What can save the Texas budget? Pot and slots, analysis suggests

ByRoss Ramsey, The Texas Tribune KTRK logo
Wednesday, November 18, 2020
Texas lawmakers looking at legalizing medical marijuana
It would take some leaps and bounds, but the proposal to legalize medical marijuana in Texas is picking up momentum after four states approved it on Election Day.

Texas budget writers will start out billions of dollars short in 2021.

New sin taxes might spell relief. Name your vice: Pot? Casinos? Online betting? Lobby signings and bill filings already point to activity there.

Federal help might be available, too, either in the form of a new coronavirus relief program or from Medicaid expansion - an attractive federal matching program conservative state leaders have avoided for years because of the strings attached to it.

Accounting tricks are always popular. To keep a budget balanced, the state can employ some of the same sleights of hand familiar to anyone who has reached the bottom of their bank account before the end of the month - like moving payments from one paycheck period to the next.

The periodic - and most often symbolic - attack on tax exemptions and exclusions will get a fresh airing. The lonely and unpopular call for a state income tax will, too.

The exemptions and exclusions from current taxes amount to billions of dollars. The state comptroller keeps an inventory for the curious, and should have a new version ready soon for the incoming Legislature. It looks less appealing, politically speaking, as lawmakers work their way through the supporters of each tax break. And every Texan is in that company: The $46 billion in exemptions and exclusions from the sales tax for this year alone includes $3.2 billion for groceries and $3 billion for motor fuel.

So keep your mind on sin. It's the easiest category to tax. In a state that loves to hate taxes, sin taxes are considered voluntary - just a cost of doing things that are considered unnecessary or frivolous, like smoking, drinking or gambling.

RELATED: Lawmakers pushing for legalization of marijuana in Texas

This explains why some of the biggest gaming companies in the country have hirelings ready to lobby the Texas Legislature in 2021, in spite of - or because of - the absence of legal casinos, slot machines, sports books or poker tables in the state. The Las Vegas Sands Corp., owned by Republican mega-donor Sheldon Adelson, has signed up a gang of lobbyists that includes former top aides to the governor and the outgoing speaker of the Texas House. Boyd Gaming, a casino operator, has a former top aide to the lieutenant governor on retainer. The lobbyist filings with the Texas Ethics Commission go on and on: Look up the filings under "Gambling," and the agency's website spits up a 12-page list of names.

The in-person and online gaming companies are loading up.

They're hardly alone. A dozen bills that would legalize or decriminalize marijuana for personal or medical use came in during the first week that legislation could be filed. Voters might get a chance to vote on something like this when all is said and done: "Proposing a constitutional amendment to authorize and regulate the possession, cultivation, and sale of cannabis."

SEE ALSO: 5 more states legalize marijuana for adults on Election Day

The hurdles are substantial, but they're less foreboding than the nearly absolute resistance to a state income tax. That's been a nonstarter in the Texas Capitol for decades.

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GAMBLING FOR GOOD: A Texas legislator wants to legalize casino gambling in Harris and Galveston counties to help storm victims.

By that measure, almost anything else seems like cause for optimism. Texas legislators have allowed agricultural hemp, which has all of the non-recreational qualities of marijuana, and CBD oil, derived from marijuana for medicinal uses without the intoxicants. Other states - even some conservative ones - have legalized or decriminalized marijuana. One law firm arguing for legalization claims a pot tax would bring in $1.1 billion every two years.

SEE ALSO: Texas Democrats push to legalize marijuana, but key Republicans likely stand in the way

And Texas has allowed charitable bingo, horse and dog racing with parimutuel wagering, and a state lottery - each new version of gaming framed as a way to alleviate budget problems.

Comptroller Glenn Hegar already warned legislators they will be $4.6 billion short of the revenue he originally forecast for the current budget, which runs through the end of October. He'll have another forecast for the coming regular session - an estimate of state revenue available to spend over the next two years.

It's expected to be short of what lawmakers hoped for. And it will trigger a conversation of unpleasant political alternatives among the people who write a budget that does the things Texans want done without taxing those same Texans hard enough to make them squeal.

They can cut programs and services. They can do some of the standard accounting tricks. They can create new taxes and fees or raise the ones they've got. They can do some combination of those things, taking care not to anger too many constituents along the way.

In the state budgeting business, that's the road to sin.

Disclosure: The Texas Comptroller of Public Accounts has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

The video above is from a related story from Nov. 10, 2020

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