Tuesday, January 4, 2011

One Huge State Budget Crisis That Everyone Refuses To Talk About

You know the conservative storyline that "liberal states" like Illinois, New Jersey, New York, and California are supposed to be in huge financial trouble thanks to bloated governments, business-unfriendly regulations, and strong public sector unions.

But there's one state, which is high up on the list of financially troubled states, that neither conservatives nor the "liberally biased press" are talking about. The reason no one is talking about it is that it doesn't fit the conservative storyline.

The state is Texas.

A budget shortfall as high as $25 billion is projected for the $95 billion 2012-2013 state budget as lawmakers head into the 2011 biennial legislative session, according to estimates from economists and the comptroller's office.

Leadership in the Texas Legislature, which has been dominated by conservative Republicans for a decade, is not expected to support any discussion about raising taxes to fill the multi-billion dollar hole. The state's Republican leadership has already ordered state agencies to cut their budgets by 5%-10% several several years running, and those agencies are currently under a new order to cut their budgets one more time. Most state agencies are already operating on a bare bones budget and if much more is cut from their budgets they will not be able to deliver the services they are mandated to deliver.

Gov. Perry and some conservative Texas lawmakers have advocated "opting out" of Medicaid altogether and closing or privatizing state schools to save money. If you think the cost of sending your kids to a state college is high now, think what "privatized" colleges will cost. Or, if mom suffers from Alzheimer's disease and needs to be in an Alzheimer's care home, the kids will have to pay mom's entire $6,000 per month care bill out of their own pocket, because there will be no Medicaid. (Opting out of Medicaid would actually be a one-two punch to Texas' economy -- Medicaid and the Lege: Throw 'Em in the Street)

So why haven't we heard more about Texas, one of the most important economy's in America? Well, it's because it doesn't fit the conservative script; It's a pro-business, lean-spending, low tax, no-union state, so the state government's budget should be in great shape.

But if you want to make comparisons between US states and ailing European countries, think of Texas as being like America's Ireland. Ireland was once praised as a model for economic growth: conservatives loved it for its pro-business, anti-tax, low-spending strategy, and hailed it as the way forward for all of Europe. Then it blew up.

This is the sleeper state budget crisis of 2011, and it conservatives will continue to praise the state's conservative government, right up until the moment before it blows up.

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