April 09, 2003
Budget update

I haven't had much to say about the state budget lately, but in the last few days we've had some interesting developments. There's a fight brewing between the Lege and the Comptroller, as the House Appropriations Committe approved a budget that included $500 million from the Rainy Day fund to help close this year's $1.8 billion gap, and Carole Keeton Strayhorn is none too happy about it.

"I have repeatedly expressed my concerns about raiding the Rainy Day Fund, one-time funding sources and delaying payments. When it gets down to 'lick-log' time -- certifying the budget -- I will not abdicate my responsibility," she said. "I will be one tough grandma watching out for Texas."

Gag me. Strayhorn doesn't have a whole lot of credibility with me right now, given that she insisted on sunny revenue numbers before the election, then abruptly changed her mind afterwards. Now we hear that we can expect a second consecutive year of lower sales tax receipts, it's a fair question to ask when we'll ever start to look around for, you know, other sources of revenue so we don't have to cut our already decimated budget even more in 2005.

Honestly, I don't quite understand Strayhorn's obsession about the Rainy Day fund. I'm not the only one, either:

Strayhorn, speaking to students at the LBJ School of Public Affairs at the University of Texas, again defended her desire to protect the $1 billion Rainy Day Fund from legislative spending. "It is there for a true emergency source of cash," she said.


During a question-and-answer session, one student pressed Strayhorn about her stance and suggested the sagging economy and Sept. 11 terrorist attacks have helped to create an emergency.

"It's about as rainy as it's ever going to get," he said.

Strayhorn stood her ground.

"When you don't have a surplus," she said, "I feel very strongly that you need a Rainy Day Fund."

Well, I'd say that when you have surpluses you don't really need a Rainy Day fund. It's when you have, you know, a Rainy Day, that you need such a fund. Maybe it isn't pouring out, but I can sure feel some drops. How much worse is it going to get?

Here's a test of Republican resolve: Close a gaping loophole in our silly tax system that will help alleviate our cash crunch but piss off a major donor.

The legislation would prohibit businesses from avoiding the state's main business tax, called the franchise tax, by changing from one type of legal structure to another, such as from a corporation to a partnership. Under current state law, partnerships are not subject to the franchise tax.

The practice is known as forming a Delaware sub because companies incorporate on paper there and in other states where taxes are lower and then organize into a virtually tax-free partnerships here.

In Texas, Dell Computer Corp., SBC Communications and some large newspapers are organized this way and avoid Texas franchise taxes.

Wilson's bill would bring in $166 million in fiscal year 2004, $239 million in 2005 and $277 million by 2008, according to the comptroller's office.

Can they do it? After all the talk about belt-tightening and all of the hits social services have had to take, I hope no one scrounges up too much sympathy for Dell and SBC.

One small piece of good news is that Governor Perry can't hide behind some made-up privacy concerns to keep the public drafts of his budget secret from the public.

Responding to requests from The Associated Press, the San Antonio Express-News and the Austin American-Statesman, the governor's office said in February that draft budget copies and other related materials should be kept private because of exceptions in the Texas Public Information Act.

Disclosing the documents would discourage the "frank exchange of information among government staff and agencies," Perry's office said in requesting an attorney general's opinion.

Not even the Republican Attorney General bought it. Perry will be releasing the papers Real Soon Now, as well he should.

Posted by Charles Kuffner on April 09, 2003 to Budget ballyhoo | TrackBack