It's official: The hole is deeper than we first thought

Our newly married state comptroller Carole Keeton Rylander Strayhorn has announced that the state budget deficit isn't $5.1 billion as she once insisted but really will be significantly more.

Strayhorn said she will release the official estimate of what lawmakers can spend on their 2004-05 budget early next week. But she said a "spending spree" by the 2001 Legislature, combined with a sluggish state economy, will force lawmakers into cutting current state services.

"It's going to be cuts. It's going to be painful," said Strayhorn, who changed her last name from Rylander after getting remarried last week.

So what changed between 2001 and September of 2002 when she last claimed the deficit would only be $5.1 billion? My guess (since the article doesn't go into that) would be that the state economy did not grow at the 2.1% rate for 2002 that Rylander/Strayhorn said it would. In other words, one way or another, she was just plain wrong.

But whatever. Let's look at the reasons she now says we're in deeper doodoo than we first thought:

As the last session ended -- and before Perry signed the budget into law -- Strayhorn predicted lawmakers would face a $5.1 billion shortfall this year.

She said lawmakers went ahead and pushed back major payments for Medicaid and Medicare and created a new system of health insurance for teachers that will cost more than $2.2 billion every budget cycle.

"The last Legislature had a party and left this Legislature with a hangover," Strayhorn said Tuesday.

I'm not sure what "pushed back major payments for Medicaid and Medicare" means, but it sure sounds to me like the kind of accounting tricks where you charge something to one year's budget instead of another's. If so, what difference does this make? It was an obligation, and one way or another it had to be paid. I'll bet it was deferred to help balance the 2001 budget, since we're constitutionally mandated to have a balanced budget. Maybe the Lege pushed this obligation back out of craven unwillingness to make tough budget decisions in 2001, and maybe they did it out of an optimistic faith that the overall economy would get better (after all, we now had a Republican in the White House who was busy stimulating the economy via massive tax cuts) and we'd be able to grow our way out of that particular mess. In any event, we chose "pain tomorrow" over "pain today", and now the bill is due.

As for the teacher-health-insurance thing, I have no doubt that it was politically popular, just as the massive tax cuts that Dubya gave us in the 90s were popular. In fact, it's an accomplishment that Governor Goodhair touts on his web page:

"Last session, we made a needed investment in our public schools with an across-the-board $3,000 pay raise for every teacher, counselor, nurse and librarian. I would like to see that trend continued by freeing up close to $700 million in capital gains from the Permanent School Fund to be used for teacher compensation or benefits."

HB 3343

$1.2 billion in budget for school employee health insurance without impacting the Permanent School Fund; funding from available revenue.

So why is this the Lege's fault? Silly question. What was the Texas Lege in 2001 that it isn't today? Majority Democrat, of course. Never miss an opportunity to remind everyone that today's problems started when the other guy was in charge.

UPDATE: Just posted on the Chron webpage is this AP story in which Governor Goodhair joins Strayhorn in piling on that bad ol' Lege:

"I vetoed one half of a billion dollars worth of spending and, frankly, I would have vetoed more had I been able to get to it," Perry said. He said he did not remember what else he would have nixed with his line-item budget veto power.

"Had I been able to get to it"??? What, was he too busy moussing his hair to give the budget a thorough review? What the hell is that?

Posted by Charles Kuffner on January 08, 2003 to Budget ballyhoo | TrackBack