Texas will have a persistent $10 billion hole in its budget for years to come unless legislators address it this session, the state’s chief revenue estimator told Senators in Senate Finance Committee meeting on January 31, 2011.
Pressed by Democratic senators on the Finance Committee, John Heleman said the state will have a $10 billion structural deficit in future budgets largely because the business tax has underperformed and the 2006 property tax swap has cost more than expected.
The revised business tax was supposed to bring in $6 billion per year. Instead, it it is generating $4 billion. The cost of the property tax relief is also running about $1 billion per year above expectations.
“That gap is not closing up,” said Heleman, chief revenue estimator for Comptroller Susan Combs.
Republican state leaders have attributed the state’s budget woes to the recession and have dismissed calls to raise taxes to deal with the current budget shortfall, estimated at $15 billion to $27 billion, saying they can cut their way out of that hole.
But the structural deficit means legislators will have to come back in 2013 and beyond to deal with at least another $10 billion hole.
G.O.P. lawmakers in Austin have taken a vow of no new taxes, which is a vow to not fix the business tax revenue problem created by law makers in the 2006 legislative session.
Last week the Texas House began debate on a $164.5 billion budget bill that strips $23 billion from two-year 2011-13 state budget. The budget bill makes the kinds of spending cuts that many Conservative Tea Party lawmakers championed in their 2010 campaigns. Republican lawmakers say voters gave them a huge majority and clear marching orders last November: reduce spending, shrink state government, don't raise taxes. Shrinking state government, as it turns out, includes firing hundreds of thousands of teachers and state employees, taking billions of dollars out of the public school system and weaken the state's safety net for low-income Texans and the elderly.
Some Democratic lawmakers are, however, advocating fixing the business tax revenue side of the equation as stated in the follow press release from State Representative Yvonne Davis.
