DALLAS – In a year of dramatic political upheaval, representatives from the bond industry and issuers will share guidance on how to cope with expected changes at The Bond Buyer's Texas Public Finance Conference in Austin.
This year's conference coincides with the 85th Texas Legislature, which is considering major public financing changes such as tax support for private school tuition and changes in pension laws for Dallas and Houston.
At the same time, issuers along the border of Mexico are preparing for President Donald Trump's plan to build a wall along the 1,200-mile boundary while renegotiating the North American Free Trade Agreement and threatening tariffs on products produced in Mexico by U.S. manufacturers.
Those potential changes come as Texas is forced to cut spending due to falling revenues in the third year of a slump in the oil and gas markets.
In his most recent report on sales tax, the primary revenue source for the state, Comptroller Glenn Hegar said that revenues continued to run slightly under those for the same month in 2016. After growing for more than five years, sales tax revenues have fallen below those of the same month in the previous year several times in 2016.
"Sales tax collections reflect tepid spending by both businesses and consumers," said Hegar, who gives the keynote speech to open the conference Wednesday night. "Receipts from the information sector were up, but declines were seen in receipts from the construction and mining sectors, as well as retail trade."
Despite that lingering economic drag, the triple-A-rated state is accelerating development of ports, highways and rail lines for the exportation of liquefied natural gas and oil from the state's major producing regions.
Christi Craddick, chair of the Texas Railroad Commission that regulates oil and gas in the state, will outline where the state's energy sector stands on Thursday.
The Railroad Commission is trying to get more funding from the legislature as lawmakers consider changing the agency's name to something that reflects its real duties.
"We know from previous downturns that when the oil and gas industry ramps up, it ramps up quickly," Craddick said in a prepared statement. "We must be fully staffed and prepared for an uptick in industry activity."
The low energy prices have contributed to reduced capital spending among public power producers, according to Fitch Ratings.
"Capital investment, as a percentage of depreciation, steadily declined throughout the U.S. public power sector over the last five years driven by declining per capita consumption patterns, increased availability of renewable energy and ample access to competitively priced energy," according to Fitch analyst Kathy Masterson who will appear on a Thursday panel on public power.
Jorge Garza, senior managing director for Estrada Hinojosa & Co. leads a Thursday morning panel on the impact of NAFTA on the border region. Also appearing will be McAllen City Council member Richard Cortez, Jesse Hereford, director of Public Affairs for the North American Development Bank, Laredo Mayor Pete Saenz and Gerald Schwebel, corporate executive vice president in Laredo's International Department.
Estrada Hinojosa managing director Paul Jack leads a Thursday transportation panel that includes Bill Chapman, chief financial officer for the Central Texas Regional Mobility Authority, Belen Marcos, president of toll road developer Cintra U.S., and Earl Heffintrayer, analyst for Moody's Investors Service.
In a Tuesday report authored by analyst Nicholas Samuels, Moody's noted that the 2015 Legislature's decision to dedicate a portion of the state's sales tax revenue to transportation will make the current session's job considerably harder.
"Demand for spending on roads and other transportation infrastructure is high in Texas, where population growth is more than twice the national rate," Samuels pointed out. "Appetite for new taxes to pay for that infrastructure is low. Instead, over the past five years Texas voters have shifted dollars from the state's rainy day fund and the state's main operating fund to pay for transportation projects."
