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Jim Pitts

House approves a little more money, Senate readies its budget

Just a little.

Texas House budget-writers voted Monday to free up an additional $3 billion for key state services through such moves as speeding up tax collections, delaying payments and suspending the back-to-school sales tax holiday.

The bills next go to the full House, which Appropriations Committee Chairman Jim Pitts, R-Waxahachie, predicted could be willing to add $4 billion to $5 billion to a bare-bones spending plan it passed earlier this month.

“I think that we can come up with that number, and I think we can still pass the bill. It’s non-tax. It’s not additional fees than what was already assumed in the introduced bill,” he said.

The proposed two-year $164.5 billion House budget would cut 12.3 percent, or $23 billion, from current state and federal spending.

It would leave school districts short nearly $8 billion of money they would get under current funding formulas; cut Medicaid reimbursement rates so much that nursing home closures are threatened; and slash college student financial aid. Extra funds could be used to soften those cuts.

It should be noted that the bulk of what the House actually did was vote to delay making payments to school districts from August to September, which pushes them into the next biennium. That “saved” $1.8 billion, and while that means it’s $1.8 billion more that can be spent this biennium, it has to be made up somewhere. If we’re lucky, revenue projections will be adjusted upward and that money can be paid back before the next Lege meets. If not, that’ll be another $1.8 billion they find themselves in the hole. This is also why school districts maintain reserves, since they know damn well that the Lege is going to do stuff like this to them.

It remains the case that the Senate is planning to spend more than the House is. The Trib documents some of the Finance Committee’s work.

The proposals from Sen. Robert Duncan, R-Lubbock, total $4.8 billion and include $2 billion in deferred payments, which help balance the budget by moving costs from the end of fiscal 2013 into the beginning of 2014. The state still has to make the payments, but not as part of the new budget. Another $1.4 billion comes from accelerated tax collections, in which the state moves the receipt of some of its taxes — on motor fuels, alcoholic beverages, corporate franchise and sales — from a later budget into an earlier one. Both maneuvers allow the state to pick which payments and which receipts will count for and against the budget they’re writing. Another $593 million comes from unspecified measures that, he said, would not require any changes in law.

The remaining $800 million comes from property sales, fee increases (on custom brokers stamps, process server certificates, a tax on small cigars labeled as a fee), changes in unclaimed property programs, and other measures.

Duncan said that all but a handful of the ideas are already in various bills being considered by the Legislature. He didn’t say whether any of the money on his list was already counted in either the House or Senate budget, or both.

The matter of moving more funds from the Permanent School Fund to the Available School Fund came up as well, though if the divided vote in favor of using it is any indication, it won’t have enough support to make into a ballot referendum. I note also that Land Commissioner Jerry Patterson, who vocally opposes using additional funds from the PSF, advocated using more of the Rainy Day Fund instead. Good for him.

Robert Miller puts the differences between the House and Senate budgets in context.

The House has passed a biennium budget spending $77.6 billion in General Revenue. House Appropriations Chairman Jim Pitts has said that he believes he sees another $4.3 to $4.5 billion in non-tax revenue the House would spend. […] Assume the House budget ultimately increases by $4.5 billion to $82.1 billion. The question is what number will it take to make a deal with the Senate in the Regular Session?

Senate Finance is scheduled to vote out its version of the budget on Thursday and take it to the Senate floor next week. I don’t know the amount of the budget, but I believe that it will be in the $85 to $87 billion range. The real gap between the Senate and House when the budget gets to conference during the first week of May is likely to be $3 to $5 billion. At this point, it is anybody’s guess whether that gap can be bridged by May 30.

All of this is without taking into account the possibility of expanded gambling, for which Texas Association of Business President and CEO Bill Hammond advocated in the Trib on Monday. That appears to be a non-starter in the Senate, but if the House passes a joint resolution, who knows? There’s still a lot that can happen. Abby Rapoport and EoW have more.

UPDATE: Per the comment left by Land Commissioner Patterson, I have clarified the post to more accurately convey his intent. My apologies for the confusion, which came directly from my own confusion about what exactly was on the table.

The House finds a few extra bucks

Where has this been all along?

State Rep. Rob Orr, R-Burleson, introduced two bills to the House Appropriations Committee that could add several million dollars to the public schools budget over the next two years.

HB 2646 proposes allowing the School Land Board to transfer at least half of the net revenue it collects from a land trust it oversees to the Available School Fund (ASF), an endowment that puts money directly into public schools in Texas. Orr said that pot of money has risen to more than $2.5 billion in market value and contains more than $1 billion in cash. If that trend continues, the fund could supply the state with an additional $500 million in the next biennium.

“I think it’s irresponsible to have that much cash sitting around when our public schools need that money,” Orr said.

Getting this measure to pass requires companion legislation, so Orr is also sponsoring HJR 109, a constitutional amendment that would allow the General Land Office, which oversees land that belongs to the Permanent School Fund, to distribute revenue directly to the ASF. The resolution would be placed before voters during the Nov. 8 election.

I’m not terribly familiar with the details of these funds, but judging by the reaction to Orr’s bills, which range from “sounds OK to me” to “praise Jeebus!”, I welcome the legislation and hope there’s more where it came from.

There’s also this.

The House’s chief champion of giving poor, elderly and disabled Texans discounts on their utility bills is so frustrated, he wants to kill a surcharge funding the program and use all unspent money as a one-time fix for gaping holes in the state’s social services budget.

“The surcharge needs to be ended. You cannot redirect it … and be honest with the people who are paying,” Rep. Sylvester Turner, D-Houston, said Thursday.

Turner reacted coolly to Senate budget chief Steve Ogden’s suggestion earlier Thursday that the fee money could help pay for Texas’ Medicaid program, presumably on a continuing basis.

“Either you end it or you rename it and call it what it is — a utility tax,” said Turner, vice chairman of House Appropriations.

This is the System Benefit Fund, which is supposed to be used for the purpose of helping the needy pay their utility bills in the summertime but which never gets appropriated for it; the sizable balance of the fund is used to certify the budget. That would be one of the usual accounting tricks the Lege is known for. I too would prefer to see the SBF used for its intended purpose, but if that isn’t going to happen, and history strongly suggests it won’t be, then putting it to use elsewhere is far better than pretending it’s general revenue so it can help balance the budget.

On a more general note, Burka examines the role that House GOP Caucus Chair Larry Taylor may play in determining how far the House will go with ideas for extra revenue. None of this stuff will matter if the slash and burn crowd decides that it’s not really about “living within our means” but about cuts for the sake of cuts.

I’ll take that bet

Jason Embry sums it up.

Nearly every Republican in the Texas House placed a bet Sunday night that the residents of their district will support taking billions of dollars out of the public school system.

In voting for the House’s proposed state budget, 98 of the chamber’s 101 Republicans supported a plan giving school districts about $7.8 billion less than the state owes them under current law. That’s about $870 less per student for schools to spend each year.

The budget cuts funding for pre-kindergarten, school technology, teacher incentive pay and programs that aim to stoke student interest in math and science. Most significantly, it is the driving force behind the elimination of thousands of jobs in school districts across the state.

Lawmakers made deep cuts across state government because the state faces a huge budget shortfall caused by a variety of factors, some of them outside state lawmakers’ control and some a result of their decisions. The House’s decision to leave more than $6 billion sitting in the state’s rainy day fund added to the severity of the cuts.

That a majority of lawmakers supported such reductions shows that they think voters, first and foremost, want them to cut spending and fight tax increases.

You know what I think about that, so I won’t repeat myself. I’d agree that a majority of the voters who showed up last year wanted spending cuts, though whether they wanted these particular cuts is another question altogether. There will also be a lot of voters coming out in 2012 who didn’t show up in 2010, and I’d bet most of them weren’t expecting this. One way or another, the electorate will be very different, and I expect the verdict to be different as well.

And despite the party line votes up and down the amendment process for HB1, there’s evidence that the Republicans themselves are a little twitchy about what they’ve done.

Less than two days after approving a state budget that cuts $23 billion from current spending, House leaders are already talking among themselves about how much more money they’d be willing to spend.

House Appropriations Chairman Jim Pitts said this afternoon that he’s already asked Rep. Larry Taylor of Friendswood, who heads the House Republican Caucus, whether the conservatives in the House would be willing to spend another $5 billion if it can be located.

“I asked the caucus chair, ‘If I brought you a bill back that’s $5 billion more than we had on the floor, what would be the reaction from the caucus?’ And he said, ‘Well, it depends on where the money comes from’,” Pitts said to reporters Tuesday afternoon after watching House Speaker Joe Straus be interviewed on the University of Texas campus.

[…]

The House bill walked past some easy-to-get money in writing its $164.5 billion budget plan. Deferred expenses aren’t in there, for instance, and Pitts has legislation that would accelerate tax collections and raise at least $1 billion and perhaps much more (“Frankly, I had good news today that I don’t have any industry opposition to it,” Pitts said). There are funds outside of the treasury that might be available, like an endowment set up years ago in a settlement between the state and big tobacco companies. And a group of senators is working on a list of suggestions for non-tax revenue that might become public this week and that could total $10 billion.

“I think we can make it go better,” said Pitts to reporters after the Straus interview ended. And he listed some areas that he says must be improved: TEXAS Grants, nursing home Medicaid shortfalls, and public schools.

“You know, it’s funny. Since we passed the bill on Sunday night, I’ve had some of the members that are more of the ‘We came here to cut’ and you know there’s a big group, especially freshmen, who feel like they’ve been mandated to cut,” Pitts said. “But they’re coming to me and they want, ‘Don’t cut this program, or don’t cut that program. Don’t cut in my back yard’. So, we may start hearing more of that and they may say, ‘If there’s some new revenue, we won’t have those cuts in my back yard.’ It’s been real interesting the last couple of days.”

Yeah, well, the cuts they want to make are the kind that affect other people. Turns out that’s not so easy to do. And even if the finished product is marginally less crappy, Republicans have already said what their preferences are. They’ve placed their bets. I’ll take my chances with that.

House passes its budget

The Trib has a good writeup of how it went down on Sunday. Mot of the heavy lifting was done before then, in the bills that closed the books on the previous biennium and allocated Rainy Day funds for them and in Friday night’s session, when the articles that deal with public education and health and human services were debated. So far, Democrats have done what they’ve needed to do politically. They’ve offered amendments that show their contrasting priorities and try to mitigate the damage being done, nearly all of which have gone down on a straight party line vote and a few of which generated some whining from Republicans who knew they were being forced to take bad votes. They voted unanimously against HB1 (two Republicans joined them) and made numerous statements about how bad it is, several of which I’ve reproduced beneath the fold. That needs to continue, in a steady drumbeat, all the way through next November, and it needs to directly refute this:

“It lives within the available revenue that we have to work with,” [House Appropriations Chair Jim] Pitts said. “…This budget is the result of the worst recession that anyone in this room has ever experienced.”

No. It was the result of deliberate policy choices made by the Republicans, who for the most part still haven’t acknowledged, much less taken steps to fix, the structural deficit caused by the 2006 property tax cut. We will be in the same position two years from now regardless of how good the economy is because of that. We will also see hundreds of thousands of jobs lost due to the choices the Republicans have made. And there was a lot more revenue available that the Republicans refused to take, from another $6 billion in the Rainy Day Fund to many billions more in outdated and inefficient tax expenditures, plus whatever non-tax revenue the Senate manages to scrape up. Speaking of which, Rep. Harold Dutton gets credit for best line of the night when he said “Thank God for the Senate” as things wrapped up. That will put the lie to Pitts’ assertion about available revenue, and it will make everyone feel a little better, but it will still fall far short of what we need to do. The budget is a failure in every way. Here’s the LSG analysis of the budget again to remind you just what it will do. PDiddie, Martha, Bob Moser, and Abby Rapoport have more. Read on for the Democratic statements.

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A little budgeters remorse?

Just a little. Not much.

As a vote looms on a bare-bones budget that would slash education and threaten nursing homes with closure, House GOP leaders softened their rhetoric on Tuesday to emphasize that it is a starting point and that cuts could be eased later without raising taxes.

“I think there’s people out there that want to keep it right the way it is right now. But I think we’re going to be able to do things that are better,” said Jim Pitts, chairman of the House Appropriations Committee.

Pitts – who last week said the budget proposal approved by his committee might be as far as many House Republicans were willing to go – said after a closed-door House Republican Caucus meeting that GOP members raised many of the same concerns that have been aired by Democrats.

“There’s a huge concern about what’s going to happen in nursing homes,” said Pitts, R-Waxahachie. “And what’s close to all of us – we all have a public school in our district – is what’s going to happen to our schools?”

I guess I’m glad to hear someone on the Republican side of the House express those concerns, though Pitts has been pretty realistic about this from the beginning. There’s not much in the story beyond hope for good news from Comptroller Susan Combs and a few accounting tricks to make you think there’s any action to back it up, however. Maybe they’re waiting to see what the Senate finds in the couch cushions.

“It is the beginning of the process,” Speaker Joe Straus, R-San Antonio, said Tuesday. “I would say judge us by the budget we pass as a Legislature, not as a first, early-in-the-process budget proposal.”

Where you end up is certainly what ultimately matters, but where you start out says something about you, too. I think we’ve learned a lot already.

Whatever the case, the budget debate begins today. There are a lot of voices urging a No vote on HB1.

School districts across the state are urging their House members to vote no on the proposed budget that will be taken up on the House floor Friday. A letter sent to House members by the Texas Association of School Administrators, Texas Association of School Boards and Texas School Alliance said the bill “proposes unsustainable cuts to your public schools” and should be rejected. “The significant reduction in state funding for school districts proposed in House Bill 1 inevitably will force districts to lay off employees, reduce salaries, or both,” the groups said.

[…]

“Before you vote on House Bill 1, we encourage you to consult with the superintendents and school board members of your school districts to understand the impact the proposed state funding cuts will have on your schools and students,” the letter concluded. “On behalf of the students of Texas, we urge you to vote against House Bill 1 until all budget balancing options are utilized to mitigate the proposed funding cuts for public education.”

You can view a copy of the letter here (PDF). I doubt it will have much effect, but I sure hope it serves to remind everyone associated with those organizations who to vote for and vote against next year. Remember that while the Senate version of the budget so far would cut funding less than what HISD is currently planning for, the House version cuts funding quite a bit more than that.

Also worth watching will be the hundreds of budget amendments, many of which would be as damaging as the budget itself.

At least three proposed amendments would prohibit funding of any organization that provides abortion services or refers pregnant women to facilities that provide abortion services. This is clearly aimed at Planned Parenthood.

Texas Conservative Coalition Chairman Wayne Christian has one to require universities to provide traditional family values centers if they support “a gender and sexuality center” for gay and lesbian students. Another of his would require universities to dedicate at least 10 percent of their courses for undergraduates to the study of Western Civilization.

Because there’s never a bad time to stick it to the gays, as it were. The only thing that could be better is denying health care to women who need it. Do yourself a favor and find a nice, solid wall on which to bang your head now. You’ll need it for later. The Trib has a list of all the budget amendments that will be debated, plus information about who proposed them.

What was this past election about?

I’ve seen the following quote from House Appropriations Chair Jim Pitts, in this Statesman story about some queasiness among lower chamber Republicans about the severe budget cuts, several times this past week, and I feel it needs a bit of deconstruction.

There are limits, in fact, to how much can be added and still get the 76 votes needed to pass the House budget.

“For a lot of members of the House, this is as far as we can go,” House Appropriations Committee Chairman Jim Pitts, R-Waxahachie, said last week. “They feel like they were elected to make cuts and this accurately reflects what their constituents want.”

I don’t know how the campaigns actually went in most House districts. There wasn’t a competitive race in mine, so the vast majority of what I saw that an average voter would have seen came from the Governor’s race, where the Republican message was basically “Texas rulz, Obama droolz”. Rick Perry certainly didn’t campaign on the need to slash the budget in Texas. Sure, he talked at length about out of control spending, but that was always clearly in the context of talking about Washington and Obama and the Democratic Congress. I realize I’m Monday morning quarterbacking to an extent here, but does anyone disagree with the claim that Rick Perry has basically been running a nonstop anti-Washington campaign for about two years now? Does anyone disagree that the 2010 election was all about the anti-Obama vote coming out in force, abetted by a weak economy and a heaping measure of anti-immigrant sentiment? I mean, the two candidates in Harris County that won races they weren’t generally expected to win, Sarah Davis and Jack Morman, both basically ran anti-Obamacare campaigns despite the fact that neither one was seeking an office that had anything to do with “Obamacare”. To say that the election was about anything else strikes me as being a big distortion of what really happened.

Now again, I don’t know how things looked on the ground elsewhere in the state. Maybe some of these Republican freshmen really did spend their summer and fall last year talking about the need to cut billions of dollars from the state budget, from public education and Medicaid and everywhere else. It’s also possible – likely, in fact – that the “out of control spending” message about Washington was also taken implicitly by voters to be a critique of Austin. That gets into some ticklish territory for Texas Republicans, since they’ve been in full control of state government since 2003, so if spending here was “out of control”, well, whose fault was that? I’m equally sure that Democrats, who seldom miss a chance to run away from themselves, would have not done a very good job pointing out that distinction and contradiction. That will have to be the task for next year, when the electorate and the climate ought to be considerably different. In the meantime, however inaccurate a characterization of the 2010 election Pitts’ statement may be, I’m not at all unhappy for the Republicans – and the Democrats – to run with it. Y’all go right ahead and tell the voters how you gutted public education and helped close a bunch of nursing homes just like we asked you to do. We’ll be glad to have that conversation.

Where the Senate is looking for revenue

The hunt for $5 billion is on.

Higher driver license fees and a hike in college tuitions are among potential money raisers as a special Senate panel searches for $5 billion in “non-tax revenue” to help fund key services, Senate Finance Chairman Steve Ogden said Monday.

“There are no sacred cows. Everything is on the table,” Ogden, R-Bryan, said after naming senators to the new Finance subcommittee headed by Sen. Robert Duncan, R-Lubbock. He asked it to report back in about two weeks.

Ogden said the subcommittee also will look at such ideas as speeding up state tax collections, a proposal also being floated in the House by Appropriations Chairman Jim Pitts, R-Waxahachie.

Among other items, the panel will examine tax exemptions and look at whether funds such as endowments created by a tobacco lawsuit settlement can be used to help balance the budget, he said.

See here for some background. “Everything” comes with an asterisk next to it, since clearly taxes are not on the table. It also means that the structural deficit caused by the gap between revenue lost to the 2006 property tax cut and gained from the business margins tax will continue to go unaddressed, but as tax legislation must originate in the House and they’re not interested in dealing with it, it was never even near the table. Whether the answers this committee finds will be acceptable to the House is another matter as well. I’m not terribly optimistic, but I consider this one more step on the journey to the eventual realization that we can’t avoid talking about taxes forever. We have to try everything else so it will be the only thing left. EoW has more.

House Appropriations Committee passes a budget

It’s not much different than what they started out with.

House budget-writers were able to sprinkle some extra money into education and health care but otherwise did little to change the bare-bones proposal with which they started.

The 2012-13 budget will hit the House floor late next week after the Appropriations Committee approved House Bill 1 Wednesday morning in an 18 to 7 party-line vote.

Weighing in at $164.5 billion — about $23 billion less than the current two-year budget — the bill still follows the no-new-taxes, deep-cutting approach that state leaders have long advocated.

“It is a budget that reflects the money we have,” said Chairman Jim Pitts, R-Waxahachie. “There’s a lot of members of the House, this is as far as we can go.”

Basically, take the original cut-everything, fund-nothing budget, add the $4.3 billion we got back from using a little bit of the Rainy Day Fund to close the last biennium’s shortfall (which as far as I know has yet to be ratified by the House), and leave it at that. Rep. Pitts sounds like he realizes what a turd this budget is.

Rep. Jim Pitts said he’d like to see House-Senate budget negotiators massage the budget his Appropriations Committee approved Wednesday — and even “make it better.”

But Pitts, R-Waxahachie, the House’s chief budget writer, said Texans alarmed at the budget’s deep cuts in spending will need to change some minds in the House, which has an unusually large number of freshman, many elected with tea party support.

“There’s a lot of members of the House, this is as far as we can go,” Pitts said. Asked to elaborate, he said, “They don’t like anything else put in this bill. They feel like they were elected to make cuts.”

I’m glad we’re all clear on that, because I for one will be happy to make the 2012 and 2014 elections all about it. Democrats did the right thing and unanimously voted against this budget, while all Republicans voted for it. Which, again, is fine by me. A press release about this from four of the Dems on Appropriations is here, but I’ve included it beneath the fold because it’s worth quoting in full.

Putting questions of electoral politics aside, there is still the very real matter of whether the House and the Senate can agree on a budget. Texas Politics explores that a little further.

The day before the House Appropriations Committee approved a budget that’s about $23 billion less than the current two-year budget and that includes huge cuts for health care and education, Lt. Gov. David Dewhurst was expressing confidence that the Senate would be able to come up with additional revenue to make cuts all agree are inevitable slightly less injurious.

Asked whether a Senate subcommittee was looking for $5 billion in non-tax revenues, he said, “I’m not sure that I or the committee are looking for a specific number, but we’re looking for an alternative if we don’t go into the rainy day fund as much as some of the members in both the Senate and the House are considering. And what I would rather see is a larger list rather than a smaller list, so that we can very carefully and thoughtfully go through and pick those, if any, that we think make sense and that will fund our operations. In some cases, some of the non-tax revenues are one-time; some of it is recurring.”

Sale of state property is among the list of possibilities, Dewhurst said.

He was parsing his words carefully, knowing that an internecine budget battle looms and knowing also that he’s likely the one who will have to find a solution that somehow mollifies zealous anti-tax, anti-spend members in both houses while avoiding cuts that go deep into the muscle and bones of many state services.

Good luck with that, a sentiment I mean half sarcastically and half sincerely. We’ll let you know how you did next year. EoW, Trail Blazers and Texas Politics has more, and here’s an LBB analysis of HB1, which you’ll either have to figure out how to rotate or risk getting a kink in your neck trying to read.

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Republican legislators want SBOE do over on social studies

Good for them.

Texas House Appropriations Chairman Jim Pitts, R-Waxahachie; Public Education Chairman Rob Eissler, R-The Woodlands; and House Administration Chairman Charlie Geren, R-Fort Worth; criticized the new [social studies] standards.

Various civil rights and minority advocacy organizations have opposed the standards, and the Thomas B. Fordham Institute, a conservative-leaning education think tank, gave the standards a harsh review last month, saying they offered “misrepresentations at every turn.”

“When groups like the Fordham Institute call our standards ‘a politicized distortion of history’ and ‘an unwieldy tangle of social studies categories,’ we have a problem,” Eissler said.

Critics fault the State Board of Education for considering nearly 200 last-hour amendments before taking a final vote last year.

“These standards and the way they were developed just don’t pass the common-sense test,” Geren said. “The law has a process laid out for how to write our state’s curriculum, and they thumbed their nose at it and wrote standards themselves..”

See here for more on the Fordham Institute criticism of the social studies curriculum. I’m glad to see this, and I hope they have a lot more company. The nutjob wing of the SBOE would feel a lot more constrained in what it could do if it were subject to more criticism and oversight from the Lege, especially from fellow Republicans. It’s a lot easier being crazy when no one is paying attention. It also doesn’t hurt for folks like Pitts to remind the SBOE that it’s the Lege that allocates money to buy the textbooks needed to teach these new standards, and putting that expenditure off for a little while would save a ton of money at a time when we need all the savings we can get. I don’t know how much effect this will have, but it’s the right thing to do and a very welcome development.

One more thing:

David Bradley, R-Beaumont, a leader of the board’s social conservatives who championed the new curriculum standards, said he doubted a majority of the 15-member board would be willing to reopen the process.

The board has already started the curriculum rewrite for math standards, with health education to follow.

You may now commence making jokes about their intent to require that the Biblical value of pi be taught in math classes.

The itty bitty budget deal

It’s not nothing, but not by much.

Gov. Rick Perry and House leaders struck a deal Tuesday to spend $3.2 billion from the state’s rainy day fund to fix one piece of the state’s budget shortfall.

[…]

Perry said at the start of the session that lawmakers should not use any rainy-day fund money, but he has softened his position in recent weeks to say the money should be used as a last resort. By endorsing the House vote Tuesday, he in many ways abandoned his last-resort position, since the January-to-May session is only halfway over.

Still, Perry’s posturing could go a long way in shaping the debate about how lawmakers should combat their much larger shortfall as they write the budget that begins in September.

“As we craft the next two-year budget, Texas leaders will continue to focus on a more efficient, fiscally responsible government, essential state services, and private sector job creation,” Perry said in a statement. “I remain steadfastly committed to protecting the remaining balance of the Rainy Day Fund, and will not sign a 2012-2013 state budget that uses the Rainy Day Fund.”

Many Republican lawmakers, fearful of looking weak to conservative activists by twice taking money out of the fund, are likely to agree with Perry.

“I think the governor wants to make sure that we don’t come back for more,” said House Appropriations Committee Chairman Jim Pitts, who says the $3.2 billion is all the House will take from the rainy day fund. “I cannot get votes to use it for anything else.”

While it’s better to use some of the Rainy Day Fund than none of it, this will do very little to mitigate the huge cuts that are still coming for public education, Medicaid, and everything else. And that’s just how Rick Perry and the most radical factions of the Republican Party want it. Burka sums up what happened.

Perry steamrolled the House. He limited the spending of the Rainy Day Fund to 3.2 billion, all of it to balance the budget by paying the state’s bills. The rest of the 4.3B necessary to balance the budget will come from more cuts ($800M and $50M).

Then, for good measure, he vowed to veto the budget if lawmakers attempted to spend any of the remaining money in the Rainy Day Fund.

I don’t know what the leadership in the House has been doing, but Perry has been calling in House members to lobby them against using the Rainy Day Fund. He has also been lobbying the committee. Obviously, he is a heckuva good lobbyist.

The House won nothing in the negotiations except the ability to spend $3.2B from the Rainy Day Fund, but only for the purpose of balancing the budget. It was a hollow victory because the state cannot constitutionally fail to balance the budget. All the $3.2B achieves is to spare the state the embarrassment of being technically broke.

Democrats on the Appropriations Committee voted for HB275, which authorized the use of the RDF for the 2010-11 biennium, then voted against companion bill HB4, which made the further cuts Burka mentioned.

State Rep. Mike Villarreal, D-San Antonio, said the leadership is using the rainy day fund to avoid the embarrassment of failing to pay its bills, which Comptroller Susan Combs has said would be result if they didn’t use some of the $9.4 billion reserve fund for the current deficit.

“We’re willing to tap the rainy day fund to save face but we’re not willing to tap the rainy day fund to mitigate the harm that is going to be inflicted upon our children,” Villarreal said. “That, in a word, is irresponsible.”

Appropriations Chairman Jim Pitts, R-Waxahachie, took the criticism from Democrats in stride, acknowledging that this is the political reality.

And that needs to be the message that gets through next November. The Republicans wanted the cuts that are to come. They’re going to get them, and they need to be held responsible for them.

UPDATE: The Trib has more.

The House Appropriations Committee voted 27-0 Tuesday afternoon to move HB 275 to the floor. The substitute bill authorizes the state to draw down about $3.1 billion from the Budget Stabilization Fund, commonly referred to as the Rainy Day Fund. A companion bill, HB 4, passed out of the committee on a party-line vote. That legislation is controversial because it outlines where the savings will come from. Lawmakers began the day short about $4 billion. After the Rainy Day funds are taken into account, the rest of the savings comes from Combs’ revised $300 million sales tax revenue estimate and more than $800 million in cuts. That latter figure is alarming, but officials say most — if not all — of those reductions have already been implemented by state agencies over the past two years.

Democrats objected to the effects the potential cuts may have on education and health care services. They also spoke out against the governor’s refusal to consider using any additional Rainy Day funds to cover the next biennium’s shortfall, especially since Perry has clearly stated he will not support any kind of tax increase.

“[This statement] ties our hands,” said Rep. Sylvester Turner, D-Houston. “To say you cannot consider the Rainy Day Fund for fiscal years 2012 and 2013 is irresponsible.”

I suspect we’ll be hearing that word a lot. In related news, more specific cuts were made.

The Appropriations Committee just approved deep cuts to the Health and Human Services Commission and the four departments it oversees. The vote was 16-8. It wasn’t quite along party lines, as Rep. Susan King, R-Abilene, joined dissenting Democrats.

Chief social services budget writer John Zerwas, R-Spring, said addition of $2 billion from Tuesday’s decision to spend rainy-day dollars eased the pain a bit. He said that allowed members to “to get it to a place that’s at least a little more comfortable than where we started.”

Still, cuts to home-based care for the disabled and seniors, nursing homes, prevention programs for child abuse, programs for developmentally disabled children and health care providers remain far deeper than any belt-tightening taken in the last fiscal crisis in 2003.

If you’re lying on a bed of broken glass and rusty nails and someone gives you one of those little airplane pillows for your head, you’ll be a little more comfortable than you were before. But you’ll still be a long way off from being in a good place. A statements from Rep. Villarreal is here, and from Rep. Eric Johnson is here.

Comptroller finds a few more bucks

Better than a sharp stick in the eye.

Comptroller Susan Combs has revised the state’s 2011 revenue estimate by $300 million because of stronger-than-expected sales tax collections.

That change would reduce the deficit in the current budget to $4 billion and make an additional $300 million available for appropriation in the next two-year budget, which begins Sept. 1.

[…]

If sales tax revenue continues at this pace, the state could bring in $620 million more than Combs estimated, according to Eva DeLuna Castro of the Center for Public Policy Priorities.

It’s not much, but it does help. Every extra dollar Combs estimates is a dollar that won’t get cut. Of course, these newer estimates are based on the improvement in the economy, and the biggest threat to that is the huge number of job cuts that would be forced by the Republican budget policies in Texas and in Congress. So I trust you’ll understand if I keep my celebration of this news modest.

You can see Combs’ letter about the revenue estimate revision at the Trib, which notes that it’s early in the session for such a revision; that may well portend a further change. In the meantime, however, it’s unclear whether this will affect the nascent consensus to use some of the Rainy Day Fund. The votes to make that happen aren’t quite there yet.

Meanwhile, Committee Chairman Steve Ogden, R-Bryan, shed possible light on why House Appropriations abruptly cancelled a scheduled meeting Monday morning, at which is was planning to approve a bill tapping $4.3 billion of rainy-day dollars to cover a deficit in the current cycle.

“The House is struggling mightily with that 60 percent — three-fifths — vote,” Ogden said, referring to the supermajority required to spend money from the rainy day fund in the current cycle.

On Monday, Senate Finance discussed an Ogden bill that would spend about $3 billion of rainy-day money on both the current deficit and the next two-year budget. Doing so requires a two-thirds vote in both chambers — which is the Senate’s normal threshold for bringing any bill to a floor vote.

But after a spirited argument of the state’s current predicament and the 2006 tax swap-school finance bill, Ogden delayed a vote on his bill, saying he could tell his colleagues weren’t ready.

Rep. Jim Pitts postponed a hearing in the House on the Rainy Day Fund after getting stood up by Perry’s office. While the consensus seems to be that the Senate will have the votes to be able to act on using the Rainy Day Fund, it’s a close shave in the House. As such, Peggy Fikac suggests that Democrats are trying to get a little leverage out of this.

Rep. Mike Villarreal, a San Antonio Democrat on the Appropriations Committee, said enough Republicans oppose the idea that Democratic support will be needed to reach 90 House votes.

“We’re going to make sure that our priorities are met,” he said. “And we’re going to make sure that we’re not taken for granted, but that we leverage to the extent possible a proper hearing of our priorities for the next two years.” Those priorities include health care for vulnerable Texans and education, he said.

One presumes that Democratic support for using the Rainy Day Fund was never in doubt. Given that, only 41 Republicans are needed to meet the 3/5 threshhold for spending RDF money on the 2010-11 biennium. I think that much is doable, based on the scattered reports of this Republican and that supporting RDF usage, but beyond that I’m not terribly optimistic.

Going through the couch cushions

“Taxes” may be a dirty word, but the Lege is busy looking for revenue in other places.

“Right now, there is a tremendous amount of effort being invested in identifying new revenues that avoid being called a tax bill,” said Dale Craymer of the business-based Texas Taxpayers and Research Association.

“Politically, a lot of members have pledged not to raise taxes,” he said. “Obviously, members are seeing the impact of the budget proposal, and there’s a desire to try and raise new revenue to protect the budget without violating the no-new-taxes pledge.”

Some revenue measures already have been filed. Details are lacking on others as lawmakers work to get them in shape in advance of Friday’s bill-filing deadline.

House Ways and Means Committee Chairman Harvey Hilderbran, R-Kerrville, is having hearings through the next several weeks on measures including his House Bill 257, which would yield $72 million by having unclaimed property revert more quickly to the state.

Hilderbran said he also has legislation to boost Comptroller Susan Combs’ enforcement and that his panel will look at efforts to strengthen audits, hike tax penalties and close loopholes.

Here’s HB257, which has been referred to committee. One revenue-enhancer that has made it out of committee is Rep. Villarreal’s HB658, which is aimed at closing a corporate tax loophole. By themselves, none of these bills adds up to much, but all together they’ll have some effect. Assuming they all pass and get signed, of course, which is far from a guarantee.

In addition to these revenue enhancers, there are the usual accounting tricks that delay payments till the next biennium, of which we saw plenty in 2003. They can save substantial amounts for this budget, but since they do have to be paid, they put that much more pressure on the next budget. The big ticket items are still the Rainy Day Fund – HB275, the bill filed by Rep. Jim Pitts to use RDF funds to balance the prior biennium’s budget, may come to the floor for a vote next week – and fixing the structural deficit. Unfortunately, that and anything else that would have a more significant effect are off the table for the session.

[Rep. Harvey HIlderbran, chair of the Ways and Means Committee,] said he sees opportunity in some of the recommendations made by the Legislative Budget Board that could generate $500 million or more by better enforcing existing law, closing some loopholes and tinkering with some tax exemptions.

One proposal, for instance, would allow the state to claim forgotten bank accounts, uncashed checks and security deposits if they are left dormant for three years rather than the current five years. That change would generate $72 million.

Hilderbran would not, however, follow the path of his predecessor , state Rep. Rene Oliveira, a Brownsville Democrat who last year identified as much as $1.5 billion in sales tax exemptions he said were ripe for elimination.

“That’s a tax hike, and that’s not what we’re going to be working on this session,” Hilderbran said. “We’re not changing the code substantially or significantly. We’re just basically making it more effective.”

That narrow approach will probably produce a relatively small amount of the $27 billion needed if the state were to maintain the current level of services in the 2012-13 budget.

Fixing the big problems, such as the revamped and underperforming business tax, will have to wait until the next legislative session in 2013.

Ideology trumps need. It’s not just Hilderbran – if it were, it might be possible to generate some leverage on him, but he has plenty of company in his stance. The Republicans may tinker, but they’re comfortable with not fixing what’s broken.

Push for HB275

HB275 is the bill by Rep. Jim Pitts to spend money from the Rainy Day Fund to close the budget shortfall from the 2010-11 biennium. Here’s an update about it from a group called Spring Branch Speaks, sent to me via email:

UPDATE ON HB  275:

We were informed late last night that the hearing for HB 275 (use of the “Rainy Day Fund”) has been postponed.  We are concerned about this action.

If you have not made advocacy phone calls or emails to the Representatives of the House Appropriations Committee, it’s even more important to do so now.

We must keep up the pressure!  Make your voice heard by contacting the members of the House Appropriations Committee at the email addresses/phone numbers below and ask them to:

  1. Send HB 275 to the House of Representatives for consideration.
  2. Spend the “Rainy Day Fund” to protect this year’s budget and the next two year’s budget for funding public education.
  3. Don’t pass up this investment in the future of Texas and our community schools.

Thank you to those of you who already emailed or called.  We appreciate the quick work – the path of legislative bills is unpredictable; information regarding the process is often at the last minute as political changes occur.

FYI – RALLY ON SATURDAY

If you are in town for Spring Break, please consider attending the “Save Texas Schools” rally in Austin this Saturday, March 12th (see details below).  Free transportation is available if you RSVP by Friday!

The House Appropriations Committee:
Rep. Jim Pitts [email protected] 512-463-0516
Rep. Sylvester Turner [email protected] 512-463-0554
Rep. Jimmie Don Aycock [email protected] 512-463-0684
Rep. Angie Chen Button [email protected] 512-463-0486
Rep. Warren Chisum [email protected] 512-463-0736
Rep. Myra Crownover [email protected] 512-463-0582
Rep. Drew Darby [email protected] 512-463-0331
Rep. Dawnna Dukes [email protected] 512-463-0506
Rep. Craig Eiland [email protected] 512-463-0502
Rep. Helen Giddings [email protected] 512-463-0953
Rep. Lance Gooden [email protected] 512-463-0458
Rep. Scott Hochberg [email protected] 512-463-0492
Rep. Eric Johnson [email protected] 512-463-0586
Rep. Susan King [email protected] 512-463-0718
Rep. Dee Margo [email protected] 512-463-0728
Rep. Armando Martinez [email protected] 512-463-0530
Rep. Ruth Jones McClendon [email protected] 512-463-0708
Rep. Doug Miller [email protected] 512-463-0325
Rep. Geanie Morrison [email protected] 512-463-0456
Rep. John Otto [email protected] 512-463-0570
Rep. Diane Patrick [email protected] 512-463-0624
Rep. Debbie Riddle [email protected] 512-463-0572
Rep. Charles Schwertner [email protected] 512-463-0309
Rep. Mark Shelton [email protected] 512-463-0608
Rep. Raul Torres [email protected] 512-463-0484
Rep. Mike Villarreal [email protected] 512-463-0532
Rep. John Zerwas [email protected] 512-463-0657
For additional information please click on these links:
Save Texas Schools

**Parents for Public Schools of Houston, a non-profit, is providing 2 buses for interested persons to attend the rally. Buses Leave at 7:00 am from the Hattie Mae White HISD Administration Bldg. located at 4400 West 18th St. (across from Northwest Mall)  Buses expected to return by 5:30 pm.

To ride these buses you must RSVP by Friday, March 11, to Nancy Lomax by email at [email protected], or call 713-668-7075.  This is a family friendly event.  Children over the age of 4 may accompany their parent on the bus.  Please bring: a pillow, a sack lunch, drinks, and snacks because there will be no opportunity to buy food in Austin.  (These items may be left on the bus during the Rally.)  And don’t forget your umbrella or signs!  It’s raining on the future of Texas.

Statewide March & Rally Austin, TX
Saturday, March 12
March: 11:00 a.m. starting at 12th & Trinity

Rally: Noon-2:00 p.m. at State Capitol Bldg, 11th & Congress

Texas students are tough, but they’ve never faced a crisis like this. In communities across the state, the same grim headlines repeat: campus closures, teacher layoffs, deep cuts to core academic programs.

There is help for Texas students – IF our leaders have the courage to use it – and you can make a difference.

On Saturday, March 12th, join thousands of Texans for a march and rally at the State Capitol to send a clear message to our leaders:

*  Make education a top priority!

*  Use the $9.3 billion Texas “Rainy Day” Fund to support schools.

*  Sign the paperwork for $830 Million in federal aid for teachers.

*  Fix school funding laws to be fair to all districts and to our growing student population.

Plan now to be part of this historic event! Talk to your family, friends, students, co-workers, teachers, neighbors, business leaders, members of your faith community and more. Ask them to join you in Austin on March 12th to show our leaders what matters to Texas.

Together, we can make a difference. Please stand up for Texas schools on March 12th at the State Capitol.  Our future depends on it!

————————————————————————————-

For more information on how you can get involved in spreading the word please visit the Save TX Schools website for more information.

Thank you,

Spring Branch Speaks

Parent-organized community outreach with SBISD in mind.

Also sent to me in email, the following call for those in Rep. Dwayne Bohac’s district (HD138) to call his office and let him know that you support using the Rainy Day Fund to help mitigate the cuts to public education:

If you live in zip code 77018- Garden Oaks, Oak Forest, Shepherd Park Plaza, Candlelight Plaza, and the surrounding neighborhoods you are most likely in district 138. It also includes people living in 77043, 77080, 77092 and some in 77040 and 77041. His district includes parts in Houston ISD, Cyfair ISD and Spring Branch ISD,
it stretches all the way to HWY 6. Please call Dwayne Bohac today. 512-463-0727 [email protected]

He is not getting enough calls from constituents. Please call or email him and call the office to tell them your name and that you just emailed. Governor Perry just addressed the Republican caucus and pleaded with them not to use the rainy day fund. Bohac needs to hear from his constituents, the real people who made him an elected official. You can also go to the state capitol Monday-Thursday, with or without an appointment. Arrive early. Call ahead if you want to make sure you see him personally. Be prepared to speak to a staffer if he is not available. Staffers are important and will relay your message.

He needs to know what you want him to do:

In 2006, a structural deficit was created when they lowered property taxes and restructured the business enterprise taxes. In theory, the business taxes were suppose to generate enough revenue to make up for the loss revenue in lowered property taxes. This has never happened and a 10 billion structural deficit occurs. It will continue to occur until they fix it. You can find more about this at

http://sunshinereview.org/index.php/Texas_state_budget
For the short term they need to utilize the rainy day fund, a fund that replenishes and whose purpose is to help in lean years. They can also accept $830 million in federal money to help supplement public education funding.

For the the long term they need to close exemptions and loopholes for large businesses, restructure taxes to generate the revenue they lost when they cut property taxes. They can also find additional sources of new revenue, such as taxing voluntary goods/ services ( cigarettes, sodas, etc.).

Please let your friends, neighbors and community members know the importance of this issue and urge them to contact Bohac soon. Please forward this email. Below is a District map. It is a fairly large district. Please share this info with anyone in these areas. If you want to help efforts in your area please contact [email protected] or [email protected] or [email protected]

Thank you again for helping support our public schools.

http://www.ipetitions.com/petition/saveourschools_investpublic_edutx_bohac138/
For constituents in House District 138. This petition list will be given to Representative Dwayne Bohac in person. If you live in zip code 77018- Garden Oaks, Oak Forest, Shepherd Park Plaza, Candlelight Plaza, and the surrounding neighborhoods you are most likely in district 138. It also includes people living in 77043, 77080, 77092 and some in 77040 and 77041. His district includes parts in Houston ISD, Cyfair ISD and Spring Branch ISD. If you know people in any of these zip codes please send them the link to the district 138 petition. (Please also sign the general list for all HISD delegates)

The rally in Austin is Saturday. The more noise we make, not just then but all through the session, the better.

Comptroller states the obvious about the deficit

Obvious if you’ve been paying attention, anyway.

The Texas comptroller told the House Appropriations Committee on Thursday that she can’t imagine solving the current budget crisis through cuts alone.

Susan Combs spoke at a hearing designed to be a reality check for conservatives who think the budget can be balanced by slashing state services. The current two-year budget cycle is $4.3 billion short and, under the Texas Constitution, that deficit must be made up by Aug. 31.

The state is also facing another projected $27 billion shortfall in the next two-year budget, but that was not the subject of Thursday’s hearing.

Committee Chairman Jim Pitts, a Waxahachie Republican, asked Combs to testify after he introduced a bill to spend $4.3 billion from the state’s Rainy Day Fund to cover the deficit. In opening Thursday’s hearing, he tried to communicate the gravity of the problem, which left lawmakers silent and stone-faced.

“The budget adopted by the Legislature last session, and signed by the governor, exceeded the comptroller’s measure of available revenue,” Pitts said. “This committee, and this Legislature, has very limited options: the use of the Rainy Day Fund, further reductions … or deferring payments into the next biennium.”

While Combs never called on the committee to dip into the Rainy Day Fund, she presented a detailed history of how it had been used in the past and how spending it would not hurt the state’s credit rating. She also examined the other options.

“I don’t know how you can get to $4.3 billion in cuts,” Combs said. She warned that even if the recession ends, that doesn’t mean revenues will return to levels seen in 2005, when the Texas economy was booming.

Pitts filed his bill to use Rainy Day Funds for the current biennium’s deficit earlier this week. He hasn’t gone as far as some of his colleagues in suggesting we may need to use it for more than just that, but he’s certainly made no bones about this. Not having to dedicate any current revenue to last biennium will help – not enough, of course, but it will help. I just hope his Republican colleagues are listening.

Ogden on board with Pitts about Rainy Day Fund

State Sen. Steve Ogden, the chair of the Senate Finance Committee, joins with his House counterpart Rep. Jim Pitts in endorsing the use of the Rainy Day Fund to at least close the deficit from the 2010-11 biennium.

Senate Finance Committee Chairman Steve Ogden, R-Bryan, said he favors tapping rainy-day money at least to fill the current budget’s hole — which he puts at just over $3 billion.

Beyond that, Ogden said, he would support using additional rainy-day dollars “if necessary” to close a huge shortfall in the 2012-13 budget. Because his budget-writing panel “hasn’t voted on spending levels yet,” though, Ogden said he can’t say for sure if the additional funds would be needed.

[…]

To use rainy-day dollars to plug holes in a current budget, as Pitts proposes, three-fifths of the members present in each chamber must vote for it. It would take a two-thirds vote of those present in each house to tap the fund to help balance the 2012-13 budget that’s being written.

A Perry veto can be overridden by a two-thirds vote of those present in each chamber.

Ogden said going for three-fifths, not two-thirds — which lowers the maximum number of House votes needed to 90 from 100 — is “a House consideration.”

“I don’t know of any senators who’ve taken a hard position on how much rainy-day fund [money] to spend,” Ogden said. “Not one.”
Pitts, asked if he, like Ogden, would be open to using more rainy-day money to balance the next cycle’s budget, said: “No. I am proposing to use it for our current shortfall.”

According to Abby Rapoport, Pitts was somewhat equivocal about using additional Rainy Day funds for this biennium. Governor Perry is opposing the use of any Rainy Day funds, claiming Pitts and Ogden are “moving too fast” for him. There are some things that nice Governors just don’t do without certain assurances, I guess. Maybe after he’s figured out where Mexico is we can bring it up again.

Ogden also spoke recently about what the current budget does to education.

Ogden said he visited the [Finance subcommittee on public education] today to encourage the senators to take a different look at the school funding changes they are considering.

“The proposed budget in public ed is draconian. So when you’re comparing these other options that actually cut spending from current law, don’t compare it to current law because we don’t have the money for current law, but compare it to what is in the base bill and see it if doesn’t look better,” Ogden said.

“The entire committee would like to add spending to public ed. What I just wanted to focus the members on is what the alternative is. The alternative is not current law. The alternative is the base bill,” he added.

Ogden formed two subcommittees to examine public school funding and Medicaid because they are arguably the most important issues facing budget-writers this session. They have been tasked with developing a consensus among both Republicans and Democrats on how much those programs need.

“If we cannot agree, we cannot pass a bill,” said Ogden, who added that the subcommittees will probably keep working past the the Friday deadline that he set.

Right now, Ogden said, he is “not even close” to having the votes to get the budget out of committee. He expects that the bill that comes to floor will spend more money than the introduced version, though he cannot say how much or where the additional money would come from.

“When we’ve got the votes, the bill is coming to the floor,” Ogden said. “Right now, I don’t have the votes so I don’t have a timeline.”

What I take from this is that pretty much no matter what they wind up doing, funding for public education will be worse off than it was before. They make may big improvements over the base budget and the $9.3 to $9.8 billion that was slashed from public ed, but they will not get back to even, let alone find a way to account for growth. Keep that in mind when the self-congratulations begin for how much “better” the final product is said to be.

Pitts endorses using at least some of the Rainy Day Fund

It’s a start.

Rep. Jim Pitts, R-Waxahachie, the House’s lead budget writer, today filed bill that would draw down nearly $4.3 billion of rainy-day money to cover the state’s deficit in the current two-year cycle.

Pitts’ plan would tap a fund composed mostly of oil and natural gas tax revenues, though general revenue fund surpluses also make some contribution to the rainy day fund. Under a 1987 constitutional amendment, tapping the fund to plug holes in a current budget requires three-fifths approval of those present in each chamber. If everyone votes, that means at least 90 House members and 19 senators would have to consent. It’s only in writing the next two year budget that the higher threshold of two-thirds in each house is required.

If you look at House Bill 275, you see a proposed draw-down of $4,273,557,000 — the very same number Comptroller Susan Combs used last month in estimating the 2010-2011 deficit.

That number may wind up being smaller for the 2010-11 deficit, depending on the effect of earlier cuts and possible upward revisions in sales tax revenue. If so, it’ll be all the more to be available for the current biennium. Still not nearly enough, but every little bit less horrible helps.

Pitts’ bill for this is HB 275, which will require supermajority votes in each chamber. That would be a challenge under any circumstance, and will be even more of one given the teabaggers’ insistence on inflicting as much damage as possible on the state’s economy. Pitts hopes he has the votes, but I won’t be too sure till they’ve been cast. More rational folks like Scott McCown have pushed back on this, though I doubt his words will have much effect on those who believe that taking money out of the economy is good for it. Abby Rapoport has more.

The business lobby’s guide to balancing the budget

Bill Hammond, the president and CEO of the Texas Association of Business, pens an op-ed with his preferred approach to the budget. The main thing to note is right here:

The state has $72.2 billion available for general-purpose spending during the 2012-13 biennium, leaving a $15 billion gap from the current general revenue spending of $87 billion.

How do we close that gap?

It will take grit and courage to address the shortfall without raising taxes, creating new fees or increasing existing ones.

Difficult? Yes. Doable? Absolutely.

First, let’s hold the line on general revenue spending at its current level of $87 billion for the biennium.

Given that the Pitts and Ogden budget drafts held the line at $72.2 billion, holding it at $87 billion – the amount spent in 2009 – would be a major step forward. It’s still not good, it still doesn’t acknowledge the state’s growth, it still shortchanges education because as Hammond would have it the structural deficit caused by the property tax cut and insufficient business margins tax continues to be ignored, but it’s a hell of a lot better than what’s currently being discussed.

Hammond’s methods for closing the $15 billion gap between what we spent in 2009 and what the draft budgets propose to spend now are a bit shaky. He starts with $6 billion from the Rainy Day fund, throws in another $2.5 billion from the Available School Fund, about which I confess I know very little, and grudgingly agrees to expanded gambling, which he says would generate another billion for this biennium. From there, he suggests some savings, delaying some payments by a day to put them in the next biennium, and waves his hands at “some of the thoughtful recommendations laid out in recent days by organizations like the Texas Higher Education Coordinating Board and conservative think tanks”, none of which suggests more revenue to me. I don’t have a problem with finding legitimate savings, though my opening bid for that would be the LBB recommendations, which do include revenue ideas as well, nor would I object to an accounting trick or two as a last resort, but these suggestions are not compatible with finding enough revenue to “hold the line” at $87 billion.

I don’t want to be too critical, because to me the main point is that Hammond is moving the chains in a direction I favor and is giving the Republicans his organization supports rhetorical cover for using the Rainy Day fund. It’s not where the state needs to be, but I’m more than happy to debate how to spend $87 billion instead of how to spend $72 billion. I hope that by writing this, Hammond is acknowledging that the mainstream consensus position is not with the Pitts/Ogden budget. That by itself would mean a lot.

Hammond’s op-ed can now also be seen in the DMN and at the Trib, where it’s accompanied by counterpoints from the CPPP’s Eva de Lina Castro and Talmadge “Kick Grandma to the street” Heflin. Wonder if he feels weird being in the “center” of this debate. Burka has more.

Is everything on the table or not?

Some things are more on the table than others.

Tax breaks that encouraged high-cost natural gas drilling in Texas cost state government $7.4 billion in lost revenue over six years and would cost the state billions more if continued, according to a study authored for legislative leaders.

The study by the Legislative Budget Board, which has not been publicly released, was created for Lt. Gov. David Dewhurst, Speaker Joe Straus, Senate Finance Chairman Steve Ogden and House Appropriations Chairman Jim Pitts.

It lays out an argument for Texas lawmakers to reconsider the industry’s breaks on its production tax as one way to help close the state’s expected budget shortfall of $27 billion and highlights questions about how the tax breaks are applied. It made no recommendations.

State leaders are looking at bare-bones budget proposals that on average would cut overall spending by about 15 percent and scale back state services, including education, across the board. They are weighing balancing the budget either with cuts or new revenue or a combination.

“Everything is on the table,” Ogden, R-Bryan, said Wednesday about the study. But Dewhurst said he is not inclined to increase taxes on the industry and still hopes to balance the budget without higher taxes.

I don’t know if this particular tax break is good policy or not. The energy industry folks quoted in the story all think it’s super swell, in case you were wondering. But why should we take the merits of this particular piece of policy into account when we haven’t done so for all of the things that are about to be devastated by budget cuts? If we’re going to talk about firing or furloughing teachers, closing nursing homes, making abused children sleep at CPS offices because there’s no other place for them, and putting mentally ill people in jail because we don’t have anything else to do for them, we’d damn well better be willing to talk about whether or not a handful of energy companies get to keep a tax break, and a hell of a lot more than that besides. Otherwise, please spare me the baloney about “everything” being “on the table”.

Higher enrollment, fewer resources

I just have one question about this.

At a time of record enrollment in Texas’ colleges and universities, a state budget proposal released this week would see these institutions suffer a 7.6 percent funding cut from the last biennial budget.

University presidents called the proposed cuts, which total $1.7 billion, “dramatic” and “drastic.” The current budget was balanced on the back of higher education, which absorbed 41.5 percent of the cuts despite comprising just 12.5 percent of the budget.

This proposal for the 2010-2011 biennium, rolled out Tuesday by Texas Rep. Jim Pitts, R-Waxahachie, would see far less of the overall cut come from colleges and universities — but the cuts still are disproportionate, said University of Houston system president Renu Khator.

Khator and other Texas university presidents must serve rising numbers of students on falling revenue. Universities saw their combined enrollment jump 35 percent, to 557,550 students, from fall 2000 to last fall. Community colleges saw a 67 percent enrollment leap over the same period, to 720,379 students.

In what universe does this make sense? Everyone says – even the Republicans – that higher education is important, that it fuels growth, that we need to get more kids in college and more kids to graduate from college if we want Texas to be economically competitive in the future. If we actually believe that, then what the hell are we doing?

Senate budget pretty much the same as the House budget

There had been some talk that the initial Senate budget would be a little less harsh than the initial House budget, on the grounds that the Senate budget would at least use some of the Rainy Day fund, but that was not the case in the end.

The Senate’s version of a starting state budget is, at $158.7 billion, $2.3 billion bigger than the House’s, but still would chop overall state spending by $28.8 billion, or 15.4 percent, from current levels.

The upper chamber’s initial budget proposal includes a total of $69.8 billion for public and higher education; the House version provides $67.7 billion for education. Their overall spending on health and human services is about the same (though some details differ). If you’re looking only at state money — general revenue funding — the Senate would spend $79.7 billion, compared to the $79.3 billion in the House plan presented last week.

The big difference in state spending, as with the overall budget, is in education. The Senate would leave public schools $9.3 billion short of what they’re due under current education funding formulas, about $500 million better off than the schools would do under the House plan. In either case, the Legislature would have to change its school funding formulas, and until they do that, there’s no way to know which school districts lose how much money. Technology allotment and pre-kindergarten early start grants aren’t funded.

Like the House, the Senate would cut more than $254 million from special item funding for state colleges and universities and $431 million from student financial aid programs (if the money becomes available, they’d add back $50 million of that financial aid, for a total cut of $381 million).

They do similar things in health and human services, cutting provider reimbursement rates by another 10 percent on top of cuts already made and without taking into account federal stimulus funds used in the current budget that won’t be available for the next budget.

No rainy day fund, or anything else to increase revenue. On the plus side, those four community colleges that would be shut down under the House budget have been spared. See, whining works if you’re a Republican.

As with the Pitts budget, the Ogden budget is also being called a “starting point”, from which we might consider using the Rainy Day fund to make the impact a little less terrible. I’m linking to that story specifically for the purpose of mocking someone who richly deserves it:

Advocates of limited government applauded a bare-bones approach as an initial step in the discussion.

“You shouldn’t start the discussion of your family budget with how much of the family savings account can we tap this month,” said Michael Quinn Sullivan, of Texans for Fiscal Responsibility.

Someone should inform Michael Quinn Sullivan about how actual American families have been living recently:

Over the two years ending September 2010, Americans withdrew a net $311 billion — or about 1.4% of their disposable income — from their savings and investment accounts, according to the Federal Reserve. That’s a sharp divergence from the previous 57 years, during which they never made a net quarterly withdrawal. Rather, they added an average of 12% of disposable income to their holdings of financial assets — including bank accounts, money-market funds, stocks, bonds and other investments — each year.

See, if it’s a choice between eating out or having premium cable or stuff like that, people will cut back in tough times. But if the alternative is to not eat two days a week, or to turn off the electricity on weekends, or otherwise cut out actual necessities for living, most people will do whatever they can to find the money to pay for them, whether that means taking another job, selling off prized possessions, dipping into savings, or going into debt. Somehow, that never makes it into conservative narratives about budget shortfalls.

LSG on the budget

The Legislative Study Group, chaired by Rep. Garnet Coleman, now has an analysis of the Pitts budget outline, which you can read here. The main point to remember:

How We Got Here: Built-In Budget Shortfall Comes from the 2006 Tax Package

The current $26.8 billion budget shortfall is partly the result of a built-in budget hole created in the 3rd Called Special Session of the 79th Texas Legislature, which has now created a structural shortfall in three successive legislative sessions. Unless the tax structure is changed, Texas lawmakers will begin every legislative session with the built-in budget shortfall.

In 2006, Governor Perry signed into law a tax package that changed the state’s business tax structure, redirecting billions each year away from public schools and into a newly created Property Tax Relief Fund. The tax package consisted of four major pieces of legislation:

  • House Bill 2 (3rd Called Special Session of the 79th Texas Legislature), creating the “Property Tax Relief Fund” which collected money from the other three tax bills in the tax package
  • House Bill 3 (3rd Called Special Session of the 79th Texas Legislature), the franchise tax or “margins tax” bill
  • House Bill 4 (3rd Called Special Session of the 79th Texas Legislature), the motor vehicle sales and use tax
  • House Bill 5 (3rd Called Special Session of the 79th Texas Legislature), the $1 cigarette tax

At the time the tax package was presented to the Legislature and signed into law by Governor Perry, the Comptroller estimated that the revenues generated from the new tax package would fall $14 billion short of the cost of the legislation in the first five years. The predicted shortfall has come true, leaving the state billions short of necessary funds to maintain basic state services.

They have charts to go along with the words for all you visual learners. No matter what we do this session, we will continue to have shortfalls until we plug this hole.

From the department of That Didn’t Take Long, we have our first Republican complaints about the budget.

“Why would we ever have a staff recommendation as a starting point that creates a headline that says Brazosport College would be closed?” Rep. Dennis Bonnen, R-Angleton, said during an explanation of the budget on the House floor.

Rep. Jim Pitts, R-Waxahachie, the House’s chief budget writer, said enrollment in the four districts had declined over the past decade.

But Bonnen and other Republicans questioned the legislative budget staff’s analysis. Bonnen said that even if supporters can stave off closure of Brazosport College, the cloud over its future could hurt enrollment.

Other targeted campuses include Ranger College, 85 miles west of Fort Worth, and community colleges in Borger and Odessa.

Rep. Jim Keffer, R-Eastland, whose district includes Ranger College, called the closure recommendations “the height of irresponsibility.”

Rep. Tryon Lewis, R-Odessa, said he doubts there will be savings because most of Odessa College’s students would simply transfer to another state-supported school.

Bonnen’s diatribe sure got attention. Look at what the Trib says:

Bonnen describes Brazosport College as “the hub and center” of his district — one that local industry relies on for job training and that community members go to for education and cultural pursuits. “The thought of losing an institution like that is kind of debilitating,” he says. Though he recognizes that the base budget is “nowhere near” how the final budget will look, Bonnen says that even suggesting a college might be closed is “significant” and even “disastrous.” Students will begin looking to transfer, and others might decide to not bother enrolling.

“It creates a high degree of uncertainty,” he says. “As policymakers, we’d better be damned sure it’s something we’re going to do if we create that uncertainty.” And Bonnen feels strongly that the school will, ultimately get that funding once his arguments have been made.

So…you’re saying that the no-new-revenue, no-rainy-day-fund, cuts-only approach that Perry and Dewhurst and the rest of the GOP have been espousing would kill jobs? I’ll make a note of that. Hey, it’s all fun and games until your own ox gets gored. Look, “cutting waste” and “tightening the belt” and “finding efficiencies” and “shrinking government” and all that other hooey will always be more popular than identifying specific programs, all of which have their own constituencies, for reduction or elimination. Now at least Reps. Bonnen, Keffer, and Lewis know what that means, and perhaps have a better understanding of why we have a Rainy Day Fund, and why that cut-only approach is a lousy idea.

Of course, one can always take the “Don’t cut me, cut that other guy” approach in response:

Bonnen says the realization that the solution to the state’s budgeting woes could include eliminating his local community college does not cause him to look upon revenue-increasing options like tax hikes any more favorably. He says it’s his job to make the case that no responsible budget eliminates Brazosport College, and he hopes that even the architects of HB 1 will come around. Similarly, Lewis is confident that all four colleges will ultimately receive funding.

“There’s no joy in this budget for anybody,” Bonnen says. “As frustrated and unhappy as I may be to see Brazosport College not funded, I can assure you Chairman Pitts and others involved in this baseline budget are as troubled as I am.”

My priorities are worthy. Yours are not. Easy, no? Kilday Hart and Abby Rapoport has more on this.

Finally, here’s a look at how the budget affects TxDOT, and a second glance at the budget and its effects on criminal justice from Grits. Clearly, the lessons learned in 2003 about how cuts in some programs wind up costing you a lot more later have not been retained.

UPDATE: Be sure to read Terry Grier’s memo about what the Pitts budget would mean to HISD:

Our analysis of the House appropriations bill reveals that the proposed $5 billion cut to public education would mean an annual loss of $202 million to $348 million per year for HISD. This represents 15 percent to 20 percent of HISD’s budget. Theoretically speaking, HISD could wipe out all of central administration and would still have to severely cut school budgets to compensate for this large of a reduction in state funding. Put another way, $202 million–the low-end projected revenue loss–is enough to pay the salaries of 3,825 teachers with an average salary of $52,800.

As you can see, there is no way for Houston schools to absorb a blow such as this without causing serious harm to classrooms.

Boy, this sure is going to be Texas’ century, isn’t it?

The Pitts budget

Here it is, and if it is a shock to you, you haven’t been paying attention.

The House’s starting-point budget proposal would provide for a total budget of $156.4 billion in state and federal money, a decrease of $31.1 billion, or nearly 17 percent, from the current budget period.

The budget proposes nearly $5 billion less for public education below the current base funding. It is also $9.8 billion less than what is needed to cover current funding formulas, which includes about 170,000 additional students entering the public school system during the next two-year budget cycle. Pre-kindergarten would be scaled back.

Higher education funding, including student financial aid, would be slashed.

The proposal wouldn’t provide funding for all the people projected to be eligible for the Medicaid program and would slash Medicaid reimbursement rates for health care providers.

Community supervision programs would be cut and a Sugar Land prison unit would be closed. Funding would be eliminated for four community colleges including Brazosport near Lake Jackson.

Thousands of state jobs would be cut.

I’m not sure where to provide a link for this, because HB1 has not been filed yet, according to TLO. If I understand correctly, Pitts’ outline was just give via printouts. Be that as it may, there are a couple of things to keep in mind. One is that this isn’t a bill. Rep. Pitts’ stated objective was to show what the budget would look like if there were no increases in revenue and the Rainy Day Fund were unused. The Senate is working on its own budget outline, which by all reports does assume that the Rainy Day Fund will be tapped for some amount, so it will be different.

Most importantly, now everybody, including all those freshman Republican legislators, know exactly what they’re up against. No more hiding behind vague and meaningless platitudes about “cutting waste” and “smaller government”, because this is what all that means. Now is the time for everyone who will be on the business end of these proposals to make their displeasure known, starting with school districts.

Cypress-Fairbanks ISD Superintendent David Anthony estimated that his district could lose $80 million under the budget blueprint.
“That would significantly impact everything we do in the district,” he said.

The state’s third largest school district has already cut more than $70 million, including some 800 positions, over the past four years.

“We’re very lean already,” Anthony said. “Future cuts will impact the services we provide. We want to maintain quality. If you continue additional pressure and cuts, eventually it breaks.”

Scaling back pre-kindergarten programs would deliver a big low for Houston ISD because about 80 percent of the students come from low-income families, district spokesman Jason Spencer said.

Here’s more on that:

Lawmakers, though, would have to rewrite school-funding formulas because the House leaders’ plan falls $9.8 billion short of obligations to school districts and charter schools.

“They’ve got to pass a major school finance bill with major cuts in it,” said school finance expert Dan Casey, who predicts renewed interest in a lawsuit against the state “if you see cuts of this magnitude and no changes in standards.”

The House budget would push Texas into uncharted territory, he said.

“There isn’t anybody – even the more veteran legislators – that have been through those kinds of reductions,” Casey said.

[…]

Under the House plan, public schools, which teach reading and arithmetic to future workers, would receive no extra money to cover enrollment increases. Nor would districts be given more state funds, as currently required, to offset declining local property values.

“That’s catastrophic for any fast-growing districts, like a Frisco or a Lewisville,” said Casey, a former adviser to the Legislature on school finance who now has a thriving private consulting practice.

The budget would eliminate funds for the nation’s largest experiment in teacher merit pay. Also zeroed out would be the main remedial program created by Texas in 1999, as it required students in certain grades to pass achievement tests to be promoted.

“You’re going to have the same rising standards and less financial help for the support that will make students successful,” Casey said.

Somewhat bizarrely, both Rick Perry and David Dewhurst made claims about protecting the vulnerable and providing a “world-class education” in their inauguration speeches. Neither of those things is remotely possible under the Pitts outline. The question is what happens next. The answer, as always, is to make your voices heard. I know of one group in HD134, organizing via Facebook, that’s meeting to “petition support from our newly elected representative, Sarah Davis, to support funding for public education”. I have no idea what effect that or any other such effort may have, but if you don’t make it clear to your Reps and Senators that you didn’t vote for this and will vote against anyone who supports these kinds of cuts, they’ll have no reason to think there’s any problem with doing so. We have 132 days to make sure they know. Reactions from various Democratic lawmakers are beneath the fold. The Trib has more on the budget in general, while Grits, Postcards, and the Trib again discuss the criminal justice impact of the outline, and the LBB webpage now has some budget docs.

(more…)

There’s still no such thing as a rainy day

Having been in denial about the size of the budget deficit, Governor Perry goes into denial about how to deal with it.

Gov. Rick Perry on Monday said he was opposed to using the state’s rainy day fund to help pay for services despite a looming budget shortfall that is estimated at $15 billion to $27 billion during the next two years.

“We will prioritize what’s important in this state. We will fund those. And we will craft a budget that meets those revenue projections and not raise taxes nor get into the rainy day fund,” Perry said. “And that’s been a consistent message for at least a year and a half.”

He disputed the idea of a shortfall when the next budget has yet to be written, noting that Texas’ budget must balance: “We don’t have shortfalls in Texas. … You couldn’t spend enough to make some of those groups happy.”

Let me ask again, what is the purpose of the Rainy Day Fund if it never gets used? There’s an old parable about a miser who buried all of his money in a box in his back yard. Every day he’d go dig it up and look at it and celebrate how much it was, then he’d bury it again. One day, someone snuck into his yard, dug up the box of money, and stole it. The miser bemoaned the loss of his fortune to a friend, who told him to bury a rock in its place, since it would do as much good for him as the buried money had done.

The point I’m making is that if we don’t use the Rainy Day Fund, it’s basically the same as not having it in the first place. Remember back when we had a federal budget surplus? The conservative argument was that surpluses are bad, because it was “the people’s money” and should be given back, via tax cuts. I find it strange to see Perry arguing that the state should hold on to all of this money. I guess if it can’t be used on tax cuts it’s not of interest to him.

The good news, if you can call it that, is that Perry’s position so far seems to be not in step with the rest of the leadership.

House Appropriations Committee Chairman Jim Pitts, R-Waxahachie, said a shortfall figure of at least $27 billion is “in the ballpark” when looking at the amount of money needed to provide the current level of services.

The initial House budget proposal that Pitts introduces will be written within available money, without using the rainy day fund or other additional revenues. Lawmakers will decide how to proceed from there, he said.

“We cut education. We cut higher ed. We cut public ed. We cut health and human (services)” in the initial proposal, Pitts said. “We’re just showing the reality of it. … There may be a group that thinks this bill is great. I don’t know what to expect this next legislative session.”

[…]

Lt. Gov. David Dewhurst spokesman Mike Walz said that while the fund will not be used in the first Senate version of the budget, Dewhurst “expects both the Senate and the House to dip into the rainy day fund this session in order to fund our priorities and still save a portion to balance the budget again in 2013.”

While I’d want to use the vast majority of the Rainy Day Fund, I’d leave a little bit for the next biennium as well, precisely because I fully expect we’ll be in a deficit situation again, regardless of how the economy does. You could argue that we ought to use it all this session, to show the reality of what our structural-deficit-causing property tax cuts have wrought in 2013, but that may be too scary for some people. While I hope the Lege will avoid disaster on this, it’s important to remember that a minority can prevent the Rainy Day Fund from being used. There’s a lot that can go wrong.

There’s no such thing as a rainy day

Rainy Day Fund? What Rainy Day Fund?

State budget writers will propose eliminating agencies, cutting others to a quarter of their current size and laying off state employees to balance the budget without raising taxes or using the state’s Rainy Day Fund.

House Appropriations Chairman Rep. Jim Pitts, R-Waxahachie, told an Ellis County group that the shortfall is also the reason lawmakers have talked about leaving the federal Medicaid program.

“We’re making huge cuts,” Pitts told the group. “There are agencies that are in existence today that we are eliminating when we introduce the bill. We are making some large cuts to some agencies that are not going away — up to 75 or 80 percent of their budget. That’s where we are today, is doing those cuts. And yes, sir, I’m nearly there. But we may need to do some more. And what we may do is we may get furloughs, we are having hiring freezes, we have told the [Health and Human Services Commission] to do a freeze on our waiting list. There are numerous things we can come up with, but we are getting very close to being able to come up with that money without using the Rainy Day Fund.”

Then why do we have a Rainy Day Fund? Seriously, if a $24 billion dollar deficit isn’t reason to use it, then why do we have it? How is it a better idea to lay a bunch of people off during a time of high unemployment and a slow economy? Never mind policy, I don’t get the philosophy behind this. If we’re not going to use it, we may as well just abolish it and use the money to give Dan Patrick another property tax cut, since that seems to be the only thing these guys care about.

Perry scoffs at budget shortfall number

What color is the sky on Rick Perry’s planet?

Gov. Rick Perry says that where some see an $18 billion budget gap ahead for Texas, he sees a figure plucked from the sky.

“I think it’s a number that somebody just reached up in the air and grabbed,” Perry said in a TV interview that aired late Thursday.

On Friday, Rep. Jim Pitts, the House’s top budget writer, stood by his $18 billion shortfall estimate, which he explained in detail last month while warning colleagues about painful choices they will face next session.

“The testimony of the Legislative Budget Board before the full committee reflected the $18 billion number,” said Pitts, R-Waxahachie, head of the Appropriations Committee. He referred to testimony to his panel on May 11 by assistant budget board director Wayne Pulver.

Under questioning by Pitts, Pulver said that last year, lawmakers plugged budget holes with about $12 billion of federal stimulus money and state money left unspent in 2007. Add $2.5 billion to cover inflation and population growth in the next two years, and a revenue shortage of about $3.5 billion in the current two-year cycle, and $18 billion “is a reasonable number” to forecast for the deficit, Pulver said.

So you’ve got the Legislative Budget Board and the Republican chair of the Appropriations Committee on the one hand, and Rick Perry on the other. Who do you think is more credible? Perry’s going around making wild claims about Houston, and he doesn’t even know what Texas’ financial situation is. Why does anyone believe a word he says?

“Perry’s Fiscal Flim-Flam”

Just go read this article/slide show from the Texas Observer about the gap between what Rick Perry says about the state’s finances and the truth. It’s stuff we mostly knew already, but it’s still sobering to see like that. And keep this in mind:

Last month, the [Legislative Budget Board] warned lawmakers that there will be at least an $11 billion shortfall in 2011—thanks to the 2006 property-tax cuts. [State Rep. Jim] Dunnam, and other legislators, predict the shortfall will be much worse.

“We are hearing anywhere from $15 to $20 billion,” he says. “You think 2003 was bad. You ain’t seen nothing yet.”

I’ve heard that Republican State Rep. Jim Pitts, who chairs the Appropriations committee, has been saying the same thing about the size of the shortfall. It’s going to be brutal. And to a large degree, we have Rick Perry to thank for it.

And in case you were wondering about gambling

And to complete this impromptu threeparter about the state’s budget situation, we ask the question “What about gambling?”

Lawmakers had been warned to expect a shortfall of at least $11 billion in the next two-year budget period. But Appropriations Chairman Jim Pitts, R-Waxahachie, on Tuesday put the gap at $18 billion — and said lawmakers should consider casino gambling as one way to fill the hole.

[…]

The expansion of gambling would require a constitutional amendment, Pitts said. That means a two-thirds vote of lawmakers and voter approval on a statewide ballot.

Casino gambling could bring in $1 billion in the next two-year budget period and $4 billion annually in the future, he said.

“I’m going to look at every revenue enhancer that we can get,” Pitts said, adding that Texans now travel to other states to gamble “and we need to grab that money.”

While I agree there’s revenue to be had by these means, I remain skeptical of pretty much any actual number that gets put out to quantify it. I’m particularly dubious of the $1 billion claim for the next biennium, especially if we’re talking casino gambling. Assuming a joint resolution passes, and it gets ratified by the voters, there would still be the need for local option elections in places like Galveston where any proposed casino would be situated. By the time you get past that, it’s already May of 2012, and you haven’t even started construction yet. I suppose this could be an opening for the slot-machines-at-racetracks crowd, since those could be in place within days of the November constitutional amendment vote. We’ll see if anyone picks up on that argument when the session opens. Just remember that there’s still plenty of opposition to expanded gambling out there, so even getting to the first step is not guaranteed.

We will keep trying the same solutions until they work

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.

I know it’s bad form to talk about revenue, but as BOR noted, taxes are at a historically low level right now.

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.

(more…)

Where have all our sales taxes gone?

The Lege would like to know.

“The situation is not good,” said Rep. Jim Pitts, R-Waxahachie, who has asked representatives of Comptroller Susan Combs to testify before his Appropriations Committee.

State revenues remain “well short” of predictions, although sales tax receipts showed a modest gain last month, Pitts, the House’s chief budget writer, said Monday.

“The members of Appropriations need to know what they’re facing next session,” he said.

Pitts said sales tax receipts in April increased by 1.4 percent over the same month a year earlier, ending a string of 14 consecutive months of decreases.

“We’re now comparing this year to a bad year. April 2009 wasn’t good,” he said.

“But at least it’s in the up direction,” Pitts said of last month’s gain. “We hope it sustains.”

Clothes and electronics are responsible for much of the uptick, with car sales improving as well. Remember, comparisons to this time last year are a comparison to a month in which we were in a recession. We’d darned well better be ahead of that! As such, the current trend will have to do a lot more than just maintain to avoid anything but the high-end deficit projections for the next biennium. We’re still in a pretty deep hole.

Special session starts tomorrow

The special session everyone knew was coming to address the disposition of several state agencies begins tomorrow. So far, at least, the agenda hasn’t changed from the original call.

Gov. Rick Perry is being pressed to add issues ranging from children’s health care to voter identification to the agenda of the special session that begins Wednesday, but his answer is still no.

Perry, a Republican, made clear when he called the session last week that he wants lawmakers to take just a few days to complete must-do business left undone in the regular session, then be gone.

He hasn’t changed his mind, spokeswoman Katherine Cesinger said Monday: “The governor has already announced what will be addressed during the special session and at this time doesn’t have any intentions to expand the call.”

“At this time” certainly leaves wiggle room for him. There have been plenty of other bills filed for the session in the event the Governor uses that wiggle room, including a CHIP expansion provision that already has majority support in the House. Unfortunately, what it doesn’t have is Perry’s support, so I wouldn’t hold my breath. As for voter ID, the best assurance we’ve got right now is this sentiment:

Rep. Betty Brown, R-Athens, said she has asked Perry, Lt. Gov. David Dewhurst and House Speaker Joe Straus for a commitment to address voter ID in the special session.

Sen. Tommy Williams, R-The Woodlands, said he hasn’t – and won’t – ask Perry to add the issue: “I want to get in here and get it over with and get back home.”

Amen to that. House Speaker Joe Straus has a vision for how that will happen.

[Monday], three House bills [were] pre-filed that correspond to Gov. Rick Perry’s agenda: The Sunset scheduling bill for the transportation, insurance, racing and two smaller agencies; authorization of $2 billion in transportation bonds and creation of the Texas Transportation Revolving Fund, and extension of comprehensive development agreements to build roads.

On Wednesday, the Legislature will convene at 10 a.m. Those House bills will promptly be assigned to three House committees — Appropriations, State Affairs and Transportation— for the required public hearings.

On Thursday, the House is expected to have its first calendar for consideration. Committees are expected to have approved the bills the previous day, if everything goes on schedule.

On Friday, “if it is the will of the members to do so, we will conclude our business.”

According to the Straus memo, House Appropriations Committee Chairman Jim Pitts, R-Waxahachie, will author the transportation bond bill; state Rep. Carl Isett, R-Lubbock, chairman of the Sunset Advisory Bill, will carry the Sunset bill, and Transportation Committee Chairman Joe Pickett, D-El Paso, will carry the so-called CDA bill.

To expedite the three-day express schedule, a special briefing for House members and their staffs will be held at 1:30 Tuesday in the Capitol Auditorium to answer questions about the bills.

The question is what happens if one item on the call doesn’t get swift approval?

arried a bill that would have extended by six years the legal authority for TxDOT and regional mobility authorities to sign what have usually been 50-year contracts with private companies to build and operate (and profit from) tollways on public land. Authority for such leases expires Sept. 1.

The general understanding was that the legislation’s final passage was dependent on approval of a separate bill by state Sen. Robert Nichols, R-Jacksonville, that would put limits on such contracts. Both bills passed the House and Senate, either with their original bill numbers or as part of the main TxDOT bill that died late in the session.

The question is, will that linkage still be the case in the special session? Nichols said Monday that it had better be, or the toll road item could end up in the ditch.

“I feel very strongly about it, and so do many” other senators, Nichols said.

Carona said Monday that he could see eliminating at least some of what Nichols had in mind if a toll road lease extension were passed that applied to only a handful of projects for which officials have already decided who — TxDOT or local toll authorities — will be in charge of the projects. That list reportedly includes extending the Texas 130 tollway north from Georgetown to Hillsboro, building the new Interstate 69 from south of Refugio to the Rio Grande Valley and adding toll lanes in the Dallas-Fort Worth area.

However, even in those cases, Carona said, “you’d have to have at least put some protections in there.”

[…]

So, what would Perry do if something close to [Nichols’ bill] were attached to the extension legislation in the special session? Some officials said that such an amendment could be determined to be outside the scope of Perry’s call. Nichols disagrees with that.

Perry spokeswoman Katherine Cesinger said Perry’s staff is talking with Nichols’ office to discuss his concerns.

Carona said, “One source in the governor’s office indicated that any bill that contained the Nichols language would be vetoed. Another said that’s not necessarily so.”

Yes, well, we know how good Perry’s staff is at communicating the Governor’s intentions in these matters. I feel reassured, don’t you?

More on Perry’s vetoes

Governor Perry’s veto of SB2468, the “revolving door” restrictions bill for Harris County, has puzzled its sponsor.

In his veto message, Perry said he rejected the ethics bill, authored by Sen. Mario Gallegos, because it addressed lobbying matters and related criminal penalties only in Harris County, not statewide, and thus characterized it unconstitutional.

Gallegos, a Houston Democrat, said he was surprised at the veto because the bill’s language had been revised to address constitutional issues and further because the governor’s office called him around noon Friday saying Perry was going to bless it.

But around 7:15 p.m., Gallegos said, the governor’s office called again and said the attorney general’s office had declared it unconstitutional.

“I was told several people from Harris County called him (the governor) and told him to the veto the bill. It was a good ethics bill,” Gallegos said.

The so-called “revolving door” restriction required former county employees to wait two years before lobbying.

You would think that a basic concept as a constitutional prohibition on criminal penalties that apply in one part of the state but not in other parts would have come up earlier in the process than this. Sen. Gallegos is suggesting that the people who would be affected by the bill’s restrictions managed to convince Perry to maintain the status quo. I have to say, that strikes me as a much more likely explanation than a sudden discovery that the bill was unconstitutional.

Speaking of bills tailored to specific counties, here’s the story on HB770, which became law by default.

Even though a provision allowing a lawmaker’s beach house — and those nearby — to be rebuilt in an exemption from the Texas Open Beaches Act was not vetoed by the governor, the measure is too flawed to be enforceable, the state land commissioner said Friday.

Commissioner Jerry Patterson said the provision won’t pave the way for the rebuilding of Rep. Wayne Christian’s home or any other one on public beaches.

“It will be the policy of the Texas General Land Office that notwithstanding the Christian amendment, no structure will be rebuilt if it will interfere with the public right to access Texas beaches,” said Patterson, who has railed against the provision but said he agreed with Gov. Rick Perry’s decision.

[…]

In a statement Friday, [Rep. Wayne] Christian said, “I am pleased Governor Perry has agreed with those of us in the Texas Legislature to expedite the post-Ike recovery of Texas families and respect their private property rights.

Patterson, who had urged a veto of the bill, said he had changed his thinking and supports Perry’s decision.

“Two weeks ago, that would have disappointed me. Today, I think the governor did the right thing,” Patterson said, adding that the Christian amendment will change nothing.

“Texas beaches will remain as they have always been, open to all Texans, not just a few,” Patterson said.

Too bad, I was kind of hoping Patterson would go rogue. So what happens if Christian starts rebuilding his house? Who’s going to stop him, and how?

One veto I hadn’t noted yesterday was of HB130, which was a pre-kindergarten bill. As with pretty much all of the vetoes here, this one caught supporters by surprise.

“It’s a bad day for public education and for Texas’ youngest and neediest children,” [bill author Rep. Diane Patrick, R-Arlington] said.

House Bill 130 would have put in place new quality standards for pre-kindergarten classes, including teacher training and class size limits. The classes serve children who are homeless or in foster care, have a parent in the military, have limited English-speaking skills or whose families are low-income.

The original bill would have expanded pre-kindergarten classes from half-day to full-day for the children who now qualify for the program. But the initial $623 million price tag proved too much for the Legislature to swallow in a tight budget.

The final bill that cleared the Legislature, while keeping the quality standards, provided $25 million in grant money for districts that already have full-day pre-kindergarten but were slated to lose state funding.

UPDATE: Perry wrote in his veto statement that the money would be better used to expand the number of children served in the existing program.

“Under the funding formula for the existing grant program, $25 million would serve more than 27,000 students over the next biennium, which is 21,000 students more than the estimated 6,800 students that would have been served under the bill’s proposed program – or a 305 percent increase,” Perry wrote.

But Patrick noted that the $25 million does not provide the districts the full amount needed to offer full-day classes, so the districts will still bear significant costs.

Even with the veto, those districts will get the money but the quality standards will not take effect.

One-hundred House members had signed on to the bill, which had the strong backing of House Appropriations Chairman Jim Pitts.

“More Republicans supported the bill than not,” Patrick said. “Clearly, many Republicans as well as Democrats understand that pre-k education is an investment for which there is a great return.”

Penny-wise and pound-foolish, which is about what you’d expect from our Governor. Other views on the vetoes: from Grits, who agreed with some but as I expected disliked the rejection of HB3148; and from Eye on Williamson.

Scaling back steroid testing in the schools

Yes, yes, yes.

House and Senate budget negotiators will decide in the coming weeks whether the [$3 million a year program to test high school student athletes for steroids] continues — and its scope and pace.

“It’s not needed. House members think that we should not do the test at all,” said House Appropriations Chairman Jim Pitts, R-Waxahachie. Pitts will lead House members in their negotiations with Senate counterparts.

A scaled-down program is possible, Pitts said. And that would satisfy Rep. Dan Flynn, R-Van, who sponsored the steroid-testing legislation two years ago.

He prefers a scaled-down program where random tests for steroid use are given to students who participate in football, track, weight lifting and wrestling, sports in which steroid abuse is most prevalent, as opposed to volleyball, for example.

“No, we don’t have a whole lot of people that we caught, but the whole idea was for them not to use it,” Flynn said. “It was a fairness and health issue, and we think we raised that level of awareness to a bar where it’s been successful.”

As noted, in the story, a grand total of 11 athletes, out of 29,000 tested, came up positive. Both Rep. Flynn and Lt. Gov. Dewhurst, who was also quoted in support of this foolishness, have given all kinds of silly justifications for this in the past as well. Even Governor Perry supports scaling this back. Now three million bucks is chump change in the context of the budget. Killing this program isn’t going to achieve any real savings. That’s not the point. Steroid testing was done for a reason, whether you believe it was deterrence or fact-finding or something else, and the results have shown that it’s not needed. We should pay heed to those results and take the next logical step.

House budget conferees announced

Elise Hu names names.

State Rep. Jim Pitts, R-Waxahachie, House Appropriations Chairman
State Rep. Richard Raymond, D-Webb, House Appropriations Vice-Chair
State Rep. Ruth Jones-McClendon, D-San Antonio
State Rep. John Otto, R-Dayton
State Rep. John Zerwas, R-Houston

Give credit to Burka – he called all five. These five will join Senate conferees Steve Ogden, Royce West, Florence Shapiro, Chuy Hinojosa, and Tommy Williams to hammer out the final budget. I don’t know yet when they’ll start their process, but I assume it’ll be soon. Will the Davis-Walle amendment, which drained the Texas Enterprise Fund in the event of a veto of SB1569, survive? Will the Ogden stem cell rider get the heave-ho? The answers to these and other important questions will be known to us soon.

UPDATE: As has been pointed out to me, Zerwas is from Katy, in Fort Bend County. None of the ten conferees are from Harris County; Williams’ district includes a piece of northeast Harris County, though he himself hails from The Woodlands. I hadn’t realized that when I first wrote this, but it strikes me now as being a little strange that the largest county in the state has basically no representation on the budget conference committee. Hope they don’t forget about us…

Senate passes SB1569, but may not be able to override a veto

The Senate passed SB1569, the bill that accepts stimulus funding for unemployment insurance, by a 19-11 vote today. As Elise noted on Twitter, two Senators flipped to No for final passage; one other Senator was either absent or did not vote. We don’t know who exactly the changed and missing voters were yet. For the record, the second reading vote went as follows:

Yeas: Averitt, Carona, Davis, Deuell, Duncan, Ellis, Eltife, Estes, Gallegos, Harris, Hinojosa, Lucio, Ogden, Shapiro, Shapleigh, Uresti, Van de Putte, Watson, Wentworth, West, Whitmire, Zaffirini.

Nays: Fraser, Hegar, Huffman, Jackson, Nelson, Nichols, Patrick, Seliger, Williams.

The same group voted to suspend the rules so the bill could be brought to the floor. As predicted, the entire Harris GOP contingent voted against. The final margin of 19-11 means the Senate would not vote to override a Governor Perry veto if it comes to that and no one flips back; even if the absentee voted Yes it would be insufficient. So if there’s the be any stick to induce Perry to sign this thing, it’ll have to be the Yvonne Davis amendment.

Speaking of the House, HB2623 by Rep. Joe Deshotel, which is listed as “similar” to SB1569, had its committee report sent to Calendars on Friday. Given that the “identical” HB3153 by Rep. Tan Parker is still in committee, I’d say that’s the bill to watch in the lower chamber. There’s still time to allow for a veto override attempt, if they don’t get bogged down. Patricia Kilday Hart has more, and a statement by Sen. Leticia Van de Putte is beneath the fold.

UPDATE: Via Postcards, the answer is that Sens. Shapiro and Estes switched their votes between second and third readings, and Harris was absent.

UPDATE: The Statesman has more on the prospects in the House.

Although there are six weeks left in the session, lawmakers need to finish a bill within the next month to attempt a veto override. During that period, the governor must veto a bill within 10 days of its final passage or it becomes law.

Business and Industry Committee Chairman Joe Deshotel, D-Beaumont, said the House is “up against a wall” to get the bill to the governor.

“Every day now counts,” said Deshotel, who will sponsor Eltife’s bill in the House. “We can make it through if it doesn’t stall somewhere.”

It was unclear Monday which House committee will take up Eltife’s bill and how long it will take to clear that committee and get to the floor for a vote. Then, assuming the governor vetoes the legislation, the hard work would begin in getting the support in both houses necessary to override a veto.

Given Perry’s clear opposition and the jam-packed legislative schedule, Rep. Wayne Christian, R-Center, said it would be “irresponsible of us to waste the citizens’ valuable time (taking up the measure) if the governor already says it is vetoed.”

“Why should we kill other bills that might be able to help the citizens of Texas if we know that this is a nonproductive exercise of yelling at each other on the House floor?” said Christian, a leader of conservatives in the House.

Deshotel said the possibility of a veto should not deter the House because the policy issue is a critical one.

He also said the governor might not veto the bill if he sees that it has broad-based support from both Democrats and Republicans, including House Appropriations Chairman Jim Pitts, R-Waxahachie.

“The governor can always change his mind. I want to get the bill to the governor,” Deshotel said.

Especially if the budget provision that moves money from the Texas Enterprise Fund to the unemployment insurance trust survives the budget conference committee. I’m sure the Governor has a fallback position prepared just in case. Speaking of that provision, a statement from Rep. Armando Walle, who was the initial author of that amendment, has been added beneath the fold.

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