The Back MicThe Back Mic: Abbott Open to Other ERCOT Reforms, Tax Collections Indicate Economic Slowdown, Legislative Bill Statistics Update

This week — the governor indicates more ERCOT market reforms are possible, the comptroller’s sales tax update features a growth slowdown, and thousands of bills have been filed in the Texas Legislature.
February 3, 2023

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Abbott Leaves Door Open for Other ERCOT Market Plans

During an emergency press conference on extreme weather conditions hitting the state this week, Gov. Greg Abbott indicated potential agreement with Lt. Gov. Dan Patrick on a certain portion of power grid reform.

Abbott, who has reiterated that “everything that needed to be done, was done” last session to fix the grid’s physical vulnerabilities, has been less vocal about the pending reform of the Electric Reliability Council of Texas (ERCOT) market redesign.

Last month, Abbott backed the proposed Performance Credit Mechanism (PCM) option in front of the Public Utility Commission and advised the agency to get on with its implementation. At the Tuesday press conference this week, Abbott again touted the PCM but then said that other options may be on the table as well.

We’re not going to end this session without passing strategies to ensure we have enough power for the people of this state for the next 40 years,” he said. Patrick has made similar references to creating more dispatchable generation on the ERCOT grid, even suggesting that it could require subsidizing the construction of new power plants.

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Abbott has made previous comments about fixing the current state of the ERCOT market. In July 2021, he called for dispatchable development and sticking renewables generators with reliability costs.

View a lengthier discussion of the PCM and ERCOT market redesign at The Texan’s 88th Session Kickoff event here.

Sales Tax Collections Hit Another Record, Slowdown Approaching

Texas Comptroller Glenn Hegar announced another record month for sales tax collections, reaching $4.1 billion in January. All collections totaled $6.2 billion, higher than December’s total but lower than November’s.

Sales taxes are the largest driver of the state’s record estimated budget surplus, which rose to $32.7 billion last month.

But Hegar cautioned the announcement, stating, “While state sales tax collections reached another all-time high, it is important to note that the rate of growth from the previous year was the lowest in the 22 months since the end of pandemic restrictions.”

This reflects slowing in the rate of inflation and slowing growth in real economic activity as well. Unfortunately, inflation continues to erode the purchasing power of Texas consumers as the consumer price index rate for December was 6.5 percent.”

That means inflation is beginning to really dissuade commercial activity for the first time since the government-mandated closures were lifted; there is broad speculation about the country dipping into a recession.

To date, inflation has largely run alongside the burgeoning activity of a rebounding economy. Even so, inflation is sticking to its downward turn, falling 2.5 percent from its 9 percent Consumer Price Index high in June — which is a good sign for the economy and comes with fewer consumption taxes paid.

2,400 Bills Filed So Far in 88th Legislative Session

The Texas Legislature is four weeks into the 88th regular session, and so far nearly 2,400 pieces of legislation have been filed. The filing period for this session first opened in November, but neither chamber has yet filed its priority slates.

Of the total filed, 1,751 are House bills and 637 are Senate bills. During the 2021 regular session, nearly 7,000 were filed, over 1,000 of which passed. That level is slightly lower than the one posted by the Legislature in 2019, the high water mark of activity since the 2009 session.

Additionally, more than 200 resolutions have been filed, more than half of which have already passed.

Legislators have until March 10 to file legislation before the deadline passes. Sine die is May 29 this year. View the filed bills here.


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Brad Johnson

Brad Johnson is a senior reporter for The Texan and an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.