Texas owes the federal government billions of dollars, but due to inaction by the state Legislature, they are on track to owe millions more.
Monday, September 6, was more than just a federal holiday. It was also the deadline by which the state of Texas was to pay back a debt of almost $7 billion to the federal government without being penalized with interest.
The date came and went, and the Texas Legislature chose not to address it, meaning Texas taxpayers will now be the ones being penalized when those millions of dollars could have instead been used for things like tax cuts or infrastructure spending.
What is the Issue?
Texas owes a total of $7 billion to the U.S. Treasury’s Unemployment Trust Fund. They had $2 billion in the fund before the pandemic and should return to that amount to help avoid a tax hike.
The $7 billion was accrued over the last 18 months, much of it as a result of poor decisions in response to the pandemic itself.
Gov. Greg Abbott added the appropriation of federal COVID-19 relief money to the recently concluded second special legislative session’s agenda. Though it was on the agenda, not a single bill was filed related to appropriating the money, let alone appropriating a portion of it to pay down the debt. The special session concluded a few days early, with the Legislature ultimately not addressing the issue.
For every day the state does not pay back the debt beyond September 6, roughly $374,398 in interest is added. The issue has again been added to the agenda for the upcoming third special session, but that session does not begin until September 20. This means that at a minimum, 14 days of interest amount to upwards of $5,241,572, on top of the $7
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