The recent news on Texas’ sales tax numbers and deficit are not good compared to where they were a short time ago. Of course, our statewide elected “leaders” keep telling us how well we have it compared to others. But that’s a relative statement, and depends on one’s perspective.
If you’re someone who is now unemployed, have lost or will soon lose your unemployment benefits, you probably don’t think you have it much better. If you’re someone who has recently got a job, but it pays much less and has no benefits, you probably don’t think you have it much better. And, if you are a small business owner whose taxes have gone up, you probably don’t think you have it much better. But if you’re the governor of a big state and live in a $10,000 per month taxpayer funded mansion, it’s easy to see why someone would think that.
There are many issues the GOP would like to discuss in this election year, but few of them are the issues that truly concern Texans. Most of the issues they want to discuss (secession, tax returns, fake voter fraud, etc..) are not the serious issues that Texans and their families will be facing in the near future. The main thing the GOP in Texas does not want to discuss is their pitiful stewardship of the Texas economy. Just listen to Comptroller Susan Combs latest spin on the August Sales tax numbers:
Texas Comptroller Susan Combs said today the state collected $1.77 billion in sales tax in August, up 0.8 percent compared to a year ago.
“Monthly sales tax collections continue to slightly exceed year-ago levels.While some major sectors including oil and gas and manufacturing were up, other sectors including construction and retail trade dropped from the previous year,” said Combs. “For fiscal 2010, which began Sept. 1, 2009, collections declined through the first seven months of the year, often by double-digit percentages, but the modest increases during the last five months resulted in an overall decline of 6.6 percent for the fiscal year. Overall, state sales tax collections appear to have stabilized, but solid growth has not yet resumed.”
Now look at collections from August for the last three years.
|Year||Rcpt Amt (in billions)||% Chg|
That’s a good sample of what has happened to sales tax receipts over the last three years. 2008, was up over 2007, 2009 was much, much lower than 2008, and 2010 has been right around – just under or just over – what was raised in 2009. With sales tax receipts making up 65% of the state’s revenue this is not good news. Couple that with Perry and the Texas GOP’s failed tax scheme of 2006 and it’s easy to see why the projected shortfall is growing so big.
The current budget was built on sales tax revenue being higher than they were in the 2008-2009 biennium. Now we learn that those projections were not met and Texas ran a deficit last year. (Sure is a good thing we had that stimulus money in 2009 or we’d really be in trouble).
Texas’ sales tax collections closed the budget year short $1.5 billion, or 6.6 percent, of the projected total for 2010, according to figures released Thursday by state Comptroller Susan Combs.
To hit Combs’ revenue estimate for the two-year budget, sales tax collections would have to increase 15 percent over the $19.6 billion brought in during 2010.
Anyone think that’s going to happen? And as far as the shortfall we’re facing heading into the next biennium, well, Combs doesn’t want to talk about that. (For specifics on Combs attempting to hide reality from Texans before the election see the post directly below this one).
But Combs also missed on her estimate of what the deficit would be for 2010 when it was first revealed last month. She stated for a “routine borrowing exercise”, as Ross Ramsey reported in the Texas Tribune, that the deficit would be $1.3 billion, instead of the 15% higher $1.5 billion reported now. Documents Reveal Deficit in Texas State Budget.
Comptroller Susan Combs’ quiet acknowledgment that Texas will show a $1.3 billion deficit at the end of the budget year contrasts with the happy face she’s put on state finances leading up to the 2010 elections. The numbers are the worst since 2003, when the Legislature responded with $10 billion in spending cuts, and increased fees, tuition and other revenue sources to balance the budget. And the deficit gives ammunition to lawmakers who want to trim spending in 2011.
Publicly, the state’s chief financial officer has said there’s no reason to adjust income and spending estimates to account for the effects of the recession on the Texas budget: mostly, falling tax revenue. But on Wall Street — where the bond markets require hard numbers before they’ll lend money — Combs had to report the deficit that will require legislative attention, and that it will have to borrow from other state funds to meet cash-flow requirements.
But as we head to the next biennium there’s a lesson for us all in what Ramsey reports from the last time Texas faced this issue in 2003.
The last time the state faced a serious budget crisis, then-Comptroller Carole Keeton Strayhorn maintained throughout 2002 that the state’s shortfall would be in the range of $5 billion. When the Legislature convened in January 2003, she surprised everyone by raising that projection to $10 billion, saying the revenue outlook was worse than anticipated — and that the state was on its way to ending that budget with a $1.8 billion deficit. Perry, who was (correctly) anticipating a political challenge from Strayhorn, cried foul and said the comptroller should’ve leveled with the public and state leaders, including him. This time, the current comptroller has kept her mouth shut publicly but is by all accounts keeping Perry and other state leaders informed about the numbers. Though they haven’t talked openly about it, nobody in that circle seems surprised by Combs’ deficit disclosure.
If Combs estimates showed the number was less than $18 billion surely she would be talking. Since she isn’t, and the election is fast approaching, it means Combs is likely seeing a pretty bad forecast. There’s nothing like the openness of GOP governing. Of course Perry’s change of heart, now calling what he once called for bizarre, is hypocritical to say the least. But it’s also how Perry and his GOP cohorts are campaigning this time around – they don’t want to answer any tough questions. And they’re hoping Texas voters won’t notice until it’s too late.
Here’s what Strayhorn said back in September of 2002, during election season, about her budget projections.
“As far as the 2004-2005 biennium that will begin next September, after the 78th Legislative Session, let me say that I am the state’s chief financial officer and my numbers of a $5 billion shortfall–not deficit–for the next biennium are concrete,” Rylander said.
“There has been recent speculation of $7 billion, $10 billion and even $12 billion shortfall,” Rylander continued. “These numbers are based on ‘wish lists’ of various agencies and also they are manufactured from faulty fabric that ignores natural revenue growth during 2004-2005, which will help offset spending needs.
Once January 2003 rolled around that number had doubled, to $10 billion. From all of this, we can logically assume, that the number being thrown around now, $18 billion, is lower than what it will be in January 2011. Just how low? Well that’s hard to tell, but if Combs is off by 15%, as she was on the state deficit, then that would make the shortfall over $20 billion. Hopefully she’s not as “wrong” as Strayhorn was and it winds up being doubled.
$20+ billion is a lot of money and if the GOP is returned to power in Texas will force much pain on working and poor Texans. But what many people don’t realize is that what we’re facing has long been the GOP’s plan. Since Reagan the GOP’s plan has been to run extremely high deficits, in this case a shortfall, and use it as an excuse to gut programs that benefit working and poor Americans/Texans. Looking back it makes sense why, during the “good times”, if you want to call 2006 the good times, taxes we’re lowered. While this was being done, it was known all along that the cost of the tax cuts would not be made up elsewhere. Creating a structural deficit. And most of that pain was inflicted on one of the GOP’s favorite targets, public education.
In Texas, as at the national level, the wealthy have been getting away with reaping all the benefits while doing a disproportionate amount of the sowing – not paying their fare share [PDF]. The unemployment rate has doubled in Texas since January 2008 (4.4%) to July 2010 (8.2%). Gov. Perry’s corporate welfare has not paid off in the job creation numbers that were promised, Phantom Jobs: Governor Perry’s Enterprise Fund Falls Further Behind On Its Promises [PDF]. And other than that it’s not clear what, if anything, Perry or his party are doing to create jobs and help the economy in Texas. Their plan, as Perry has stated many times, is to cut programs needed most by the least among us, and raise fees. That’s what they did in 2003.
As Perry and his GOP cohorts continue to run and hide from these and other tough questions, expect them to continue to bring up silly and nonsensical issues, that matter little to Texans in their daily lives. The will also try and draw our attention away from the issues that matter most. Let’s each of us and the media in Texas not to allow them to do it this time.