Mon January 10, 2011
Estimated Texas Budget Gap Still Between $15 and $27 Billion
After today's eagerly awaited revenue estimate from the Texas Comptroller, it appears we are not much closer to knowing how deep and how wide the state's dreaded budget shortfall will be.
Listen to KUT's Ben Philpott talk about it with KUT freelancer Gretch Sanders.
Comptroller Susan Combs' revenue estimate, issued this morning, predicts the state will generate $72.2 billion to spend in the 2012-13 biennium, the two year time span for which legislators must draft a budget in the once-every-two-years session that begins tomorrow.
So that's how much money is coming in, but we won't know how big the budget gap is (and consequently, how severe cuts to government could be) until we receive a baseline budget from the Legislative Budget Board. No exact date has been set, but it is not expected for a couple weeks.
We know how much last year's budget was, but with increasing enrollment for government services like public schools, Medicaid/Medicare, and food stamps - not to mention inflation pressures - costs will increase just to maintain the same level of services.
In the meantime, public interest groups differ on their forecasts for the budget shortfall. The conservative-leaning Texas Public Policy Foundation predicts a $15 billion shortfall. The progressive-leaning Center for Public Policy Priorities predicts a $27 billion shortfall. The difference is mainly due to conflicting opinions on how much you think the state needs to spend to maintain current services.
Those estimates are almost exactly within the range observers were discussing before the Comptroller's estimate: $15 to $28 billion.
Meanwhile, just about everyone involved in state politics is issuing reactions to the Comptroller's report. Here are some of the first to send us their statements. We'll add to this throughout the day as more reactions come in. Please register your opinion in the comments below.
From Texas Governor Rick Perry:
“Comptroller Combs delivered a revenue estimate today that shows the Texas economy continuing to grow steadily ahead of the nation, yet, as expected, is also reflective of the national recession’s lingering impact on state revenue. To ensure Texas continues to lead the nation’s economic recovery, state leaders must remain good stewards of taxpayer dollars, continue strategic investments and stand by the proven fiscal principles that have helped us balance our state’s budget when facing similar challenges in the past. As families and employers are doing all across this state and nation, we will separate the wants from needs, and then cut spending.
“I am confident we will meet our state’s needs within this revenue estimate by prioritizing spending without raising taxes, laying the foundation for our state’s future prosperity.”
From Lt. Governor David Dewhurst:
"At this point, we know that the budget shortfall for the current 2010-2011 biennium is $4.3 billion, but any further speculation about future spending is just that – speculation. Unlike Washington, the Texas Legislature prioritizes spending based on available revenue, not from an infinite wish list of earmarks and automatic spending increases.
"I think that when we pass the final budget, it will be reminiscent of 2003 when people said there was a $10-16 billion shortfall because some wanted $10-16 billion in new spending. Yet, we balanced that budget, increased funding for public education, covered our obligations under Medicaid, and still cut the budget by $2 billion."
From House Speaker Joe Straus (R-San Antonio):
"The Comptroller's revenue estimate reflects a conservative, cautious outlook on the economy, which is consistent with the expectations we used in developing the base budget bill," said Speaker Straus. "We have serious challenges, but I look forward to working with Gov. Perry, Lt. Gov. Dewhurst, the Senate and the House to address the will of the voters and pass a fiscally conservative, balanced budget with no new taxes."
"Comptroller Combs' estimate provides a clear picture of the budget challenges the Legislature faces during the 82nd Session," said Rep. Jim Pitts. "Texas remains strong, and we will make the tough choices necessary to ensure that we have a balanced budget and that our state remains the best business climate in America."
From Talmadge Heflin, director of the Texas Public Policy Foundation's Center for Fiscal Policy:
“This session’s budget writers must recognize that just as Texans’ family budgets have shrunk, so now must the state’s. Now is the wrong time to increase the burden of state government on those family budgets. Legislators must set careful priorities to ensure that taxpayers’ limited resources are spent in the most effective and responsible manner.
“While this challenge may seem daunting, I encourage incoming lawmakers to heed the lessons of 2003—when the Legislature closed a $10 billion budget shortfall without raising taxes and positioned Texas for a decade of economic dominance.
“The decisions of this legislature will determine what kind of future Texas will have. A budget within existing revenues will keep a light burden on Texas taxpayers, encouraging large businesses and entrepreneurs to create jobs here. However, raising taxes to expand government’s footprint would send Texas down the path of California and Ohio toward economic stagnation and fiscal bankruptcy.”
From CPPP executive director Scott McCown:
“Today the Texas Comptroller of Public Accounts delivered her constitutionally required biennial revenue estimate. While she projects continuing economic recovery, her forecast shows a $4.3 billion deficit in the current budget and only $5 billion more in General Revenue for the upcoming two fiscal years than in the current biennium adjusted for the deficit. When increased population and higher costs are taken into account, Texas is at least $26.8 billion short of the General Revenue needed to provide for current services into the next biennium. In other words, we are short by at least 25 percent.
“With a revenue shortfall this large, the Legislature cannot write a budget through cuts alone without doing terrible damage to Texans and to the Texas economy. For example, cuts alone mean shortchanging our children’s education from kindergarten through college. Cuts alone mean compromising public safety. Cuts alone mean suffering for children, the elderly, and those with disabilities. Cuts alone mean losing jobs and curtailing economic development.
“Instead, the Legislature should do what Texas families do. When Texas families face tough times, they use their savings and try to raise more money before they resort to cutting back on things their family really needs. The Legislature should take a similar balanced approach."
From State Senator Eddie Lucio, Jr. (D-Brownsville), quoting CPPP's $27 billion shortfall estimate:
"The Comptroller's revenue estimate is a bitter pill to swallow. A $27 billion hole in the state budget means there are no easy answers and no quick fixes. This session is going to be about hard decisions. Do we cut vital services? Do we raise taxes? Do we spend the rainy day fund? My priority will be to stand up for working families and the vulnerable. I will advocate for healthcare, education and the working poor. After all, an unhealthy, uneducated and underfunded Texas is not a globally competitive Texas. But more than that, the budget must be compassionate. It is a moral document which speaks to our priorities as a community. I implore my fellow lawmakers to put politics aside and invest in Texas - to place morality above ideology."
From State Senator Wendy Davis (D-Fort Worth) quoting the CPPP's $27 billion shortfall estimate:
“If we expect Texas to continue to attract good-paying jobs and to protect the jobs we already have, we need to make education funding a priority. Education is the key to preparing our young people for a competitive, global economy and to bringing companies and work to Texas.”
From the Texas Conservative Coalition Research Institute State Budget Task Force:
State Representative Warren Chisum (R-Pampa), TCCRI President and co-chairman of the budget Task Force, stated: "The challenge posed by the revenue shortfall is significant, but the work of our budget Task Force should instill confidence in legislators and the public that we will balance the state budget without raising taxes."
State Senator Tommy Williams, TCCRI Board Member and co-chairman of the budget Task Force, added: "New or higher taxes are a non-starter: they undermine economic growth and future prosperity for our state. Fighting for taxpayers means thoroughly reviewing the state budget, reconsidering our priorities, and eliminating spending that is duplicative, wasteful, or outside the constitutional missions of state government."
“The Comptroller’s estimate shows Texas revenue is coming up billions of dollars short of the amount required to meet our state’s minimum need for essential public services. Addressing this huge revenue shortfall by cutting spending alone would hurt Texas families and the Texas economy. In the short run, Texans would lose jobs. In the long run, Texans wouldn’t have the education and skills we need to compete in the global economy.
“Texas needs to take a balanced approach, rather than closing the shortfall through cuts alone. We need to use money available in the Rainy Day Fund, we need to maximize federal funds, and we need to consider ways to add new revenue. Only through a balanced approach can we protect Texas families and the Texas economy."
From State Rep. Mike Villarreal (D-San Antonio), who quotes the CPPP budget gap estimate of $27 billion:
"Republicans have ignored the fact that over the last decade our population has grown three times faster than our state tax system. A fast-growing state the size of Texas requires investments in infrastructure and basic public necessities, but Republicans failed to take responsibility."
"As a result, Texas’ revenue shortfall is larger than California’s budget hole. Our children deserve better. Texas has always risen to the challenge of ensuring a brighter future for our children. It’s time we rise to that challenge again."
From State Rep. Lon Burnam (D-Fort Worth):
"The Comptroller's estimate lifts the veil and exposes the truth behind Republican claims of fiscal responsibility," said State Rep. Lon Burnam (D-Fort Worth). "Now they want to short-change hard-working, over-taxed Texans by cutting basic services to make up the short-fall they created."
From Round Rock-based Bluebonnet Trails Community Services:
“Comptroller Combs confirmed what we’ve expected and feared for many months—that available state revenues will require legislators to make very difficult budget decisions for the state. Any cuts to state mental health and intellectual and developmental disability services will ultimately force Bluebonnet Trails to reduce the number of people we are able to serve,” said BTCS Executive Director Andrea Richardson.
“We look forward to working with legislators this session. We have begun discussions of the value of our life changing and life saving services to the community— services where we effectively treat patients and keep them out of the more costly cycle of unnecessary incarceration or hospitalization.”