R.G.'s Take: Senate budget plan is still bad business
Fri April 22, 2011 1:34 am

If you think of the two-year budget passed by the Texas House as a bankruptcy filing for the State of Texas, then the budget approved by the Senate Finance Committee yesterday is a reorganization plan that requires a substantial liquidation of assets.

Finance Chairman Steve Ogden (R-Bryan) and other senators who supported the plan bragged on how the Senate budget contains $12 billion more than the House budget, but the $176.5 billion Senate version still cuts $11 billion from current state services. It’s sort of like Dish Network saving Blockbuster Video from going completely out of business in bankruptcy court. Even in saving Blockbuster, Dish still plans to close hundreds of stores, putting an untold number of people out of work. It may be good for business, but not for all the employees or customers.

Senators were gleeful that they put $5.3 billion into public education over their base budget. That still is $4 billion short of paying for the current needs of Texas’ public schools. Wonder what that might mean to you and your children? The Texas Association of School Boards has run the numbers. Under the better-than-the-House Senate plan, Houston ISD will lose $224 million in state funding over the next two years; Dallas, $185 million; Austin, $108 million; and Northside in San Antonio, $100 million. As a single point of comparison, Dallas would lose almost $300 million under the House version.

Just glancing at a few of the school districts represented by finance committee senators who voted for the bill, we find these losses: Plano, $64 million; Conroe, $51.3 million; Bryan, $11.8 million; and Amarillo, $7.6 million. And, remember, funding public education was a priority for the Senate.

But it isn’t the only casualty. With almost $1 billion in cuts to higher education, you can expect tuition rates to rise and devalue your college savings plan for the kids. Will you feel safer knowing $141 million was cut from public safety and the criminal justice system? And a deferral of $3 billion in Medicaid spending to the next budget cycle means the Legislature that gathers in 2013 will have just that much less money to spend. It’s sort of the Texas balanced-budget version of deficit spending.

In the no-tax-increase world of the Legislature, however, this is the budget that a majority of the senators apparently are choosing to defend. “This bill keeps Texas government function and essential services available to Texans without doing harm to the private sector economy because it’s just sucking too much money out of the private sector through revenues and taxes,” Ogden told us reporters after the committee vote. “It doesn’t generously meet the essential needs of Texas, but I think it’s adequate and I think in these circumstances ‘adequate’ is a pretty big deal.”

Committee Vice Chairman Juan Hinojosa (D-McAllen) admitted the bill is a stinker. “It’s like having to choose between the good, the bad, and the ugly. House Bill 1 is ugly. Senate Bill 1 is bad, but sometimes you have to make hard choices,” he said.
Senator John Whitmire (D-Houston) was one of the committee members who voted against the bill. Whitmire told me the responsible course would have been to make cuts and raise taxes to balance the budget. He said most Texans don’t realize that the Parks and Wildlife Department will be cut by 29 percent or that there will be fewer state investigations of bad doctors and dentists. “We have put ourselves in a position to have the House budget as our measurement. The leadership here wants to sell the Senate version as much better than the House, and that’s a no-brainer,” Whitmire said. “But we shouldn’t have started with that as the floor.”

Senator Dan Patrick (R-Houston) also voted against the bill. He said he favors a responsible budget but thought it was irresponsible to draw an additional $3 billion from the rainy day fund to pay for it if Comptroller Susan Combs does not raise the revenue estimate. Patrick said he expects the state to enter the next budget cycle in 2013 with another shortfall of $10 billion to $15 billion. “We need to have every dollar in reserve that we can hold onto because we will have used a lot of tools out of the toolbox this time.” Patrick could join Democrats in blocking the budget bill from debate next week in the Senate, but he indicated to me he is unlikely to do that.

Regardless of what the Senate finally decides, it will still have to contend with the House. House Appropriations Chairman Jim Pitts told me, “I cannot sell the Senate budget in the House,” said House Appropriations Chairman Jim Pitts (R-Waxahachie). He thinks the House can close the gap with the Senate by about $4 billion to $5 billion based on some non-tax revenue raising measure, but that still would leave the chambers about $3 billion apart. And as to the Senate balancing its budget with a raid on the rainy day fund, that’s a non-starter. “We’re not getting into the rainy day fund,” he said. “I don’t think we could get a vote for the rainy day fund.”

Politicians like to say they want to run government like a business. In this case, the state is just like a business whose fixed costs exceed its revenues. To survive, it is either going to have to raise prices or short-change its customers. Right now, the customers should start preparing themselves for some bare shelves next fall.

By R.G. RATCLIFFE

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