Perry's Role in the Budget Mess

[sonias]

Texas Observer 5/20/10
Perry's Role in the Budget Mess

(snip)
We’ve gotten a preview this week of just how painful the budget process will be next session. (This Fort Worth Star-Telegram story has details on the first round of cuts.) State leaders are once again saying they intend to rely mostly on spending cuts to make up a budget shortfall that may reach $18 billion. It’s already clear lawmakers will have a difficult time cleaving that much money from Texas' miserly state budget.

Now is the time to talk about this—not next year—because the budget gap isn’t just a result of the bad economy, although that has played a part.

At least half the budget deficit can be directly attributed to Gov. Rick Perry, Lt. Gov. David Dewhurst and other Republican leaders. The question is, will their handling of the budget become an election issue? (For more details on Perry’s budget dealings, I suggest you read this recent feature by my colleague Melissa del Bosque.)

To understand how Perry and other state leaders intentionally created a large chunk of the budget shortfall, we must retrace some history from 2006. That was the year the Legislature, under court order, passed a school finance reform plan. The framework of the plan was largely devised by Perry in conjunction with former comptroller John Sharp.

The idea was to cut property taxes and replace the lost revenue with a new business tax. It was pitched as a tax swap that wouldn’t cost the state any money. Problem is, it wasn’t a swap at all. The business tax doesn’t bring in nearly enough money to cover the loss in property tax revenue.

This means Texas budget is guaranteed to have a shortfall of several billion dollars every year.

And here’s the key point—one often missed in the reporting on what’s known as Texas’ structural deficit—Perry and the Legislature knew full well the plan didn’t balance when they passed it.

Holy deficit spending cow! Perry and his republican crew have essentially been deficit spending since 2006.

Excellent reporting! Kudos to the Texas Observer for making this easy to understand.

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