Jan. 19 (Bloomberg) -- Texas lawmakers unveiled a $79.3 billion two-year general-fund budget plan that doesn’t raise taxes while cutting spending by 10 percent from current levels.
The draft budget from House of Representatives leaders would slash general-revenue education spending by 10 percent, to $44.3 billion, and health and human services by 7.7 percent, according to the plan. Lawmakers from both parties attacked the education cuts at a legislative hearing today.
“This budget reflects a smaller, more limited government,” Representative Jim Pitts, a Republican from Waxahachie who heads the Appropriations Committee, told lawmakers today. He said the proposed two-year spending plan “doesn’t include new funding for growth in any area.”
Texas voters in November re-elected Governor Rick Perry and supported other Republicans who pledged to cut spending and not raise levies, Lieutenant Governor David Dewhurst said yesterday in his inaugural speech. Members of his party hold all statewide elective offices and control both the House and state Senate, where Dewhurst presides as its president. Perry pledged to hold the line on taxes in his re-election campaign and after winning.
“We must cut spending to keep our economic engine on track,” Perry, 60, said yesterday in his inaugural speech. “These tough times dictate government doing more with less.”
The House spending plan would cut education jobs by 2.4 percent to 85,119 while withholding funds for teacher incentive pay and prekindergarten 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.
The budget plan also would cut 13 percent from higher-education spending to $13.6 billion, compared with the current biennium. Public-school funding would fall $3.1 billion to $30.7 billion, according to the draft. It would trim financial aid by $431 million and eliminate funds for four community colleges.
Plans to close one of those, Brazosport College in Lake Jackson, angered Representative Dennis Bonnen, an Angleton Republican whose district includes the school. “We need to make clear that these four colleges aren’t closed and hopefully won’t be closed,” Bonnen said.
The two-year school serves more than 25,500 students and has been operating since 1968, according to its website.
“It’s not a done deal,” Pitts said in response to critics of the plan.
“This is a work in progress” that will evolve over the next four months, Pitts said. The state’s fiscal year begins Sept. 1.
The House proposal projects cutting 9,610 state jobs, or 4 percent of the total, over the next two fiscal years, to 231,574, according to the draft. 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, Pitts 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.
Legislators and Perry face a 2.9 percent drop in revenue for the biennium, according to Comptroller Susan Combs. Last week, she projected revenue available for general-fund spending would fall to $72.2 billion, after accounting for a $4.3 billion gap in the current fiscal year and $866 million in energy revenue to be placed in a reserve, which is projected to reach $9.4 billion by the end of the budget period. House lawmakers said their spending plan doesn’t rely on the reserve fund.
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.
The Republicans’ plan to keep taxes from rising while cutting education spending threatens Texas’s economic future, Representative Garnet Coleman, a Houston Democrat, told reporters in a briefing today.
“If any private company were in this shape, they’d be filing for bankruptcy,” he said.
The proposal doesn’t provide any funds to cover costs associated with a projected increase of 160,000 in public-school enrollment over the two-year period, Coleman said.
The state’s population grew by 21 percent to 25.1 million from 2000 to 2010, adding more people than any other state, the U.S. Census Bureau said Dec. 21. The nation’s population increased 9.7 percent, by comparison.
Almost three-quarters of the state’s gain, or about 2.7 million people, were Latinos, according to Lloyd B. Potter, a University of Texas at San Antonio professor who is the official state demographer.
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.
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.”
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