Today’s Senate session cast in stark relief two different leadership styles: those of Governor Rick Perry and of Senator Steve Ogden, who was elected Senate president pro tempore today. Perry expressed his belief that the Legislature could produce a balanced budget with no additional revenues, noting that the public had spoken loudly on Election Day in favor of a conservative budget. “I am confident we are going to heed their message.” Then, he announced he was giving emergency designation to two items of legislation, one regarding eminent domain and one abolishing sanctuary cities in Texas. The latter earned Perry applause from the Senate gallery.
Then, Ogden, chairman of the Senate Finance Committee, laid out in direct and unvarnished terms the perilous condition of the state’s fiscal house. Medicaid, the program for providing health care to the poor, will cost the state billions more this biennium because the federal match will drop from 70/30 to 60/40. In real dollars, that will bring in $4.5 billion fewer dollars than the more generous previous match. He decried the complicated formulas used by the federal government for reimbursing hospitals for various procedures and said that a managed care system could save the state $4 billion. “Our first job is to figure out how to save Medicaid. We have got to reform it,” he said.
The contrast with Perry's frivolous focus on sanctuary cities was obvious to all. Ogden's blunt statement was a bipartisan call to arms: It assumed every senator in the chamber wanted to save Medicaid and recognized the need for reform. If you had just walked into the Senate chamber, knowing nothing about who the players were, you would have thought Ogden was one heck of a statesman and the other guy was some gladhander just passing through.
Ogden had more solemn news about school finance funding. The five-year-old "target revenue" system, which included funding school districts at the same level they received in 2006, reducing local school property taxes by $14 billion, and replacing some of the property tax cuts with a new business margins tax, isn’t working. The margins tax is underperforming by about $2 billion each biennium, creating a structural deficit in state budgeting.
“Here’s the reality," Ogden said: "None of us were elected to raise taxes. But the margins tax is different. If we don’t change the trajectory, property taxes will go up for sure,” he said.
Yesterday, Perry called the Rainy Day Fund off-limits. Today, Ogden told the Senate that by drawing $9.2 billion from that source, a balanced budget is within the Legislature’s reach. Thus, on the Legislature's first day, Ogden set up a future confrontation with Perry over whether lawmakers will use the Rainy Day Fund for the purpose for which it was intended.
Other than opposing the use of the Rainy Day Fund, the governor barely mentioned the budget problem, while Ogden delivered the painful truth about the state’s fiscal picture and issued a challenge to his fellow senators: “Check your political considerations and ambition at the door and let’s do our very best for the 25 million people who call Texas home.”
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