Yesterday Rick Perry and OTG fought it out over whose numbers are right when it comes to HB 1. Which Vince has done a great job of highlighting here and here and Kuffner has highlighted The Governor’s Fuzzy Math. David Dewhurst has broken the tie:
Dewhurst acknowledged the predictions of Comptroller Carole Keeton Strayhorn and the Legislative Budget Board that the revamped business tax and one-dollar hike in the levy on cigarettes may leave the state confronting shortfalls of nearly $25 billion over five years. According to the lieutenant governor, the plan will consume the current state surplus of $8 billion.
Dewhurst’s suggested solution is much the same as Houston Mayor Bill White’s plan for dealing with projected city budget deficits: We’ll cross that bridge when we come to it. The state is conducting a trial run of the tax plan by analyzing dummy tax returns from the state’s 1,000 largest corporate taxpayers. The results, expected early next year, should give a reliable estimate of how much revenue the new formula will generate when it actually goes into effect in 2008. Dewhurst says he figures the mix of tax increases and cuts can be adjusted then to bring the state’s finances into balance.
“We’re going to look at tweaking, re-examining the tax,” said Dewhurst, who holds out hope that instituting technical corrections in the tax package could solve imbalances without having to adjust tax rates. Unfortunately, long-running controversies involving school finance and tax reform in the state have shown that painless solutions are few and far between.
What this makes clear is that after all the happy talk of the last two weeks reality is setting in. Or shall I say the revolution is ongoing:
Lt. Gov. David Dewhurst predicted the legislative package will meet the requirements of the Supreme Court, which ordered a new funding system last fall after the state was sued by hundreds of school districts.
“Of course, anybody can sue anybody on anything at any given time. But … this bill is a good response to the issues identified by the Supreme Court,” said Mr. Dewhurst, who called the legislation “revolutionary” for the way it will fund education.
Fund education? Texans should not forget what was just done. This was nothing revolutionary. This was a Party trying to show it could govern and had to get something passed. Because if the schools closed they were in serious trouble. Also remember that businesses acquiesced because they were promised a cut to $1.00/$100 on their property taxes to balance out the new business tax. I think we can safely assume that the business community will be at least a little angry if that’s part of the “tweaking” that is done to this “revolutionary” new tax structure.
Rep. Carter Casteel, R-New Braunfels, suggested backers of the bill were playing a “shell game” by cutting property taxes now with no way to replace the revenue in future years. She cited a nonpartisan budget analysis indicating that the state could face deficits of as much as $5 billion a year within a few years.
But Mr. Chisum responded that the new taxes in combination with the strong economy in Texas will handle the property tax cut, which will be phased in with an 11 percent reduction this year and another 22 percent decrease next year.
“I have a lot of confidence in the economic engine of Texas,” he said. “I wouldn’t be standing here if I weren’t comfortable with this plan.”
But comfort is relative and Mr. Chisum and his judges pension don’t have to worry about the social services cuts that are likely as a result of any future “tweaking”, which has always been part of the plan.
There’s some good political analysis of the governor’s race and Perry’s ads from News 8:
“He’s getting the word out right now that they didn’t fail,” News 8 Austin’s political analyst Harvey Kronberg said. “That’s the first impression most people are going to have of what happened.”
Whether you agree with the claims in the ads they are an opportunity to frame the discussion on the special session.
“He’s stating things that are going unchallenged on television and as a result, he’s creating a reality,” Kronberg said.
Creating a reality, that sounds like lying to me. It’s not going unchallenged in the print media as we’ve seen already, nor by his challengers.
There’s nothing revolutionary or historic about creating a stop-gap plan that ultimately creates a deficit. It’s been done before by Republicans, see Reagan and Dubya. They took the easy way out. To fix this would have meant taking a chance and this was CYA. The plan is bad public policy with fuzzy math, we knew that when it was passed. The reality is, it was the best this crew was capable of, with time running out and a lack of leadership. Unfortunately this problem still needs to be fixed, not tweaked.