February 02, 2006
Is it raining in the Capitol?

Sometimes it's hard to see the forest for the trees. When I blogged about the TTRC's business tax proposal, I noted this quote:

Byron Schlomach of the Texas Public Policy Foundation, which advocates for smaller government and lower taxes, said he hopes the commission keys in on consumption taxes, such as the sales tax and the roughly $3.5 billion in surplus money now sitting in state coffers, to replace property taxes.

"We have to ultimately judge this policy by what it's long-term effects are likely to be," Schlomach said. "The fact is that a business tax taxes innovation, work effort, investment and job creation."

I interpreted this to mean that the TPPF and its ilk would oppose the TTRC's proposal, which in turn led me to wonder again what Rick Perry would do. I missed something in there, and it wasn't until I was sent a not-online news story (copied and uploaded here - PDF) about a recent SD7 candidate forum that I understood what it was that I'd overlooked. Here's a quote from candidate Dan Patrick, responding to the question "If we reduce taxes that go to education, how do we replace them?"

Patrick said there was plenty of money available now to replace reduced school property taxes.

"We're awash with money in Austin, but there's tremendous waste in our education budget," he said.

"Awash with money". Sure didn't feel like it all last year when CHIP cuts were left unrestored and we had those endless battles over school finance, did it? And I'm not sure where this idea that there's a ton of surplus cash, $3.5 billion or whatever, lying around. This is the latest financial information I can find, and if I'm reading this correctly, it's a deficit situation, not a surplus. So what gives?

Three words: Rainy Day Fund. I have this bad feeling that the solution to the cut property taxes/leave bidness alone/make school finance comply with the court's ruling conundrum is going to be a raid on the Rainy Day Fund. Why not, if it's currently loaded? It's an easy fix, no hard choices need to be made, and the loudest voice against it will be none other than Carole Keeton Strayhorn, whom Perry can then paint as a tax-raiser-wannabee.

Of course, this is a one-shot fix, and it'll put us right back in the hole afterwards. But so what? There's an election to be won. Who cares about the future and the stability of the tax system?

I could be wrong, of course - among other things, I can't find a link that's got the current Rainy Day Fund balance in it, so who knows if this is accurate - but these are the clues, and this is what I make of them. When Perry speaks, we'll know for sure. Stay tuned and see if I'm right.

UPDATE: Ah, here's where that 3.5 billion figure comes from:

Months before a raucous showdown over education funding, Texas lawmakers haven't been officially notified about a massive budget surplus — at least $3 billion — sitting in the state treasury, and it's quickly becoming a political football.

The estimated surplus means that Texas has that much more money than the Legislature budgeted in the current two-year spending period. Lawmakers going into a spring special session on school financing know they'll have at least $3 billion more, but they don't know how much more money there is.


A $3 billion surplus would be the largest the state has seen in several years. In contrast, lawmakers wrote the 2004-05 budget in the face of a $10 billion revenue shortfall.

Some of the money, $1.2 billion, is leftover tax revenue from the last budget cycle and $1.9 billion was stashed away by lawmakers to use in the upcoming school funding debate. Current projections indicate that the surplus will grow even larger over the biennium, as the result of larger-than-expected tax revenue from consumer spending and higher oil and gas prices.

"The glitch is, there hasn't been a revised revenue estimate released yet. They ususally do it in December to say if what they said a year ago is still true or not," said Eva DeLuna Castro, a budget policy analyst for the Center for Public Policy Priorities. "Things change in an economic forecast based on consumer spending and oil and gas prices."

The state also is sitting on $473 million in savings from vetoed legislation in the current budget that can be spent anytime by the budget board.

So there you go. Thanks to Damon for the catch.

Posted by Charles Kuffner on February 02, 2006 to Budget ballyhoo | TrackBack

$3.5 Billion surplus on a $138.2 Billion yearly budget? What a bunch of morons. President Bush wants to spend more money on math and science, and I understand why. Republican math skills are hideous. The budget is decided on a two year cycle, so this "awash in money" budget amounts to 1.25% per year. One natural disaster (we never get those) will wipe it out.

Are the Repubs going to blame Dems for that? Last time I checked, natural disasters come under the heading of "Acts of God". That makes them a Republican problem. And we all know how they handle THOSE problems.

I really wish my fellow Texans were intelligent enough to toss a candidate who says $3.5 Billion is a large surplus. But, I've lived here 29 years. So much for our Rainy Day Fund.

Posted by: RedScare on February 2, 2006 8:24 PM

From the PDF that you cited, Charles, I thought the most interesting comment came from Joe Nixon regarding the Grand Parkway. Two weeks ago, he stated publicly that he did not support the Grand Parkway coming through the Spring area. At the Breakfast Forum held by the NHA, he changes his position and says, "those people should have seen this day coming." But, I guess that's what you can expect from such a seasoned legislator as Joe; his stance on issues changes depending upon his audience.

Posted by: Cathy on February 3, 2006 7:55 AM