The Committee on House Appropriations met to take up several interim charges. This report focuses on testimony related to the charge addressing the need to identify state resources to respond to Harvey relief and recovery efforts as well as the use of federal funds and opportunities to maximize those funds.

This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. This report is not a verbatim transcript of the hearing; it is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.

Hurricane Harvey Interim Charge

 

Ed Emmett, Harris County Judge

  • Since 2007 has been part of numerous events
  • Argues it important to follow procedures
  • Need to know why dollar amounts are received, very aware they get media attention but there are others out there that need attention – important dollars flow through counties
  • In Harris County have ability to come up with matching funds on their own where others don’t
  • Proposes a new title or section in appropriations for disaster relief – go back and review occurrences over the interim so appropriations committee can take it up early in the process
    • Harris County Flood Control District suffered damage of existing infrastructure
    • San Jacinto River – aftermath of flooding so river is silted up
    • Third reservoir option – should be a state project that Appropriations could look like as past of the natural disaster section

Judge Robert Hebert, Fort Bend County    

  • Many open applications and very little funding, must be very specific when speaking of grant funding
  • Provided attachments to members with overall funding request and each category in Fort Bend County
  • Request $1.6 billion and to date received just over $5 million
  • Disjointed shift during emergency to a federal recovery operation leaves a void in communication
  • Need to fund skilled recovery experts to help mitigate suffering while FEMA ramps up
  • Need to have something at state level to smooth transition out, people who care about the victims but go for weeks and months waiting for the ramp up to complete
  • Need more of states rapid response attitude, network of social services similar to Fort Bend Recovery team
  • Applaud GLO attempts to manage HUD funding which has produced little result in the county
  • Harvey has been a learning experience that should enable a faster HUD response in the future
  • Received permission to apply for some projects through TDEM – have 14 projects totaling about $83 million and working to submit grant applications
  • Uncertainty comes in to play regarding awarding of some of the funds
  • CDBG funding – still waiting to see how it will be distributed
    • Money may be of little benefit to their flood victims
  • Overall system of delivering the funds has been frustrating
  • Judge Emmett mentioned local match – but they have no idea how much the local match would be because they don’t know what projects they would be eligible for and until then they are flying blind
  • Anticipate a soon completed watershed study ($3 million) they undertook on their own think overall need is $390 million but may find they need around $250 million request they can put before the voters

Judge Bob Blaschke, Refugio County Judge

  • Thankful there was no loss of life
  • Argues they have a fragile local economy – will need collective will to rebuild
  • $100 million ($56 million public assistance) of damage
  • Had 2,700 residents apply for assistance but only just over 1k were approved – notes plane is being built as it is flow between FEMA and HUD
  • Reufgio does not have the dollars to match at 10%, understands there is a global match policy that is handled at the state level and questions why they have not heard about this policy
  • Recommends that TDEM have more vested interest, training local leaders is not sustainable and many cannot afford to employ certain skill sets, TDEM must be funded to support
  • EMPG Application process favors larger counties and is annual application – suggest allocating state match or emergency management coordinator stipend
  • Suggest TDEM formalize strike team
  • FEMA and GLO are designing the plane as it is being flown
  • Would like to begin preservation of 101 year old Courthouse ($26 million) but Texas Historical grant dollars will not come close, and public buildings not considered infrastructure but points to previous waivers he would like to see get started
  • Wants to harden buildings for safety of first responders
  • Have started strategic planning and adopting ordinances and codes to make them more resilient

Questions of Panel

  • Roberts – agrees federal government has failed to date due to bureaucracy, need help cutting red tape, regarding short term needs what if they took a certain sum and established a line of credit for small areas/counties/cities to be able to access immediately if they can secure it in some way
    • Emmett – Something that counties and cities have asked for all over the state and makes great sense
    • Emmett – notes many have written the state to ask for match dollars from the state, the reply has been why not use CDBG funds, the issue is 70% for CDBG has to go to low or moderate income so many may not qualify
    • Points out HUD language that says grantees should contribute through recovery from reserve or rainy-day funds
    • Blaschke – can’t afford loans, so need access to loans that can be forgiven
    • Hebert – if they could access funds they could start addressing things immediately
  • Walle – argues there is a divorce from reality at all levels, many individuals from the storm are just meandering through the system with no support system, recounts a Democratic event where many members got a briefing and saw the areas hit by Harvey
  • Walle – non-profit work can only go so far, thinks we need to overhaul our disaster response and financial responsibility finds it mind boggling that FEMA and GLO are building the plane as they are flying it
  • Walle – asked about Emmett’s idea to start up a disaster relief fund, not sure where those dollars would come from (TCEQ, clean water, RDF)
    • Emmett – notes immediately after Harvey saw piles of debris/people’s lives and they have not been put back together yet so need:
      • Long term case management has got to be focused on by the state (currently being handled by groups not in the area) as an aside says how those contracts are being awarded needs to be looked into
      • Needs a disaster section in the budget for the state, rather than piecemeal every time it comes along the legislature has a process for recovery
    • Hebert – need better conversation at all levels, gives two examples of this
      • Given funds to clean up reservoir and creek so they started the work of removing the silt, Corps came out and shut them down because some of the silt was falling out during the process and it was a violation of federal law so now waiting for a permit
      • Private land above 200ft of flood area so they were not required to have flood insurance so when they applied to FEMA for assistance they were told they did not qualify because they should have had insurance
      • These conflicts illustrate disconnects, so in favor of anything state government can do to make monies more quickly available to local governments
      • Good therapy for us to work on silt, etc but right now nothing is happening
    • Walle – cost ratios discussion, some communities don’t qualify for certain resources because certain homes are not seen as valuable as other homes
      • Benefit cost ratio federal government put in many years ago – in some ways are logical but in Harris County and throughout the state just want to move people out of harms way regardless of what the home is worth… which is why bond in Harris County may be over $2 million since they need to use local dollars to buy-out homes
      • Wish government would go back and look at it
    • Roberts – asked about means testing, still believes there is $500 million in Ike funding that has not been distributed based upon the means testing
      • Emmett – why don’t we just look at number of people removed from harms way, one of the problems that we all saw right after Harvey because so many areas flooded that pe
    • Walle – knows there is open tension about being able to utilizes federal resources by going straight to county versus state agency distribution
      • Hebert – would personally prefer a state agency determine the distribution of funds, only gotten $5 million in cash and $50 odd million in Awards to date but details on how to address next emergency, Harvey is done
      • Hebert – we need a champion for cities and counties in Texas that are impacted by these emergencies (would prefer to see it at a state level), need to understand what the rules are – can’t write rulebook as we are working on it
      • Emmett – once percentage is determined, they think direct funding makes a lot of sense than them going through bureaucracy of GLO or state agency
      • Blaschke – need assistance from someone with certain skill set and that disaster funding ought to be a part of the sustainable plan in the future

John Sharp, Rebulid Texas Commission

  • Reviews structure of addressing questions
  • Over 7k already addressed and 6k remain today and they are working on them
  • First phase focused on FEMA, TDEM and working with other state agencies involved in the response
    • Points out Nim Kidd knows more about this issue than anyone in state or federal government
  • They help with paperwork as well
  • Final phase of work is preparing a citizen’s report, what happened, responses, what was lacking, involving all stakeholders
    • Have also convened three workshops of various individuals/groups, next one is next week
    • Have also reached out to those impacted such as oil and gas, insurance, public utility companies, etc
    • Housing and CDBG also another phase and group working on this but will prepare a report on the entire spectrum with recommendations
  • Thinks there ought to be a training process where someone knows everything there is to no about how to do emergency response – not getting money from federal government but how to do deal with various federal agencies
    • Does not see an appropriation on this but use a certification process with existing resources
  • Still in midst of policy development but will make a report before legislature meets for 86th
  • Notes they have used rainy day funds: DSNAP $1billion, School costs for making districts whole with ADA could be as much as $1.5 billion, TxDOT about $70 million on debris clean up and assumes that would be a reimbursement so have spent some of RDF or of some fund to reimburse
  • FEMA has $680 million distributed for debris hauling, put $1.6 billion of individual assistance including SMA and national flood program
  • A lot of issues have to deal with HUD
    • Reviews time line – HUD took a month to publish guidelines, GLO sent in plan and now HUD has 45 days to determine distribution and not one penny has hit the streets of Texas yet
    • Would like to see exceptions for disasters in getting access to funding
  • Giddings – we are smart enough to figure out how to help people and prevent fraud, agrees with thought they don’t want fraud but that should not be the hold up
  • Giddings – Concern about 1600 people that are still in hotels – who, where and what’s the plan
    • Main concern was that people would be forcibly removed from the hotels but FEMA has given verbal assurance on continued access
  • Perez – to what date have they been extended, is anything being done to get those numbers done
    • May 31st but hoping it will be extended again, this is the history of them waiting until the last minute and then extending
    • A million different ways that people left the system, hopefully when housing money starts flowing… about half of the people who applied for insurance claims were turned down which is true but a bit misleading in that in order to access FEMA money they must be turned down by their insurance company
  • Perez – asked about plan to dwindle down number on vouchers
    • Billy Hamilton – thinks FEMA wants to wind down, it is supposed to be transitional housing
  • Walle – tension between what insurance and FEMA will, can and want to pay
    • Looking at that, gives example of using helicopters to drop feed to farm animals
    • Regarding insurance, one study they are looking at is what is happening to flood plain and looking at the areas
  • Walle – Houston was created because of another huge natural disaster that wiped out Galveston
  • Zerwas – create a fund that is readily available to natural disasters, but you say we have spend the RDF, but asked if he would support having a pot of money available for disasters
    • If you trust the Federal government, if you are absolutely convinced you will be reimbursed for the funds spent
  • Zerwas – if county decides to go forward to do mitigating things that need to be done but Corps of engineers say that is not allowed (earlier witnesses testimony) but it is a gross example that you can’t win
    • Thinks it will help if we can put all of this under one umbrella
  • Roberts – asked about federal Congress discussions
    • Says John Cornyn has been an angel, a bull dog on funding

Glen Hegar, Texas Comptroller

  • Points to Fiscal Notes publication reporting on some of the economic impacts
    • Project loss of $3.8 billion but results in net gain of $800 million over a few years
    • Storm did impact state revenue collections and in months following storm saw some spikes such as motor vehicle sales tax collections, hotel sales tax collection but much of revenue bump has likely shifted revenue bump in time
    • So increase revenue may only come out of future revenue projections
  • Working with LBB on tracking and analysis
  • Zerwas – can only access RDF by act of legislature?
    • Not aware of any changes to statute to take funds out of ESF
    • During interim the LBB working in conjunction with the Governor’s office can move around appropriated funds and has done so
  • Zerwas – as far as excess revenue last session, but at one point had said maybe $100 million
    • At one point said $94 million, but if look at sales tax revenues have been about 10% higher, not sure that increase will continue in the summer
    • We will probably do a new cash flow analysis and do new revenue estimate at that time – could have $1 billion more than they said in the October certification but that is months ahead – probably still looking at $3.5 billion supplemental appropriation
    • Trend is more revenues but can’t quiet close gap on entirety and as soon as he says a number the numbers will change

Chuck Finney, Texas Division of Emergency Management (TDEM)

  • Reviews statistics on applications, awards and funding released and distributed
  • $13.6 billion is cost for Harvey according to FEMA
  • Davis – do these numbers include or affect the auditing process – hopefully working on applications will ensure they are good?
  • Davis – who does audits?
    • We audit mostly, FEMA sends in own auditors in
  • Davis – is state still closing out audits in wake of Hurricane Ike, is that normal?
    • Unfortunately, it is a normal thing
  • Davis – can you provide an estimate on how long it will take to close out the Harvey contracts?
    • Hesitant to give estimates but it will be years
  • Davis – a place where public can go to see all Harvey related contracts, are you aware of status?
    • Not aware of project, can find out and get back to you
  • Longoria – what are you doing at this point?
    • Staff of recovery folks work at local jurisdiction, focus on public assistance and individuals assistance mostly public assistance
    • Have a number of people from different agencies working with local jurisdictions
    • Try to be aware of number of funds available
  • Longoria – where is outreach for locals, nothing seems organized or streamline, what can be done
    • Thinks Rebuild Texas is a best practice that can be used
    • Training program for local jurisdictions on disaster finance, its not emergency response but disaster finance

Pete Phillips, General Land Office

  • First in history of federal disaster of FEMA partnering with state agency – developing 5 housing programs and one sheltering solution
  • GLO worked with local jurisdictions to determine which options met the community’s need
  • Hoping this new model will expedite response in future years, goal to provide flexible and expedited options
    • Galveston waste water treatment facility example
  • Anticipate a federal register for the last $600k to be released in the next few days so they can start allocating that money to communities
  • Roberts – dollars come from every taxpayer that pays federal taxes, but homeowners making over a certain amount who did not have flood coverage will not be eligible even if there is a residual amount of dollars
    • Yes
    • Yes, they will not have access to those funds and it is a rule by HUD
    • Agrees with Roberts that the rule could be changed by HUD to change access
    • They agree the rule is unfair and they are working to get the rule changed
    • Roberts – who can we direct correspondence to in order for the committee send a letter to request rule be modified if appropriate
  • Walle – quote on FEMA and GLO building the plane as it is being flown, can you address how local communities are feeling they are not being taken care of
    • Didn’t take days off, numerous trips, went from weekly calls to bi-monthly calls as participation waned which also included elected individuals
    • Obtained software so they can have a HUB enabling real time collaboration
  • Walle – there is a serious disconnect and some issues need to be addressed yesterday, huge disconnect locally, at this point more angry than anything else
  • Zerwas – talking about a number of things that are frustrating, goes back to silt example
  • Phelan – expands on examples, housing issues – can’t hook up electricity because they needed to make sure the property was placed properly so they have to wait several weeks, Corps of Engineers causing delays
    • Phelan – not even worth going through FEMA hoops for $4,500, people in his community didn’t have time for it so they went around it (sold extra car, took extra job, etc)
  • Phelan – don’t see anything changing until people in Washington pay attention, unbelievable Texas elected officials would vote against a bill that would help Texans – but thanks the agency for work they are doing
    • Speaks to dedication of those working in the agency
  • Phelan – is anyone at state level educating on flood insurance?
    • Commissioner drafting a letter that is scheduled to go out next week
  • Bonnen – there is no reason to negotiate housing programs in the aftermath of the storms, that should be determined now, would like to get aggressive so we negotiate in advance of what the program and approved contractors look like, we can aggressively pursue this avenue
    • Would ideally request that FEMA give a grant and walk away and have look at previous program and made corrections and given to federal government – includes best housing options in the state of Texas such as:
      • Direct lease option limited to facilities that were not available to the public so would like to use that for any dwelling of multiple family program
      • Preps Cap is unreasonable and would like FEMA to increase value
      • Modifications on permanent home construction so they can get people back in own homes
    • Bonnen – will they be agreed to in advance
    • They are informing FEMA of this now
  • Perez – request mandatory 30 day wait language included in letter
    • Yes
  • Phelan – are you familiar with who is using the vouchers right now? What percent of that is homeless?
    • Yes
    • Difficult to determine with information being provided
  • Under long term recovery program have three targeted programs: home owner (can request funding to cover out of pocket expenses), homeless prevention and state run multi family housing program (more difficult program to execute and will be run by the state)
  • Leveraging lessons learned, employees are staying with agency so a very experienced staff in Texas
  • Perez – PREPS program question, approved contractors list available?
    • Yes there is a list – 36 vendors approved – use top 16 on list
  • Davis – already reports or allegations that contractors are using substandard materials, etc what is GLO doing in regards to bad actors preying upon people?
    • Personally they go out and do surprise spot inspections
    • Anytime they find a bad actor they bring them to task and make them go fix items
  • Davis – this is probably going to be another major issue we will see
    • Encourages members to pass on complaints if they hear any of them
    • They will take every complaint seriously and deal with every complaint within 24 hours

Mike Morath, Texas Education Agency

  • Remarks on Santa Fe – working aggressively to determine what can be done to improve security, Governor Roundtable discussions has been extraordinarily fruitful, commends Santa Fe ISD police department
  • Quickly offers an overview of the slides presented to the committee
  • Already committed to ADA hold harmless ($100 million down from earlier best guess of $300 million)
  • Facility repair – $90 million that still needs to be covered either locally or by the state – color coding on numbers on what state may need to pay for example recapture offset may be an option so it could be $60 million or those that facility repairs exceed recapture amounts and this could bleed over into the next biennium
  • Gonzalez – concerned on differences between Ch 41 and 42s,
    • There is one potentially statutory complication – special education cameras have highest priority
    • So request on special education cameras draws down funds first
    • So legislature would need to make a specific appropriation
  • Weights – as listed on the handouts, all green portions is money that will definitely be spent and all orange portions subject to legislative action
  • M&O finance discussion – provides some history on M&O including pointing out they always use last year local property tax collections, and there are those areas that reappraised versus those that did not, this will be biggest supplemental appropriations and will be hit with another
  • $300 million in the current fiscal year – would require a specific action on legislature if they want to make the district whole
  • Those districts that reappraised will get about $150 million from the state (notes it is an estimate but decent estimate)
  • Will also have those districts that did not reappraise – state will fill bucket up based on prior year so there will be a hole – anticipate this amount to be between $500 million – $1 billion
  • The legislature intervened to fill that hole in IKE but the hole was much smaller
  • Gonzalez – the hole was filled in the supplemental last time, what happened if they don’t fill the hole?
    • Yes in the supplemental
    • If you don’t fill the hole is that districts will have between $500 million and $1 billion less, notes districts are budgeting for this amount right now and are concerned of what they should do/plan for
    • Notes he has heard support from legislature members, does not know if it will be the complete amount because not sure of other drains but he has encouraged districts to be as conservative as possible but not be drastic
  • Gonzalez – says local school leadership does not have clarity but they could access RDF to help
    • Notes there are other complexities, won’t have appraisals in until August and they are used to making assumptions
    • Districts that have a fund balance are in the best position but if they don’t then they will need to be deeply conservative for the upcoming year
  • Gonzalez – would you recommend to the legislature to change statute that the formula use previous year instead of past year?
    • Pro – is for equity, everyone is on formula not really a variation
    • Con – districts are used to this benefit and would get more money, benefit for about 80% of the districts but about 20% get less money than you would think
    • $1.8 is a sizeable surplus over formulas, has been a topic of conversation at school finance
  • Howard – this is a one time decline in values, believes common thoughts on use of ESF/RDF that this need fits the bill
  • Notes Chair of Finance, Lt. Gov., Chair of House Public Education – heard from them and this body that they are supportive to fill the hole, Zerwas said House Appropriations could be added to the list
  • Instructional Materials are part of physical repairs that will be covered by FEMA, etc and they have also coordinated some of the donations to help with logistical support
  • Special thanks to Meadows Mental Health Policy Institute provided support as they work to strengthen mental health but there is a lot of work to be done there
  • Giddings – is task force on mental health support, does it have a life cycle?
    • Thinks for it as two charges – 1) immediate relief support that allows for extra availability of resources (about done) and 2) long term of network mapping (ongoing for some time)
  • Giddings – have professionals stated what type of mental health improvement is being experienced? Any analysis
    • Know there has been some strengthening but do not have strong data in this area, will be working to build capacity to evaluate own performance
  • Walle – does agency provide individual campus waivers or district waivers?
    • Regarding accountability ratings, precedent is to examine on a campus by campus basis
    • Impact to district, in Ike example district may or may not be rated but campus still rated will still received consequences for rating
  • Walle – regarding displaced students coming into schools, process?
    • Asked districts if campus was relocated, what happens if you receive a campus for an extended period of time, number and percent of students themselves were physically displaced and asked teaching staff displacement are factors into their proposed rule framework
    • Accountability should not impact budget planning
    • Walle – contends there is a financial component to accountability
    • Understands point and trying to provide clarity as soon as possible, possibly within next two weeks
  • Giddings – hopes when there is discretion on accountability that we come down on the side of compassion
    • Thinks part of rule framework may include districts that received whole campuses, evaluate with the students and without and give campus the better score
  • Howard – of 76 districts, 19k students they will hold harmless, are there charters in there because the amount would be different?
    • Only a few, mostly ISDs

 

Eileen Murphy, Legislative Budget Board

  • Continues to survey agencies and higher ed to determine loss in response to the Hurricane
  • $2.2 billion in all funds of expenditure – agencies project an additional $4.6 billion in FY 2018
  • Presentation to committee included actual expenditures by agency
  • 148 Harvey related contracts valued at approximately $264.5 million
  • Account 5000 utilized to fund for Debris Removal
  • Page 11 includes a list of funds for state and local entities received from the Trusteed Programs in Governor’s office (Disaster)

 

Edward Rodriguez, Legislative Budget Board

  • will cover expected expenditures
  • Most matched but of note, guidance may have been administered after funds spent
  • Some agencies have not reported expenditures since they had very few or little amounts
  • Some discrepancies between amounts claimed by HHSC and those recorded in another system
    • Separating out DSNAP and those receiving Medicaid prior to Hurricane the challenge
    • Difference is $437 million when taking out Medicaid/DSNAP
  • Howard – still have about a 100% variance, that is pretty significant?
    • Yes, working through this with the Comptroller, could be timing issues and reclassification of expenditures
  • TCEQ, and several other institutions of higher education also have discrepancies
    • Notes universities have reported amounts, they flow outside the treasury
  • Notes costs on report are just cost to TEA agency, not amounts to the Foundation School Program