Lt. Gov. David Dewhust informed reporters today that “a cloud has arisen” over the conference committee’s efforts to produce a balanced budget: a $1 billion shortfall in Medicaid now predicted by the Legislative Budget Board. Apparently, the worsening economy has prompted a bigger demand for Medicaid than anticipated by either chamber.
“We’re going to have to come up with a billion dollars more,” Dewhurst said. Added, Sen. Steve Ogden: “It (the budget) has just gotten tighter, because we’ve got to address this issue.”
Dewhurst also added that the Medicaid trend will likely affect future budgets as well. “I had hoped we would grow out of our strucutural shortfall,” referring to the gap left by the newly business tax enacted for property tax relief.
The lite guv wouldn’t say whether the news merited dipping into the Rainy Day Fund, noting that the state will need every penny during the next budget cycle. It did sound as though his enthusiasm for exempting more businesses from the new tax had been curbed somewhat.
At a meeting of Senate chairman, he said, “there was concern that we need to be very careful about adding expenditures of reductions (in tax revenue) right now.”
That’s one more negative for passage of bills exempting more businesses from the new tax: Last week, the Center for Public Policy Priorities argued that proposals on the table granting tax breaks could imperil Texas’ stimulus money.