Texas Lawmakers Propose 10% Spending Cut in $79.3 Billion Biennial Budget

Texas lawmakers plan to unveil a $79.3 billion two-year general-fund budget that would cut spending by 10 percent from the current fiscal biennium and not raise taxes, according to documents outlining the proposal.

The draft budget would slash education spending by 10 percent, to $44.3 billion, and health and human services by 7.7 percent, according to a copy of the plan. Leaders of the Texas House of Representatives will make the proposal public today.

The spending plan would cut education jobs by 2.4 percent to 85,119 while withholding funds for teacher incentive pay and pre-kindergarten programs. The draft projects a 160,000-student increase in public-school enrollment over the biennium, while cutting related expenses by 9.1 percent as property-tax receipts are projected to fall by more than $2 billion.

“We must cut spending to keep our economic engine on track,” Governor Rick Perry, a Republican, said yesterday in a speech following his inauguration for an unprecedented third term. “These tough times dictate government doing more with less,” he said.

The budget plan also would cut 13 percent from higher- education spending in the current biennium, to $13.6 billion. Public-school funding would fall $3.1 billion to $30.7 billion, according to the draft. It wouldn’t cover enrollment growth at community colleges and state universities while trimming financial aid by $431 million and eliminating funds for four community colleges.

Budget Cutters Favored

Texas voters in November re-elected Perry and supported Republicans who pledged to cut spending and not raise taxes, Lieutenant Governor David Dewhurst said in his inaugural speech. Members of his party hold all statewide elective offices and control both the House and state Senate, where he is president.

The House proposal projects cutting 9,610 state jobs, or 4 percent of the total, over the next two fiscal years, to 231,574. Public-safety positions would be trimmed by 6.3 percent to 51,395, and health and human services employment would be reduced by 3 percent to 56,072.

Many of the jobs that would be cut aren’t filled now, state Representative Jim Pitts, chairman of the House Appropriations Committee, said in a Jan. 14 speech.

The House plan also would pare contributions to state- employee pensions to 6 percent of salary. The state contributes 6.95 percent for most workers now, while it puts in 6.64 percent of a teacher’s pay.

Falling Revenue

Legislators and Perry face a 2.9 percent decline in revenue for the two-year period that starts Sept. 1, according to Comptroller Susan Combs. Last week, she projected revenue available for general-fund spending would drop to $72.2 billion, after accounting for a $4.3 billion gap in the current biennium and $866 million in energy revenue to be placed in the state’s reserves. House lawmakers said their spending plan doesn’t rely on the projected $9.4 billion in reserves.

Perry reiterated his view that the state’s fiscal position will let it balance spending and revenue without raising taxes, in his speech yesterday in Austin, the state capital.

“As legislators do the hard work of trimming agency budgets, the headlines will be dominated by impacted constituencies,” Perry said.

Texas isn’t alone in grappling with budget issues. Illinois lawmakers last week increased personal and corporate income-tax rates to plug a deficit of at least $13 billion. California Governor Jerry Brown’s proposed budget would cut $12.5 billion in spending, mainly from welfare programs and universities.

Magnified Imbalance

In Texas, the budget imbalance has been magnified because tax receipts from a new business levy adopted in 2006 haven’t reached projected levels, according to Scott McCown, executive director of the Center for Public Policy Priorities, an advocacy group in Austin. The group favors more services for the poor.

“The cuts-only approach taken in the proposed bill would hurt Texas families, cost us jobs and undermine our economy’s recovery,” McCown said yesterday in a statement. He has said that the state will need to spend about $99 billion over the next two years to maintain current service levels, after accounting for inflation and population growth.

Including funds received from the federal government and other sources, the budget proposal calls for $156.4 billion in total spending, down 17 percent from the current biennium. Legislators have limited authority over funds that aren’t derived from general tax revenue.

“Prudent spending, not crisis-mongering, will balance Texas’s budget,” Michael Quinn Sullivan, president of Empower Texans, an Austin policy group that favors less government, said yesterday in a statement. “The imperative must be for legislators to spend only what is available to them.”

To contact the reporter on this story: David Mildenberg in Austin at dmildenberg@bloomberg.net

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

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