The 2015 Legislative Session: A Report from Your CFO

The following is a report from Texas Comptroller Glenn Hegar:

A chief financial officer, or CFO, is a person who oversees a company's financial activities. A CFO's duties usually include keeping the books, monitoring cash flows and maintaining a constant watch on the company's financial health.

And that's my job — except I work for you.

As Texas Comptroller of Public Accounts, it's my duty to keep a close eye on the state economy and the finances of state government, and to report on our finances to the Legislature and Texas taxpayers.

I'm also responsible for certifying that the state's proposed budget can be paid for with the revenues we expect to collect over the next two-year budget period. Basically, when the Legislature's job is done, one of my most important duties begins.

A few days ago, I certified the state's budget for 2016 and 2017, which calls for about $209 billion in total spending. It's an enormous budget for a varied and complex state. But I'm pleased to say it's also a fiscally responsible budget. It stays well within our spending limits. And it will guarantee we can keep providing the many vital services on which Texans rely, while keeping Texas economically vibrant.

I applaud our legislators for delivering tax relief to the citizens of Texas. Texans deserve it, and more money in their pockets will boost our economy as well. If the voters approve a November ballot issue, the homestead exemption on school property taxes will increase from $15,000 to $25,000, saving homeowners about $1.2 billion over the next two years.

The Legislature also slashed rates on our main business tax, the franchise or "margins" tax, by 25 percent, which should reduce costs for our business community by some $2.6 billion for the 2016-17 biennium.

But I think it's also important to note that this budget takes important steps toward addressing some long-term financial issues facing the state.

In early May, I sent a letter to the governor and legislative leadership, outlining some of these longer-term challenges. Anyone who watches the capitol knows that just writing a two-year budget is a daunting task involving thousands of hours of work and hundreds of compromises.

But as CFO, I must remain vigilant in protecting the state's long-term financial interests. There are issues over the immediate horizon we have to be aware of, and begin working on now.

One of them is our highway infrastructure, which is being stretched to the limit by Texas' extraordinary growth. SJR 5, if approved by voters in November, will beef up our Highway Fund with portions of our state sales and use tax and motor vehicle sales tax collections, to help keep traffic flowing on the nation's largest state highway network.

Another issue concerns pensions for state workers. Texas is in better shape by this standard than are many other jurisdictions, where skyrocketing pension costs have driven cities to bankruptcy and downgraded credit ratings in several states. But we still have a net pension liability of at least $14.5 billion, and current contribution rates simply aren't high enough to retire that liability in an acceptable length of time.

The 2015 Legislature acted to make sure our pension costs don't overwhelm us, boosting the state's contribution rate to the constitutional maximum of 10 percent and increasing the employee's contribution from the current 6.9 percent to 9.5 percent beginning in fiscal 2016. This puts us on the path toward paying off the unfunded liability. We are securing the benefits we pay to our dedicated employees while protecting future generations of Texans from the kind of financial chaos we've seen in other states.

These and other measures passed by the 2015 Legislature represent big steps in the right direction, promising steps toward preserving our economic future over decades rather than years.

But our lawmakers will have to stay focused on our long-term challenges in 2017 and beyond if we're to overcome them. Addressing the state's long term liabilities will protect the state and our credit rating, which will save us all money in the long run.

I'll keep watching the state's finances and reporting what I learn to you. After all, it's my job.