State Budget Battle to Resume
Texas could have more than $8 billion in its rainy day fund, but lawmakers must be willing to spend it. Photo illustration by Todd Wiseman/Texas TribuneAudio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.
In less than a year, the Texas Legislature will head back to work. Another protracted budget battle will be waiting for them, in spite of the fact that the state’s economy has picked up in recent months.
The good news: The state ended 2011 with about $1.6 billion more in revenue than was predicted. According to comptroller spokesman R.J. DeSilva, many of the state’s economic indicators are pointing in the right direction.
“Sales tax is a major source of our revenue and it’s been doing well – increasing for 20 plus months now because of a combination of strong business spending and industries like oil and gas producing sectors, and consumer spending,” DeSilva said.
“It’s too early to say for sure, but right now it looks that 2013 will be a somewhat easier session then 2011,” said Lieutenant Governor David Dewhurst.
In a couple of months, Dewhurst will sit down with legislative staff and senate budget leaders to begin working on the next budget.
“I am encouraged by the additional revenue that has been generated by our Texas economy from – collectively – a lot of hard work,” he said.
Revenues are expected to grow for the foreseeable future, but slowly. Too slowly, said Eva DeLuna Castro. She follows the state budget at a progressive think-tank called the Center for Public Policy Priorities. The situation probably won’t be better, according to Castro, but it might not be worse either.
“We might actually just see a rerun,” she said.
Just to remind you: that could mean a repeat of the $15 billion cut from the current state budget – a budget that will need an emergency appropriation in 2013 just to cover the state’s Medicaid bill. One bright spot is the state could have more than $8 billion in its Rainy Day Fund. Castro said for that to help, lawmakers must be willing to spend it.
“Just as in the 2011 session, we did have a sizable rainy day fund, but legislators weren’t willing to use it all,” Castro said. “So, if that dialogue doesn’t change, if they’re saying the rainy day fund is once again mostly off-limits, that narrows down a lot of options that legislators have.”
There were plenty of conservative advocates for saving the rainy day fund in 2011. Governor Perry helped lead the charge, as did the Texas Public Policy Foundation – a conservative think tank.
“We’re still advocating not using any of the money for ongoing expenditures for the next biennium,” said Talmadge Heflin, who directs the TPPF’s Center for Fiscal Policy.
He said lawmakers could use rainy day funds for that looming Medicaid bill, which could reach $5 billion. Beyond that, as always, Heflin is pushing for more cuts and no new taxes in the next state budget. He acknowledged that making cuts for two straight sessions won’t be easy.
“You know every dollar has a constituent, and those constituents start communication with the legislators when there’s talk about cutting them back,” Heflin said. “So yeah, the more you come press it, the more difficult it is.”
The first real evidence of how the next budget is shaping up will come this summer, when state agencies receive letters from Governor Perry on how to proceed with their requests. If it’s good news, he’ll be telling agencies to budget for what they need. If it’s bad news, he’ll tell them to figure out how to provide their current services with less money.
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