A Texas lawmaker has proposed a solution to cover the cost of the under-funded Texas Windstorm Insurance Agency: build casinos in coastal counties and use the tax proceeds to cover the cost of insurance.
In a bill filed Friday, state Rep. Joe Deshotel, a Beaumont Democrat, proposed licensing casinos so taxes from them could provide money for residual windstorm insurance and flooding assistance.
The bill, HB 494, would give the Texas Lottery Commission the power to issue six licenses to operate casinos — one each in Galveston, Jefferson and Nueces counties, and three more to horse or dog tracks in Harris and Bexar counties.
The proposal also would create a gaming tax of 18 percent of a casino’s revenue, and apply some of that money to ensure the windstorm association has enough funding to cover its insured losses and operating expenses.
It also would send part of the tax to a flooding assistance trust fund the governor’s office could use for emergency assistance during disasters like Hurricane Harvey.
“Just like the lottery, where a portion of funds go to public education, this is a need that’s underfunded,” Deshotel said. “If the lottery helps education, we can help with the problem of windstorm, which is disproportionately paid for by the coastal counties.”
It’s not the first time Deshotel has filed a bill proposing that casinos pay for the windstorm association. He filed a similar bill in 2015 that was left pending in a house committee. New this year is the proposal to create a fund for flood damage.
Deshotel acknowledged his bill was a long shot with or without the connection to windstorm or flooding. Both Democrat and Republican members of the legislature have opposed legalized casinos over the years for reasons rooted in religious, secular social justice and economic arguments.
Deshotel expected that opposition to continue in the coming session, he said.
“It’s something we should do regardless of whether the funds are dedicated to those issues,” he said. “Every bordering state to Texas has legalized gambling. We lose millions of dollars in potential tax revenue to those areas. We have the consequences of gambling, but none of the positives.”
Legislators will discuss making changes to the windstorm association during the coming session. The association is facing a funding crisis in the wake of Hurricane Harvey, for which it paid out $1.2 billion after the storm, numerous observers, including members of the state’s Sunset Advisory Commission, have argued.
Texas Gov. Greg Abbott earlier this year blocked a proposal by the association’s board to raise commercial and residential rates by 10 percent.
Abbott wanted to give the legislature time to consider systemic reforms before a rate hike was approved, he said.
In November, the Texas Sunset Advisory Commission released a report offering a grim view of the association’s financial sustainability.
The association would need to increase its residential rates by 32 percent to cover the anticipated costs of claims and expenses, according to the sunset report.
The commission also recommended the association be restructured.
The association does not receive any general revenue or tax dollars.
As of Monday, no other bills regarding the windstorm association had been filed.
The Texas Legislative Session begins on Jan. 8. The deadline to file bills is March 8.