Texas Comptroller Glenn Hegar painted a bright but uncertain picture at a policy luncheon Wednesday that included over 40 community and business leaders from Killeen and the surrounding area.
“The health of the Texas economy has never been better,” he said during the luncheon which was attended by the likes of Mayor Jose Segarra, Killeen Independent School District Superintendent John Craft, Greater Killeen Chamber of Commerce CEO John Crutchfield, Bell County Judge David Blackburn and others, including representatives from the First National Bank of Texas and financial advisor Peter Beroni.
During the approximately half-hour presentation, Hegar described a state in a period of rapid expansion and incredible growth.
“Roughly 1,100 people call Texas their new home every day,” he said.
The reason is simple; according to Hegar, Texas has one of the most bustling, thriving economies not just in America, but the world.
As the ninth largest economy in the world and the producer of 25% of America’s jobs, Texas ranks higher than both Canada and Russia.
Hegar attributed much of this growth to the COVID-19 pandemic — in the past 17 to 18 months since the pandemic forced much of the world into lockdown, Texas has risen rapidly from its No. 12 position and away from 2015 contraction in the oil and manufacturing sector.
“We have been surprised like so many others,” he said.
Some of this growth may be due to a Senate ruling in 2019 that allowed the state of Texas to tax and audit not just brick and mortar businesses, but any business that has an “economic nexus” located in Texas.
Since the start of the pandemic, he explained, more and more businesses have followed an online “ship anywhere” model, resulting in an explosion of Texas’s sales tax revenue as residents increased online shopped.
In addition, Texas’s sales tax collection — which makes up 60% of the state’s public account — has increased to the point where Speaker of the House Dade Phelan projects a $12 billion surplus for next year, a number Hegar confirmed Wednesday.
“The hard part will be deciding what to do with it,” he said to a laughing crowd. “It’s easy when you don’t have any money — you can just say ‘no’ to everyone.”
The two-year state budget cycle will start up again in August.
Despite the rosy outlook, the comptroller has a few concerns, which fall largely in line with a majority of business owners: supply chain shortages, inflationary pressure and a labor shortage.
“It’s the last one that really has me worried,” Hegar said.
Hegar explained that the labor shortage extends even as far as his own office, prompting an examination of the situation.
Additionally, he said that the current rate of inflation, 3.8%, may be lower than is really the case.
“At the end of the day, it’s not ‘if’ we have a recession at any point. It’s ‘when’ we will have a recession,” he said. “The one thing that concerns me, we’re going to deal with these inflationary pressures, and then we’re going to have to deal with the labor shortage.”
After wrapping up his speech, Hegar took a few questions from the crowd.
Killeen school board President JoAnn Purser asked if the comptroller’s office is considering the use of alternative currencies such as Bitcoin.
“This is one case where we want Texas to be a follower,” he said.
According to the comptroller, Bitcoin is too volatile a currency to use as a tax payments mechanism.
Hegar also answered questions regarding the legalization of marijuana and how his office handles property tax valuations.
It is unlikely Texas will see the free flow of marijuana any time soon — the business is simply too cash-heavy, he said.
If Texas does move toward a legal trade scenario, Hegar explained that it would need to do so incrementally so as to regulate the marijuana industry. For now, however, that scenario appears nearly impossible.
In regards to property tax, Hegar clarified that his office is responsible for setting regulations for property tax valuations, and occasionally receives pushback from county appraisal districts when his office finds different a different valuation than the county office. According to policy, he must remain within 95% of county findings.