Betting on the come, in gambling terms, means: You don’t have what you need but you’re betting that you will have it when you need it.
Betting on the come is exactly what House and Senate Republicans are doing with Governor Rick Perry as they press for a final budget deal before the legislative session ends on Memorial Day. They are betting that the state’s economy will improve enough by 2013 to raise enough additional tax revenues to cover what essentially is $6 billion to $10 billion in deficit spending. The Republican leadership is pushing some of our budget problems down to local governments while also engaging in accounting tricks and deferrals that will come home to roost in the next budget cycle, if not sooner. Their budget pushes about $4.8 billion in Medicaid spending off to the next budget (as a federal entitlement that is money that cannot be cut), and counts on unapproved federal waivers to reduce Medicaid spending. It also defers $1.8 billion in payments to school districts by a month, pushing that spending into the next budget cycle too. If a new school funding formula fails to pass, then current law will trigger a system of proration. That means the state will not pay school districts money they currently are owed but would have to pay those districts in the next budget cycle. That would add somewhere between $5 billion and $6 billion to the Legislature’s deficit tab. Proration is avoided by changing the funding formulas to short-change school districts.
One of the latest bright ideas from the Senate is to simply change the estimate on how much revenue property taxes will raise for local school districts. The more money property taxes raise for the districts, the less money the state owes them. House Education Chairman Rob Eissler, R-The Woodlands told me that would be worth about $800 million for the budget balancers. It also would be a hidden cut to the state’s school districts.
The GOP leadership is jumping through all these budget hoops all in the name of preserving the rainy day fund because we may need the money in the future. With this budget, we are almost guaranteed to need the money in the future.
A strict anti-spending ideology is ruling the Republican debate right now, both in Texas and nationally. Look at the backlash GOP presidential contender Newt Gingrich suffered when on Sunday he described the U.S. House’s Medicare reform plan as too much, too fast. By Tuesday he was trying to salvage his campaign by disavowing his own words.
Gingrich’s problem was brought home to me on Tuesday as I watched Lieutenant Governor David Dewhurst’s press conference defending the Senate’s level of public education funding. Despite the fact the Senate budget cuts $4 billion needed by schools to operate with a growing student population, Dewhurst felt compelled to defend himself as a conservative. “I’ve always considered myself a very fiscally conservative person. As lieutenant governor since January 2003 … I’ve led the Senate three times in making very large cuts to our spending, and I’ve led the Senate twice in making major cuts, major tax cuts.” Dewhurst also noted the proposed Senate budget cut $15 billion in state spending, and he warned that deeper cuts in public education spending could result in the “unintended consequences” of local school districts raising property taxes to make up for lost state funds. However, even under the Senate’s plan, school districts around Texas will lose an average of about $320 in state aid for each student.
One website is trying to track the loss of Texas school district jobs as a result of budget cuts, teaching, support and administrative. As of last Sunday, just 66 of the state’s 1,234 school districts had submitted reports. A total of 12,304 jobs already have been eliminated.
The anti-spending mantra is also drilled into the House and Senate by the governor. I take him at his word that he does not plan to run for president, but I also believe those close to him who say he likes the attention. Twenty minutes of love from Rush Limbaugh and another pro-Perry presidential boomlet among the D.C. chattering class had the governor thinking in national terms yesterday as he discussed the budget negotiations with reporters and his desire to get done without a special session: “The people expect us to get our work done. I think the last thing folks want to go home to is: ‘Even Washington is functioning with the budget. You can’t?’” Perry called the presidential talk a distraction from the state budget negotiations. Then several hours later Perry put out a statement criticizing President Obama on his new position on where the borders of Israel should be set.
But nobody is perfect, and the biggest motivator for closing a budget deal in the regular session may have come this week, when House Republicans – especially those from rural areas – started seeing what their tough-as-nails austerity budget would do to their local school districts. They began milling on Tuesday like cattle ready to stampede before a storm. Representative Jim Keffer, R-Eastland, took the back microphone to ask whether they were going to be asked to vote “blind” on Scott Hochberg’s new school funding formula. Hochberg, D-Houston, had developed a formula for distributing money to school districts under the House budget without triggering proration. Hochberg told me that the formula amounted to a “permanent reduction” in public school spending but was demanded by the House budget. “I’m not excited about resetting the base,” he explained, “but if we’re going to reset the base, I want a say in how it is done.” When House members got the runs on Hochberg’s plan on Wednesday, they were devastated. Some rural school districts would see cuts in state funding that exceeded $2,000 a student. Funding formulas favored fast-growth suburban school districts. For instance, Plano ISD with a staff of more than 6,700 would have lost about $800 a student under the House spending level. The governor’s alma mater, Paint Creek ISD, with a staff of about 30 to educate 162 kids, would have lost $900 a student under House spending but less than $100 per child under the Senate plan.
The House Republicans suddenly saw themselves in this dilemma: They could run for re-election as the incumbent who broke their Tea Party promise to hold the line on spending. Or they could go into next year’s Republican primary as the incumbent who cut their local schools. Deal done. Go with the Senate level of funding.
A final budget deal likely will be hammered out over the next several days and will favor the Senate’s version of austerity over the House’s.
But even at the Senate level of funding, $4 billion is still being cut from the state’s schools and a new influx of 80,000 students is not being covered. And the budget does not include $1.7 billion needed to pay for an estimated nine percent growth in the 2010 Medicaid population of 3.2 million Texans. Sure, some of these same kinds of budget tricks were used in 2003 and the economy recovered so fast that lawmakers in 2005 wiped their deficit off the books and increased state spending.However, this recession is not on a fast recovery, and this state budget already has cost thousands of jobs. If state revenues don’t make a strong recovery, the Legislature that convenes in January 2013 may find this one already dug them a $10 billion hole.
I can already see those future lawmakers down on their knees with a set of dice ready to roll:
“Come on, baby, daddy needs a new pair of schools.”
By R.G. RATCLIFFE
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