Post-session Wrap-up: The Legislature and the Recovery Act
Legislators began the 81st Legislative Session with the knowledge that an unprecedented influx of federal money was coming, and Texas Impact was there from the beginning, urging the Legislature to take proactive steps that would increase the likelihood that this windfall would provide the maximum benefit to the state. 
At issue was how best to ensure that funds from the Recovery Act would be spent not just in a transparent manner, but in a way that was transformative as well. Now that the session has ended, we can summarize and assess the Legislature's response to the $15 billion in federal stimulus funds, not to mention the hundreds of billions in additional federal dollars that will be available in the form of nationwide competitive grants. In short, the Legislature failed to take proactive steps, opting to end the session without enacting any special measures to accommodate such an extraordinary amount of federal dollars and without passing a single piece of significant legislation related to implementing or tracking Recovery Act funds.
Continue reading for more about the Legislature's actions in full.
In the House, Speaker Straus facilitated the creation of a Select Committee to act as the House’s eyes and ears with regard to the federal stimulus funds. That committee, led by Representative Jim Dunnam, proved to be a valuable resource for keeping the entire body informed about Recovery Act details. Beyond that, however, little to no action was taken to adjust to the state’s new financial situation in the midst of the economic downturn. The Senate did even less, with any discussion of how to handle Recovery Act funds going on behind closed doors. Only one piece of significant legislation dealing specifically with implementing and tracking Recovery Act funds was filed during the session. That bill—HB 4263—passed out of committee before being rolled into HB 2942, which made structural changes to state government, and it went on to pass the House unanimously before dying in the Senate.
When it came time to make the state’s budget for the biennium, the Legislature’s plan for those funds became clearer. Coming into the session, legislators had planned on tapping the state’s Rainy Day Fund in order to cover a $4 billion budgetary gap, but they quickly saw the Recovery Act funds as a way to leave the RDF untouched in order to use it in 2011, when the structural deficits created in 2006 will be even worse than they are now. Wherever there was an opportunity to supplant state funds rather than supplement them with federal stimulus money, legislators chose to do so. So instead of local school districts receiving extra funds to avoid teacher layoffs and improve education, they will not see the increases that federal officials intended. This strategy of supplantation will save the state some money in the short term, but it will result in stagnant funding for education, Medicaid, and other vital services.
Certainly people across the state will see some tangible benefits from the Recovery Act. The Department of Housing and Community Affairs will scale up its Weatherization Assistance Program, for example, as it was granted more than $300 million to help homeowners increase efficiency. Texans will see tax breaks, extended unemployment benefits, and increased amounts in their food stamp accounts, just to name a few changes.
Those benefits will come with a host of missed opportunities, though. Texas Impact long supported the implementation of temporary measures that would have dealt specifically with the Recovery Act funds. The state could have benefited greatly from having some way to define goals, strategies, and performance measures that would have gone a long way towards ensuring that Texas’ share of these funds is used wisely. Just as important as the $15+ billion the state has already received will be the hundreds of billions of dollars in competitive grants for which state and local governments around the nation will be vying. While most of those other states have taken proactive steps in this regard, entities in Texas—especially those in rural and poor areas—will be at a distinct disadvantage thanks to a dearth of coordination, planning, and resources.
Texas Impact will continue to monitor the state’s handling of Recovery Act funds and work with legislators and state agencies as they look for best practices.
