January 08, 2007
Combs' first revenue estimate expected today

Susan Combs will take her first meaningful action as State Comptroller today when she releases the revenue forecast for the next biennium later today.

"The numbers we put out on Monday will be the dollar numbers the Legislature can spend on behalf of and for every single man, woman and child in the state," Combs said. "Though it doesn't feel personal, always, it is very, very personally important to them how the numbers look and how the economy is."

Work on the budget already has started, as lawmakers anticipate extra revenue to spend and a list of needs and wishes that could eat up every bit.

Before a free hand with spending is a possibility, lawmakers must grapple with a constitutional spending cap.

Unless the cap is bypassed (lawmakers can vote to waive it), it limits their ability to spend billions of dollars and could keep them from fulfilling their promise to cut local school property tax rates.

State spending to lower local taxes counts against the cap just as spending on programs does.

As previously noted, the spending cap will have some interesting repercussions. It's not clear yet who's going to advocate for what to deal with this.

Combs' estimate will be the formal successor to an estimate that Texas has $15.5 billion in extra general revenue, made by Craddick, R-Midland.

His informal projection included $7.9 billion left from the current two-year budget period and $7.6 billion in projected revenue above current spending. That is in addition to $8.7 billion expected to come from expanded state taxes, mostly levied on businesses and cigarettes, which is dedicated to property tax relief.


Bill Allaway, president of the business-based Texas Taxpayers and Research Association, said the revenue figures his group has come up with aren't dramatically different from those of the speaker and that he anticipates Combs' figures will show "the revenue system has produced significant sums."

"It looks to us like there ought to be enough money available for the Legislature to meet all the commitments that they have already made, both in terms of the property tax relief and the new spending for schools and the other visible estimates of spending demand and have money left over," he said.

That would allow them to carry money over for the next two-year budget period, when they will face a continuing need to pay for local property tax relief. State taxes dedicated to that effort aren't projected to be enough to cover the whole tab.

By spending all the money and effectively making big, new spending commitments for the future, Allaway said, "They can dig themselves a hole if they choose to do it, but they don't have to."

Also as noted previously, the problem isn't with this biennium but with the next one and the ones after it, since the new business tax won't bring in enough money to pay for the property tax cuts. The Lege could avoid having to deal with that for a long time by considering the revenue that will be dedicated to paying for those tax cuts as being subject to the cap, but that's not what they want to do. So, assuming they can fend off any challenges to their ability to subvert the cap, they'll steam ahead and punt the problem to the 81st Lege.

On the plus side, at least no one is arguing about whether or not we have a surplus, as was the case the last time. We just don't know what we're doing with it yet. Stay tuned.

UPDATE: It's $14.3 billion for the surplus. Not as much as originally projected, but still more than the spending cap would allow.

Posted by Charles Kuffner on January 08, 2007 to Budget ballyhoo