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Follow TURFDespite promise of no new taxes, budget packed with 'fee' increases
Stay tuned for more details on the OUTRAGEOUS tax hikes and deeper raiding of our gas taxes proposed in the new budget! FYI, comprehensive development agreements (or CDAS) are public private partnerships (PPPs) -- these are the privatized foreign-owned toll roads that cost Texans 75 cents PER MILE to drive our PUBLIC roads. It's tantamount to paying $15/ gallon for gas! So in times of extreme fiscal austerity for the average Texas household, our lawmakers are increasing spending millions of very limited tax dollars to review contracts that grant monopolies to private, foreign companies that will result in THOUSANDS per year in new taxes on driving, while telling you they're NOT raising your taxes!
Budget plan proposes millions in new fees
The Associated Press
Published: 10:19 p.m. Tuesday, Jan. 18, 2011
Republican leaders are promising not to raise taxes, but that doesn't mean Texans won't be paying more for services in the new state budget.
A preliminary spending plan released Tuesday night proposes millions of dollars in new fees. State employees and retirees who smoke would pay a $30-a-month "tobacco user monthly premium surcharge," raising an estimated $42 million for the budget.
There are also several new fees, worth about $28 million, that would be imposed by the Texas Attorney General's office, among them an "annual child support service fee," a "monthly child support processing fee," an "electronic filing of documents fee," and a "comprehensive development agreement review fee."
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January 18, 2011 11:19 PM EST
Copyright 2011, The Associated Press. All rights reserved. ____________________________________________________________________
Link to New York Times article here.
What's the Matter With Texas?
Conservatives say that the furor over the state's huge deficit is overblown. Are they right?
A Self-Inflicted Mess
Updated January 20, 2011, 02:34 PM
Dave Mann is executive editor of The Texas Observer. He detailed Texas's latest budget problems in an article last week.
Texas’ budget is a mess. The state comptroller’s office has estimated that Texas has a budget gap of $27 billion for fiscal years 2012 and 2013 (Texas budgets in two-year cycles). The shortfall represents roughly one-quarter of all state spending. It’s one of the worst state budget deficits in the country — even worse than California’s.
While conservatives express giddiness at the prospect of deep cuts in state spending, Texas faces a shortfall worse than California's.
Texas Gov. Rick Perry has blamed the mess on factors beyond his control — mostly the nation’s faltering economy. But that’s only part of the story. The current crisis in Austin has been largely self-inflicted.
To understand how this happened, you have to go back to 2006, when Texas lawmakers passed a massive tax reform plan. The goal was to cut property taxes without costing the state any money. Perry designed a “tax swap” that would reduce property taxes and replace the lost revenue with a new business tax.
There was one major flaw with this plan — it didn’t balance. Property taxes were cut by $14 billion annually. But the new business tax brought in only $9 billion a year in new money. As a result, the tax-swap plan has burned a $5 billion hole in the budget every year since. (In 2007, a booming economy helped mask the problem, and in the 2009 session, lawmakers used $12 billion in federal stimulus money to fill the gap.)
The imbalance was well known. The Texas comptroller’s office warned Perry in 2006 that his plan didn’t pay for itself. The comptroller’s office estimated the plan would result in a five-year deficit of $23 billion. Perry and other legislative leaders ignored those warnings. Some Democrats in Austin suspect that G.O.P. leaders intentionally created this structural deficit as a way tamp down state spending. And some Republican leaders and conservative activist groups have made statements in recent weeks that expressed downright giddiness at the prospect of deep cuts in state spending. Lieut. Gov. David Dewhurst referred to the budget gap in his inaugural speech on Jan. 18 as an “opportunity.”
Whatever the reason for the structural deficit, the bill is now coming due. The 2006 tax swap has resulted in a shortfall of at least $20.9 billion the past two budget cycles, according to an analysis by the Center for Public Policy Priorities, a left-leaning Austin think tank.
The structural deficit accounts for a large piece of Texas' current $27 billion shortfall.
In short, we did it to ourselves.
____________________________________________________________________
Link to article here.
Introduction
In a recent column on Texas's huge budget deficit, Paul Krugman wrote that "it’s hard to imagine what will happen if the state tries to eliminate its huge deficit purely through further cuts."
On Tuesday, this was what Texas legislators proposed doing, with a plan to slash $31 billion in state spending that includes cuts in education, Medicaid and the prison system. New taxes weren't an option for the Republican-controlled state government. Texas has among the lowest tax burdens in the country, with no income tax.
But how did a state which touts its fiscal tightfistedness find itself in a deficit bind in the first place? Its oil and gas industries hummed along during the recession, and it had no housing meltdown. Unions are not an issue, and it has the lowest state spending in the nation per person.
But there is not even unity on the amount of its budget shortfall: is it $12 billion to $15 billion, as the Republicans say, or up to $27 billion, a figure used by liberal groups like the Center on Budget and Policy Priorities? Many fiscal conservatives say that the gap is not a problem. Why do they say that? Are there lessons for other states?
What's the Matter With Texas?
Conservatives say that the furor over the state's huge deficit is overblown. Are they right?
A Self-Inflicted Mess
Updated January 20, 2011, 02:34 PM
Dave Mann is executive editor of The Texas Observer. He detailed Texas's latest budget problems in an article last week.
Texas’ budget is a mess. The state comptroller’s office has estimated that Texas has a budget gap of $27 billion for fiscal years 2012 and 2013 (Texas budgets in two-year cycles). The shortfall represents roughly one-quarter of all state spending. It’s one of the worst state budget deficits in the country — even worse than California’s.
While conservatives express giddiness at the prospect of deep cuts in state spending, Texas faces a shortfall worse than California's.
Texas Gov. Rick Perry has blamed the mess on factors beyond his control — mostly the nation’s faltering economy. But that’s only part of the story. The current crisis in Austin has been largely self-inflicted.
To understand how this happened, you have to go back to 2006, when Texas lawmakers passed a massive tax reform plan. The goal was to cut property taxes without costing the state any money. Perry designed a “tax swap” that would reduce property taxes and replace the lost revenue with a new business tax.
There was one major flaw with this plan — it didn’t balance. Property taxes were cut by $14 billion annually. But the new business tax brought in only $9 billion a year in new money. As a result, the tax-swap plan has burned a $5 billion hole in the budget every year since. (In 2007, a booming economy helped mask the problem, and in the 2009 session, lawmakers used $12 billion in federal stimulus money to fill the gap.)
The imbalance was well known. The Texas comptroller’s office warned Perry in 2006 that his plan didn’t pay for itself. The comptroller’s office estimated the plan would result in a five-year deficit of $23 billion. Perry and other legislative leaders ignored those warnings. Some Democrats in Austin suspect that G.O.P. leaders intentionally created this structural deficit as a way tamp down state spending. And some Republican leaders and conservative activist groups have made statements in recent weeks that expressed downright giddiness at the prospect of deep cuts in state spending. Lieut. Gov. David Dewhurst referred to the budget gap in his inaugural speech on Jan. 18 as an “opportunity.”
Whatever the reason for the structural deficit, the bill is now coming due. The 2006 tax swap has resulted in a shortfall of at least $20.9 billion the past two budget cycles, according to an analysis by the Center for Public Policy Priorities, a left-leaning Austin think tank.
The structural deficit accounts for a large piece of Texas' current $27 billion shortfall.
In short, we did it to ourselves.
______________________________________________________________________________
Texas budget cuts may shift burden to locals
By CHRIS TOMLINSON
© 2011 The Associated Press
Jan. 22, 2011, 1:14PM
AUSTIN — Conservative lawmakers who dominate Texas politics make their political careers on promising to cut state spending and block new taxes. But when the budget slashing is done, city and county officials must pick up the pieces — and possibly raise taxes.
State legislatures across the country are facing budget problems brought on by the economic recession. California, Illinois and Georgia face shortfalls just as bad as Texas, but they plan to raise taxes to avoid dramatic cuts. The Texas governor, lieutenant governor and House speaker — all Republicans — have promised to make the state live within its means without new taxes.
When the legislature released the first draft of the new budget this week, the proposed cuts were staggering. All told, if lawmakers want to avoid raising taxes, they need to cut $27 billion from what it would cost to maintain the current level of state services.
Texas lawmakers from both parties have always been fiscally conservative, explained Sherri Greenberg, interim director of the Center for Politics and Governance at the LBJ School for Public Affairs in Austin. Texas spends less per person on state services than any other state, and the Texas Constitution forbids a personal income tax.
"It's one thing to say `no new taxes,' however, that doesn't mean there won't be all kinds of fees increased," Greenberg said. "Things are just pushed down to the local level."
Cuts set off a domino effect: Historically, public schools raise property taxes when the state education agency sends smaller checks. Cities and counties have to pick up the bill when the sick go to the emergency room because fewer doctors accept Medicaid. And when the mentally ill don't receive treatment, local law enforcement often steps in.
Texans pay for these services in one of two ways. Local authorities collect property taxes, and 64 percent of the state budget comes from sales taxes. Less spending during the recession has meant reduced state revenues. The state also collects a business tax, but that has never produced as much revenue as lawmakers predicted, Greenberg said.
The draft budget assumes no new taxes and over the next two years takes $9.8 billion away from schools and could cost 100,000 school district jobs, according to Moak, Casey & Associates, a school finance consulting firm that analyzed the budget. This at a time when Texas schools is projected to add 160,000 new students, according to census figures. The Houston Independent School District alone could lose $348 million in financing, something that could result in teacher layoffs.
"You could take to your voters a tax increase . but in this economy it's tough to even think about that," said Melinda Garrett, the chief financial officer for Houston schools. "We are 80 percent people, so you can't cut the budget without cutting people."
Some schools are already charging the maximum rate allowed without voter approval, but the Houston school board can still raise taxes 3 cents per $100 of real estate without a referendum. That is one option Garrett will present to the board — along with proposed cuts — once the state budget is finalized and becomes law in May.
Hospitals and doctors will likely absorb the $2.8 billion the state plans to cut from Medicaid programs. The state is considering reducing what it pays doctors and hospitals to treat Medicaid patients by 10 percent. Based on past cuts in Medicaid fees, the result will be fewer doctors accepting Medicaid patients and more people relying on emergency rooms when they fall ill. Hospitals cannot turn away emergency patients.
Parkland Health and Hospital System is one of the largest public hospitals in Texas, treating more than 93,000 low-income patients who depend on the program each year. Ron Anderson, the CEO, said state cuts in health care merely shift the costs to counties and hospital districts, which rely on local property taxes. Parkland relies on medical school faculty and students to provide services, so cuts to the higher education budget will compound the cuts to the health budget, costing millions in local taxes.
"Sometimes you think you're saving money with one budget, but your actually transferring the costs to somebody else and the costs might actually be higher," Anderson said. "The taxpayers who pay these bills are actually the same taxpayers."
Texas ranks 49th in the nation in per capita spending on mental health programs, and the draft budget would cut spending by 40 percent. When mentally ill people can't get the help they need, they often end up in jail or worse, said Harris County Sheriff Adrian Garcia.
"Officers and the mentally ill will be having confrontations that will result in arrests, tazings and, regretfully, even shootings," Garcia said. "That should not be the way that families or individuals resolve their mental health issues, but that's generally how it works because there is a lack of service."
Garcia and other sheriffs across the state have repeatedly asked the legislature to increase spending on mental health programs to divert people away from jail and into treatment programs. About 25 percent of the inmates in the Harris County Jail already require psychological treatment and psychotropic drugs, costing the county $27 million a year. Many more would qualify for other treatments, he said. Now the Texas Sheriff's Association just wants the state to maintain the current funding.
"We have been working hard to control spending in the sheriff's office, but when these folks come into my custody, I have no option, I am constitutionally obligated to provide them with the care they need," Garcia said. And funding for that treatment comes from county property taxes, he said.
The draft budget introduced on Wednesday is only a start to the budget process, and the final budget will look much different. But as debate begins, local authorities will be visiting state lawmakers to try to protect their piece of the budget.