The Ax Man Cometh (Again) to Texas

Rick Perry shows us around his office. He's Te...

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Not the economically unaffected state that Governor Rick Perry promoted in his 2010 campaign adds, the Texas legislature is faced with how to over come a $25 billion shortfall over the next two years.

Rick Perry’s claim before last fall’s elections that “we have billions in surplus” was deceptively misleading.  His reference in that ad seen here was what currently existed in a “rainy day fund”, more formally known as the Economic Stabilization Fund, with about $7.6 billion when the ads went public.  But this money is not revenue that reliably comes to meet or exceed what our expenditures are going to be, says Sherri Greenberg, a former Democratic state representative who served on the House Appropriations Committee.  This money comes from oil and natural gas tax excesses that have climbed over the last decade but as a result of higher prices, not ample supplies.   Texas oil peaked in 1970 and production actually began to decline in 1982.  And now with new efforts to convert to renewable sources because of increased oil prices this cash flow will begin to diminish rather than grow.

In a fact check article by PolitiFact last February “ Ms.Greenberg, who lectures at the Lyndon B. Johnson School of Public Affairs, noted too that it’s not easy to tap the fund. In the 2011 session, Lawmakers will legally be permitted to dip into the fund for any reason by two-thirds’ votes of the House and Senate. If they’re faced with revenue running short of what’s needed to fund the current (2010-11) budget, they can take money from the fund by getting three-fifths’ votes of each body. The same reduced threshold applies to tapping the fund if state revenue for the 2012-13 fiscal years is projected to run short of revenue that comes in during 2010-11. Other fiscal decisions take simple majority votes.”

It looks like some dipping into this fund is going to be required.  According to a report by Joe Weisenthal and Gus Lubin in the Business Insider the state legislature will be facing a $25 billion deficit on a two-year budget of around $95 billion.  Since Texas writes budgets biennially, the shortfall affects the 2012-2013 state budget also.

This shortfall came about as it did for other states; declining sales tax receipts and the Recession.  So when Perry was pompously telling voters how his actions have spared us from the effects other state economies were suffering, he was being anything than fully transparent.  And to pour salt into the wound this shortfall was further aided by Perry’s political whimsy back in the 2010 primaries to reject $750 million in federal education assistance along with conservatives who “cut school property taxes by one-third and expanded the business tax to make up the difference” in 2005. (2011 Budget Shortfall, The Texas Tribune, 6/6/11)

So where does this leave the state.  Knowing the conservative mindset of the legislature we are not likely to see revenues generated from eliminating some existing tax cuts (like the expanded business tax cut mentioned above) or creating new ones.  That leaves spending cuts and according to Weisenthal and Lubin’s article, the whole budget is basically education and healthcare spending. Cutting everything else wouldn’t do the trick.” And to Perry and the Republican’s dismay, unlike GOP governors who are accusing labor union pensions for budget short falls in their state, Texas cannot hide behind this accusation.  It’s a lean-spending, pro-business state that may have cut taxes for 40, 000 businesses as Perry’s campaign ad gloated about but it can’t blame unions for their problems and it sure can’t cut anymore spending from strapped education and health agencies.

Doing the unthinkable though is not beyond Perry and conservative state legislatures so school districts and state medicare/medicaid agencies should prepare to brace themselves to cover revenue losses.  One area of concern expressed in an e-mail to Denton DISD educators from Congressman Michael Burgess is to load up class rooms by “releasing districts from the state requirement of a maximum of 22 students in K-4 classrooms.  Releasing districts from servicing gifted and dyslexic students is also on the table.”. In other words continue to use the same number of teachers with increased school populations and leave handicapped people fewer resources to progress with.

Burgess’ e-mail states that “We all have to make sacrifices in tough times” and then further notes it will be a struggle to “keep up” in a district [like Denton] that already has “a relatively low amount of money [to spend] per student”. Perhaps we can lean on the District 26 congressman, Perry and state law makers to get themm to ask the very profitable industries in Texas, especially oil and natural gas, to make more of a sacrifice by increasing their low tax rates so those “little people” in our state can go to bed at night and have one less issue to be worried about as they try and cope with rising health care costs, diminishing educational services and simply remaining off the unemployment rolls.

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