Warnings about Hinojosa affordability initiatives

New warnings coming out regarding two big affordability promises made by Governor-elect Gina Hinojosa. Those promises involve an executive order to freeze utility rates and send out relief checks. Fox 7 Austin's chief political reporter, Rudy Kosky, joining us live in the newsroom right now with the details. Rudy. Hi, Alec. Yeah, addressing affordability was a big campaign promise on the campaign trail, but today I was told making good on that promise may actually end up costing you and definitely the state some money. Freezing electricity rates for homeowners and renters is an attempt to make good on a pledge regarding affordability. Energy expert Ed Hurst doubts the idea will work. No, the governor proposing a price cap or a price freeze on current electricity rates, that's not the way to go about this. Is there a quick fix? No, there really is not a quick fix. Power rates in Texas are influenced by how ERCOT and the Public Utility Commission manage power generation. Under the current model, prices increase when demand increases. In theory, that extra profit is to encourage construction of new power plants. Past attempts to change that financial model? As we remember in 2021, Governor Abbott appointed Peter Lake to be chairman of the Public Utility Commission. In his first public statement, he said that the ERCOT market model needed to be scrapped. And no one liked his proposal. The legislature and Governor Abbott refused to go with it. Hinojosa's promise to declare a high-cost emergency may backfire during a major weather event. Analysts like Hurst say the executive cap may trip an emergency shortage and rolling blackouts. We could have some really tough times January, February. A different kind of state. Payout is the other promise, a $1,500 check from Hinojosa to every Texas household. But that extra cash could be considered extra income and taxed by the IRS. Hinojosa's affordability emergency declaration. May prevent the tax hit, but political analyst Matthew Wilson pointed out to me that kind of tax break is typically done for natural disasters. The conditions that we face right now would not fall under most people's definition of an emergency. This seems like it's going to get into a larger debate over emergency powers and the governor-elect. I think that's right. What we've seen in recent decades, in fact, Is a tendency of executives and by executives, I mean from the president to governors to mayors increasingly making use of emergency powers to enhance the authority of their office. Is this really just a semantical political game? I think to a large degree, yes. Legislation called Emergency Household Economic Relief was filed by San Antonio Democrat Roland Gutierrez. It's estimated 11 million households would be eligible, including undocumented migrants living in Texas. Currently written, the bill has a $17 billion price tag with the money coming out of the state rainy day fund. I do think there is some cause for wariness about what really does constitute an emergency, a truly exceptional circumstance, and what really is just politics Yeah, but certainly everyone's feeling the pinch. Now, passing this relief check idea would require a two-thirds vote in both the House and the Senate. Democrats, you know, they're going to be the majority in the House under the Capitol Dome in 2027, but they will still need some Republicans to sign on to that relief measure. Alec? Rudy, how big of a hit would the Rainy Day Fund actually take if, and I say if, if we see these relief checks? It's a big if and it's a big number. $17 billion is the estimate of what this is going to cost, those relief checks. So that would leave the Rainy Day Fund with a balance of about $10 billion. That's not a lot of money to help if a major disaster happens. Alec? $17 billion. Thank you, Rudy.