties.

The study, which comes from researchers at the Climate Impact Lab, relies on “business-as-usual” emissions estimates, mapping the effects of climate change if nothing is done globally to mitigate greenhouse gas emissions throughout the 21st century.

You can see the study here. As you can see from the map, the entire South really takes the brunt of it, which given how widespread climate denialism is in that part of the country seems like a particularly brutal form of poetic justice. Too bad the people who are the biggest part of the problem will be long dead before the worst of the effects take place. But hey, no worries, it’s just our kids and grandkids. The Atlantic and the Press have more.

The Arizona experience

This is what Texas has to look forward to post-SB4.

Seven years in, Arizona’s experience hints at what Texas, with the nation’s largest Hispanic population after California, might expect. Supporters of Arizona’s legislation say it has worked, helping to reduce the number of immigrants illegally in the state by 40 percent between 2007 and 2012, according to the Pew Research Center, a think tank in Washington, D.C. More than 200,000 left. Since then, the population has stayed about the same.

“Enforcement does work and even the threat of enforcement makes a difference,” said the bill’s Republican sponsor, former state Sen. Russell Pearce, who became Arizona’s first legislator to be removed from office in a 2011 recall election shortly after the passage of what’s known as SB 1070. “As long as you got the bird feeder out, the birds are going to come and eat. You gotta take the bird feeder down.”

Many of Trump’s supporters see it the same way at a time when the issue has arguably never been more rancorous. But business leaders in Arizona warn that such a reduction came at a cost.

“No one stops to think that, when you eject people from an economy, you’re not going to feel it,” said Todd Landfried, executive director of Arizona Employers for Immigration Reform. “It’s a dramatic impact. People aren’t buying food, clothes, gas. They’re not going to baseball games or buying soccer uniforms, they’re not going out and socializing. Business owners have to cut back and lay people off. It’s a snowball effect.”

Some economists have found that the exodus reduced Arizona’s gross domestic product by roughly 2 percent a year. Proponents of the law say that loss was bolstered by savings in education, medical care and the costs of incarceration. A 2004 study by the Federation for American Immigration Reform, a Washington, D.C., group seeking to reduce immigration, argued those services cost the state more than $1 billion annually.

But Landfried called that a red herring, noting that all of Arizona’s residents, no matter their legal status, contribute to property taxes paying for education, whether they own homes or rent. Immigrants illegally in the state don’t qualify for any public benefits, although their American children do.

The overall impact to the state’s convention and tourism industry alone was $752 million in completed and potential cancellations and booking declines, Landfried testified to the U.S. Senate judiciary committee in 2012. That involved more than 4,200 lost jobs.

[…]

Some executives say that even the perception of the law as anti-Hispanic casts a shadow that they are still struggling to overcome. The city of Oakland, Calif., declined Phoenix Mayor Greg Stanton’s invitation to a Governing Magazine summit this month, reportedly citing an ongoing travel ban due to the 2010 legislation. Stanton’s office, meanwhile, has been working to improve relations with the state’s largest trading partner of Mexico, recently opening a second office there.

“This was a complete disaster for our state from an image perspective and from an economic perspective,” said Lisa Urias, the president of a large advertising agency and a member of the boards of the Greater Phoenix Leadership Council and the Arizona Hispanic Chamber of Commerce. “There is still lingering damage that is there, and we are still a state that feels very raw about this issue.”

Of course, Greg Abbott and Dan Patrick have clearly shown via their support of a bathroom bill that they don’t really care about the state’s image and economy, since everyone with any credibility has told them that it would be bad for those things. The same is true for the so-called “sanctuary cities” law, with law enforcement added in for good measure. At this point, it’s hard to imagine anything that would change their minds. All that remains is to change who’s in power. Easier said than done, obviously, but it’s the only way.

Super Bowl economic impact was about what we expected

Not too bad.

The receipts are in, and February’s Super Bowl LI appears to have been a substantial boon for Houston — albeit with slightly less spending than expected.

Gross spending during the nine days of Super Bowl programming, minus the amount of usual tourism displaced by the event, came to $338 million, according to a consultant retained by the Host Committee. That’s a bit off the $372 million originally projected by the same firm, Pennsylvania-based Rockport Analytics.

The discrepancy occurred because the costs of goods and services were lower than expected, even though the number of out-of-town visitors was higher than anticipated, at 150,000, according to Rockport Analytics. In particular, visitors spent about half of what was expected on rental cars because of the availability of car-sharing service Uber and special Metro routes.

Host Committee Chairman Ric Campo, the CEO of apartment developer Camden Properties, said that should still be counted as a win for Houston, since it allowed more people to come to the party.

“One of the things that the Host Committee really worked hard on was affordability,” Campo said. “We didn’t want you to have to go to Discovery Green and spend $100 to feed your family.”

The total impact includes $228 million spent on wages and $39 million spent on state and local taxes. Although that number was about $6 million lower than projected, it was more than enough to pay back the state for the $25.4 million the state advanced the Host Committee, with $15 million in proceeds.

[…]

In addition to the financial impact, officials played up the the game’s halo effect for the city’s image, and the benefit of catching the interest of potential customers. Houston First President Mike Waterman said several of the 16 convention organizers he brought down to see the event have committed to bringing conventions to the city.

“We weekly get customers coming to Houston and saying they saw us shine during the Super Bowl, and now they’re interested in booking a meeting here,” Waterman said.

Let’s hope Greg Abbott and Dan Patrick don’t ruin that by forcing a bathroom bill down our throats. The one economic impact estimate I saw before the Super Bowl pegged the haul at $350 million, so it was pretty darned close. I’m glad all these people came to visit, I’m glad they had a good time (and spent some money), and given that we’re preparing a bid for the 2024 Super Bowl, I hope they’ll want to come back. Assuming our leadership doesn’t take the good impression they went away with and turn it into trash.

Bill King wants you to lower his property taxes

That’s not what he says in this op-ed, but it is the effect of what he’s arguing for, even if he’s not honest enough to come out and say it.

Let’s start with the basic point that despite King’s disingenuous attempt to rebrand it, what the city has is indeed a revenue cap and not a property tax cap. The mechanism that causes the cap to kick in is a combination of inflation and population growth, and if the city’s total revenue from one year to the next exceeds that combination, the cap gets enforced, which has so far always meant a reduction in the property tax rate. My point is that it doesn’t have to be an increase in property tax collections that triggers the cap. If sales tax collections were sufficiently robust, it could tip the revenue increase past the limit. If population growth plus inflation, which together have at best a small influence on the city’s expenses, are sufficiently small then even a modest increase in revenue could cause the cap to come into play. The factors that define the cap have basically nothing to do with the things that drive the city’s finances.

What the revenue cap does above all is prioritize property tax cuts over anything else the city might choose to do. If in a flush year the city wanted to pay down some bond debt or make an extra payment into the pension funds, well, too bad. The cap says the city has to cut the property tax rate, which doesn’t just affect the flush year in question. The reduced rate remains in place, thus hampering the city further in bad times like we just experienced. It also takes the option of increasing the tax rate off the table, which is one reason why Mayor Parker raised fees so much. These are the policy decisions that get made when policy options are artificially limited by bad laws. The effect of the cap is especially pernicious when the city is recovering from down years, as it is now, because even the process of revenues getting back to previous levels after falling due to a bad economy can trigger it. Every candidate for office in Houston I have ever interviewed has talked about spurring economic growth to improve the city’s bottom line. The revenue cap puts a limit on how much that growth can be leveraged. Why would anyone think that’s good policy?

And let’s be clear about who the main beneficiaries are when these forced property tax cuts are enacted: Wealthy property owners like Bill King. Renters get nothing, while owners of lower-priced houses get nominal reductions. It’s only once you get up int seven figures and more that the cuts start to add up. To be sure, it’s still not that much, mere pocket change to the beneficiaries, but the point is that the lion’s share of those benefits go to those who have the most to begin with.

Which brings me back to my main point. If Bill King thinks this dumb law is really good public policy, even if ratings services that he likes to cite when he argues about how to fix the city’s finances think it’s a dumb law, then fine, he’s allowed to argue for it. But just as people have been asking how much Donald Trump would benefit from the tax “reform” plans that are being floated by his administration and its Congressional enablers, we should ask how much he himself has benefited in recent years from the coerced property tax rate cuts that he wants us to go along with. The least he can do is tell us how much this policy that he advocates will add to his own bottom line.

UPDATE: King insists in the comments and via email that “other revenue sources” like sales taxes don’t trigger the charter amendment. Fine, whatever. This does not change my point that the revenue cap is a stupid idea, nor that people who have benefited from it, like Bill King, should be honest about that when they advocate for its continued existence.

Another study of bathrooms and business

Short answer: Bathroom bills are bad.

Legislation viewed by many as discriminatory toward LGBT Texans — including proposals to regulate which bathrooms transgender individuals may use — could cost the state $3.3 billion in annual tourism dollars and more than 35,600 full-time jobs associated with leisure travel and conventions, according to a study by the Waco-based Perryman Group. The study was commissioned by Visit San Antonio and the San Antonio Area Tourism Council.

“In other words, what we have been saying all along is absolutely undeniable,” Casandra Matej, president & CEO of Visit San Antonio, said in a statement. “These numbers tell us there will be a significant — and longstanding — adverse impact on San Antonio and the state. We urge our legislators to consider these effects in making their decisions.”

[…]

While it’s “impossible to know with certainty the magnitude of the net effects of the proposed bathroom access policy on travel and tourism in Texas,” the report estimates that the initial impact on business activity could cost the San Antonio-New Braunfels area $411.8 million annually.

“If the Texas Legislature passes a law viewed as discriminatory against LGBT persons, it is likely that some meetings and events would be canceled and that some leisure travelers will also avoid the state,” the study says.

The findings — based on losses experienced in other states and data from a survey by a national travel association — will likely help boost opposition to the legislation from business and tourism groups. Those groups have already pointed to millions of dollars lost in North Carolina following the passage of that state’s original bathroom law, which was recently rewritten amid mounting public and economic backlash.

Tourism officials from the state’s five biggest cities oppose bathroom-related legislation and they have already warned lawmakers that they’ve heard from organizations that are reconsidering planned events in their cities — a move that could cost each of them several millions of dollars.

You can find a copy of the study here. The Rivard Report, which is based in San Antonio, adds some more details.

The local report takes into consideration the counter-flow of conventions and organizations that would prefer to host their event in a city or state that has a “bathroom bill,” Perryman said during a conference call with media Monday morning, which are nominal. “There is a perception that group is much larger than it is. Ninety-plus percent feel the other way [do not support such legislation] … it’s overwhelming.”

There are at least 11 groups that have or are considering backing out of events located in San Antonio already, said Matej, who estimates the impact of those cancellations alone would be around $40 million.

“In other words, what we have been saying all along is absolutely undeniable,” she said Monday during the event announcing the report in the lobby of the Henry B. Gonzalez Convention Center. “These numbers tell us there will be a significant and longstanding adverse impact on San Antonio and the state. We urge our legislators to consider these effects in making their decisions.”

[…]

“SB 6 is an idiotic piece of legislation,” said Hispanic Chamber President and CEO Ramiro Cavazos, adding that the laws would be unenforceable and create more problems for cities. “Now is not a time to be apathetic.”

San Antonio, South San Antonio and North San Antonio chamber representatives were also present during the press event on Monday.

City Council will be presenting a “united front” against both bills, said Councilwoman Rebecca Viagran (D3). “Now we have the data and numbers that back up what we’ve been saying.”

Even without the economic impact, Viagran said she would oppose the legislation.

“No matter what, this bill – whatever carve outs or amendments they put to it – it’s still not an inclusive bill,” said Viagran, who chairs the Council’s Public Safety Committee. “It’s still discriminatory.”

Yeah, that’s pretty much it. If you don’t believe that at this point, I don’t know what else there is to say. If there’\s one small bit of good news in all this, it’s that the business lobby isn’t buying it, and remains opposed to this nonsense.

Texas Association of Business President Chris Wallace insists this bill is just as concerning as SB 6.

“This is not just about jobs, this is about discrimination,” he told the Current. “We are hearing from our members that business are steadfastly opposed to any discrimination law.”

Wallace said HB 2899 would “tie the hands” of business owners wanting to recruit top talent, because few people want to work for a place where discrimination is welcome.

“A lot of people, especially Millennials, do not want to work for a business or live in a city or a state that is not welcoming to all people,” Wallace said.

[…]

On Tuesday, a day before a House committee holds a hearing for the new House bill, a group of bipartisan business members representing Apple, IBM, Facebook, Google, Microsoft — and a handful of other national and local businesses — held a press conference at the capitol to oppose Rep. Simmons’ new iteration of a bathroom bill.

“I’m a conservative and a proud Texan. I am especially proud of our state’s reputation for being a warm and welcoming place to live,” said Sally Larrabee, who works for Process Control Outlet, a decades-old Texas tech company. “We don’t need to give our state a reputation for being a place that has laws that discriminate against people.”

Sarah Meredith, an employee of Austin tech startup Umbel, said businesswomen of her generation aren’t okay with being political pawns. “We need a robust economy. What we do not need is to be used as props to promote discrimination for political gain,” Meredith said.

“The people who are promoting discriminatory bills are backed by radical groups that have literally called for driving LGBT people out of the state of Texas.”

Indeed. And I hope all of the Republicans in that bipartisan group of business people remembers that next year when it’s time to vote, for their legislators, their Lt. Governor, and their Governor.

Gov. Greg Abbott is signaling support for House legislation that some hope will serve as an alternative to the Senate’s “bathroom bill.”

In a statement Tuesday, Abbott called the House alternative developed by state Rep. Ron Simmons, R-Carrollton, a “thoughtful proposal.”

[…]

“I applaud the House and Senate for tackling an issue that is of growing concern to parents and communities across Texas who are now looking to the Legislature for solutions,” Abbott said in the statement. “Rep. Simmons is offering a thoughtful proposal to make sure our children maintain privacy in our school bathrooms and locker rooms.”

Don’t reward bad behavior next year, Texas Association of Business and others. You have one chance to get this right. Get it wrong, and everyone will know that your words mean nothing. RG Ratcliffe has more.

Harris County’s growth slows

We’re still growing, we just didn’t grow as fast last year as we had in previous years.

After eight straight years of boom – adding more new residents than any county in the nation – Harris County in 2016 felt some of the oil bust’s sting.

The county gained a total of about 56,600 people last year, a decline of 37 percent from the previous year, placing it behind Arizona’s Maricopa County, which added nearly 81,400 new residents.

The decline was largely attributable to the fact that for the first time in years more people – about 16,000 – left Harris County than moved here from elsewhere in the country, according to Census data released Thursday.

Despite the losses, Harris County held on to its No. 2 position in the nation in overall growth thanks to the number of people moving here from abroad and the number of births.

The greater Houston region, which includes The Woodlands and Sugar Land, also saw the total number of new residents fall by about 21 percent to just over 125,000 in 2016, the lowest in at least the last four years.

[…]

State demographer Lloyd Potter said Houston’s population growth is also powered by its high birth rates, especially among its young, rapidly expanding Hispanic population.

“The net out domestic migration was pretty substantial,” Potter said. “That’s kind of impressive, to still have the second-highest numeric growth. You would have expected it to slip a little more than that.”

Stephen Klineberg, a Rice University sociology professor and founding director of its Kinder Institute for Urban Research, pointed to the fate of other cities that have seen similar dramatic job declines such as Detroit, where Wayne County last year lost about 7,700 residents, the most in the nation after Chicago’s Cook County. Michigan’s Republican governor, Rick Snyder, has in the past called for more visas for high-skilled immigrants for the Detroit area, citing the population losses and need for an economic jump-start.

“This is a powerful reminder of how much Houston benefits from immigration,” Klineberg said.

We sure do, in many ways. The flip side of that is that we have a lot to lose if immigration is curtailed the way Dear Leader Trump and his minions want to. Even with them being 0 for 2 on travel bans, we’re already seeing the effect of that. We’ll just have to see what the numbers look like next year.

You can’t talk about population growth without talking about redistricting. Texas is on track to get more Congressional seats in the 2020 reapportionment, probably two or three. It seems likely that the greater area, if not Harris County itself, will get a bigger piece of the Congressional pie. Of more interest is whether Harris County will remain at 24 members in the Legislature, or if it will go back to having 25 members. Too early to say, and things can certainly change, but it could happen. Keep that in mind as we go forward. This Chron story and the Trib, both of which have charts, have more.

The North Carolina bathroom bill price tag

How does $3.76 billion, at a minimum, grab you?

Despite Republican assurances that North Carolina’s “bathroom bill” isn’t hurting the economy, the law limiting LGBT protections will cost the state more than $3.76 billion in lost business over a dozen years, according to an Associated Press analysis.

Over the past year, North Carolina has suffered financial hits ranging from scuttled plans for a PayPal facility that would have added an estimated $2.66 billion to the state’s economy to a canceled Ringo Starr concert that deprived a town’s amphitheater of about $33,000 in revenue. The blows have landed in the state’s biggest cities as well as towns surrounding its flagship university, and from the mountains to the coast.

North Carolina could lose hundreds of millions more because the NCAA is avoiding the state, usually a favored host. The group is set to announce sites for various championships through 2022, and North Carolina won’t be among them as long as the law is on the books. The NAACP also has initiated a national economic boycott.

The AP analysis (http://apne.ws/2n9GSjE ) — compiled through interviews and public records requests — represents the largest reckoning yet of how much the law, passed one year ago, could cost the state. The law excludes gender identity and sexual orientation from statewide antidiscrimination protections, and requires transgender people to use restrooms corresponding to the sex on their birth certificates in many public buildings.

Still, AP’s tally ( http://bit.ly/2o9Dzdd ) is likely an underestimation of the law’s true costs. The count includes only data obtained from businesses and state or local officials regarding projects that canceled or relocated because of HB2. A business project was counted only if AP determined through public records or interviews that HB2 was why it pulled out.

Some projects that left, such as a Lionsgate television production that backed out of plans in Charlotte, weren’t included because of a lack of data on their economic impact.

The AP also tallied the losses of dozens of conventions, sporting events and concerts through figures from local officials. The AP didn’t attempt to quantify anecdotal reports that lacked hard numbers, or to forecast the loss of future conventions.

Bank of America CEO Brian Moynihan — who leads the largest company based in North Carolina — said he’s spoken privately to business leaders who went elsewhere with projects or events because of the controversy, and he fears more decisions like that are being made quietly.

“Companies are moving to other places because they don’t face an issue that they face here,” he told a World Affairs Council of Charlotte luncheon last month. “What’s going on that you don’t know about? What convention decided to take you off the list? What location for a distribution facility took you off the list? What corporate headquarters consideration for a foreign company — there’s a lot of them out there ̵— just took you off the list because they just didn’t want to be bothered with the controversy? That’s what eats you up.”

[…]

Supporters are hard-pressed to point to economic benefits from the law, said James Kleckley, of East Carolina University’s business college.

“I don’t know of any examples where somebody located here because of HB2,” he said. “If you look at a law, whether or not you agree with it or don’t agree with it, there are going to be positive effects and negative effects. Virtually everything we know about (HB2) are the negative effects. Even anecdotally I don’t know any positive effects.”

The applicability of this to Texas is, I trust, clear to all. It’s that last point I want to zero in on for a minute. You can quibble wit the AP’s numbers if you want – I haven’t given them a close look as yet – though as he story notes if anything they are being conservative in their calculations. But even Dan Patrick isn’t arguing that SB6, like North Carolina’s HB2, would be an economic boon for Texas. He’s merely claiming that it won’t do any economic harm. Even if it were possible to put aside the human cost of SB6, isn’t that an awfully weak argument to make? Trust me, it won’t hurt a bit, and all those people with all their numbers who are saying otherwise are just trying to scare you. Is that really the best they have? Think Progress has more.

SB6 is already costing us business

There will be lots more of this to come as it advances.

Three groups — with meetings estimated to bring $3.1 million in total spending — no longer are considering the Alamo City for their events because of a bill prohibiting transgender Texans from using bathrooms tied to their gender identity, said Richard Oliver, spokesman for Visit San Antonio, the former Convention and Visitors Bureau.

Another eight conventions already booked for upcoming events in San Antonio have threatened to pull out should the legislation pass, taking with them a projected $19.9 million economic impact that includes spending by convention-goers on area hotel rooms, meals and attractions, he said.

Oliver declined to name the conventions that passed over San Antonio or the gatherings that plan to uproot themselves if state lawmakers pass the bill, but said convention organizers regularly express concern about the legislation.

“Everyone has their radars up regarding this issue,” Oliver said.

[…]

The NAACP chose San Antonio for its 2018 annual convention — rejecting a bid from Charlotte after former North Carolina Gov. Pat McCrory signed the Tar Heel State’s bathroom bill into law. The gathering is projected to bring 10,000 visitors and generate an economic impact of $10 million.

Leon Russell, vice chairman of NAACP’s board of directors, said the organization may have to revisit the decision if Senate Bill 6 becomes law.

“It says to people, ‘We openly discriminate and we don’t mind being recognized for openly discriminating,’” Russell said. “That’s not somewhere a lot of people want to come to.”

The NCAA relocated seven championship games scheduled this year from North Carolina to other states. Last April, the organization’s board of governors adopted standards requiring host cities to “demonstrate how they will provide an environment that is safe, healthy and free of discrimination.”

Local leaders see the moves as an indication the NCAA could pull its Final Four championship from San Antonio in 2018, costing area hotels, restaurants and attractions an estimated $75 million in revenue.

Losing the Final Four championship or NAACP convention would deprive San Antonio of visibility needed to boost the city’s $13.6 billion-a-year tourism industry, Oliver said.

“You lose an event like that and the incredible economic value that that brings to a community, but you also lose … the fact that you are a spotlight city in a spotlight moment,” Oliver said.

And that’s just San Antonio. The visitors and tourism boards in multiple cities have been against SB6 all along, and I’m sure they’d have similar tales to tell as well. As a reminder, here’s the economic impact tracker that Texas Competes has been maintaining. That’s just what has been made public, well in advance of the bill even getting a hearing; again, there is sure to be much more to go with this. The Current has more.

Global investors against SB6

From the inbox:

Led by New York City Comptroller Scott M. Stringer and Trillium Asset Management, a group of some of the largest investors in the world, with a combined $11 trillion of assets under management, today spoke out against Texas Senate Bill 6 (or SB6), a “Bathroom Bill,” as well as similar discriminatory legislation. In the wake of hundreds of millions of dollars in lost economic activity in North Carolina after HB2 – a similar bill – was signed into law in that state, major investors are standing up against this discriminatory legislation.

The 40 signatories include some of the biggest investors in the world, such as BlackRock, State Street Global Advisors, T. Rowe Price, and AllianceBernstein, as well as New York City Comptroller Scott M. Stringer, California Controller Betty Yee, Connecticut Treasurer Denise L. Nappier, New York State Comptroller Thomas DiNapoli, Oregon Treasurer Tobias Read, Rhode Island Treasurer Seth Magaziner, and Vermont Treasurer Elizabeth Pearce.

The investors’ letter urges Texas Governor Greg Abbott, Lieutenant Governor Dan Patrick, and House Speaker Joe Straus to oppose the legislation, which would discriminate against transgender individuals in Texas. This not only makes it more difficult for companies to attract and retain the best talent, but could have real effects on the Texas economy by undermining businesses operating there and delivering extraordinary reputational harm to the Texas business environment. The state could lose hundreds of millions – if not billions – of dollars in economic activity. Tourism dollars, sporting and other entertainment events, and corporate expansions – all are vital to Texas’s economy and could be at risk. As just one indication of the potential impact, organizations including the National Football League and the NCAA have already warned that the siting of future events in Texas would be jeopardized.

The investors’ letter also highlight opposition to SB6 from more than 1,200 companies doing business in Texas, including major firms like American Airlines, Dow Chemical, Southwest Airlines, Texas Instruments, and Waste Management.

“This bill is the 2.0 version of North Carolina’s HB2, and we saw how that bill impacted North Carolina. Not only is SB6 wrong for Texas residents, it also undermines anyone who is invested in companies in that state. SB6 would take Texas in the wrong direction,” New York City Comptroller Scott M. Stringer said. “This group of investors represents a truly extraordinary level of assets, and the market is unquestionably speaking out about the economic consequences of such bills. We hope that message will be heard. I couldn’t be prouder to lead this massive effort to protect not just the interests of New York’s retired firefighters, police officers, and teachers, but also fundamental human rights.”

“The evidence is overwhelming that inclusive corporate and public policy that embraces diversity and equality are essential to strong businesses and financial success. Trillium Asset Management, and the trillions of dollars of assets that support this letter, unequivocally and emphatically urge Texas legislators to maintain a healthy and vibrant climate for business in the State of Texas,” said Trillium Asset Management, CEO Matthew Patsky, CFA. “Senate Bill 6 must be defeated and not allowed to negatively impact the economy of Texas, the second largest in the United States.”

SB6, introduced in early January 2017, is similar to North Carolina’s HB2’s bathroom restrictions, and requires individuals to use the public restroom that aligns with the gender on their birth certificate, discriminating against transgender individuals. The bill also eliminates municipal bathroom access non-discrimination laws, effectively legalizing discrimination against the LGBT community in both public and private accommodations. SB6 allows the Texas Attorney General to impose fines of up to $10,500 a day for violation of bathroom access regulations.

North Carolina has faced significant financial harm since enacting a similar bill, HB2, in March 2016. In the months since the bill was enacted, sporting events, concerts, TV shows, and conventions were canceled and business expansions were halted. By some estimates, the cost to the state reached over $600 million.

To read the investor letter, and see a full list of signatories, click here.

Here’s a Chron story about this letter.

[Trillium CEO Matthew] Patsky told the Chronicle, “We didn’t have this level of support for divestment from South Africa during apartheid.”

[…]

Stringer and others said the state lost more than $600 million in economic activity after passing HB2, with the NBA and NCAA pulling championship games. Given that Texas’ economy is the second largest in the country, Stringer said there is fear that negative economic impact in the state as a result of passing the bathroom bill here could be felt across the nation.

“I’m worried that pension fund investments could suffer,” he said.

Patsky said Trillium Asset Management, which has business ties to Texas, has previously coordinated efforts to get investors to speak out against the North Carolina law. He said it didn’t take much to convince them to speak out against the Texas proposal.

T. Rowe Price and others echoed the concern over an economic backlash.

“Our decision to participate was taken out of concern for the likely adverse economic impact of the proposed legislation and its inconsistency with our commitment to fostering diverse and inclusive communities,” a T. Rowe Price spokeswoman said in a statement.

A representative of BlackRock said the company has previously signed a letter to North Carolina lawmakers in opposition of their law as well as signed an amicus brief in defense of marriage equality when the Supreme Court was reviewing it.

Patsky said passage of the bill also could deter venture investors looking for startup activity in the state or companies that might look to expand here. He also projected municipal bonds could be hurt as investment falls.

He also questioned the rationale behind the bill and said he recalled seeing misleading campaign ads during an effort in Houston a year and a half ago to overturn the city’s equal rights ordinance that guaranteed protections for transgendered people seeking to use the bathroom where they feel most comfortable.

No comment on this from Abbott or Patrick. I guess telling these folks to “stay out of politics and stick to business and finance” would sound weird even to them. It’s certainly possible that as with that TAB study that Stringer and Patsky et al are overstating the possible effects of SB6, but even if they are there’s no question that the effect we will have will be negative. A lot of investing comes down to perception in how things are and belief about where they are going, and the passage of SB6 would negatively change both of those things about Texas, for no real purpose. That is what this debate has always been about.

Houston’s tourism business

People like to spend money here. In particular, people from Mexico like to spend money here.

Mexicans are the largest group of international tourists who visit Houston – and recently, their numbers have grown. In 2015, Houston received 2.5 million international tourists, 1.8 million of whom came from Mexico.

In 2016, the convention and visitors bureau launched a campaign, “Hola Houston,” to promote the city as a cultural and culinary destination.

“We aimed to increase the number of Mexican tourists to 2 million by 2018,” said Jorge Franz, the bureau’s vice president for tourism, “but we are already well beyond that mark for the year 2016.”

Mexican tourists also spend the most money of all Houston’s visitors. In 2015, on an average two-night trip, each spent an average of $1,253.

Franz said that Mexican tourists love shopping in the Galleria and at the area’s suburban outlet stores.

Many also visit the less- crowded luxury boutiques and designer shops of the upscale River Oaks District shopping complex. Mexican shoppers “typically go after the luxury brands,” says Jennifer Rivera, marketing manager for the River Oaks District. “They are big shoppers of Dolce & Gabbana, big shoppers of Hermés, and huge shoppers of Canali and Dior.”

According to the story, some twenty thousand Mexican nationals were in Houston for the Super Bowl. The story doesn’t give a cumulative annual number for the revenue the city and the greater region derive from all this, but between hotel taxes, rental car taxes, sales taxes, and just a whole lot of stuff being bought, I think we can assume it’s a decent chunk of change. Now ask yourself, what would the effect be if all this activity were to be dramatically scaled back, due to some combination of further restrictions on immigration and the well-heeled travelers of Mexico deciding they just don’t need this crap, as some of them featured in the story say is the case for them? It would not be good. If that happens, you can thank Dear Leader Trump and the people like Dan Patrick (are you paying attention, Texas Association of Business?) who enable him.

Politifact muddles the economic debate over SB6

This doesn’t change anything, but we must fuss about it anyway.


In what appeared to be an attempt at a show of force, Lt. Gov. Dan Patrick on Monday once again attacked claims that the proposed “bathroom bill” is bad for business in Texas.

Flanked by nine Republican senators — including Senate Bill 6 author state Sen. Lois Kolkhorst — Patrick appeared emboldened by a PolitiFact Texas report that identified flaws in some of the numbers used by the Texas Association of Business to sound the alarm on legislation regulating bathroom use for transgender Texans.

While PolitiFact focused only on weaknesses in the report commissioned by the top business lobby group in the state and did not rule out any actual impact in Texas, Patrick insisted that PolitiFact’s analysis undermined the “bogus” report, which claimed that anti-LGBT legislation could cost the state up to $8.5 billion and thousands of jobs.

“Fearmongering is what that report was about,” Patrick told reporters on Tuesday. “There is no evidence whatsoever that the passage of Senate Bill 6 will have any economic impact in Texas.”

[…]

Ahead of Patrick’s news conference, the Texas Association of Business in a statement defended its report and claims about the economic fallout Texas could be setting itself up for if it passed anti-LGBT legislation similar to laws passed in other states.

Calling it “the tip of the potential iceberg for Texas,” the group highlighted reports indicating the NCAA is on the verge of withholding major events from North Carolina for several years — a move that could keep $250 million in “potential economic impact” from the state.

“The Texas Legislature can protect Texas families and businesses from unnecessary, costly legislation and protect our state from the wide-ranging harm that discriminatory legislation delivers,” the statement read.

Politifact didn’t dispute that there would be a negative economic impact on Texas if SB6 passed, they just didn’t think it would be as bad as the high end of the TAB study’s range (which to be sure is what generally got reported, because everyone loves big numbers) indicated. The study had also drawn from states like Indiana and Arizona, which passed (or in the case of Arizona, had vetoed by the Governor) legislation that didn’t go as far as North Carolina’s HB2 did. And as far as North Carolina goes, we’ve seen plenty of negative effect, more than enough to convince anyone not wearing Dan Patrick’s blinders that SB6 would be bad for Texas. The NCAA has certainly made it clear that there’s a price for passing bills like that, a message that was aimed a San Antonio and the 2018 Final Four as much as anyone. Quibble about the size of the number if you want, it still exists and we can all see it coming. And not to put too fine a point on it, but even if there were no bad economic effects to worry about, SB6 is still wrong and it will still hurt people. There’s no changing that. Texas Monthly, the Texas Observer, and the Dallas Observer have more.

Dan Patrick and the wall tax

Hey, you know who’s going to pay for Dear Leader’s wall? You and me and everyone else in the country.

The Trump administration sparked widespread surprise Thursday by announcing it intended to implement a 20 percent tax on Mexican imports to pay for a coming border wall — followed by extreme confusion when it appeared to walk back the statement later that afternoon.

White House Press Secretary Sean Spicer made the initial announcement Thursday afternoon aboard Air Force One, as President Trump returned from a meeting with House Republicans in Philadelphia.

“Right now, our country’s policy is to tax exports and let imports flow freely in, which is ridiculous,” he told reporters. “By [imposing the tax], we can do $10 billion a year and easily pay for the wall just through that mechanism alone. That’s really going to provide the funding.”

Spicer further indicated that the administration has “been in close contact with both houses” of Congress.

“It clearly provides the funding, and does so in a way that the American taxpayer is wholly respected,” he added.

Later on Thursday, however, White House officials sought to characterize the tariff as one of several options to fund the wall, according to multiple news reports.

If passed by Congress, such a move is all but certain to have a dramatic affect on the U.S. economy and particularly in Texas, which imports far more from Mexico than from any other country, according to U.S. Census data.

Hmm, so that would be bad for the Texas economy. What does Dan Patrick think about that?

Many business and political leaders in trade-dependent Texas already have expressed reservations about the proposed import tax proposal itself, even without linking it to the wall.

Gov. Greg Abbott, who has championed increased trade with Texas’ southern neighbor since he became governor a year ago, had no immediate comment on Spicer’s suggestion.

Lt. Gov. Dan Patrick, an outspoken supporter of the wall who served as Trump’s campaign chairman in Texas, told Fox News that he was “not too concerned” about any adverse impact of such a tax. He suggested the proposal could be “the first warning shot across the bow” fired by Trump, and that the tax could end up being something less.

It’s only a little tax. You won’t even notice it. Also, of course Greg Abbott had no comment. I don’t know why anyone bothers to ask any more.

Now here’s a statement I got from the Texas Association of Business about this idea:

The following statement may be attributed to Texas Association of Business President Chris Wallace.

“Texas’ number one trading partner by far is Mexico, and imposing a 20 percent tax on Mexican imports to fund a border wall would hurt the Texas economy. This proposal could mean a loss of jobs and a hit to state tax revenues. We look forward to working with our Texas congressional delegation and our TAB members to address this proposal and I would encourage our state leaders to make the economic ramifications of this proposal known.”

Dear Chris Wallace and TAB: Dan Patrick cares way more about his pet ideological obsessions than he does about your interests. What are you going to do about that? The Rivard Report and RG Ratcliffe have more.

(Patrick has since said in a Facebook comment about his TV appearance discussing the wall tax that he is not concerned about it because it won’t happen, and he doesn’t actually support it. Which isn’t what he said on TV, and doesn’t say that he would oppose it if it does become a thing that might happen. I think that’s pretty wishy-washy, but in the interests of accuracy, there you have it.)

The Super Bowl economic impact calculators have figured out it’s all a game

They’ve adjusted their methods in anticipation of your criticisms.

With less than a month to go before the big day, let no one say that Super Bowl LI — as an economic event, not a football game — has been inadequately forecast.

We’ve already seen two studies on the financial boost that the two-week extravaganza is expected to provide to the Houston area: One from a consulting firm hired to figure out how much hospitality tax revenue the state should provide in advance, and another from a local bank. They ranged pretty widely in their predictions and definitions, making it difficult to know what benefits to expect.

Now comes another study from the Host Committee, this one designed to capture the new money that will flow to Houston as a result of the game and all the programming around it. The headline: The city will net $350 million from the whole affair, which appears to be in the middle of the range of windfalls from Super Bowls past.

Aware of the skepticism surrounding previous in-house analyses, the consulting firm that performed it — Pennsylvania-based Rockport Analytics — emphasizes that it doesn’t count anything that shouldn’t be counted. “One of the reasons why we tend to be hired by events like this is that we produce conservative estimates,” says managing director Kenneth McGill.

As such, the firm took the overall expected amount of Super Bowl spending — based on a budget provided by the Host Committee and data from past Super Bowls — and subtracted out both the typical amount of tourism the city sees during this time of year and the spending that’s likely to leak out to other states and cities. It included the amount the city would be spending on the event, about $5.5 million, as a net gain; city officials have said the Host Committee will reimburse all of those costs.

That got them down from from $450 million to the ultimate $350 million, which is slightly more than the $338 million that Rockport is forecasting for next year’s Super Bowl in Minneapolis — a number that has already come under fire from independent sports finance experts — and the $277.9 million it determined that Indianapolis reaped from hosting the event in 2012.

I don’t really have a point to make, I’m just always entertained by these economic impact estimates. It would be nice if we were systematic about comparing the post-event data to the pre-event projections, so that we could make better projections in the future, but we don’t, and I’m not even sure we could. So take these as I do as mostly for entertainment value, and it’s all good.

Here’s your 2018-19 revenue estimate

It’s pretty mediocre.

Facing sluggish economic forecasts amid low oil prices along with billions in tax revenue already dedicated to the state highway fund, Comptroller Glenn Hegarannounced Monday that lawmakers will have $104.87 billion in state funds at their disposal in crafting the next two-year budget, a 2.7 percent decrease from his estimate ahead of the legislative session two years ago.

Hegar told state lawmakers he expected a “slow to moderate” expansion of the Texas economy. Still, he said, the amount of revenue they will be able to negotiate over has fallen. That’s largely because lawmakers in 2015 moved to dedicate up to $5 billion in sales tax revenue every two years to the state’s highway fund, rather than being spent on other priorities such as schools, health care or reforms to the embattled Texas foster care system.

“We are projecting overall revenue growth,” Hegar said. “Such growth, however, is more than offset” by the demands of the state highway fund and other dedicated funds.

The revenue estimate does not determine the scope of the entire Texas budget. Rather, it sets a limit on the state’s general fund, the portion of the budget that lawmakers have the most control over. The general fund typically makes up about half of the state’s total budget.

Two years ago, Hegar estimated that the Legislature would have $113 billion in state funds, also known as general revenue. Adding in federal funds and other revenue sources, lawmakers would have $221 billion in total for its budget, as well as $11.1 billion in the state’s Rainy Day Fund, he said at the time. Lawmakers ultimately passed a $209.4 billion budget, which included billions in tax cuts.

On Monday, Hegar estimated lawmakers would have $104.87 billion in general revenue, and $224.8 billion in total revenue to write a budget for the 2018-19 biennium which begins in September.

See here for more on Hegar’s 2015 estimate, which would up being a tad bit optimistic, but not too far off. It won’t be surprising if this one is off a bit one way or the other – this is why 2014 Comptroller candidate Mike Collier called for more frequent revenue estimates during his campaign, so the course can be corrected as needed more often – but again I expect this to at least be in the ballpark. Assuming the economy doesn’t crash and burn and/or we don’t have ten percent annual growth under Dear Leader Trump, of course.

There are a lot of ingredients that go into making the budget sausage, and there are various things that can and will be done to avoid doing anything too painful. We could of course just assume this was a temporary dip and take a few bucks out of the Rainy Day Fund to smooth out the curve – that was its original purpose, after all; now it serves as a hole in the back yard into which we bury sacks of cash for no clear reason – but that isn’t going to happen. We do have your local property taxes bolstering the state’s bottom line, so be sure to send a thank you note to the State Supreme Court for that. And as always, remember that the biggest boost to spending in 2015 was tax cuts, but that’s never what the leadership has in mind when it says we need to “cut back” on expenses. We do things one way in this state, and will continue to do them that way until there are different people running the state. The Chron and BurkaBlog have more.

What’s going on with Metro’s ridership numbers?

I have no idea what to make of this.

Houston’s heralded bus system redesign – garnering kudos from local riders and transit supporters around the country – is running into the reality that nothing can boost transit when fewer people are riding to work.

When the Metropolitan Transit Authority revamped its bus system in August 2015, officials said it would boost ridership by 20 percent in two years. However, transit use in Houston has been declining.

In November, fewer people boarded Metro buses, hopped on trains and commuted to work via the park-and-ride system. When all types of transit except service for the elderly and handicapped are considered, Metro handled 13,625 fewer trips daily, a 4.6% decline last month, according to figures released last week. Commuter bus ridership has plunged by more than 10 percent each of the last two months.

Now likely unable to reach their predicted ridership growth, which would have been unprecedented in the history of Houston mass transit, Metro officials concede more refinement is needed to gain riders on buses and trains.

They blame the declining ridership on fewer oil and gas industry jobs in the area and the transition of many jobs away from downtown Houston. Though the job cuts have been evident in the region’s economic outlook for months, the switch to the new bus system last year might have hidden the negative effect of fewer daily commuters.

“What I think we are seeing is the unemployment rate has had a real effect on ridership and it is just now exhibiting in our numbers,” Arthur Smiley, Metro’s chief financial officer, said.

I say I don’t know what to make of this partly because I can’t tell what the numbers actually are. They’re presented in bits and pieces throughout the story, and it’s not always clear to me when the stated declines are in comparison to the previous month, or to last year at the same time. I realize that I’m more number-oriented than most people, but please give me a table or chart with all of the relevant data. Context is everything.

As for the reasons for the decline, the recent slowdown in the local economy, specifically with energy sector jobs, is one possible factor. Others, not mentioned in the story, may include continued low gas prices and possibly a side effect of Uber’s penetration into the market. No one felt confident putting forth a firm idea, and with much of the decline coming on park-and-ride routes and high-volume local routes that didn’t really change in the system redesign, I’d say more study is needed. It was just four months ago that we were celebrating a big increase in the first year of the new local bus system map, so I’d say it’s a little early to panic. Maybe ridership fluctuates for reasons that aren’t always clear. Let’s do some work to figure this out, and then see what if anything we can do about it.

Who is paying for public education

The state is paying less, while local districts are paying more.

The state of Texas will spend a projected $40.5 billion on public education during the current 2016-17 budget period, and when state officials tell you they’re spending more on education, they’re telling the truth.

Not all of the truth, but some of it. Their spending increases haven’t kept up with the burgeoning number of students. In the 2017 fiscal year, the state is planning to spend $19.6 billion, according to the Legislative Budget Board, up 7.4 percent from the amount they spent 10 years earlier.

The average daily attendance in 2017, one way to measure the number of students in public schools, will reach 5.04 million, an increase of 16.8 percent over the 4.3 million in Texas classrooms 10 years earlier.

This isn’t a brainteaser: The population has been rising faster than state spending. Texas is spending more, but not keeping pace.

Local and federal spending increases have covered the difference. Public school districts are on track to spend $26.2 billion in 2017, up 44.2 percent from 2008. Federal spending rose 22.2 percent to $5.1 billion.

On a per-student basis, local spending rose $990.21 over those 10 years, state spending fell $339 and federal spending rose $45.06.

The state is spending more than it was overall, but it’s spending less per pupil.

[…]

Try this exercise. Don’t fool with the overall cost of public education in each of those 10 years — leave that number alone — but keep the state’s overall share of 44.9 percent in place the whole time. State government would have spent $18.6 billion more than it did on public education over the past 10 years. Local school districts paid 44.8 percent of the total in 2008 and are on track to carry 51.5 percent in 2017. Had the burdens remained constant, local school districts would have spent $11.6 billion less over that decade.

For the second session in a row, state Rep. Donna Howard, D-Austin, has pre-filed a proposed constitutional amendment that would require the state to keep its share of public school spending at 50 percent or higher.

Pinch yourself — that would cut $10.3 billion from what the school districts and their property taxpayers are spending in the current budget, but it would cost the state government — fueled by sales and other taxes — the same amount. That’s back-of-the-envelope math, but you get the idea.

If the state agreed, as Howard has proposed, to cover even more of the cost of public education local schools could spend less. They’d be able to lower property taxes by a sizeable, politically significant amount. Legislators would be on the hook for education support they have been foisting off on local school boards.

Wouldn’t that be something? I’m sure you can guess what its odds of passage are, but it’s still worth the effort. This highlights perhaps the main reason why so many people called for the defeat of the recapture referendum last month. The money HISD will have to send to the state won’t go towards education elsewhere, which at least would be a good moral reason for supporting it. It’s an accounting maneuver that gives the state credit for spending on education when it really isn’t doing anything more. And remember, the Supreme Court said this was all fine. Meanwhile, Dan Patrick wants to divert money away from public education to the private school vouchers that he doesn’t want you to call vouchers because that’s an unpopular name. I’ve said it before and I’ll say it again: Nothing will change until we have different people in charge of these things. In the meantime, spare a bit of pity for your school board trustee, and tell your Rep and your Senator to support Rep. Howard’s bill.

On welcoming immigrants

Mayor Turner puts out the welcome mat for a key part of Houston’s community.

Mayor Sylvester Turner

A press conference Monday morning to announce the unveiling of Houston’s Office of New Americans and Immigrant Communities evolved into a denunciation by city officials of President-elect Donald Trump’s rhetoric toward immigrants and refugees.

With portraits of Mahatma Gandhi and Martin Luther King Jr. looking down across the diverse crowd at the Neighborhood Center’s Baker-Ripley Center Monday, Mayor Sylvester Turner pledged to protect citizens against discrimination and to remain a “just and compassionate city.”

“In the wake of a national election, many members of our community are asking whether they will continue to have a place in our great city. They fear for themselves, their children and their communities. We cannot ignore those realities,” Turner said, emphasizing that 1 in 4 Houstonians are foreign born. “The city that existed prior to the election is the same city that exists today.”

Though his exact positions have wavered over the past few months, Trump has called for deporting all immigrants here illegally as well as curbing legal immigration. At one point he also suggested banning all Muslims from entering the United States.

Last week, Turner joined 17 other mayors across the country in urging the president-elect to support the Deferred Action for Childhood Arrivals program, which provides protections to certain immigrants who illegally entered the country as minors. Trump has spoken of rescinding DACA.

The new office, formerly known as the Office of International Communities, will provide guidance and assistance to immigrant and refugee communities in obtaining citizenship and access to services. The rebranding does not come with increased staff or funds, according to city officials.

It will work in conjunction with other organizations, like the Houston Immigration Legal Services Collaborative, in the “Welcoming Houston Task Force,” which will provide recommendations early next year to Turner on gaps in immigrant services.

The Mayor’s press release is here. Immigrants are a big part of Houston, culturally and economically. A quick check at census.gov says that 28.5% of Houston’s population in the 2011-2015 time frame was foreign born. They’re key components in medicine, energy, information technology, restaurants and hospitality, and more. So it makes all kinds of sense to put out an expressly open and welcoming message, especially at a time when neither the state nor incoming federal government is either of those things. And if that puts the city at odds with the state and the feds, well, that’s a fight worth having. A statement by the Texas Organizing Project is beneath the fold, and Stace, the Press, and KUHF have more.

(more…)

More on the cost of a bathroom bill

Whatever one thinks of the Texas Association of Business, you have to hand it to them for their lobbying focus on the great potty issue.

With the legislative session just weeks ahead, the Texas business community is digging in its heels in opposition to Texas Republicans’ anti-LGBT proposals, warning they could have dire consequences on the state’s economy.

Representatives for the Texas Association of Business said Tuesday that Republican efforts to pass a bill to keep transgender people from using the bathroom that aligns with their gender identity and another that would shield religious objectors to same-sex marriage could cost the state between $964 million and $8.5 billion and more than 100,000 jobs. Those figures are part of a new report from the prominent business group.

“The message from the Texas business community is loud and clear,” Chris Wallace, president of the Texas Association of Business, said at a press conference at the Texas Capitol during which he was joined by representatives for ad agency GSD&M, IT company TechNet and SXSW. “Protecting Texas from billions of dollars in losses is simple: Don’t pass unnecessary laws that discriminate against Texans and our visitors.”

Those figures — based on an economic impact study conducted by St. Edward’s University and commissioned by the business group — depict the possible economic fallout in Texas if lawmakers move forward with legislation similar to North Carolina’s so-called bathroom bill and Indiana’s so-called religious freedom law.

[…]

Though the Texas Association of Business and Republicans are regularly legislative comrades, the business group has long warned lawmakers against moving forward with anti-LGBT efforts and it has picked up its lobbying against those proposals as Republican leaders, namely Lt. Gov. Dan Patrick, have vowed to push more extreme measures.

A copy of the report is here. We first heard about it a month ago. Here’s the bullet-point summary from the intro:

In summary, the studies demonstrate that discriminatory legislation could:

  • Result in significant economic losses in Texas’ GDP, with estimates ranging from $964 million to $8.5 billion
  • Result in significant job losses with estimates as high as 185,000 jobs
  • Substantially hamper the state’s ability to attract, recruit and retain top talent, especially among Millennials
  • Drastically impact convention and tourism industry, which has a direct economic impact of $69 billion, generates more than $6 billion in state and local tax revenues, and directly and indirectly supports more than 1.1 million Texas jobs (Economic Development and Tourism, Texas Governor’s Office, 2015)
  • Serve as a catalyst for domestic and global companies to choose other states over Texas to start or expand their business.
  • Alienate large, globally recognized businesses, including Apple, Google, Starbucks, British Petroleum, Marriott, IBM, PayPal and the National Football League, which have opposed this amendment and similar ones
  • Allow for an expansion in discrimination, which is counter to prevailing public opinion and conflicts with corporate policies that prioritize diversity and inclusion in the workplace.

As we know, Dan Patrick does not believe that passing a bathroom bill, which is one of his top priorities for this session, will have any negative effect on Texas. He finds it “ridiculous” and “more than offensive” that anyone would boycott Texas (as they have done in North Carolina) over it, and he says he’d consider losing the 2018 election over passing this bill to be an acceptable risk. He can believe what he wants, but the evidence is right there.

Patrick has shrugged off suggestions that major sporting events would stay away from Texas if his proposal became law. But those fears have been heightened in San Antonio, which is set to host the NCAA Final Four in 2018.

After North Carolina passed its version of a restroom law, the NCAA moved seven college basketball championship games out of the Tar Hell State, the NBA canceled its All Star Game and the Atlantic Coast Conference withdrew its college football championship and woman’s college basketball tournament, along with other events. Large companies such as PayPal and Deutsche Bank also dropped expansion plans in the state.

“I think the evidence is crystal clear that the NCAA will not host anymore championships in Texas if we were to pass a law similar to North Carolina,” said state Sen. José Menéndez, D-San Antonio. “I don’t need anymore proof than seeing what they did in North Carolina. Why would they treat Texas differently? Whey would they give us a special pass?”

I don’t think it’s possible for them to make it any clearer that they wouldn’t. And by the way, there are a lot more events than just the Final Four – the 2016 NCAA Division I Men’s Soccer Championship finals will be right here in Houston, at BBVA Compass Stadium, this Friday and Sunday, possibly for the last time if Patrick gets his way. Which gets me back to the question I keep asking, which is at what point does the TAB take him up on that and work to make Dan Patrick the next Pat McCrory? Because losing an election is the only language Dan Patrick will understand, and the lesson he will learn if TAB rolls over and endorses him as usual in 2018 is that he is not accountable to them, or to anyone. Your windup is great, TAB. Now let’s see your follow-through. The Austin Chronicle has more.

Judge issues injunction against overtime pay change

Because of cours he did.

Millions of low-paid supervisors would have become eligible for overtime pay next week, but a federal judge in Texas blocked that path late Tuesday afternoon, ruling that Congress intended duties, not wages, to determine eligibility for overtime and minimum wage.

U.S. District Judge Amos L. Mazzant, sitting in Sherman, issued an emergency preliminary injunction to stop new overtime rules adopted by the Obama administration from taking effect on Dec. 1 as scheduled. The new rules would have raised the automatic salary threshold for executive, administrative, and professional positions to be eligible for overtime.

Under current rules, white collar workers earning more than $455 a week ($23,660 annually) are not eligible for overtime. The new rules would double that threshold to $921 per week, ($47,892 annually).

The state of Texas and 20 other states requested the injunction after filing suit to prevent enactment of the higher wage thresholds. The states argued they couldn’t afford to pay overtime to employees who were exempt under existing standards. The injunction appears to apply to all employers, including private employers.

[…]

Employment lawyers said that the ruling doesn’t mean that the new rules will get thrown out, but rather stops them from being put into effect while the case is litigated. Stephen Roppolo, a Houston lawyer, said he expects the Labor Department will ask the Fifth Circuit Court of Appeals to step in and overrule the lower court.

“It’s not a done deal,” Roppolo said.

The Labor Department did not immediately respond to a request for comment.

Mazzant noted in his ruling that when Congress enacted the Fair Labor Standards Act in 1938, it did not include a salary threshold. The Labor Department developed a duties test to define which occupations were exempt from overtime. By 1949, the department had incorporated a minimum salary into the formula.

The last time the rules changed was 2004, when white collar workers had to meet three tests to be exempt from overtime: they had to be paid a salary, earn at least $455 per week and perform executive, administrative or professional duties.

The real focus of Congress was on the duties performed, not salary paid, noted Mazzant.

See here for the background, and here for the opinion. You’d think after an election that was supposedly all about economic anxiety and stagnant wages, a judge blocking an effort to increase the pay for millions of people who currently earn modest salaries, due to the relentless efforts of Attorneys General like Ken Paxton, might be a bit of a political issue going forward. Just a thought. The Trib, Kevin Drum, Nancy LeTourneau, and the Current have more.

How much is that bathroom bill worth to you, Danny?

Is it worth $8.5 billion and 185,000 jobs?

The Texas economy stands to lose $8.5 billion and 185,000 jobs if anti-LGBT legislation passes in next year’s session, according to an analysis from the Texas Association of Business, the state’s chamber of commerce.

The TAB analysis is based on actual or projected losses in four states where lawmakers have passed or considered anti-LGBT legislation in recent years — Arizona, Indiana, Louisiana and North Carolina.

TAB determined that anti-LGBT legislation would cost Texas roughly 0.5 percent of its gross domestic product, mostly from decreased travel and tourism. The analysis cites hundreds of millions of dollars worth of potential losses related to events such as the Super Bowl, NCAA championships and Austin’s South By Southwest festival, in addition to reduced investments by major employers including Apple, Google, Marriott, IBM and PayPal.

“We’ve done our homework, and we feel very confident in the numbers,” TAB President Chris Wallace told the Observer. “There will be a significant economic impact in Texas if we continue down this path of legislation that is very much discriminatory. Why go there when we’re one of the top states in which to do business?”

Wallace, who provided a one-page executive summary of the analysis to the Observer, said TAB’s full report will be released in early December.

In September, TAB’s board overwhelmingly approved a resolution opposing anti-LGBT legislation. But the state chamber’s position appeared to have little impact on Lieutenant Governor Dan Patrick, who subsequently reiterated his push for an anti-transgender bathroom bill, one of his top priorities.

A spokesman for Patrick didn’t respond to a request for comment on the TAB analysis.

Last week, the Quorum Report reported that Patrick has been pressuring business leaders to get on board with an anti-trans bathroom bill, allegedly telling them, “You’re either with us or against us.” Because they must work with Patrick on other issues affecting their bottom lines, some business leaders may be reluctant to defy him by publicly opposing an anti-trans bathroom bill.

See here and here for some background. I think we know that Dan Partick neither believes that passing an anti-LGBT bill will have any negative effect on Texas nor cares if he’s wrong. So this all comes down once again to the question I’ve been asking these business types every time one of these stories appears. Are you going to keep rolling over for Dan Patrick even though he does all these things that are harmful to your interests, or are you going to grow a backbone and stand up to him? Will you meekly support him after he pisses on your agenda because you fear him, or will you work to defeat him and elect someone who actually does care about the things you say you care about, even at the risk of making him mad at you? It’s totally your choice.

East End former KBR site sold again

I’d forgotten all about this.

When a sprawling tract of land lining Buffalo Bayou east of downtown hit the market three years ago, some of Houston’s most prominent observers of urban development put forth ideas about what could be done with the 136-acre site boasting both water and skyscraper views.

Visions for the property included repositioning existing buildings as cutting-edge workplaces, adding townhomes and apartments along tree-shaded streets where trolleys could shuttle people to and from downtown, and creating spots where Houstonians could rent bikes and take canoes into the bayou.

Now, with the recent sale of the property, some of those visions may start to take shape – though they could be years away.

An affiliate of Houston-based Midway, the company behind CityCentre, GreenStreet and other local mixed-use developments purchased the site in May, property records show.

The seller, William Harrison, a wealthy Houstonian with business in energy and real estate, bought it in late 2012 from KBR. The engineering and construction company had owned the onetime office and industrial complex since 1919, when the company was Brown & Root. Most of the buildings there have been demolished.

[…]

Anne Olson, president of the Buffalo Bayou Partnership, lauded Midway for its focus on park space, including a project the company is developing in the Upper Kirby neighborhood next to a park that’s been around for more than 60 years.

The partnership owns an easement on the property that will allow it to expand its hike and bike trail system through it.

“It’s been a coveted spot for some time just because of its size,” Olson said. “I don’t know if there’s a site that big in the inner city.”

See here and here for the background. People were excited when the property was sold in 2012, then it continued to sit there undeveloped for almost four more years before being sold again. Maybe this time will be different, though with the current state of the local economy and the housing market, it’s hard to imagine anything happening in the short term. Swamplot and The Urban Edge have more.

Our bioscience future

Looking bright.

Biotechnology continues to grow in Texas, contributing to the state’s overall economy by adding jobs, making strides in research and innovation and last year attracting $1 billion in federal funding for research, a new report on business development from a biotechnology trade association found.

As the Texas economy struggles under the weight of an oil and gas industry downturn, the biosciences of medical research, treatment innovation and pharmaceutical development are seen as a bright light that stands to soon glow brighter.

The Texas bioscience industry reported 81,000 jobs in 2014 across 4,865 businesses, which translates to 1 percent growth since 2012, according to a report released [recently] by the Biotechnology Innovation Organization, the national trade association, which compiled the study along with Teconomy Partners to measure growth over previous years.

The findings were made public in San Francisco at the organization’s annual convention, which attracts 15,000 biotechnology and pharmaceutical professionals from around the world.

“Texas is one of the top-tier states in the size of its bioscience and biomedical research and innovation base,” the report concluded.

[…]

In that time the state has set its sights on becoming a true competitor with the more established institutions of research and pharmaceuticals on the East and West coasts. “The third coast” has become a popular rallying cry for those working to turn Texas in general and Houston in particular into a bio-science destination.

“Houston is becoming a major player not just from a research perspective but also in its clinical prowess,” said Melinda Richter, head of Johnson & Johnson Innovation JLABS.

JLABS opened a state-of-the-art, 34,000-square-foot business incubator not far from the Texas Medical Center’s main campus in March. The project offers laboratory space, equipment and guidance for biotechnology and life science startups in their march toward commercialization.

The luring of a JLABS facility was seen as a coup not only for the innovation expected to blossom there but also for bragging rights.

“That is huge,” Kowalski said of the opening of JLABS @ TMC. “They don’t just go anywhere.”

Nationally, biotechnology exploded in the early 2000s but slowed during the recession years. The report says the industry is now regaining lost ground.

In 2014, the industry employed 1.66 million people at more than 77,000 businesses across the country, the report found. Wages continue to be robust with a $95,000 average annual salary.

You can find a copy of the report here. This is all to the good, though we’re a ways away from being able to mitigate the effects of the energy industry slowdown. Imagine how much better things could be if our state leadership wasn’t so relentlessly hostile to science, too. Until that time, we’ll take the growth we can get.

Council unanimously passes Turner’s first budget

Good job.

Mayor Sylvester Turner

Mayor Sylvester Turner

Mayor Sylvester Turner achieved his goal of securing unanimous passage of his first general fund budget Wednesday morning, a month ahead of the typical schedule and after an unusually brief and uncontentious discussion of council members’ proposed changes.

The $2.3 billion general fund budget, which pays for most basic city services with revenues from taxes and fees, represents only the second budget cut for Houston in two decades. The first came after the 2008 nationwide financial crisis.

“It’s not my budget, it’s our budget,” Turner told City Council. “There are fewer than 20 amendments today, which I think speaks to the collaborative nature of the partnership we have. I want to thank you for the trust you’ve placed in me.”

[…]

Turner’s budget proposal in general , which spends $82 million less than was budgeted in the current fiscal year, despite an additional $27 million for employee raises and an increase of $29 million in pension payments, cuts 54 vacant positions and includes roughly 40 layoffs.

The document pulls $10 million from reserves, makes $56 million in permanent changes, mainly cuts within departments, and relies on $94 million in one-time fixes to bridge the $160 million gap the city had faced between its revenues and expenses.

The Mayor’s press release is here, and a longer version of the Chron story is here. This is the “easy” budget, in the sense that it doesn’t yet do anything related to pensions, and was able to use a number of one-time items to help boost revenue and mitigate the need for deeper cuts. Next year will be harder, especially if sales tax revenue continue to sag. The relative ease and widespread harmony with which this budget was passed gives Turner some momentum and a fair amount of political capital to deal with that budget as it comes. The Press has more.

The state is starting to feel the squeeze

Things are tough all over.

BagOfMoney

The state is facing big problems affecting vulnerable populations that will take significant money to fix at the same time that a slump in the energy industry is chipping into its revenues, House Speaker Joe Straus warned Tuesday.

“Writing a balanced and disciplined budget that appropriately funds our top priorities is going to be a significant challenge,” Straus said in a letter to House budget-writers, expressing confidence they are up to the challenge.

“This is not a theoretical exercise, but rather a task that affects children, taxpayers, and our state’s future,” he wrote.

Oil prices that stood at close to $60 a barrel when the Legislature adjourned last year are averaging “closer to $37 a barrel,” Straus wrote. And the state sales tax has marked five monthly declines.

Texas Comptroller Glenn Hegar last year reduced his estimate of anticipated tax revenue for the current budget period by billions of dollars, while still leaving more than enough money for the state to pay its obligations.

Even before this week’s costly flooding, lawmakers were facing budget challenges such as addressing a foster care system in crisis, Straus wrote. A federal judge has ruled that the system violates the rights of children who most often “leave state custody more damaged than when they entered.”

The public school funding system also is under court challenge. A state district judge already has ruled it unconstitutional, suggesting that a fix could cost up to $11 billion. The state has appealed the case to the Texas Supreme Court, which could rule this year.

In addition, Straus said, the program providing health-care benefits to retired teachers is in need of a long-term solution.

Those challenges will require “significant financial resources,” wrote Straus, R-San Antonio, and they alone would pose a challenge for lawmakers who return in regular session in January 2017.

[…]

In addition to looking at state program needs, leaders including [Lt. Gov. Dan] Patrick are setting the stage for additional tax relief in the next legislative session. Sen. Paul Bettencourt, a Houston Republican named by Patrick to head the Select Committee on Property Tax Reform and Relief, said there will be room for reducing taxes and that zero-based budgeting, in which all spending items must be justified, will help accomplish that goal.

Of course there’s room for property tax reductions. There’s always room for property tax reductions. We can do those other things with whatever’s left. Wafer-thin mint, anyone?

I don’t know what the Lege will do about this next year – who knows, the price of oil may go back up and we’ll all have forgotten any of this happened by then – but I do know how I’d be planning to run a campaign in 2018. The Republicans running this state are all crooks or crook-coddlers. They busted the budget giving tax breaks to big corporations, while the rest of us get standardized tests, jam-packed highways, a foster care system that kills kids, and no solutions from state leadership. They’ve been in complete control for 15 years. It’s time for a change.

Maybe that would work and maybe it wouldn’t. I doubt it could be any worse than what we’ve done before, and who knows? Maybe the business community will finally have had enough by then, especially if the Lege goes all North Carolina on gays and all Trump on immigration. Democrats would still need good candidates running on a whole lot of faith, the money to get that message out, and some clue how to boost turnout past the pathetic 1.7 million in off years level we’ve been stuck at. I can dream, can’t I? Trail Blazers has more.

Turner announces his budget

From the inbox:

Mayor Sylvester Turner

Mayor Sylvester Turner

Utilizing a shared sacrifice approach, Mayor Sylvester Turner today unveiled a proposed Fiscal Year 2017 General Fund budget that eliminates a projected $160 million shortfall that was the result of cost increases, voter imposed revenue limitations, a broken appraisal system and the economic downturn. The budget totals $2.3 billion, which is about $82 million less in spending than the current FY2016 appropriation. The decrease was accomplished while still meeting $60 million of contractual and mandated cost increases the City is forced to cover in FY2017. The mayor is unveiling his preliminary budget plan more than a month ahead of the normal schedule and has requested accelerated City Council approval in an effort to send a positive message regarding City budget management.

“This was the largest fiscal challenge the City has faced since before the Great Recession,” said Mayor Turner. “By bringing all parties to the table to engage in shared sacrifice, we have closed the budget gap and started addressing the long-standing structural imbalance between available revenues and spending. Each City department, the employee unions, the Tax Increment Reinvestment Zones, City Council and various other parties have worked together to identify cost savings and efficiencies while preserving a healthy fund balance, minimizing employee layoffs and maintaining the City services our residents rely on and deserve.”

Due to an arrangement negotiated by the mayor, the City’s tax increment reinvestment zones will send $19.6 million back to the City to help cover increased operating costs citywide. The rest of the budget gap was closed utilizing a combination of savings from debt restructuring, spending reductions, revenue from anticipated land sales and a small contribution from the City’s fund balance. Even with this fund balance contribution, the City’s savings account will remain well above the threshold necessary to satisfy the credit rating agencies.

The budget includes the elimination of 54 vacant positions and 30 to 40 layoffs, most of which the mayor hopes to accomplish through attrition. There are no significant reductions to park and library operations, which have been hit hard in the past and there will be no layoffs of police officers or fire fighters. There is funding included for an additional police cadet class, for a total of five classes and the mayor continues to look for ways to streamline operations to get more officers back on the street.

The budget was balanced using both recurring and non-recurring initiatives. If non-recurring items had been taken off the table, there would have been drastic cuts in City services and another 1,235 City employees would have lost their jobs.

The recurring initiatives mark the start of institutionalizing a new way of running City government. The elimination of redundancies and increased efficiency in operations has generated $36.2 million in recurring annual savings. In addition, the TIRZs will continue to contribute at least $19.6 million in subsequent years. Yet to come is a new approach for the City’s pension liabilities. Productive discussions are underway with stakeholders and I am committed to having an agreement ready to take to the legislature by the end of this year.

“I strongly urge City Council to resist the urge to tinker with this budget,” said Turner. “Even one small change will upset the delicate balance we’ve achieved as a result of shared sacrifice and put the City at risk for a credit rating downgrade. This plan prepares us for the additional fiscal challenges anticipated in FY18 while also improving public safety, increasing employment opportunities and meeting the critical needs of the less fortunate in our city.”

City Council is scheduled to vote on the budget May 25, 2016, nearly a month ahead of last year. The new fiscal year begins July 1, 2016.

Details are here, and the Chron story on the budget is here. I confess, I’ve only scanned the details so far – sorry, but it was a long week, and it’s been a busy weekend. I am sure there will be plenty of opportunity to discuss the details between now and May 25. Have a look for yourself and feel free to tell us what you think.

Have I mentioned lately that the revenue cap is stupid public policy?

Because it is.

BagOfMoney

Sales taxes are Houston’s second-largest source of revenue for the general fund, which pays for most core services.

Just as concerning for city officials, however, was more news about the city’s largest general fund revenue source: property taxes.

Mayor Sylvester Turner, as he did in February, criticized what he said is an unjust and inequitable system that lets commercial property owners abuse legal loopholes to successfully challenge their property appraisals and pull millions out of local governments’ budgets.

As of February, the hole created by those tax lawsuits was to be a projected $16 million for the current fiscal year, which ends June 30. By Wednesday, Turner and his finance director, Kelly Dowe, said that projection had risen to more than $32 million.

Council cut the property tax rate last fall to ensure the city would not collect more property tax revenue than is allowed under the city’s decade-old, voter-approved revenue cap, which limits growth in property tax collections to 4.5 percent or the combined rates of population growth and inflation, whichever is lower.

Companies’ successful lawsuits are pushing tax collections below the cap, however, with no way to adjust the rate back up to fill that hole.

“It’s a double hit. Last year you all lowered the tax rate based on the revenue cap. Had we known then we were going to be down another $32 million, I don’t think you would have lowered it that low. You cannot budget that way,” Turner said. “I will again ask the Legislature to remedy this situation. Taxes from hard-working homeowners should not effectively subsidize wealthy commercial property owners.”

But hey, look on the bright side: The system is working exactly as designed.

Final Four weekend was pretty good for Houston

We’ll take it.

Beyond the basketball court, the Houston economy appears to be the big winner of the Final Four.

Across the city, several restaurants, bars and hotels reported big boosts in customers and cash flow, as an estimated 70,000 out-of-town basketball fans arrived for the NCAA men’s basketball championship. Organizers say those fans could spend $150 million in a city that could use a lift as a prolonged oil slump persists.

“I feel like it’s exceeded expectations,” said Rachel Quan, vice president of external operations for the Houston Final Four Local Organizing Committee.

Many local officials and business leaders said they view the Final Four as something of a test-run for next year’s Super Bowl. The city is sprucing up to accommodate the thousands of expected visitors with a slew of development projects – from road improvements around NRG Stadium and Hobby Airport to building the Marriott Marquis that will connect with the George R. Brown Convention Center.

The benefits of hosting major sporting events -weighing costs and crowds versus the visitor spending and promotion – have long been debated. At times, the city struggled over the weekend to accommodate the swarms of Final Four visitors. Concerts at Discovery Green in downtown were so busy that police were forced to turn people away, leading some to complain of poor planning.

The Final Four alone might not create a wave of economic growth, but is the culmination of events like the Super Bowl and the annual Offshore Technology Conference next month that have the greatest potential impact, said Barton Smith, professor emeritus of economics at the University of Houston.

“Collectively, it can be a very important part of the Houston economy,” he said.

I’ve made plenty of fun of economic impact projections for sporting events, but this at least is talking about something that has already happened, and whatever you think about those projections, it’s a different matter when a business like Phoenicia reports a big increase in sales during the period in question. As always, you still have to be careful about accepting numbers like these on their face, as some folks might have stayed home instead of going out or otherwise not spent money that they would have if there hadn’t been a big event crowding the streets and clogging up traffic. We also don’t know how much the city had to spend on maintenance, overtime, cleanup, and what have you – that figure is never taken into account in these stories. But overall it seems that local businesses got a boost from the weekend’s activities, and that’s always a good thing. Let’s hope we get more of the same from next year’s Super Bowl.

Lawsuits and low oil prices

Both are threatening the next Texas budget.

BagOfMoney

Last week, lawyers for the state of Texas got the latest in a string of bad legal news.

A lawsuit challenging the state’s foster care system as inhumane appeared to gain steam when an appeals court rejected the state’s request to stop the appointment of two “special masters” to recommend reforms.

The overhauls that have been discussed so far would be pricey to implement — as much as $100 million per year, according to rough estimates from the state comptroller’s office. But they actually are on the lower end of all the extraordinary legal expenses the state is facing at a time when stubbornly low oil prices are simultaneously threatening to blunt its coffers.

Three other lawsuits against the state — two of them pending before the Texas Supreme Court, with rulings expected soon — could cost the state billions if it ends up on the losing side. Experts say the state may have the cash to cover one of them in a single budget cycle, but probably not any more than that — especially if low oil prices persist, dampening the state’s stream of tax revenue. That could mean budget cuts when lawmakers meet for the 2017 session, at least if the Republican-dominated Legislature remains steadfast in its refusal to tap the state’s nearly $10 billion Rainy Day Fund.

Two of those three lawsuits, both tax cases, could cost the state a combined $10.4 billion in tax refunds and up to $2 billion in collections per year beyond that, according to the comptroller’s office, which is closely monitoring them.

Potential cost estimates do not exist for the last case — a high-profile challenge to the state’s public education funding system — but past school finance rulings have cost the state billions.

Such sums would handily eclipse the state’s $4.2 billion projected surplus, which could itself dwindle if oil prices remain low and further blunt tax collections. (Comptroller Glenn Hegar has already lowered projections once.)

“Any of those by themselves are a huge hit,” said Dale Craymer, president of the business-backed Texas Taxpayers and Research Association. “But if you start losing two or three of those issues then, yeah, it’s much more questionable that the state’s general revenue reserves are sufficient to cover that.”

See here and here for some background. There’s not much that can be done about the price of oil, though after years of living it up, and of politicians claiming credit for all that robustness, I doubt there’s much sympathy out there for us. The rest are the result of policy and/or legislative decisions, some of which may well bite us in the bottom line. I’m rooting for the Supreme Court to stick it hard to the Lege on school finance, but the other cases I’d rather see the state win. As much political hay as there is to be made in a chaotic situation, there’s nothing good from a public policy perspective on those cases, and I have little faith the Lege would do a good job cleaning up the mess. But on school finance, all bets ought to be off. We’ll see how it goes.