CPPP's McCown weighs in on budget cuts article
Tue October 5, 2010 10:51 am

I encourage readers to look at Scott McCown's criticism and proposals concerning my article on balancing the state budget. McCown is the executive director of the Center for Public Policy Priorities. To access McCown's article, clickHERE.

I am going to respond to some of the points McCown makes:

I.

McCown: We cannot balance the budget through cuts alone without seriously damaging our children’s opportunities and leaving needy Texans unprotected. Instead, for state government to be able to do its job, we must take a balanced approach that includes new revenue.

Taking the contrary view, Paul Burka offered in his story “The Eighteen Billion Dollar Man” a plan that he claims would balance the budget without hurting the state’s most vulnerable citizens and without new taxes. In fact, his plan would cut help for the needy, and he ignores the damage his plan would do to our economy. Worst of all, Paul gives comfort to those who mistakenly think that Texas can somehow balance its budget through cuts alone.

* * * *

My response: I do not take a "contrary view." I agree that new revenue is needed. Along with cuts, I propose approximately $9.24 billion in revenue:

--$2.74 billion from a 20% increase in fees, licenses, fines, and penalties.
--$1.5 billion from video lottery terminals at racetracks
--$4.5 billion from the Rainy Day Fund (approximately half of the amount in the reserve fund).

II.

McCown: As a very low-spending state, we are long past being able to do more with less by adjusting priorities or increasing efficiency. Because Texas has budgeted carefully and tightly for years, we can’t balance our budget through cuts alone without seriously damaging the ability of state government to do its job. This is why politicians never have any specific ideas about how to save big bucks. Whatever adjustments or efficiencies we can identify will be dwarfed by the magnitude of our revenue shortfall.

Paul nonetheless suggests big cuts are possible with fundamental rethinking. For example, he proposes eliminating the Public Utility Commission, an agency he describes as engaging in unnecessary rate regulation. But Paul misreads the budget. Most of what he proposes cutting is actually assistance provided to low-income families for their utility bills. For each of Paul’s suggestions, once you have all the facts, you see that his hoped-for savings are illusory or damaging.

* * * *

My comments: I don't misread the budget. The budget is written to be misleading. It says that the money is for "electric restructuring." We don't need to spend a dime for electric restructuring. It's a done deal. The money to which Mr. McCown refers is the "system benefit fund," some of which--not "most"--is indeed assistance to low-income families for their utility bills. The rest of the money (about half a billion dollars) is unutilized. It is an ad-hoc rainy day fund that budget writers sock away to help certify the budget. There is a total lack of transparency about what really happens. I'd do away with PUC and its unnecessary bureaucracy and let the comptroller write the checks to low-income families.

III.

McCown: Consider education. Paul proposes to save almost half a billion dollars by delaying building new schools. But the money he identifies doesn’t pay for new schools; it pays for debt service on bonds for existing schools. For higher education, Paul proposes to cut more than a billion dollars, leaving it to public universities to cut programs or raise tuition. Tuition has already skyrocketed, putting college out of reach for many kids with good grades but no money. Paul’s approach to just slash doesn’t work.

* * * *

My comments: The budget allocates approximately $1.45 billion for "equalized facilities." I didn't realize that this was for debt service. Nothing in the bill indicates how the money is to be used. Going foward, I still think it is the right thing to do to spend less money on bricks and mortar. If that means allocating less money for debt service in the future, I think that is generally the right thing to do. Construction can always be deferred.

My cuts in higher education involve the special items for universities. Some of them are academic programs; many are peripheral to the core purposes of universities. The state provides seed money, but universities are supposed to take over the cost at some point. That point rarely comes. That's why I cut them--all of them. Universities should not expect the state to pay for them. That wasn't the deal. Most of these items are widely regarded as pork.

Let me try to sum up all of this. The purpose of my article on balancing the budget was to show readers how difficult and how painful these cuts will be. I respect Scott McCown's point of view. I think CPPP does great advocacy work. But I was not going to propose a budget plan that includes raising taxes. The political realities are such that tax increases are going to be very hard to pass--even a cigarette tax, which Mr. McCown advocates. I tried to do what the Legislature ought to do, but seldom does: which is, ask whether we need all the state agencies that we have, and whether we ought to be spending so much on bricks and mortar ($138 million at DPS, $140 million at TDCJ, more than a billion on school facilities). The budget process is designed to protect the status quo--a few more dollars here, a few less dollars there, just shuffling deck chairs on the Titanic. Like Scott McCown, I would love to see the Legislature take a long and serious look at our budget process. We are headed the way of California: gridlock over budgets, ideologues dictating policy, and ever declining public services. Should we raise taxes? Of course we should. But it isn't going to happen any time soon.

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