Texas Leaders Demand Spending Cuts Topping $500 Million in Current Year

Texas Governor Rick Perry and two other state leaders directed agencies to curb spending by as much as $750 million over the next nine months, citing “insufficient revenue” to cover costs.

The 2.5 percent reduction is aimed at producing savings of $500 million to $750 million, said Mike Walz, a spokesman for Lieutenant Governor David Dewhurst, who signed a letter to state officials with Perry and House Speaker Joe Straus. State revenue receipts for the year ended Aug. 31 came in $2 billion below estimates, they noted in the letter, which was dated yesterday.

“Reduced spending in the current fiscal year puts state government in a better position to prepare for the budget reductions that will be necessary to balance the budget,” Perry, Dewhurst and Straus, all Republicans, said in the letter.

A 6 percent increase in sales-tax receipts in September and October over year-earlier periods won’t make up enough ground to avoid reduced spending, they said.

Texas has the second-largest state economy behind California, according to the U.S. Commerce Department. It may have a budget deficit of more than $15 billion over the next two years, according to Dewhurst and other officials. The state gained 172,800 non-farm jobs in the last year, the Texas Labor Department said Nov. 19. The 8.1 percent October unemployment rate was the lowest of 2010, it said.

To contact the reporters on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net or.

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net

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