What to Know about Hurricane Harvey and the Economic Stabilization Fund

///What to Know about Hurricane Harvey and the Economic Stabilization Fund

Texans are still reeling from the tragedy that Hurricane Harvey wrought on our state. We mourn the loss of over 60 lives, the disruption and anxiety for millions more, and the harm to people and property across the state.

As the water recedes, the discussion turns to how Texas will pay for the mammoth costs of rebuilding and recovery. The short answer is that – as in most natural disasters – most of the rebuilding funds will come from the federal government. 

Texas has spent relatively few state tax dollars on past disasters. The 2003 supplemental spending bill included $1.5 million in General Revenue to help cover costs of Tropical Storm Allison’s flood damage to the University of Texas Health Science Center at Houston. The 2007 supplemental for Hurricanes Rita and Katrina was almost $16 million, while 2009’s supplemental to cover Hurricane Ike damages to state facilities was the largest at $312 million. For context, total U.S. damage from Hurricane Ike was $35 billion.

We thank federal, state and local leaders for their commitment to funding Harvey relief efforts. Some lawmakers have suggested that Governor Abbott call a special legislative session and tap the state’s Economic Stabilization Fund (also known as the Rainy Day Fund) to provide prompt payment to affected Texans and to get devastated areas rebuilt faster. The Fund has been used once for natural disasters: 2013’s supplemental spending bill (HB 1025) included $185 million for wildfire costs, with most of the wildfire recovery paid for by the federal government. 

As state leaders and communities consider the best ways to help those recovering from Harvey, here are a few things to keep in mind:

  • While it would be a very welcome and positive development for the state to add funding to federal, local, nonprofit, and other relief and rebuilding efforts, this would be a major change in how state government has responded to previous natural disasters.
  • Some of the things lawmakers are calling for – like a way to make immediate cash payments or loans from the state to flooded homeowners and businesses – don’t just involve the ESF; they would require changes to state law, which could take long enough to resolve that it would be of less use to Harvey victims.
  • Public school districts in communities flooded by Harvey may lose enrollment due to displaced children, or see reduced property valuation. The state Commissioner of Education could adjust school funding to reflect lower attendance or property tax revenue, as well as waive the number of school days required.
  • Texas leaders and state agencies should continue doing everything in their power to support those affected by Harvey, like nutrition assistance, public education support, health care/ Medicaid/CHIP support, and property and health insurance oversight.

The next time lawmakers convene for a legislative session, they will review how much agencies like the Health and Human Services Commission, Texas Education Agency and others have paid out unexpectedly due to Harvey. If General Revenue is not available, then lawmakers could use the ESF – as intended – to help backfill funding for those agencies to prevent sudden and drastic cuts to critical services for Texans.

Our state has faced difficult challenges before, and we will draw on our strong Texas spirit to recover from this devastating storm. 

Eva DeLuna Castro joined the Center in 1998 and focuses on state budget issues. Before coming to the Center, she was an Analyst for the Texas Comptroller of Public Accounts, researching various policy issues related to state revenue and spending. She earned a Bachelor of Arts in History and Literature, cum laude, from Harvard University in 1988 and a Master of Public Affairs from the LBJ School of Public Affairs at The University of Texas at Austin in 1997.

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