COVID-19 Hits the Texas Economy

The COVID-19 outbreak has reminded us that any one person’s well-being depends on everyone else’s. Texans must work together to help those bearing a disproportionate brunt of the harm caused by the sharp economic downturn already underway. By standing together and making sure each and every one of us — Black or White, Latino or Asian, Native American or newcomer — has the resources and information we need, we can prevail and ensure that all of our neighbors are able to make ends meet.

Our daily lives have already been radically changed by this public health crisis. We are postponing or canceling travel and major purchases and practicing “social distancing.” School boards, mayors, county judges, and the governor are closing schools, bars, and restaurant dining halls, and limiting group gatherings. These disruptions, while significant, don’t even compare with the hardships facing the most vulnerable Texans.

Economic activity has slowed dramatically. Comptroller Glenn Hegar Tuesday estimated that Texas’ unemployment rate in Texas could more than double during the crisis – from the current 3.5% to 9% or even higher. This would match or exceed the state’s record-high rate of 9.2%, set in November 1986, when the state economy was reeling from a sudden collapse of oil prices.

The comptroller, briefing legislators earlier this week, said it was premature to revise official forecasts for the Texas economy or state revenue, but he expects both to suffer a severe blow in the current crisis. He may update his forecast in July, when he expects to report that state revenue may be billions of dollars below the amount forecast when the state budget was certified. In addition, estimates of the Economic Stabilization Fund balance by 2021 would also probably be reduced by $1 billion from his 2019 estimate of $9.4 billion.

People working in hospitality, retail, and leisure (e.g. sports or entertainment) account for more than one-fourth of Texas private-sector jobs and have already been particularly hard hit. These jobs tend to have lower wages and fewer benefits than other jobs, meaning these unemployed workers have less to fall back on in this emergency.

As Congress works through proposals to respond to the crisis, our federal leaders must focus on supporting states’ ability to provide necessary services, as they did in response to the Great Recession. Our local governments are feeling pressure from slowing revenue and higher public health costs, and the state budget, which as enacted did not fully fund Medicaid, would benefit greatly from a more favorable match rate. 

We also must work to ensure that families can put food on their tables and purchase basic necessities. Congress can do this by sending benefits directly to people, focusing on low- and moderate-income households. Federal and state officials should increase food assistance to households through the Supplemental Nutrition Assistance Program (SNAP, formerly “food stamps”) by raising the maximum benefit and easing or removing administrative barriers.

In one positive step, the Texas Workforce Commission (TWC) recently waived the “waiting week” for unemployment insurance, meaning workers can receive benefits sooner. TWC also waived “work search requirements” that require unemployed workers to actively search for jobs. The Congressional agreement on economic stimulus reached Tuesday night is reported to expand the number of workers covered by unemployment benefits, increase the amount of the benefits, and extend the number of weeks that benefits can last.

Everyone wants assurance that if they or their loved ones get sick, they’ll get the care they need. We want to know that even during tough times, we can still pay the rent or mortgage and feed our families. As this crisis disrupts our daily lives, including our ability to work, pay bills and send our kids to school, we need to ensure working people can make it through the crisis. The choices our government makes now to help us weather the outbreak of this virus can also set a better course for the future of our communities. Now is the time for us to unite across our differences and make policy choices that help people in pursuit of a safe and thriving nation.

The details of COVID-19 policy proposals are changing very rapidly – contact CPPP if you have questions about the status of anything mentioned here.

Dick Lavine focuses on building state and local revenue systems that meet Texans' needs. Before coming to the Center in 1994, he was a Senior Researcher at the House Research Organization of the Texas House of Representatives for ten years. He is a Chartered Financial Analyst and served for many years as a member and chairman of the Board of Directors of the Travis Central Appraisal District. He is also a member of the Executive Board of AFSCME Texas Retirees, the statewide union local of retired public employees. The Equity Center named him the 2011 Champion for Equity for his work to reform our tax system to ensure it can adequately support public education and other public services. He earned a Bachelor of Arts in Economics, magna cum laude, from Harvard College in 1969, and a Doctor of Jurisprudence, cum laude, from the University of Pennsylvania in 1975.