Is Harvey recovery changing the way Texas defines fiscal responsibility?

As the eastern part of the state recovers from Harvey, the costliest storm in US history, flood-prevention measures that had stalled due to lack of funding are now priorities for some Republican lawmakers.

Standing outside the Greenspoint Mall in North Houston, under a swelling mass of gray clouds, Nicole Turner reflects on the month she’s had. The single mom of four works for an oil and gas company and takes care of her mother. Then hurricane Harvey brought 52 inches of rain in four days.

Ms. Turner’s house flooded to the point where walls needed to be ripped out. The six of them are still living amid the damage.

“I’m just trying to keep upbeat and keep going,” she says. “Yup.”

That includes taking the day off work and waking up before dawn to get to the mall more than three hours before the Federal Emergency Management Agency (FEMA) disaster recovery center there opens. By 11 a.m., with the clouds thickening and starting to drizzle rain, Turner is still in line.

Like many of the hundreds of others lining up with her, she’s looking for any assistance she can get for her family. (“Just some help,” she says.) And while she hasn’t had much time to think about the broader implications of the storm, there’s one aspect of the recovery debate she – and many others in line – has a firm opinion on.

“I’m a native Houstonian so I’ve seen us flood a couple times,” she says. “I definitely think that they should put some money into the sewer system, because if they don’t it’s going to happen again.”

In recent years, high-cost investments in projects that could prevent or mitigate future flooding haven’t seemed a priority for many Texas congressmen, committed as they are to fiscal conservatism and limited government spending. (Several of those projects were in the works before Harvey, but stalled due to a lack of federal funding.)

That appears to have changed. The Texas delegation is now requesting billions of dollars for long-term flood mitigation projects from Washington. In the grand scheme of Harvey recovery, it seems a question of how, not if, Texans will re-evaluate some of the state’s core principles around issues like taxation and the role of government. This is not to say the Lone Star state is going on a spending spree, but experts see a growing sense among some lawmakers that fiscal prudence could include preventive measures.

“We’re seeing [that] very Republican or fiscally conservative voters, [and] fiscally conservative public officials, are in agreement that some changes will have to be made,” says Renée Cross, associate director of the Hobby School of Public Affairs at the University of Houston.

Commitment to fiscal conservatism

In a letter sent to the leaders of the US House and Senate appropriations committees last week, nearly all of the Texas delegation called for $18.7 billion more in federal funding for Harvey relief. More than half of those funds should be to help construct infrastructure to prevent and mitigate damage from future storms, the letter requested.

And while those investments may seem less urgent than funds for immediate problems like debris removal, Houston Mayor Sylvester Turner told a state appropriations committee otherwise last week.

“Now people are thinking of the question of: Should they rebuild where they’ve been, or should they go somewhere else? And if people don’t know if we’ll really be moving forward on mitigation projects that could take their home out of the floodplain, then we’re not giving them much hope,” he told the state House Committee on Appropriations at a hearing in Houston last week.

Mr. Turner, for his part, is hoping for a more significant show of financial support from the state – a show of support he knows the state isn’t used to making.

“This is when people see what government does,” he said. “And government only functions with the resources.”

Whether the Texas state legislature is willing to front the projects with its own money and be reimbursed later, as Turner suggested, is another question that could loom over the next few months. With the mayor estimating that expanding the bayous and constructing a third reservoir to mitigate flooding would require around $720 million, Congress could cover those costs if they give the Texas delegation the funds requested. If Congress isn’t so generous, however, the state’s fiscal conservatism will be tested further.

Despite the scale of Harvey’s damage – the storm destroyed about 40,000 homes and a million cars, with the governor estimating total damages in excess of $180 billion – Mark Jones, a fellow in political science at Rice University’s Baker Institute for Public Policy in Houston, doesn’t think the state’s own commitment to fiscal conservatism will bend too far in coming years.

“There may be [money] for an additional reservoir, some [home] buy-outs, but nothing game-changing,” he says. “I don’t expect a dramatic shift in spending patterns in Texas because of Harvey.”

Toughest spending debates still to come

There will surely be uncomfortable debates over shifting those spending patterns, however. In fact, one has already unfolded.

After Harvey hit, Gov. Greg Abbott hesitated to appropriate state funds for the recovery – including tapping its $10 billion savings account (known as the Rainy Day Fund). In response Turner proposed an emergency one-year property tax hike to raise $50 million for recovery efforts, publicly blaming Governor Abbott’s inaction.

The spat concluded two weeks ago when Abbott, a Republican, presented Turner, a Democrat, with a $50 million check taken from a $100 million disaster relief fund. Abbott says the Rainy Day Fund will be used, but only “when the expenses [of Harvey recovery] are known.” Only the state legislature can decide when and how to use the fund.

So the most difficult debates won’t begin until the state legislature reconvenes in January 2019. It is likely to be a redux of battles in Austin between fiscal conservatives and freer-spending Democrats – with some moderate conservatives in between – says Professor Jones.

“A major cleavage in Texas politics over the past six-to-10 years has been with the Rainy Day Fund,” he adds. “How much should be tapped to pay for recurring expenses like K-12 education and health care, and how much should be retained … for when we really have a rainy day?”

For Harvey recovery, “there’s a baseline amount [of the Fund] where there’s probably a pretty strong consensus,” he continues, “but when you start rising up into additional money for buyouts or reconstruction efforts, new projects, that’s where some people – especially in other parts of the state – say, ‘Wait a second.’ ”

'The most miserable tax ever created'

Of the many uncomfortable funding debates awaiting Texas politicians, perhaps none will be more sensitive than property taxes. A state cap on how much revenue cities and counties can generate from property taxes, enforced in the name of curbing excessive taxation and keeping local governments small, has been debated for years. Harvey has turned up the heat.

Turner and big city mayors across the state have long sought to ease the cap, arguing that it limits their ability to run city services effectively. In the wake of Harvey, he’s continued to press the issue.

The mayor now seems to be getting more support in softening Texans’ traditional aversion to taxes, including from colleagues across the aisle.

Ed Emmett – a judge in Harris County, which includes most of Houston, and a former Republican state legislator – said last week that he would push for a tax hike to help pay for new flood control infrastructure projects.

Property taxes are “the most miserable tax ever created,” he added. “But it’s what we’ve been given to work with, so we don’t have a choice.”

Cities and counties around Houston are also considering, or have already passed, property tax increases. Some had been planned before Harvey hit.

But while there may be support for some property tax reforms at the local level, at least on a temporary basis, more permanent changes in how Texans are taxed are seen as unlikely.

“ ‘Taxes’ is such a dirty word down here in particular, I would be hesitant to say that” Harvey changed the debate, says Professor Cross.

That said, the definition of fiscal responsibility appears to be shifting in Texas. How far remains to be seen.

“It’s rare for a Republican to be [saying] that maybe we shouldn’t be building in floodplains, maybe there should be some regulations,” says Cross. “The wounds are still fresh right now, but we’re seeing folks crossing over the aisle and agreeing with each other here on the ground.”