Tuesday, April 12, 2011

Mess With Texas: A Budget Disaster

Posted By on Tue, Apr 12, 2011 at 2:00 PM

Back in the day before Sen. Al Melvin blacklisted me for asking too many pesky questions about the impacts of his votes, he used to talk about how, if Arizona were just more like Texas, we wouldn't have budget problems because our economy would be booming and tax revenues would soar.

It appears that the Texas miracle isn't working out so well. Not that reality is likely to change Melvin's mind, since he's ideologically locked into his belief system, but it's worth noting that the Texas government facing the same type of problems as Arizona, according to The New York Times:

The public pressure to reduce taxes makes it difficult to do something about what many budget experts say is a chronic shortage of revenue in Texas. The experts said the economic downturn caused only a third of the revenue shortfall here, as sales tax receipts fell off. Most of it, they said, stemmed from the state’s decision to overhaul its business tax structure and to reduce local property taxes in 2006. Various tax exemptions have also weakened revenues over the years.

“The tax system is out of whack,” Senator Ogden said. “There are more and more exemptions, and the taxes we do have are not performing as expected.” At the same time, Texas continues to grow by about 1,500 people a day, and costs are rising inexorably. “It’s unstable,” he said. “The curves will not cross.”

Given the political climate, however, few in the Capitol expect the Legislature to perform major surgery on the tax code. The Democrats were sidelined in the Republican landslide last fall, and moderate Republicans are worried about their re-election prospects after seeing so many incumbents fall to Tea Party challengers in the last election. If the final budget resembles the House version, however, some politicians fear that there could be a price to pay at the polls next year — a backlash to the backlash.

The House plan would give schools almost $8 billion less than current state law requires over the next two years. Medicaid would be about $4 billion short of what officials say is needed to meet the growth in caseloads. One group of budget analysts predicted that 97,000 teachers and school employees would be laid off. Other analysts said that the cuts to Medicaid would force hundreds of nursing homes out of business and would have a devastating effect on rural hospitals and doctors.

Those sorts of austere budget cuts have not been seen in Texas since Truman was president, not even during the oil bust in the late 1980s and the recession in 2003, several lawmakers said.

“There is nothing comparable to this since World War II,” said State Senator John Whitmire, a veteran Houston Democrat who is the vice chairman of the Finance Committee. “I think we are in a hell of a mess, and I am not sure of the path out of it.”

[New York Times]

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