DALLAS - With energy prices falling and a fight over school funding looming in January, the next Texas Comptroller may face unforeseen challenges in creating a budget blueprint for the 2015 legislative session.
Republican Glenn Hegar, a state senator, faces Democrat Mike Collier, a certified public accountant and auditor for PriceWaterhouseCoopers, in the Nov. 4 election to replace Comptroller Susan Combs, who isn't running for a third term.
Collier said he was motivated to seek his first political office after the current comptroller missed estimates of state revenue and what he considers lax oversight of state spending on events such as Formula 1 racing in Austin and Gov. Rick Perry's job creation fund.
"Texans look to the comptroller to tell us what's happening with our money," Collier said in a campaign statement. "When Texans find out just how much money we have, they are going to start asking some tough questions about the legislature's refusal to fund education and infrastructure."
Collier noted that revenues for September increased 10.7%, far higher than the 1.9% budget estimate from Combs' office.
"Once again we see our state is crippled by stunningly inaccurate revenue forecasts by our comptroller," Collier said. "What's more disturbing than the magnitude of the error is that on the eve of an election, elected officials aren't talking about it."
Hegar, a social conservative who has led the fight to restrict abortion in Texas, promises to loosen regulation of businesses. He has also said he favors reducing property tax burdens by increasing sales tax.
Although the Texas Constitution forbids a state property tax, lawmakers have set up a system through which local property taxes are shared among school districts statewide. A district that is considered "property wealthy" must share excess revenue with one that is "property poor" under state law.
In August, State District Judge John Dietz reaffirmed a ruling that the state's so-called "Robin Hood" funding formula fails to meet the Texas Constitution's requirements for a fair and efficient system.
Dietz's final opinion gives the Legislature, which reconvenes in January, an opportunity to "cure the constitutional deficiencies." However Texas Attorney General Greg Abbott, who is the Republican candidate for governor, has appealed the ruling to the state Supreme Court.
If the court upholds the Dietz decision, it will be up to state lawmakers to design a new funding method, though appeals may not conclude until well after the 2015 legislative session is over.
Collier traces the $5.4 billion in education cuts during the 2011 legislative session that led to the lawsuit to botched revenue estimates from the comptroller's office. Other Democrats have made similar observations.
A study by Combs' office found that the 2011 estimate, which projected how much revenue the state would collect during the 2012-13 biennium, was off by $11.3 billion, a 14% variance. No other estimate since 1974 has been that far off on a dollar basis, though three others missed by a wider margin on a percentage basis.
Hegar, who represents Katy was a key figure in the 2011 session that cut school funding for the first time in Texas history and was part of the 2013 session that restored $3 billion of that spending. Dietz ruled in August that the restored funding was inadequate.
Hegar's campaign for comptroller touts his role as chairman of the state Senate Subcommittee on Fiscal Matters, where he pushed for cuts of almost $1 billion in taxes during the 2013 legislative session.
Hegar's website also includes a press release on his legislation restricting abortion in Texas, a law that is under a stay from the U.S. Supreme Court during an appeal on constitutional grounds. With an endorsement from the National Rifle Association, Hegar is also proposing a tax holiday for hunters.
As comptroller, Hegar has said he wants to "restructure the agency and refocus higher performance metrics on the agency's constitutional functions: accounting, revenue estimates, and tax collection."
"It is not just the office that gives the legislature its revenue forecast, but it is also the tax collecting agency for people in the state of Texas," Hegar said when he announced his candidacy for comptroller. "I would like to give the position a fresh set of eyes and calm stable voice of leadership."
During her two terms in office, Combs has boosted reporting on debt and tax issues from local governments in Texas. The comptroller collects the state's 6.25% sales tax and distributes the revenue monthly to the local governments in which the purchases were made.
Without an income tax, Texas is heavily reliant on sales taxes for its general fund.
Combs has reported 54 consecutive months of sales tax revenue increases since the recession briefly weakened the Texas economy. The major driver of Texas' economic resurgence has been record oil and gas production made possible by new hydraulic fracturing techniques in tight shale formations
With prices of West Texas Intermediate crude down 25% since June, concerns have surfaced about the profitability of some drilling operations.
Industry execs in Texas have said they do not plan to curtail production even if prices fall below $80 per barrel, the breakeven point for some Texas shale drilling sites. But the lower prices could have an impact on state revenues.
In 2013, Combs reported that the state's severance tax receipts exceeded prior estimates by $900 million. In her January biennial revenue estimate, Combs predicted oil and gas severance taxes would grow 27% to nearly $3.4 billion.
Collier vows to improve those estimates with more frequent quarterly updates.
"My opponent, who thinks our current comptroller Susan Combs is doing a good job, doesn't support making this change," he said.
Hegar said called Combs is "a bold leader and has had an enormous impact on Texas. She has helped us create an economy equal to none in the country and has worked tirelessly for the citizens of Texas."
Combs returned the favor, calling Hegar "a man of conservative principles" who "has a proven track record of reducing government inefficiencies and saving taxpayer dollars."
Facing long odds in a state that has not elected a Democrat to statewide office since 1994, Collier has taken the offensive, saying that the state needs a Democrat as Comptroller to keep an eye on the Republican leaders and Legislature.
Gov. Rick Perry is under indictment for allegedly abusing the power of his office in an attempt to force the resignation of Travis County District Attorney Rosemary Lehmberg.
Collier has also accused Abbott of ignoring Perry's handing out $222 million of taxpayer revenue from the Texas Enterprise Fund to companies and organizations that did not apply for the funds or did not produce jobs in the state as required by law.
Another controversy circulated over Combs' decision to provide up to $250 million over 10 years to help support bringing Formula One races to the Circuit of the Americas racetrack in Austin. The San Antonio Express-News uncovered an affidavit showing that the state money was not used for the purpose it was intended.
Under a 2012 ruling by Abbott, misuse of the Major Events Trust Fund should have disqualified the race promoters for the funding, according to the Express-News; however, Abbott and Combs continued to supply the funds, $50 million to date.
"As recent reports of misconduct at Texas Enterprise Fund, Major Events Trust, and CPRIT make clear, our elected leaders in Austin act like they are above the law and treat taxpayer money as their own personal slush funds," Collier said.
Hegar, declining to comment on specifics of the findings on the Major Events Trust Fund, did call for more transparency.
"If the state is going to operate these types of programs they must be transparent and provide accountability to the taxpayers," he told the Express-News in a written statement.
Hegar has far outpaced Collier in fundraising and gained endorsements from Republican officials and political action committees, but the Democrat has won an array of endorsements from the state's largest newspapers.
