Omnibus Law and the IRS; Preview of Upcoming TX Legislative Session:
Harvey Recovery & Public Education
Passed by Congress and signed into law by the President, the $1.3 trillion-dollar Omnibus Law of 2018 is controversial, both, as to the total amount of spending it authorizes as well as the “trade-offs” included in order to get enough of the minority Democratic party to vote in favor and avoid a shut-down of the government. The final determining factor for the President was reported to be the impact on the military in that it provided $61 billion dollars for national defense over 2017 levels and a 2.4% pay raise for the troops – the largest since 2010.
The IRS also received increased funding under the Omnibus Bill. After years of criticism by conservatives for the “targeting” of certain nonprofits along partisan lines, inappropriate internal expenditures and generally bad behavior vis-à-vis the average taxpayer, the new law allocates $11.4 billion dollars to the IRS which is $320 million dollars more than last year. However, the money comes with some stipulations for the IRS to improve its operation and mechanisms to prevent abuse. Forbes Magazine recently reported these initiatives as including:
1. Employee training for dealing courteously with taxpayers.
2. Policies and procedures to keep taxpayer information confidential and protected against identity theft.
3. Adding facilities, staff and a “sufficient and effective” 1-800 help line for taxpayers.
4. Barring spending on videos unless approved in advance.
5. Barring use of funds to target U.S. citizens for exercising their 1st Amendment rights or for regulatory scrutiny based on ideological beliefs.
6. Barring use of funds to issue regulations or rulings for determinations on section 501 (c) (4) organizations when not limited to a particular taxpayer.
Hurricane Disaster Relief
The Omnibus Law also funds the FEMA disaster relief account for a total of $7.9 billion dollars, with $249.2 million marked for pre-disaster mitigation grants.
Over the six months since Hurricane Harvey, and prior to passage of the Omnibus Law, the Texas Senate reported about $2.1 billion dollars in federal (FEMA) and state funds have gone toward recovery efforts in southeast Texas and that another $5.1 billion will be needed to meet needs for the remainder of this fiscal year.
In a recent Senate Panel Hearing, Senate Finance Committee Chair Jane Nelson noted that the continued costs associated with Harvey “are adding up and are going to have a major impact on our budget”, and Texas Education Agency Commissioner Mike Morath noted how the strain is affecting public education:
1. More than 1.5 million public school students lived in hurricane-affected areas, and many did not return to the same schools after the hurricane; 95 thousand students were displaced by the storms. Since state funding of schools is based on attendance, Texas will send almost $100 million dollars to districts who lost student populations in order to maintain funding levels.
2. In addition, reduced property values from the storm damage will result in reduced property tax revenue for at least the next budget cycle and which revenue makes up most of school district funding. This loss is estimated as potentially approaching $750,000 million dollars for the next year.
While no final determination as to assistance will occur until the Texas Legislature reconvenes, the Texas Senate Finance Committee and Texas House Appropriations Committee are already considering the problem and how to integrate help into the next budget.
Unlike the federal government, the State of Texas operates by way of a balanced budget, spending no more than what it receives in revenues. However, this has not resulted in panic or pessimism. In addressing the upcoming school-funding-in-response-to-Harvey situation, Senator Nelson was quoted as saying “In speaking with other legislators, in speaking with our governor and Lt. Governor, I think you’re going to see a very sympathetic legislature to the needs of those students in the districts that have been affected. We want those students to be taken care of, we want them to continue to learn” she said. “I won’t speak for the next Legislature, but my sense is that we’re going to take care of those kids.”
[Reminder that the activity of the Texas Legislative Committees in these periods between Legislative Sessions are accessible and reported at www.capitol.state.tx.us.]
Gail Schubot, CFRW Legislative Chair
March 26, 2018