02.24.11

Budget reality sinking in for Texas GOP

Posted in 82nd Legislature, Around The State, Commentary, Taxes, The Budget at 4:37 pm by wcnews

The balance in the Economic Stabilization Fund should continue to accumulate and be held in reserve to address future potential shortfalls as a consequence of the current economic downturn. Comptroller Susan Combs has warned that the impact of the financial crisis will be felt not in the 2010?11 state budget, but two years from now as the 82nd Texas Legislature writes the 2012?13 budget. Retaining the entire balance in the Economic Stabilization Fund is important so that the state does not have to cut essential programs or raise taxes in response to an anticipated budget shortfall in 2011.
– To see who signed onto that statement in 2009 click here. I think you will be surprised.

It looks like the reality of the budget situation in Texas is starting to set in for many Texas Republicans. They are beginning to say out loud that the Economic Stabilization Fund, aka the Rainy Day Fund (RDF), will be used to help fill the $27 billion budget shortfall.

State Rep. John Zerwas, R-Simonton, said on Wednesday that all but $1 bllion of the Rainy Day Fund should be tapped to reduce the size of the budget shortfall. That’s roughly $8.4 billion, only $18.6 billion left to go.

Also state Sens. Steve Ogden and Chris Harris, State’s rainy-day fund may be tapped.

Senate Finance Chairman Steve Ogden, R-Bryan, the Senate’s chief budget writer, told the Star-Telegram on Wednesday that he believes lawmakers will be forced to draw from the fund as they try to write a balanced budget for the 2012-13 fiscal biennium.

“We’re going to have to use a substantial amount of the rainy-day fund if we’re going to pass a budget,” Ogden said.

The senior Republican lawmaker said he hasn’t determined a likely amount but will have a “better idea” of how much would be needed as his committee maps out spending obligations for two high-cost priorities — public education and Medicaid.

[...]

“I think we’re going to have to,” said Sen. Chris Harris, R-Arlington. “At this point I can’t really come up with a number. There’s been talk of leaving $2 billion to $3 billion in it for the next session.”

And state Sen. Florence Shapiro, State Senators Try to Buy Time for Teachers.

As the senators took questions from the media at the conference, Shapiro also said she believed the Legislature would use some of the Rainy Day Fund to increase general revenue in the budget.

Now that it looks like many Republicans want to use the RDF, the GOP will have to start scrounging for votes to get it passed.  They need two-thirds in both chambers to use if for the budget shortfall.  But to get to that number the GOP will likely need votes from Democrats in both chambers.  (With 102 in the House they could pass this without Democratic support, but I’d bet a paycheck that at least 3 Republicans in the House will vote against this).  Here’s what Democratic state Sen. Wendy Davis had to say about the RDF:

Sen. Wendy Davis, D-Fort Worth, said that she would also favor using the fund if Republican legislative leaders first commit to correcting a so-called structural deficit created in 2006 when the Legislature compressed property taxes and created a business tax that has subsequently underperformed.

That is solid reasoning from Davis. Yes we should use the RDF to cover for the current structural deficit we have that was created by Perry and the GOP in 2006. But we should also fix the structural deficit first so that we don’t have to do this every session. Makes sense.

Yes we need to have an honest debate about the severity of the Texas budget crisis and how to solve it. But there really shouldn’t need to be much discussion about whether to use the RDF, as big as the projected shortfall is.  Texas Forward has put forward a balanced approach, that’s what we should really be debating.

Here’s a good primer on the Rainy Day Fund [PDF].

1 Comment »

  1. Eye on Williamson » Ogden blames right-wing ideologues for sessions budget failure said,

    June 20, 2011 at 11:43 am

    [...] said here before Ogden started out the session saying and doing some things that made him seem like a fair arbiter. But once Dewhurst pulled his trick Ogden figured he [...]

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