Glenn Hegar is the chief accountant, revenue estimator, treasurer, check writer, tax collector and procurement officer for the 12th largest economy in the world – the state of Texas.
The comptroller’s office, which has almost 3,000 employees in 26 divisions, processes every single bill for the state government. That works out to about 12 million checks a year – 59 checks in any given minute.
Luckily the state owns a signing machine.
“Do you have any idea how bad I would have writer’s cramp?” Hegar quipped Monday morning at the Greater El Paso Chamber of Commerce.
About 50 business, political and community leaders gathered at the town-hall style meeting to hear from the comptroller and ask him questions. El Paso was the last stop on Hegar’s 27-city, two-month “Good for Texas Tour.”
The comptroller’s office also collects taxes and helps state agencies and local governments buy the things they need, managing billions in contracts on behalf of state agencies and local governments.
But perhaps the comptroller’s most high profile – and sometimes controversial – job is tracking the state’s revenue streams and telling legislators how much they have to spend when they meet in Austin every two years.
“Is there anybody in this room that with 100-percent accuracy can predict how much money will come into their personal household, starting in nine months and ending two years later? Because if you can, we’d like to hire you,” Hegar said Monday.
It’s a tough job, and the stakes are high.
If the estimate of how much revenue the state will collect over the biennium is too conservative, legislators may decide to make deep cuts they don’t need to, leaving the state with a windfall, as in 2011.
If it the estimate is too optimistic, the state can end up in a hole.
The comptroller’s office does a lot in a big state – Texas has a gross domestic product larger than Spain, South Korea and Mexico – but the question Hegar says people most often ask him first is, “How do you pronounce comptroller?”
So Hegar began his talk on Monday as he has many of his others: by putting the matter to rest. It’s pronounced like “controller,” he said.
“But I always tell people just call me Glenn, and we can skip the comptroller part.”
To make its revenue estimates, the comptroller’s office collects tons of economic data and publishes some of it, providing economic snapshots for the state’s 12 economic regions.
The Upper Rio Grande region, which includes El Paso, lags behind the state in economic growth, dragged down in part by a lack of business diversity, according to the most recent economic snapshot. The government and manufacturing sectors play an especially large role in the El Paso economy, it says.
El Paso is the only metropolitan statistical area in Texas to experience a decline in real per capita gross regional product from 2001 to 2014, the data show.
But it’s not all bad news. The Upper Rio Grande region accounted for 2.3 percent of the state’s $1.6 trillion in personal income in 2013, according to the data.
Per capita personal income grew 43 percent from 2003 to 2013 in the Upper Rio Grande region. That’s behind the state, which saw incomes grow 46 percent, but ahead of the nation, which saw incomes grow 37 percent.
The comptroller’s office is also in charge of unclaimed property, which includes things like undiscovered valuables, royalty payments and abandoned safe deposit boxes. At last count, it was valued at $4 billion. El Paso County residents have more than $44 million waiting to be claimed, according to Hegar.
You can check to see if you have any unclaimed property at ClaimItTexas.org.
Hegar was elected comptroller in 2014, replacing Susan Combs. A sixth generation Texan, Hegar grew up farming land that has been in his family since the mid 1800s.
He earned a bachelor’s degree from Texas A&M and went on to earn his master’s degree and law degree from St. Mary’s University. Later, he earned a master’s of laws degree from the University of Arkansas.
Before moving into comptroller office, Hegar served for 11 years in the Texas Legislature.
He and his wife, Dara, have three young children: Julia, Jonah and Claire.
Hegar sat down with El Paso Inc. after the town hall meeting and talked about the importance of the regional economy, how declines in the oil and gas industry are impacting state revenue projections and the state’s promise to make local school district’s budgets whole again after the passage of Proposition 1.
Q: One of the most common questions you get is how to pronounce comptroller?
Yeah, that’s correct.
Q: I’m not sure how they get to the pronunciation “controller” when the word starts C-O-M-P-T. There is an “m” and “p” in there.
It’s much like a lot of different words. Is it tomato or tomahto?
Q: What does the latest state revenue estimate show? It’s down I hear?
We are constantly looking at economic data every week. You want to make sure you aren’t looking at things in a vacuum. The state is comprised of 254 counties and 27 million people.
Earlier in the year when we estimated what revenues were going to be in, it was hard to say at the time if oil prices were going to stop or continue to go down.
The price stabilized for the most part in the 40s, and as a result, right after the close of the business year, which is the end of August, it was time to refresh our revenue estimate.
With a slightly slower growth rate in the state of Texas, about 2.4 percent annual growth, we revised the revenue estimate lower. That ended up taking $1.6 billion out of sales tax revenues.
Sales tax revenue is the biggest receipt of state tax dollars, and then also oil and gas severance taxes.
In net, the short of it is, it ends up being about $2.6 billion, which is a significant amount of money but only about a 2.4-percent decrease.
Q: What is the primary reason for the decrease?
Really, the main driver is the contraction in the oil and gas industry.
Q: What’s still strong – the horse to bet on going forward?
Here in El Paso, if you look at the last three-month average, sales tax collections are 2.9 percent higher than they were for the same three months last year.
If you go to the metroplex, say to the Dallas-Fort Worth area, you are roughly still at about 8 percent above what it was last year – for every single month.
But overall the state is really barely positive, taking together some hot economic regions and some slower economic regions.
Some of the biggest economic drivers include retail, the hospitality industry, information technology and construction. Those all continue to grow. You also have the financial services sector and health care industry that continue to grow.
The two sectors that have contracted the most are the mining sector, which is oil and gas, and manufacturing.
Texas is the largest exporter out of the 50 states. We export $294 billion worth of product. You can add up California and the state of Washington and you still don’t get to $294 billion.
Of course, 40 percent of that goes across to Mexico, the state’s largest trade partner.
Q: The El Paso region is heavily reliant on manufacturing, so a contraction in that sector never bodes well for our economy. How is this region performing?
The economic activity that moves back and forth along the border is a significant economic driver, but you have also seen a big increase in the education and health care sectors – growth at the University of Texas at El Paso and the Texas Tech Health Sciences Center.
You also have seen growth in the military sector and that is where a lot of the job growth has been.
Statewide, there are roughly 600 people a day in natural population growth and another 650 move to Texas every single day.
A lot of the growth in Texas over the past three or four years has been because of the oil and gas industry, and that’s not in El Paso, so it has not seen the surge in population that other areas have.
But is that necessarily a bad thing? With a higher growth rate, there also come some other issues.
Q: Anything else you might add about this region? The economic snapshot published by your office for the Upper Rio Grande region paints a pretty negative picture.
Is El Paso growing like the Dallas area? No. But looking at the increase in sales tax receipts over the last three months, is it doing better than the Houston? Yes.
When you talk about the Upper Rio Grande region, in terms of population and economics, you’re mostly talking about El Paso.
And thinking about $27 billion in per capita income in this region, that’s huge. That’s 2.3 percent of the entire state.
My point is, one thing you can cull from that is, as a small portion of the state, it’s amazing how well economically El Paso has continued to do over the years.
Q: Is the revenue going to be there for the state to make local school districts’ budgets whole after the approval of Proposition 1, which provides property tax relief to homeowners? The state has promised to cover the cost so school funding does not suffer.
Absolutely. The voters approved Proposition 1, which increases the homestead exemption by $10,000. That’s about a $700-million tax cut to local property tax payers across the state.
That $700 million will be made up on the state side and that is in the state budget. So that money has been essentially swapped.
Q: What is the latest on efforts to reform the franchise tax, also known as the margin tax, which many businesses despise?
The Legislature cut the margins tax by 25 percent last legislative session.
The House and the Senate recently announced their interim charges, which are the issues they will study between now and next session.
The margins tax, much like the property tax and other tax systems, are part of their charges to study. Legislators will work through that process of what they want to change, if anything.
Q: The comptroller’s office has consistently found the El Paso Central Appraisal District’s commercial valuations to be below market value. Are property appraisals in El Paso where they should be?
I haven’t pulled the data set for El Paso County as a comparison.
The property tax assistance division, we can get the information pretty easily to find out where their studies are at, but that’s not something I looked at on the plane ride out here. That’s a good question, though.
Q: Some have raised concerns about the amount of debt Texas cities and counties have piled up. How is El Paso doing in that regard?
I can’t comment specifically on what the local city or county’s debt burdens are in El Paso, but on our website, you can easily look up and see what those numbers are.
Statewide, though, if you look over the course of the past 10 years, Susan (Combs, former Texas comptroller) made a point of it: the rapid growth in local debt.
There has also been growth in the state debt overall. If you look at the state of Texas as a comparison to the other 10 largest states in our nation, our growth debt rate has increased significantly.
But if you look at the debt per capita, we have a much better ranking. But it is something to be very cautious of as we move forward.
Q: Is there revenue to address the deferred maintenance of state property?
The Legislature last session put $200-plus million into differed maintenance. So there was money that was put in to help build up state parks and also to put into state buildings. This is something I realized once I got into office, that we needed to improve the maintenance of our state facilities.
The Legislature also put money into building some new facilities because, in the long run, it is cheaper to own it than lease it. The Legislature took a major step forward on dealing with deferred maintenance.
Q: What are your priorities going forward?
Focusing on the core mission, which is the administration of the tax and how we make it much more customer oriented. Also with the finance treasury section, we are continuing to make sure we have a good operation.
We also need to constantly monitor as we do with the revenue forecasting.
We play a fairly large role in state contracts from a procurement perspective. Contracts was an issue the Legislature talked about last legislative session, so we have a little bit of an increased role going forward in state contracting.
Q: How is the comptroller’s office involved in state contracting?
Not the technology, computers and such, but when it comes to everything else you might buy, we set those procurement contracts. Those are the contracts that state government can buy from as well as local governments.