We’re still paying for the GOP tax swap scheme of 2006 – An 18 month budget & proration

Posted in 82nd Legislature, Around The State, Bad Government Republicans, Commentary, Education, Had Enough Yet?, Health Care, Public Schools, The Budget, The Lege at 11:11 am by wcnews

Yesterday, as several needed House bills were postponed/killed, the situation with our state’s budget added a few new wrinkles. Peggy Fikac does a good job of explaining part of it here, Texas schools, Medicaid broke by 2013? (Notice that the “past budget decisions” is the 2006 GOP/Perry tax swap scheme that created our state’s structural budget shortfall).

Cuts are planned because of the recession and past budget decisions that have left the state facing a shortfall of as much as $27 billion through the next two years. In addition to agreeing on a funding level for the overall budget – and finding the revenue to pay for it – lawmakers must agree on a school finance plan that would allow them to spend billions of dollars less through the next two years.

Otherwise, current school funding formulas would entitle school districts to existing spending levels, Pitts said. At those levels, under the House budget proposal, Pitts said the money would run out by February 2013 or, perhaps, months earlier.

“That means the schools cannot operate. The teachers will not be paid,” Pitts said.

The House proposal would give schools $8 billion less through the next two years than they would get under current funding formulas. The Senate proposal’s cutback would be half that.

A Legislative Budget Board staffer said in a memo that if education were underfunded and formulas were not changed, the LBB would propose spending money from the rainy-day fund for fiscal year 2013 to meet the gap. If the Legislature did not do so, the education commissioner would pro-rate state aid.

The House bill only would fund Medicaid through March 2013, Pitts said, falling $5 billion to $6 billion short in general revenue of covering caseload growth for the two-year fiscal period and slashing rates to health care providers, including nursing homes. Those facilities have said such drastic cuts would result in closures.

“So, when you come back next session, there will be no more funds as of March to fund Medicaid. And that is not just funding for medical services to people. … It will stop funding to your local nursing homes, to your local doctors and other medical providers of Medicaid services,” Pitts said. [Emphasis added]

The tax swap that created the structural deficit is the key to our current budget shortfall.  The House wants to defund public education by around $8 billion. Again, from what Lt. Gov. David Dewhurst said – “Dewhurst said the tax is underperforming expectations by about $4 billion per biennium, that gap is at the heart of the current budget shortfall” – we can deduce that Texas is at least $12 billion short since 2006. (We will have been through 3 bienniums, once the 2012-2013 budget is done,  since the schemes enactment).  More than enough to cover the $8 billion.

The other thing we must remember is that the GOP in Texas purposefully did this – defunded public education. Everyone knew this tax was bad in 2006, especially Lt. Gov. David Dewhurst.

In a visit with the Chronicle editorial board this week, Texas Lt. Gov. David Dewhurst devoted much of his presentation to touting the improvements to public education to be funded by the new state school finance plan, which includes an expanded business tax and reductions in school property taxes.

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.

A plan he had called “revolutionary” shortly before that.

The worst part of this, obviously, is what will  happen to public education and Medicare if this “18 month” budget is passed.  Students, ISD’s, teachers, parents, sick people, the elderly will all be put in limbo until the next legislative session.  And we learn a new term “proration”, School finance bills are stalled in Texas Legislature.

If attempts to add school finance legislation as amendments fail, schools could receive their funding based on a proration provision, which means schools would maintain their current level of funding next year and into the following year until the state runs out of appropriated money, which some legislators estimate to be February 2013.

Schools would then have to make up the deficit locally — by using taxes, fund balances or other means — and would be repaid by the state when the Legislature meets again in two years.

“Districts need to know with some kind of certainty what their funding levels will be,” said Dax Gonzalez, spokesman for the Texas Association of School Boards. “You can’t staff and run a school with a promise like that.”

Ray Freeman, deputy director of the Equity Center, which advocates for poorer districts, said that the situation is not ideal but that the proration option could be better than the proposed school finance legislation, which he said would not fairly apply cuts to districts.

He said proration would at least maintain funding levels for districts temporarily while giving the Legislature time to meet in a special session to address funding issues properly.

“There are several issues that make people nervous about this and rightfully so,” Freeman said. “But if it could be done in such a way where those concerns are addressed before the second year, that could help.” [Emphasis added]

(Here’s a link to some Proration Issues.)  There are several problems with this latest scheme the Texas GOP is floating.  First of all who would believe any of the current elected Republicans would actually come back and approve continuing to fund education – at current levels – 18 months from now?  They won’t even spend the Economic Stabilization Fund, aka the Rainy Day Fund.

It’s hard to believe that after all the GOP has done this session to defund public education that they would continue to fund education at current levels.   It would certainly give the opposition, meaning Democrats, an easy issue to hammer the GOP with in 2012.  How serious the GOP is about an 18 month budget and proration we’ll find out in short order.

What we do know is that the GOP can’t figure our a way, amongst themselves, do fund their austerity budget. And they keep ignoring the easy money.  The truth is, it is because of  the failed leadership of this state over the last decade that we are in this mess in the first place.


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