05.27.11

“Yeah, I think so”

Posted in 82nd Legislature, Around The State, Bad Government Republicans, Commentary, Education, Public Schools, Take Action, Taxes, Teachers, The Budget, The Lege at 12:07 pm by wcnews

That was Texas Governor Rick Perry’s response to a question asked about not cutting education funding during an interview by KERA’s Shelley Kofler in September 2010.

Shelley Kofler: Public Education is a very big part of our budget. Can you assure the educators of this state that public school spending will not be cut in the next session.

Rick Perry: Yeah, I think so. Uhm..I go back to 2003, it’s a priority. Our state’s still growing. Uhm..As a matter of fact we put $1.8 billion more into public education in the 2003 legislative session for the…for the following biennum [sic], then we had the previous biennum [sic]. This is the same time we were cutting $10 billion out of our budget and spending…reducing spending. (Chuckles) And uhm..so..uhm..Education is a priority.

When a politician breaks an assurance given during a campaign these days is doesn’t draw much concern. But this one, to use Perry’s words, is a priority.  It’s doubtful, that even in Texas in 2010, the GOP would have done as well as it did had they campaigned on this budget.  Perry went so far as to imply – when he said “still growing”, “$1.8 billion more into public education” – that not only would education spending not be cut, but it might even be increased.  What a fabulous liar, and the media and far too many voters bought it.

Now that reality has set in, (Texas Progressive Alliance shows over 12,000 jobs already lost in only 60 school districts), educators, administrators, and all Texans, since we all rely on public education, should never take an election so lightly again.  Because the consequences are severe, as state Rep. Garnet Coleman points out, Does the budget balance?

It is our understanding, based on testimony made during the conference committee meeting and from news reports, that the state budget could be in violation of our state constitution. The budget relies on many accounting tricks. According to statements made by the  Legislative Budget Board, it does not fund $4.8 billion in general revenue for Medicaid. Those are dollars that go to pay for our grandparents in nursing homes and our children who need health care. More information on the cuts to Medicaid can be found in the CPPP briefing: “State Budget Conference Committee Medicaid Decisions: Cuts, IOUs, and Gray Area.

Overall, the accounting tricks in the budget include:

  • $4.8 billion in unfunded general revenue for Medicaid
  • $1.8 to $2.2 billion in public education deferrals, depending on the outcome of school finance legislation
  • $700 million in waivers that are unlikely to be granted for maintenance of effort requirements in health care
  • Using GR-Dedicated funds for general revenue
  • Using 1-time payments that only leave holes in our next budget
  • No answer to the $10 billion structural deficit created in 2006

With so many accounting tricks and by refusing to fully fund our schools and our nursing homes, we can expect that state agencies — as they were in this biennium — will be asked in twelve months to make additional cuts. It is important to know that the budget that we vote on in the final days of session is hardly the final budget for the 2012-2013 biennium. Without fully identifying how we expect to pay for the costs to our state, serious questions should be raised about whether or not this budget fulfills our constitutional obligation to balance the budget.

The truly sad part about this is that it doesn’t need to happen. Beside using the Economic Stabilization Fund, aka Rainy Day Fund, many simple, fair, and easy ways around this were ignored.

Going forward those of us opposed to these types of austerity measures must start organizing and working to fix what is obviously wrong with our state’s mismanaged fiscal situation. Because the next budget cycle, when these accounting tricks will have to be paid for, is likely to be just as bad if not worse, The Next Budget Crisis.

Take a look at the state’s books and you will find a permanent deficit that runs about $5 billion a year. This is the result of a poorly designed scheme in 2006 to swap a property-tax reduction for a business tax that doesn’t generate enough money. Everyone at the Capitol knows about this mess. But no one has the guts—or the sense of responsibility—to deal with it. As a result, the structural deficit has now become as much a part of state government as the Capitol’s pink granite. In 2013—for the fourth session in a row—the state will start its budget process in a $10 billion hole at a minimum.

Then there are the accounting tricks. To balance the 2012-2013 budget without more revenue, lawmakers used every budget gimmick a dishonest accountant could think off. For instance, the budget proposals delay billions in payments to schools and Medicaid providers until the next biennium and count that as “savings” now. The state will have to pay those bills eventually, probably with a multi-billion-dollar emergency spending plan in 2013.

Too many of us have  become too uncritical in our thinking, which is deadly for democracy, to see what is really causing our problems. Inequality caused by an unequal system. Raising taxes sometimes is the answer, especially when certain income levels have been getting away without paying their fair share for so long. That is why a proposal like this must be part of any real solution going forward, (Tip to Texas Forward).

As Texas lawmakers struggle to balance the state’s books by cutting public education, health and human services and other popular programs, a new study says there is a simpler and far less painful way to turn deficits into surpluses.

The study released today suggests flipping the state tax structures so that the wealthiest pay the rates low-income wage earners are now paying, and vice versa. That would immediately wipe out Texas’ $27 billion budget shortfall, according to report author Karen Kraut, an analyst with United for a Fair Economy, who says Texas has the nation’s fifth most regressive tax structure.

“The top 20 percent of taxpayers pay 4.4 percent of their income in state and local taxes, whereas the lowest-income taxpayers pay 12.2 percent of their income in state and local taxes.”

Reversing those figures, she says, would raise $72 billion for state coffers. It would require a state income tax, which Kraut acknowledges would be a hard sell politically. However, she thinks Texans would warm to the idea if they learned it would be accompanied by big reductions in property taxes.

The sweetheart deal the rich and corporations have been getting in Texas has to come to an end. The lesson of 2010 should be that we must all be more engaged in the political process and informed about the issues if we truly want anything to change.

Further Reading:
Lean times ahead in Texas.
In Texas, a Businesslike Budget, After a Fashion.

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