Budget projections

This is going to be such a fun year for the State Lege. The Legislative Budget Board can't even agree on projections for state economic growth and its implications for next year's budget:

In a battle portending more to come, legislative budget leaders Monday narrowly fended off a conservative move to severely limit state spending in the next two years.

Instead, the Legislative Budget Board set a spending ceiling of $54.9 billion for the 2004-2005 budget, enough to maintain existing government services at current levels.

The board, in its most spirited debate in years over setting a spending cap, sided with Republican Comptroller Carole Keeton Rylander's projection that Texas' economy will grow nearly 11.8 percent during the next budget cycle.

"I think it was quite significant. Usually the Legislative Budget Board rubber stamps the number unanimously," said board member Rep. Rene Oliveira, D-Brownsville.

"We were expecting a fight today," he added. "We were expecting a close vote, and we were right.

Three Republican legislators argued that growth is more likely to be 7.8% and that the budget ceiling should be set lower as a result. (Annoyingly, the article doesn't specify what the lower ceiling would have been if they had gotten their way.)

I have to say, I think the pessimists have the better argument. I just don't believe that 11.8% growth next year is realistic. Maybe it's that I'm feeling gloomy about the state of the ecomony overall and the wave of cutbacks, layoffs, and pullouts going on here, I don't know. I sure hope the pessimists and I are wrong, but I wouldn't bet on it just yet.

Despite that, I think the Board was right not to force cuts in existing services by imposing a lower budget cap. I think Ron Wilson gets it right:

"We've got a ceiling here at the Capitol. Am I going to jump high enough to touch it? No, but it's there," Wilson said. "If you have to estimate a ceiling, I'd rather estimate a ceiling that gives us room than one that does not."

When Comptroller Carole Keeton Rylander gives her report on revenue in January, then it would be appropriate to revisit this issue. I've criticized Rylander before for her rosy deficit projections, but by January she should be in a put-up-or-shut-up position.

(It should also be noted that the main critics of Rylander's projections in that earlier post I just cited are from the University of North Texas, the same place that gave the lowball 7.8% growth estimate. Guess if I lived in Denton, I'd be a sourpuss, too. Anyway, at least they're consistent.)

Posted by Charles Kuffner on November 26, 2002 to Budget ballyhoo | TrackBack