Better Nate than never
Thu April 7, 2011 11:47 pm

I see that my colleague Nate Blakeslee and I have been working on the same story--the leaking of the proposed one-time savings that would help certify the budget, and he finished his post nineteen minutes before I began mine. Some of the proposals are not going to be controversial. I doubt that anyone will make a fuss over the release of older, nonviolent inmates from prison (estimated to produce a savings of $111 million), although if they are going to be deported, somebody is going to have to pay for that. What the list shows, above all, is that the state has relatively few options, and even fewer that bring in big chunks of money. Taxation has been described as the art of plucking the goose so as to get the most feathers with the least hissing. If that is the case, some of the items on the list are going to generate a lot of hissing. A fuel inefficiency fee for new vehicles seems downright un-Texan, and it is not going to endear lawmakers to owners of pickups and SUVs. (Fortunately, my fuel-inefficient Suburban is old and will escape the taxman.) Families that have gotten used to doing their back-to-school shopping during the August sales tax holiday are going to be unhappily surprised when they find out that the tax has been reinstituted. My view is that things like the sales tax holiday and the latest business tax exemption are exactly the kind of thing that has gotten us in the financial pickle we are in--one little giveaway after another (and the fatal big one in 2006) until the revenue stream becomes a trickle. The fattest gooses are the Enterprise and Emerging Technology Funds, which should certainly be plucked to fill this budget hole, especially since the governor has been so adamant that the Rainy Day Fund must not be touched. Still, even the $200 million the funds would provide is small in comparison to the shortfall. The budget will probably come in around the low eighty billions. That's about $6 billion less than the previous budget. Do you know how many $200 million items you need to close the gap? The answer is thirty, and they don't exist.

Perhaps the worst idea the committee generated was liquidating the tobacco funds. The state received the money in the big tobacco lawsuit that arose during the years when George W. Bush was governor. It is an endowment fund that is supposed to be dedicated to public health ills created by tobacco. It can be liquidated for $591 million. That's real money, but it just doesn't seem right to spend your endowment. We might as well start borrowing from the Permanent School Fund. I think the Duncan committee did a reasonable job of identifying some sources of revenue, but the numbers aren't big enough, and the political cost is likely to be high.

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