BUDGET

The Texas Legislature will convene on Tuesday, January 11, 2011, for the 82nd Regular Session. For essential state services to continue in 2012 and 2013, the Legislature must pass a state budget before adjourning. This Policy Page explains the process of writing the 2012-13 budget and how you can participate to ensure a budget aligned with your valuesâ€"a budget that invests in the critical public services and structures necessary to create opportunity and prosperity.

CPPP Executive Director Scott McCown, Senior Fiscal Analyst Dick Lavine, and Senior Budget Analyst Eva DeLuna Castro show how a balanced approach to balancing the state's budget will meet of the needs of Texas today and tomorrow.

In the Education Jobs Fund, Congress set aside approximately $10 billion for states for public education for 2010-11.  You can read the legislation and administrative guidance on the U.S. Department of Education’s website under Education Jobs Fund.  This money is extremely important for Texas public schools.  We urge school boards and superintendents to call upon the Governor to request Texas’ share of this money before the September 9 deadline.

On August 10, Congress set aside approximately $10 billion for states to spend to save public school teachers’ jobs. Saving jobs helps today’s economy and protecting education helps tomorrow’s economy. Texas’ share of the total is about $830 million. The U.S. Department of Education estimates that this will pay for about 14,500 Texas teachers and other personnel. As this paper explains, both technical and legal questions must be answered before Texas can draw down its share. But Texas should be able to access these funds to help our schools and economy.

On May 27, the Governor’s Budget Office and the Legislative Budget Board issued budget instructions to state government agencies, state courts, and public higher education institutions, setting the baseline for the coming 2012-13 biennium at levels that reflect any General Revenue (GR) cuts already approved to 2010-11 spending. Agencies must also submit information on how they would cut GR spending by another 10 percent.

Yesterday the Governor and the Legislative Budget Board (LBB) began the budget-writing process for 2012-13 by instructing state agencies, courts, institutions of higher education, and health-related institutions to submit proposals that include more deep cuts.

CPPP urges that the state leadership instead take a balanced approach to balancing the state budget by spending all the state’s Rainy Day Fund and raising new revenue, rather than relying solely on reducing services to make ends meet.

CPPP Senior Fiscal Analyst Dick Lavine appeared on this week's edition of Texas Matters, where he discussed the best ways for lawmakers to deal with Texas' projected $10-15 billion budget deficitâ€"and how we got here in the first place.

Many are looking to how legislators dealt with the 2003 budget shortfall for guidance in approaching a similar problem in 2011. For history to be helpful, though, we must accurately remember what happened. The budget shortfall in 2003 was almost $16 billion, not $10 billion, and it was closed with a balanced approach of both cutting spending and increasing revenue. The Legislature should also take a balanced approach in 2011. A balanced approach that includes new revenue is the better choice for Texas. Relying solely on budget cuts leaves critical public structures and systems, such as education and health care underfunded.

Texas should use the Economic Stabilization Fund, commonly called the Rainy Day Fund, to maintain essential services during tough economic times and to stimulate our economy. The constitutional purpose of the fund is to maintain vital state services during economic downturns. The Legislative Budget Board forecasts that the fund will have $9.6 billion available for appropriation through 2012-13. The Legislature has in the past often spent all of the Rainy Day Fund to maintain the state’s investments in critical public structures and systems such as education. It should do so again in 2011.

Concerned that there won’t be enough revenue to fund state services in 2012-13 and cover a $9-billion-plus school finance budget “hole” created in 2006, top state officials have instructed Texas agencies to propose ways to reduce General Revenue (GR) spending by 5 percent in their 2010-2011 budgets. If these cuts can actually be implemented, the need to use the state’s $9.6 billion “Rainy Day Fund” would be reduced, as would the need to find other sources of ongoing revenue.

This Policy Page analyzes some of the proposed cuts in health and human services, workforce and economic development, and higher education. The Center for Public Policy Priorities (CPPP) recommends a balanced approach that uses the Rainy Day Fund and new sources of state revenueâ€"not just budget cuts aloneâ€"to balance the state budget without needless human suffering.

CPPP appreciates the evident efforts of agency officials to mitigate harm to clients in proposing these options. We will advocate with our elected officials for Medicaid and CHIP reimbursement cuts to be avoided. CPPP will support use of the Rainy Day Fund and pursuit of new revenue sources to avoid such cuts, and to support ongoing updates to provider rates.

The Center for Public Policy Priorities is a member of the State Fiscal Analysis Initiative, and we monitor the state budget closely. While the recession may not be as long or deep in Texas, things are bad. Because of falling tax revenues our state government needs additional fiscal help from Congress to avoid reductions in public services such as education or increases in taxes such as the school property tax. We urge Congress to provide additional state fiscal relief to ensure our state can meet vital needs and our economy fully recovers.

Today the Governor proposed two constitutional amendments, a California-style budget and tax restriction based on minority rule and a Colorado-style spending restriction based on an arbitrary formula unrelated to what Texas needs or can afford. Texans are best protected by a representative democracy based on majority rule without arbitrary restrictions. Texas faces many challenges but spending too much is not the problem. Texas ranks near the bottom in state spending. The Texas problem is that low- and moderate-income families pay too much in taxes while the top pays too little. Minority rule and arbitrary spending limits are designed to protect the top, not to protect Texas.