Thread: Texas revenue shortfall could be $27 BILLION UPDATE

Blog: Texas revenue estimate released, shortfall could be $27 billion

By Zahira Torres / El Paso Times
Posted: 01/10/2011 12:55:37 PM MST

Texas could be facing a budget shortfall of about $27 billion if it expects to keep the same level of services approved two years ago by the legislature.
On Monday, State Comptroller Susan Combs projected that the state would have about $72.2 billion available for general-purpose spending during 2012-2013. Maintaining services at the current level would cost about $99 billion, according to estimates from groups such as the Center for Public Policy Priorities.

Read more in Tuesday's El Paso Times.

http://www.elpasotimes.com/newupdated/ci_17057078

Full Story

State to face shortfall: Budget deficit may be as high as $27B

by Zahira Torres \ Austin Bureau
Posted: 01/11/2011 12:00:00 AM MST

Texas budget

Hospital district considers raising taxes
Hospital district warns of possible tax increaseTexas lawmakers faced with $15 billion shortfallPending state budget cuts could hurt El Paso most

Some in Texas eying sales tax increase to plug budget hole

AUSTIN -- Continuing the same level of state services in areas such as education, health care and Texas' jail system could create a budget gap as high as $27 billion, some analysts said Monday.

State Comptroller Susan Combs released estimates projecting that Texas would have about $72.2 billion available to spend when lawmakers craft the state's 2012 and 2013 budgets. Texas spent about $87 billion over the past two years, but that includes about $6.4 billion in federal stimulus money that will not be available this time around.

State figures suggest at least a $15 billion gap if spending is unchanged.

But Dick Lavine, a policy analyst with the Center for Public Policy Priorities, which advocates for low-income families, provided a more grim outlook. He said maintaining services at the current level for the state's growing population would cost about $99 billion -- putting the state's projected deficit closer to $27 billion.

State Rep. Joe Pickett, D-El Paso, who agreed with that estimate, said there will be some difficult decisions ahead for the Legislature, which convenes today. Estimates from Combs and the Legislative Budget Board will help guide Texas lawmakers over the next 140 days as they craft the budget for the coming two years.

But Pickett said reducing spending by $27 billion will have a large negative impact on services that El Pasoans rely on. Those include funding for public education, higher education and health care, which make up the largest chunk of the state's budget.

El Paso County, with an estimated population of about 751,000, has nearly 144,000 people enrolled in Medicaid and about 24,000 in the Children's Health Insurance Program, according to state figures. Two years ago, the state and federal government spent $728 million on Medicaid and $28 million on CHIP for the county.

The county's three largest school districts and the University of Texas at El Paso have also estimated a loss of about $56 million if the state does not

TX CAPITOL REPORT
A view from the state capitol.

restore one-time federal stimulus money it used to pay for school district and university operations.
The comptroller did not provide a forecast for expenses. A clearer picture of the state's financial position will emerge when the Legislative Budget Board puts out its budget estimates Friday.

El Paso lawmakers said they will band together to protect the city from cuts that are disproportionate or unfair.

"If they are an elderly person that's getting Medicaid and other social services, they may see that reduced," Pickett said. "If they're a homeowner and public education is cut, school districts may seek to raise taxes. That may have the biggest impact."

Lawmakers, who have been at odds over how to plug the state's budget gap, will ultimately decide how much to trim services, whether to increase fees and if they should tap into the state's $9.4 billion rainy-day fund.

Using money from the rainy-day fund requires approval from two-thirds of the Legislature.

Gov. Rick Perry and key legislative leaders have said they plan to balance the budget without a tax hike. Some lawmakers say those limitations will result in deep cuts to state programs.

Talmadge Heflin -- with the Texas Public Policy Foundation, which advocates for limited government and free markets -- said the projected shortfall numbers are too high because no one should assume that services will remain the same.

The former Appropriations chairman said that after factoring in the cuts that are being proposed by agencies and other unspecified reductions, the shortfall should be between $12 billion and $16 billion.

He urged lawmakers to plug the budget gap through cuts and avoid relying on the rainy-day fund.

But state Rep. Marisa Marquez, D-El Paso, said lawmakers cannot deal with the budget crisis simply with cuts.

"It's a rainy day in Texas. We're facing the largest deficit we've ever faced in the state -- absolutely we need to look at those funds and use them," Marquez said. "We certainly don't want to balance our budget on the backs of schoolchildren and our most vulnerable citizens."

The comptroller arrived at her revenue projection by factoring in a hole of about $4.3 billion in the current budget that lawmakers will have to fix before tackling how to finance the next two years.

That figure, though, does not include savings from most proposed agency cuts that were requested by Perry, Speaker Joe Straus and Lt. Gov. David Dew-hurst.

Combs said income from the state's sales and franchise taxes suffered during the national recession, bringing in less money than she initially forecasted.

"We did not expect it to be this severe and I would say that most other states and other countries didn't, and if you're in Portugal, or in Italy, or in Spain at this time, you are not really happy with what your prediction was," Combs said.

Dewhurst focused solely on the state's current budget deficit of more the $4 billion and said any guesses about a projected shortfall for the coming two years were simply speculation.

"Unlike Washington, the Texas Legislature prioritizes spending based on available revenue, not from an infinite wish list of earmarks and automatic spending increases," he said.

Combs stressed a silver lining during her news conference Monday. She said the state's economy is on an upswing. Revenue from the state's sales tax, which accounts for 64 percent of all general tax revenue, is expected to increase by 8 percent to $42.9 billion in the next biennium. The collections were down 6 percent in the current budget cycle.

Texas added 220,000 jobs after losing 431,300 jobs between the summer of 2008 and the fall of 2009.

Zahira Torres may be reached at ztorres@elpasotimes.com; 512-479-6606.

By the numbers
$72.2 billion
The estimated amount available to spend for the 2012 and 2013 budgets.

$99 billion
A policy analyst's projection of how much it would cost to maintain state services at the current level.

http://www.elpasotimes.com/news/ci_17061584

Continuing the same level of state services in areas such as education, health care and Texas' jail system could create a budget gap as high as $27 billion, some analysts said Monday.

Hmm, what do these costs have in common I wonder?

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