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We have a number for the hole

There’s actually more than one number that can be used to accurately describe the state budget deficit, depending on what your perspective is, but however you look at it, it’s big and it’s no longer projected or theoretical.

State Comptroller Susan Combs today said lawmakers will have $72.2 billion available to spend in general revenue over the next two years — nearly $15 billion less than they budgeted in the current period.

Combs’ official revenue estimate sets the limit for how much lawmakers can budget for state services.

Her estimate puts the shortfall in the amount needed to continue the current level of services – taking into account such items as population growth – at least at $27 billion, according to figures from the Center for Public Policy Priorities, which focuses on low- and moderate-income Texans.

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Looking at state agency funding requests, the Center for Public Policy Priorities found that the state will need at least $99 billion in general revenue through the next two-year budget period, on top of closing a shortfall in tax collections in the current budget period.

Combs’ estimate includes a prediction that tax collections will fall $4.3 billion short in this budget period. Combs’ $72.2 billion figure takes that shortfall into account.

In addition to having to meet that recession-driven shortfall, lawmakers will be working without two sources of funding that they had last time they met: unspent state fund balances and federal stimulus money.

First things first: The $4.3 billion figure refers to the 2009 biennium budget. The amount of revenue that Combs estimated at that time for the two-year period was short of what we actually collected, so the first order of business will be to appropriate money to make up that gap. How big the hole is for this biennium then becomes a matter of opinion based on how much you think the state needs to spend to pay for what it does now.

Lawmakers budgeted $87 billion in general revenue spending in the current biennium; at least $6.4 billion of that money came from federal stimulus funds which aren’t available to budget-writers this time. Public and higher education and health and human services spending accounted for $73 billion of that; without the stimulus money, that leaves just over $7 billion that’s not in those two major categories.

The comptroller’s official biennial revenue estimate sets the limit, effectively, on what lawmakers have available to spend during the two-year period that will begin in September. There’s a shortfall between what’s available and what’s needed, but estimates of the size of that shortfall depend on the size of what’s needed. For instance, the Center for Public Policy Priorities, a think tank that advocates for the poor, estimates it would cost $99 billion over the next two years to maintain the services the state provides now; they put the size of the shortfall at about $27 billion. Former Appropriations Chairman Talmadge Heflin, now with the Texas Public Policy Foundation, a think tank that advocates for small government and free markets, estimates the shortfall at “$15 or $16 billion.”

In other words, the slash-and-burn TPPF is basing the shortfall on Texas not spending any more than it did two years ago. Thing is, Texas is a growing state – you might have heard about those four shiny new Congressional seats we’re going to get because we’ve been growing like gangbusters – and with all that growth comes added expenses. Much of the state’s increased population comes from children, which means we need to spend more on schools just to keep up. A lot of it comes from lower-income folks, which means things like Medicaid and CHIP need more revenue to keep up. That’s the reality of the situation, and it’s what the Lege will have to deal with.

Now the good news is that after more than a year of declining sales tax revenue, economic indicators are pointing in the right direction again. The next two years will be better for the state, and who knows, maybe in 2013 we’ll hear that this biennium’s budget came in under cost because we took in more money than we initially thought we would. But let’s not lose sight of the fact that the system we have in place now isn’t equipped to keep up with the state’s growth. Too many things are exempt from the sales tax. The property tax cut of 2006 created a structural deficit. We’re going to face many of the same problems in two years’ time even if the economy recovers to a large degree. In the meantime, we’ll be shortchanging schoolchildren and pushing the sick and the needy onto local governments.

Finally, it must be said that Combs’ figures, which you can see in detail here, stand in stark contrast to the denial and Pollyanna-ism that Rick Perry displayed all last year, as Greg and ThinkProgress document and BOR pointed out before the election. He can’t hide from it any more. For more, see statements from Rep. Mike Villarreal, Rep. Lon Burnam, and Sen. Wendy Davis; Vince has more as well.

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2 Comments

  1. John says:

    Perry is a fool, one of his comments was the legislature better not dip into the Rainy Day Fund. There is a leader just put the burden on others and take zero responsibility himself.

    It will be interesting to see how much the R’s really gut the budget. Also why are some of the far right Reps pushing so hard against Straus, now they are trying to get some of the Democrats to join in

  2. [...] been in denial about the size of the budget deficit, Governor Perry goes into denial about how to deal with it. [...]

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