Speaker Straus says that all options are on the table for dealing with the budget shortfall, as long as we’re talking about spending cuts. The table isn’t big enough to accommodate any other kind of options.
Straus, R-San Antonio, said in a rare appearance before the Appropriations Committee that the trick will be to write “a balanced, no new taxes state budget in the face of a daunting shortfall.”
He noted the federal health care overhaul law will require Texas and other states to spend more money on their programs for the poor and near-poor in coming years.
“This makes it even more imperative that the state of Texas cover its budget shortall without a tax increase,” Straus said. Higher taxes would slow the state’s economic growth, he warned.
Straus said state lawmakers should consider “a blanket moratorium” on new programs or services funded by state taxes; ways to improve collection of fines and fees; a halt to further state bond issues; and even the unpaid furloughs or four-day workweeks for state employees that have been tried in many other states.
“I’m not advocating for any one of these choices in particular but I do know that every cost savings idea must be on the table,” he said.
All this talk about cuts and furloughs and no politically correct stones being left unturned is little more than window dressing. Any conversation that doesn’t acknowledge the $4.6 billion structural deficit is a conversation that isn’t dealing with the problem. To his discredit, Straus not only doesn’t want to talk about this, he’d rather try to blame others for the fix we’re in. I don’t know about you, but I’m getting a very bad feeling about the budget battle to come.
Federal, state and local taxes – including income, property, sales and other taxes – consumed 9.2% of all personal income in 2009, the lowest rate since 1950, the Bureau of Economic Analysis (BEA) reports. That rate is far below the historic average of 12% for the past half-century. The overall tax burden hit bottom in December at 8.8.% of income before rising slightly in the first three months of 2010.
“The idea that taxes are high right now is pretty much nuts,” says Michael Ettlinger, head of economic policy at the liberal Center for American Progress. The real problem is spending, counters Adam Brandon of FreedomWorks, which organizes Tea Party groups. “The money we borrow is going to be paid back through taxation in the future,” he says.
Taxes paid have fallen much faster than income in this recession. Personal income fell 2% last year. Taxes paid dropped 23%. The BEA classifies Social Security taxes as insurance payments and excludes them from the tax calculation.
And yet we can’t even put taxes on the table. Why are we so afraid to talk about this in any context but cuts?
One more thing: In his testimony before the committee, Straus specifically mentioned things like furloughs, moratoriums on new programs, and no more bonds to cover debt. Absent was any talk about reducing the prison population as a means of achieving savings. So I ask again: Is everything really on the table or not? Because it sure looks to me like there’s a lot of things that are not.
Beneath the fold is are statements from Becky Moeller with the Texas AFL-CIO and Linda Bridges from the Texas AFT calling on the Lege to spend down the Rainy Day Fund before making cuts to the budget. I endorse this approach, having seen what the 2003 budget cuts wrought on the state. I fear, however that, we will be as penurious as ever when the time comes.
Lawmakers will have more than $8 billion in the state’s so-called “rainy day fund” to help fill the budget hole. But it takes a two-thirds vote to spend any of it. For now, [Appropriations Committee] Chairman [Jim] Pitts thinks he only has the votes to spend half the fund.
I guess it never rains hard enough for some people to open their umbrellas. Read on for the statements from Moeller and D’Amico, and see EoW for more.
Moeller: Spend Rainy Day Fund Before Budget Cuts
In the wake of updated estimates of a looming budget shortfall from the Legislative Budget Board, Texas AFL-CIO President Becky Moeller said today that the state should spend down the Rainy Day Fund before any consideration of layoffs enters the picture.
“Before discussing any layoffs and cuts in state services, Texas leaders should commit to drawing down the Rainy Day Fund,” Moeller said. “With high levels of unemployment in Texas and the nation, it’s clearly ‘raining’. The Rainy Day Fund was started to protect Texans in tough economic times. We are facing a budget squeeze now.”
“There is no sense in cutting the job of a single teacher, professor, correctional officer or other state or school employee when we will have nearly $10 billion available to address the budget shortfall,” Moeller said. “Nor should the state expand class sizes in elementary schools or cut state health insurance benefits while billions sit in the bank, ready for use in just this situation.”
Background: State government leaders have plans to cut jobs due to an expected budget shortfall next legislative session. But the state treasury has $8.2 billion sitting in a Rainy Day Fund that is expected to grow to $9.6 billion by next session.
The Texas AFL-CIO, a state labor federation consisting of more than 200,000 union members who advocate for working families in Texas, is taking a stand in favor of using the entire Rainy Day fund before a single state or school employee is laid off.
Teacher leader warns against unbalanced approach to state budget shortfall, calls for use of “rainy day” reserves before “significant cuts” urged by House speaker.
Today Speaker Joe Straus told the Texas House budget-writing committee to develop a “balanced, no-new-taxes state budget in the face of a daunting shortfall.” His instruction to the committee to consider “significant cuts” came as state agencies anticipate receiving similar instructions soon to chop their budget proposals for the coming biennium from Straus, the lieutenant governor, and the governor. Cuts of 5 percent already requested by the three leaders in agency budgets for the current biennium were “just the beginning,” Straus said.
But talking of “significant cuts,” as the speaker did today, without even mentioning the availability of billions of dollars in the state’s “Rainy Day” reserve fund, sets the framework for a severely unbalanced approach to a projected budget shortfall. “Why would we talk about cutting vital services for Texans when the Rainy Day Fund alone stands to provide well over $9 billion for the 2012-2013 state budget?” asked Texas AFT President Linda Bridges.
The current economic downturn, after all, is exactly the type of situation for which that fund was created. “Failure to make full use of the Rainy Day Fund to cushion the impact of this downturn would be budgetary malpractice, threatening needless, deep cuts in educational services and other vital programs that benefit the schoolchildren of Texas and their families,” Bridges said. Using the Rainy Day Fund as intended would buy time while state revenues rebound from the Great Recession, as sales-tax receipts have now begun to do, the teacher leader added.
Lawmakers and the public need full and accurate information about all the options available before they can make truly balanced state budget decisions, Bridges stressed.
Texas AFT is working with other like-minded organizations to pursue a balanced approach to meeting both the short-term and long-term challenges facing our state. “We will advocate strongly both increased revenue and an open budget process to ensure our state’s future prosperity by investing in our citizens today–especially the nearly five million children in Texas public schools,” Bridges added.
Texas AFT represents more than 64,000 teachers, paraprofessionals, support personnel, and higher-education employees across the state. Texas AFT is affiliated with the 1.4-million-member American Federation of Teachers.