HB 10

My Friend,

The Texas 82^nd Legislature’s Budget has serious problems. Because the most frightening of the implications of the choices the legislature has made seem to be education, I’d like to focus on that issue. There are plenty of other considerations, however. Many state agencies and state workers are going to see losses and job cuts. Health care in particular will see a huge loss in funding. This will create human misery, but I doubt it is something that will have as many long term consequences to the state as will cuts to education.

Sunday night, the Texas House of Representatives Voted to pass House Bill 1. HB1 is the Budget Bill for the next two years.

With $7.8 Billion in cuts to education alone, the likelihood of a negative impact to Texas schools is pretty significant. Based on the Texas Tribune pie chart (embedded in the link above), that seems to be roughly 17% (almost 1/5^th) of the public education budget. That figure, however, does not seem to be quite correct. The Sunshine Review says that from 2008-2009 the state of Texas spent $75 billion. This leaves us with a more accurate 10% cut to education. That’s still nothing to sneeze at.

Sounds bad, but this is just the cost of having to endure a recession right? Not really.

First of all, we have to remember, that Texas Constitutionally requires that the State Budget be balanced from biennium to biennium. So there’s no deferring to a later date the way the Federal budget is allowed to grow from year to year. Texas must make sure that its books are balanced. Generally this seems like a pretty good idea, but this year I’m not totally convinced.

Secondly, back in 2006 Texas ran into trouble as it’s method of paying for schools relied on local property taxes. All districts of which had reached a statewide cap, and this effectively amounted to a state wide property tax which is unconstitutional by Texas law. The State Supreme Court mandated that the state had to adjust how it funded the schools.

The Legislature voted to lower property taxes and instituted a new margins tax that would add a 1% tax to certain business revenues. That’s why you’ll hear a lot of discussion about how we are in a “structural deficit.” Many of the proposed taxes, in particular the marginal, did not generate nearly as much revenue as the state leaders expected.

The State Comptroller at the time predicted we’d be in this situation.

There’s been some effort to blame the recession. That’s not beyond the realm of possibility, but assuming our shortfall is $27, and State Comptroller Strayhorn predicted a $23 billion shortfall, we can assume that only $4 billion of the shortfall is due to the recession and the rest is structural.

The state has a number of options to deal with this.

#1. Presumably it could extend it’s deficit into the next biennium. However, because balancing the budget is written into the Texas Constitution (and thus would require a massive political process) it wouldn’t be useful until next session at best.

#2. The state could (and should) tap into its entire “Rainy Day” fund. The trouble is that the $4.3 billion dollars Rainy Day fund wouldn’t even cover the proposed cuts to education.

#3. Raise Taxes. Because of the current anti-government, anti-tax political climate this is neither popular of feasible, but sooner or later it will become necessary for our government to move forward.

I’m sure there are other creative options. Something needs to change, besides spending less. Without looking into any moral considerations for taking care of the poor and the sick, Texans need to at least consider the long term effect of few and poor government programs. How are children going to become properly educated? How is Texas going to be competitive with a poorly educated workforce?

As Texas Impact puts it:

“National data consistently demonstrates that Texas is at or near the bottom of the 50 states in spending when its economy and population are taken into place. Per capita, Texas ranked 50th in state government spending and 49th in state taxes in 2006. State aid per K-12 pupil-- another measure often used to compare state government spending--rose in Texas in the late 1990's, but subsequently declined. In 2005-2006, state revenue per student in average daily attendance (ADA) was only $3,129, putting Texas in 47th place nationally on this measure.”

Thus, Texas taxes the least and spends the least. HB 1, if not changed, drives the state further into a hole of poor services and poorly educated children. This is not a sustainable direction.

The Representatives spoke closing arguments Sunday night on the Bill. I'll include some of the most salient.
This, I think, was the most thoughtful response:

Representative Dutton pointed out, in his own way, that this bill was just general foolish behavior.