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March 15th, 2011:

The itty bitty budget deal

Mar 15th, 2011
by Charles Kuffner.
11 comments

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.

Get your economic projection brackets ready

Mar 15th, 2011
by Charles Kuffner.
1 comment

The Final Four will be played in Houston this year, and you know what that means.

The NCAA’s estimate for economic activity in Houston puts the total to be spent during the Final Four at $60 million, while the Greater Houston Partnership estimates that total will exceed $105 million.

And businesses from hotels and taxi services to restaurants and street vendors are preparing to welcome the surge of visitors expected to fill Reliant Stadium for three games, each packed with 76,500 fans.

“I’ve been hearing that it’s almost like the Super Bowl,” said Sophia In, who sells parking at her Shipley Do-Nuts location near Reliant Stadium.

As long as you don’t mean Super Bowl LXV, I hope. The last thing we need here is an ice storm.

“I believe that this event, in terms of the direct expenditure, is going to be better than the Super Bowl of 2004,” [Greg Ortale, chief executive officer of the Greater Houston Partnership] declared.

With the attendance per Final Four game equaling that of the Super Bowl of 2004, the thee games will bring more spending from fans who likely will stay in Houston for much of the five-day event, he said.

The Texas comptroller’s office anticipates the Final Four in Houston will generate $11.7 million in tax revenues. The NCAA Regional Final in Houston last year generated $5.7 million in tax revenue over a 30-day period.

We have some actual numbers to play with, so let’s see what they mean. Last year at this time, when Houston was set to host a regional final, we learned the following:

Houston and Reliant Stadium last hosted an NCAA regional in 2008, employing the “mid-field” court configuration and elevated seating systems that now serve as the model for all Final Fours. The attendance then was similar to Friday’s.

“We were north of 38 (million dollars),” Ortale said. “We verified it through a third party, and we think it’s a conservative estimate. We prefer to err on the side of being conservative instead of overstating.”

Let’s assume the $38 million figure was accurate, and that we got the same amount of activity last year. Using those assumptions, and the assumption that the ratio of economic activity dollars to tax revenue dollars remains constant, the Comptroller’s tax revenue projections equate to $78 million in economic activity. Which falls right between the NCAA’s number and the GHP’s, so everyone is being consistent. I still think there’s a nontrivial amount of voodoo in these calculations, but at least there’s nothing obviously ridiculous. We’ll see how it all turns out.

Comptroller finds a few more bucks

Mar 15th, 2011
by Charles Kuffner.
Comments are off for this post

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.

Lowe has confirmation issues, too

Mar 15th, 2011
by Charles Kuffner.
1 comment

John Bradley isn’t the only Rick Perry appointee who is having trouble getting confirmed by the Senate.

State Sen. Bob Deuell, R-Greenville, who chairs the Senate Nominations committee, says Gail Lowe has not been scheduled for a hearing as chairwoman of the State Board of Education because she lacks the votes for a confirmation on the floor.

Gov. Rick Perry nominated Lowe, who currently serves in the position, on Feb. 1. Democrats in the Senate have been unhappy with her performance — especially in light of a recent report that blasted the state’s social studies standards.

Deuell said that while he believes the Lampasas Republican’s nomination has the votes to get out of committee, she currently does not have the support of any Democrats — meaning she would not survive a vote of the full Senate.

[…]

In blocking Lowe, who, while a member of board’s social conservative bloc, is known for a balanced management style, Democrats run the risk of a more controversial member as her replacement.

I feel the same way about this as I did with Don McLeroy’s ultimately scuttled confirmation back in 2009. I have nothing good to say about Gail Lowe, but I have absolutely no illusions that her successor would be any better. In fact, I’d bet money that should Lowe fail to get confirmed, Perry will nominate David Bradley as the next Chair, which will not only ratchet the crazy factor back up to 11, it will also be a big, ironic middle finger aimed at every Democratic Senator. I’m not going to tell anyone how they should vote on this one – the game is rigged, and the choices all suck – but I do think everyone should give it a lot of thought.

By the way, we have no money for roads

Mar 15th, 2011
by Charles Kuffner.
1 comment

Just another issue we won’t be dealing with this session.

During the next 20 years, the Texas Department of Transportation will need $315 billion to spend on the state’s roads and freeways for maintenance and construction just to keep traffic from getting worse, according to a report commissioned by the Texas Transportation Commission.

The gasoline tax, federal dollars and other fees, which provide almost all of TxDOT’s road funding, are expected to generate only about $160 billion during that same time.

The Center for Transportation Research at the University of Texas predicts that the lack of money for road construction and repair will lead to a significant deterioration of Texas’ roads — by 2025, only 21 percent of Texas’ roads will be in good or better condition.

This issue, however, is not likely to get much attention during the current legislative session.

“There’s not going to be a lot focus on transportation because of the budget crisis, which has really no effect with TxDOT,” said Rep. Joe Pickett, D-El Paso, a former chairman of the House Transportation Committee.

I don’t know if that’s the same study from a few years ago that I criticized a few times for overstating the need – at the time, it was a pretty transparent ploy to generate leverage for Governor Perry’s various privatized toll road schemes – but it doesn’t really matter. No one will argue that there is a need for more transportation funds, even if we argue over how big the gap is. And the two obvious solutions – raising the gas tax and indexing it to inflation, and allowing for local options on taxation for transportation funding – aren’t going anywhere this session. We’ll just kick the can down the road a little more, and hope it doesn’t get lost in a pothole.