Bill filed to give every Texas household $1,500, a Gov.-elect Gina Hinojosa campaign promise

As Texas Democrats firm up their agenda ahead of next year’s legislative session, more details have emerged about a key campaign pledge by Gov.-elect Gina Hinojosa to tackle the state’s cost of living woes: sending $1,500 checks to every Texas household.

State Sen. Roland Gutierrez, a San Antonio Democrat, laid out a proposal this week to implement that pledge, spelling out some of the potential mechanics of how Texas — not in the business of sending cash payments to its residents — would send $1,500 to 11.6 million households. 

The state would have to build a way to distribute the cash payments from the ground up, with the idea of putting money in Texans’ bank accounts by the end of next year.

The idea, which Hinojosa pitched as one-time financial relief to help Texans ease their affordability woes, faces a tough climb out of both chambers. To pay for the $17 billion proposal, lawmakers would draw from the state’s “rainy day fund” — essentially Texas’ savings account, which sits north of $27 billion. Doing so requires a two-thirds vote of the members present in each house.

Though Democrats control the Texas House of Representatives, they would still need significant Republican support to get it over the line. In the GOP-dominated Senate, Democrats would need to peel off nine Republicans.

Getting Republicans on board will prove difficult if not impossible. Though GOP state lawmakers have sought to provide financial relief to Texans, including via property tax cuts, they’ve criticized efforts to send cash directly to Texans in the past — although President Donald Trump said in September he’d give $5,000 to every adult if Republicans held both chambers of Congress following last week’s midterm elections. Texas prohibits sending direct cash payments to residents, but Democrats appear to have found a workaround.

There’s one aspect of the proposal likely to stir a fight. The bill doesn’t specify whether residents have to be U.S. citizens in order to receive payment, according to a Tribune analysis.

It’s possible the bill already comes up short. Gutierrez’s bill calls for using $17 billion to fund the idea, and allows up to 1% of those funds to be used to pay for administrative costs. That’s not enough to cover every Texas household, leaving a shortfall of at least $400 million.

If the proposal dies over the lack of GOP support, it could give Democrats fodder to cast Republicans as insufficiently attentive to the pressures put on Texans by the state’s cost of living.

How it might work

Under Gutierrez’s bill filed Monday, Texas households would get $1,500 each. For example, that’s enough to cover all of, if not a good chunk of, the typical monthly rent in many Texas metro areas, according to Zillow data. Households would have to live in Texas as of Jan. 1, 2027.

The comptroller’s office would have to set up a process for determining whether households are eligible for the payments — and then figure out how to send those payments. Texas doesn’t have an income tax, so it doesn’t have a ready-made statewide list of households and ways to send them money.

The bill would allow the agency to use information “lawfully available to the comptroller or another state agency” to verify whether a household is eligible. Residents would also be able to apply, and could prove their eligibility by providing documents like a lease or utility bill. It’s not clear whether households deemed eligible by the comptroller’s office would automatically receive payments.

For Texans experiencing homelessness or other households without a permanent address, the comptroller would have to figure out a way to get payments in their hands.

State law generally bars lawmakers from granting public money directly to individuals, but an exception allows legislators to do so in cases of “public calamity.”

The bill attempts to take advantage of that exception by declaring the affordability crisis a “public calamity.” It’s unclear whether that’s legal. 

The proposal aims for the state to issue payments by the end of 2027, though they would accept applications for that money through the end of 2028.

There are some concerns the bill could backfire.

Issuing $1,500 checks to every Texas household carries the possibility of driving inflation by fueling demand and driving up prices, said John Diamond, senior director of the Center for Public Finance at the Baker Institute for Public Policy at Rice University.

Some research suggests that $1,400 checks the federal government sent to U.S. citizens in the wake of the COVID-19 pandemic, aimed at providing financial relief and stimulating the economy, contributed to inflation. Those checks helped create demand while the global economy was still dealing with supply chain problems.

Diamond said $17 billion is “not a massive amount,” given the state’s approximately $2.9 trillion gross domestic product, “but it’s still enough to create some pricing pressures.”

“You really don’t want to add any fuel to the fire,” Diamond said.

In an August interview, Hinojosa disputed the idea that the plan would drive inflation. Economists who vetted the idea, she said, believe a state-level payment wouldn’t have the same effects as the federal stimulus checks given its smaller scale.