On September 10, the Texas Tribune Festival hosted the conversation “One-on-One with Glenn Hegar” with Texas Comptroller Glenn Hegar.

This report is intended to give you an overview and highlight of the discussions on the various topics taken up. It is not a verbatim transcript of the discussions but 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.

Ross Ramsey – Executive Editor of The Texas Tribune, Moderator

Q: Current condition of economy?

  • Went from $3 billion surplus to $4.6 million deficit
  • Downturn will have immediate impact, so we will have a recession but still working on those details
  • Worldwide impacts are expected
  • Revenues are slightly ahead of July revision, so sales tax not quite as negative
  • So many uncertainties

Q: Estimate at end of year and you will present in January, any foreshadowing?

  • Second Monday in January will present on what will come into the treasury for the next budget cycle
  • Wants a couple more months of collections, need to test some assumptions
  • A lot of questions before they feel comfortable to provide estimate, will probably revise estimate again as they are going into the legislative session

Q: Can you provide sectors of economy that have been impacted?

  • Oil and gas sector hit from reductions in traveling, productions values have gone down because of supply/demand
  • Hospitality, restaurants, bars
  • Health care sector- not allowed to have any procedures for a period of time
  • People reluctant to engage in parts of economy
  • Improvements in online and home improvement areas

Q: Retail is different because of Wayfair?

  • No longer need a physical presence, can audit those businesses and/or require them to collect sales tax
  • Legislation passed last session dealing with this which was estimated to resulted in $500 million dollars to State of Texas
  • Growth in area meant instead of $500 million it was $1 billion to the State of Texas

Q: What are the indicators you are watching right now?

  • Things they normally watch, sales tax is biggest portion and really critical but those numbers lag
  • Look at employment data, industry sectors, GDP growth
  • Look at travel rate, people going to restaurants and hotel stays, box office sales, people flying around
  • One day avg. went from 2.3 million to 90k flying, average is going up but still about 1/3 of usual
  • Live in person snapshot more important now than ever before

Q: What is your sense of business now?

  • Depends industry by industry but more optimism now; however, business still struggling
  • Even can be subcommittee of industry will see variation of optimism and outlook
  • Still over 1 million people on unemployment claims in Texas

Q: What has been surprising to you? Sales tax looked better than forecast? What else?

  • Biggest surprises in Texas was June economic activity resulted in a July positive sales tax (compared to same month the year before)
  • What caused the bump – people making purchases in and around their homes

Q: What is permanent and what is transitory?

  • There will be several structural changes – we will never have same footprint again in offices, mix combinations of tele-working and coming into the office
  • Shift in some work environments as you space out people
  • Habits and patterns may change how people travel
  • Not sure what are short term and long-term changes at this point

Q: Since in legislature in 2009, what is legislator looking at going into the session?

  • How much revenue will they have/amount of deficit? But difficult to get some of those numbers too far in advance
  • Are there things that need to be tweaked? What are tools in toolbox they may have
  • Need to provide options in toolbox they may have
  • Important to have conversations on overall health of economy now

Q: Tax Exemptions and Incidents report, is that the first place to go for revenue?

  • Get asked about the book frequently
  • Will be publishing it in a few weeks
  • It is a reference and guide to understand how some things are put into place and dollar amount, tried to offer more context than they have in previous publications

Q: Are lawmakers asking you about where state is wasting money?

  • Reasons there are a separation of branches of government, he will give information and up to lawmakers to debate it and weigh it

Q: What will 87th look like?

  • Interesting rumors around right now
  • Heard from one extreme to the other; feels like it will be somewhere in between
  • Thinks it critical for it to be open but not seeing it happen at same capacity – what is appropriate balance
  • Ask his kids about their days now they are back in school; they like it but not fans of mask or one-way hallways for traffic – sees this as example for Capitol

Q: Uncertainty, how certain will you be of your two-year estimate and will you need periodic adjustments?

  • Imperative to let legislature know if trajectory has changed
  • Let them know as early as possible because that could impact the decision and budget cycle process