Gov. Rick Perry agreed with the Texas House Appropriations Committee on March 15 to use $3.2 billion, or about a third of the Rainy Day Fund, for the state budget. This came right after Lt. Governor David Dewhurst set a committee to create $5 billion worth of revenue for use in the next two-year budget cycle, without involving taxes.
The reserve fund still won’t be used unless the Texas senate votes for it, making Lt. Dewhurst’s committee eager to find and create revenue.
An example of non-tax revenue is the sale of government investments and real estate properties, which Dewhurst sees as a viable option, even though selling real estate in a buyer‘s market isn‘t going to make much profit.
Keep in mind this revenue is not going to be used to help close the gap between the budget and the deficit. The revenue will go straight into easing the current cuts to public education and healthcare.
The deficit for 2011 is approximately $4.3 billion, while the two-year budget deficit is projected to be from $15 billion to $27 billion.
Likewise, the money approved from the Rainy Day fund will only cover the 2011 fiscal year deficit and do next to nothing for the projected deficit.
Dewhurst still hopes to close the gap, but the projected $5 billion, if found, will only go to cover the current costs of running the state.
When politicians have to sell property to stay afloat, the state is in trouble. This is like living from paycheck to paycheck. When someone is out of money and looking to make quick cash by hitting the pawnshop or selling off assets, it’s usually viewed as desperation, and this situation should be seen as no different.
Dewhurst accurately says that we are in a fiscal crisis, and to his credit he is actively trying to deal with the budget.
It’s good to know that the Lt. Governor is trying since Gov. Perry publicly thinks Texas isn’t even in a crisis, and Texas House Republicans think Texas simply needs to “live within it’s means”.
As of Sunday, the debates in Austin have been predictable. The majority of Republicans don’t want to take more funds, saying that not using the Rainy Day fund will pay off in the long run, opposed to the smaller minority of Republicans and Democrats who live in what we call reality.
Those who are for using the fund realize it’s no longer a choice, but a requirement to barely keep the state above the water.
Even if the fund was used in its entirety that would cover $9.4 billion, and the shortfall could easily be three times as high. With this in mind it is obvious that the future budget will have to either increase cuts or increase taxes.
If the former, cuts would range from every department of state government including, but not limited to low income programs, elderly programs, healthcare programs and of course, public education.
All benefits for the elderly and poor would be reduced to nothing, tuition for college students would spike (ironically it wouldn’t be considered taxation) and students in elementary through high school would get crammed together, receiving a worse education than they already are.
If the latter was chosen and taxes increased, businesses and corporations that benefited from Texas’ low tax system would pay their dues by returning to the system previous to the 2006 tax swap. Business taxes would revert back to normal, public school funding would gain the 33 percent in funding that was lost, and maybe, just maybe, Texas would be able to drag itself out of the negative.
But most Texas politicians refuse to step on the toes of big business in fear of scaring them away. In all probability, the current status quo of desperately selling assets while punishing the future generation of Texas will be here to stay.
