Candidates silent on budget crisis
Posted on 09/08/2002 3:21:09 AM PDT by MeekOneGOP
Candidates silent on budget crisis
State hopefuls oppose higher taxes, say it's too early to talk about cuts
09/08/2002
AUSTIN - Candidates for governor and lieutenant governor, afraid of alienating voters, are dodging a looming budget crisis that could mean either higher taxes or draconian budget cuts and maybe both, legislative leaders say.
Democrats and Republicans say candidates are doing a disservice to voters by not spelling out how they intend to tackle the budget monster that will dominate next year's legislative session.
"Everybody knows it's going to be bad," said acting Lt. Gov. Bill Ratliff, a Republican who is running for his old Senate seat rather than seeking statewide election. He said the state faces "the worst, most difficult budget session in 50 years."
"I'm convinced that the people of this state are not stupid, and they know what happened to our economy when Sept. 11 happened, and they know we've been in a debt period; they've seen the stock market," he said. "Many of them feel sort of insulted that nobody is treating them like they have any sense."
Those seeking the high offices said they are not avoiding discussion of taxes and budget cuts. They all said they oppose higher taxes and that specifics about cuts are premature until state revenue projections are made in January.
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The contenders for lieutenant governor, Democrat John Sharp and Republican David Dewhurst, have sold themselves as experienced public officials who can handle the budget crunch.
Unlike Congress, which can use deficit spending, the Legislature is legally required to balance the budget each year.
Comptroller Carole Keeton Rylander has projected a $5 billion revenue shortfall for the next two-year budget, but Sen. Chris Harris, R-Arlington, vice chairman of the Senate Finance Committee, and others are ringing a warning bell.
Mr. Harris said he believes the state could be confronted by a need for a whopping $12 billion in new revenue over the next two-year budget cycle - more than 10 percent of the current budget.
"I see no way that the $5 billion figure can hold as being the full extent of the deficit," he said. "I find it awfully hard to stick with that figure with the economy and state revenues so static, and with the increase in unemployment we've had."
Mr. Harris ticked off a list of potential budget busters that were not included in the $5 billion projection: an additional 200,000 Medicaid clients who were not anticipated in the current budget, an extra 22,000 kids in the state's Children's Health Insurance Program and an expected 12 percent increase in health insurance premiums for state employees and teachers.
Texas is in the middle of a $114 billion, two-year budget. Of that money, $53 billion either comes from the federal government or is legally earmarked such as gasoline taxes that are constitutionally dedicated to highways and can't be touched.
That leaves $61 billion in state funding, $26 billion of which is for public education. To reduce that allotment would mean that local school districts would have to charge more in property taxes.
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The remaining money is for public safety, including running the prisons; higher education; economic development; and state agencies.
Don't rule anything out
Senate Finance Committee Chairman Rodney Ellis, D-Houston, said statewide candidates shouldn't rule out any answers. "I am concerned that some of them may put themselves in a box too early," he said.
The senator also said it would be virtually impossible to make up the revenue shortfall through budget cuts without slicing into education and health care - two areas that most political hopefuls insist should be spared.
Both Mr. Sanchez and Mr. Perry are running on improving public education. Neither are currently willing to outline proposed budget cuts.
"Tony wants to look at the inefficiencies and waste, and he wants to bring 30 years of business experience to bear on the problem," said spokeswoman Michelle Kucera.
"He'll bring in the best and the brightest to look at this economic mess that Governor Perry has gotten us into," she said.
Ray Sullivan, a spokesman for Mr. Perry, said the state economy is growing and that an upswing in revenue from existing taxes could help the state meet its obligations.
"In all the hyperventilating of recent days, some facts are getting lost," Mr. Sullivan said. "By most accounts, we will likely have more revenues available in the next two-year budget cycle."
Year-old forecast
At the center of the budget debate this year is Ms. Rylander, a Republican who said last week she is standing by her prediction on the revenue shortfall even though it was issued more than a year ago.
"There has been recent speculation of a $7 billion, $10 billion and even $12 billion shortfall," she said. "These numbers are based on wish lists of various agencies and also they are manufactured from faulty fabric that ignores natural revenue growth during 2004-05, which will help offset spending needs."
Others said Ms. Rylander, who is running for re-election, is missing the red ink because she's wearing rose-colored glasses.
"These agency requests are not wish lists. They're a reflection of population growth and the increased cost of providing services," said Dick Lavine, executive director of the Center for Public Policy Priorities, a nonpartisan group that tracks policies for low-income groups.
He said even the current budget doesn't provide enough money to meet some basic needs. He believes the Legislature will have to raise taxes.
"We have long waiting lists for services. We have deteriorating bridges and highways. We have kids trying to learn in portable classrooms. We weren't really funding everything we needed to anyway," Mr. Lavine said.
Mr. Ratliff, of Mount Pleasant in East Texas, also said he doubts the shortfall will hold at $5 billion.
"You take acceleration in medical costs, acceleration in population and then you have a flat revenue and it's just a recipe for a true fiscal crisis," he said.
Democratic House Speaker Pete Laney said those who think the Legislature can nip and tuck the budget into balance are mistaken. "We've scrubbed the budget," he said.
Because the GOP is poised to win control of the House next year for the first time since Reconstruction, Republican lawmakers will be loath to mark the session by originating a tax bill, both he and Mr. Ratliff said.
Mr. Laney said that if increasing revenue is taken off the table, then lawmakers will be looking at deep and painful budget cuts.
"With some of these candidates, it might not bother them to cut MH-MR, or health and human services. It may not bother them to release people from prison," Mr. Laney said. "The question is, where are you going to reduce services? And I don't think you'll hear that between now and November."
'Too early to panic'
Although there will be pressure to preserve and possibly expand some critical state services, most Texas business groups are ready to oppose any tax or fee increases.
"We know the situation will be tighter than it has been in a long time, but it is too early to panic," said Bill Allaway, president of the Texas Taxpayers and Research Association, a fiscal policy and advocacy group primarily funded by businesses including oil companies, law firms, accounting firms and fast-food chains.
"Our members don't want to slash and burn state programs, but they believe we can work through this. Our advice to the Legislature is to quit piling on new programs. We don't have the money."
He also pointed to the flagging economy and said new business taxes or higher government spending "will slow down the recovery."
Alternatives are few. In the big-ticket item of health care, for instance, the state spends $37 billion. Last week, the health and human services commission said it would need another $2.4 billion in the next two years just to continue programs for poor children and disabled Texans.
If money isn't there, legislators would have to look at raising eligibility for Medicaid and children's health insurance to choke off the number who could get benefits.
That could mean Texas would fall further behind what other states are doing. Texas ranks 45th among the states in how much it spends per capita on welfare and Medicaid, according to the state Legislative Budget Board.
"I don't think people want to see those in need hurt, but that's on the table," said deputy comptroller Billy Hamilton, who oversees revenue forecasts for the state. "So is higher education. You have to look at the whole," Mr. Hamilton said. "I don't envy the Legislature it's job."
Mr. Laney said lawmakers are looking at the whole, but they probably won't be talking about it until after Nov. 5.
"By January, after people are elected, the budget may be in a crisis mode, and those people might become statesmen," he said.
Staff writer Sam Attlesey contributed to this report.
E-mail choppe@dallasnews.com and tstutz@dallasnews.com
Kill this amount right after passign a Texan version of Prop 187 and we'll be kewl.
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