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Business leaders urged to oppose “cuts only” approach to the budget

Good luck with that.

Former Lt. Gov. Bill Hobby is helping lead an effort to rally Texas business leaders against what he calls a “catastrophic” cuts-only approach to balancing the state’s budget in the face of a massive shortfall, estimated at $15 billion to $27 billion over the next two years.

Hobby, a board member of the Center for Public Policy Priorities, and F. Scott McCown, the group’s executive director, say in a letter being sent today to the state’s hundreds of chambers of commerce that such an approach would undermine the state’s economic recovery, weaken education and leave vulnerable Texans unprotected. The center focuses on low- and moderate-income Texans.

“We simply can’t balance the budget through cuts alone without doing terrible damage to our economy and our future,” Hobby and McCown said in the letter.

They want business leaders to speak up for a “balanced approach” that includes spending the state’s rainy day fund savings account, which is expected to contain $9.4 billion; adding new revenue through such options as increasing alcohol or tobacco taxes; raising taxes on “sugar-loaded” drinks; eliminating “unwarranted” sales tax exemptions; or temporarily increasing the state’s sales tax rate.

You can read Hobby and McCown’s letter here I applaud them for this, and I wish them the very best of luck, but a couple of points. One, let’s not expect too much from the business community. They’re kinda sorta on board with this, but if you read their quotes in the story or listen to what they have to say here, they’re supportive in a very mush-mouthed kind of way. They’re okay with using the Rainy Day Fund – which is a big deal, don’t get me wrong – but not much beyond that. They don’t want to see education gutted, but they don’t want to pay for it, either.

Bill Hammond, president of the Texas Association of Business, which has 220 local chambers as members, said his group opposes a cuts-only approach, although it doesn’t back spending the entire rainy day fund and doesn’t want new taxes. It favors keeping spending about the same over the next two years.

Well, we have $15 billion less to spend than we did two years ago, and the entire Rainy Day Fund would only cover 60% of that. How do you expect us to get there from here, Bill? This is likely to have as much effect on the debate as the business community’s pitiably weak opposition to anti-immigration legislation has had. I have more faith in the school superintendents.

The other point I’d make is that if I’d written the CPPP’s letter, I’d have stuck to the revenue ideas already on the table, which include reviewing the sales tax exemptions, fixing the business margins tax – yes, I know, even with this audience – the LBB recommendations, and expanded gambling. I would not have mentioned new things like the sugar tax or other extra sin taxes, since they’re extremely unlikely to get anywhere and might distract from the overall message. Just my opinion.

By the way, if anyone reading this still thinks that balancing the budget with cuts only is a good idea, here’s more evidence that you’re wrong.

State protective services chief Anne Heiligenstein dropped some bad news on Senate budget writers today: Her year-old push to redesign the payment system for foster care providers will be a non-starter if lawmakers approve proposed cuts that would effectively drive down rates by 12 percent.

Abused and neglected children with complex emotional and psychiatric problems often are ripped from their home communities in North Texas and shipped down I-45 to so-called “residential treatment centers” in the Houston area, Heiligenstein has said, saying she’d like to change that. An agreed-upon overhaul of rates and contracting would put a private provider in charge of a region, which would include a duty to make sure there are enough beds close to home.

Sen. Jane Nelson, R-Flower Mound, who’s sponsoring the redesign bill, asked if efficiencies might be found that would allow the effort to go forward.

Not really, said Heiligenstein, head of the Department of Family and Protective Services, which oversees Child Protective Services.

“The presumption for being able to do this is that there would not be a rate roll-back,” she told the Senate Finance Committee. “We will not ask for an increase in foster care rates … , but we need what is currently invested in the system, plus normal caseload growth.”

Is that something you really want to support? BurkaBlog has more.

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  1. […] give Hammond credit for being out in front of the need to use the Rainy Day Fund, and I give him credit for being a voice of relative […]