Wednesday, March 16, 2011

Rainy-Day Money Plus Cuts Cover $4.3 Billion 2009-11 Deficit

Many newspaper headlines this morning heralding "Deal breaks impasse on using state’s rainy-day money" and "Perry, legislators reach limited deal on dipping into rainy day fund" are a bit misleading -- and copy below the headlines does little to clarify. Here's the straight scoop...

Most of the recent Texas budget and rainy-day fund headlines are related to the new 2011-2013 budget that starts with a projected $27 billion deficit, according to State Comptroller Susan Combs.
It is the new 2011-13 budget wherein the Republican controlled legislature proposes to cut up to $31 billion in funding from K-12 and college education, public safety, Medicaid and other health care programs for children and the elderly.

Many are calling for Gov. Perry and the legislature to use $9.4 billion available in the rainy-day fund to avoid cutting $10 billion in education funding from the 2011-13 budget. Using that rainy-day money to fund education in the 2011-13 budget would save up to 189,000 education related jobs in Texas and almost 14,000 education jobs in Collin Co. over the next two years.
But the straight scoop is that the new 2011-13 budget starts on September 1, 2011, which means the current 2009-2011 budget continues to fund state spending until August 31, 2011 -- and the current budget is short by more than $4.3 billion, according to Combs.
In her testimony before the House Appropriations Committee on March 4th, Combs made no bones about the fact that the “Rainy Day Fund” would have to be tapped to help cover the current budget. “I don't know how you get to $4.3 (billion) with cuts. I really don't know how you do it,” Combs told the committee.
It is that 2009-11 budget shortfall that, with Perry's acquiescence, the House Appropriations Committee voted to take $3.1 billion out of the rainy-day fund to cover.
But Perry said, "I remain steadfastly committed to protecting the remaining balance of the Rainy Day Fund, and will not sign a 2012-13 state budget that uses the Rainy Day Fund," he said in a statement.
That $3.1 billion in rainy-day funding the Appropriations Committee just approved does not fully close the current 2009-2011 budget deficit. To fully close the remaining budget deficit the Appropriations Committee also voted to immediately impose an additional $1.2 billion in spending cuts across state agencies.

House Democrats are critical of the deal House Republicans struck with Perry. Representative Mike Villarreal (D-San Antonio) said the House leadership is using rainy-day money to avoid the embarrassment of failing to pay the state's bills for the current budget.
"We're willing to tap the rainy day fund to save face, but we're not willing to tap the rainy day fund to mitigate the harm that is going to be inflicted upon our children," Villarreal said. "That, in a word, is irresponsible."

The decision to leave most of the remaining $6 billion in the rainy-day fund untouched for the 2011-13 budget will deepen already painful cuts in state services.
Reconciliation between the House and Senate proposals for the new 2012-13 budget may be a challenge. State Senators reportedly have been talking about not cutting billions of dollars from public education and Medicaid, although they have not publicly talked about where they would get the new tax revenue money to do so. The House seems on track to pass a budget bill closer to the one proposed in January by the Legislative Budget Board, which cuts $31.1 billion from current spending levels.

Remember, that $27 billion projected deficit between 2011-13 tax revenues and spending is on top of the $4.3 billion deficit for the 2009-11 budget period. Those deficits total to just over $31 billion in cuts from current spending levels. So, everyone, please, start using the correct 2011-13 budget cutting number. It isn't $27 billion it is something over $31 billion. How's Gov. Perry's Conservative Texas Miracle thingy working for you now?

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