MarketNeutral
6th April 2010, 12:38 PM
Somewhere, somehow, Texas will have to find some new money.
It is too soon to say how much extra will be needed to help close the projected shortfall in the state's 2012-13 budget. Estimates of the budget hole range from a very conservative figure of $11 billion to more than $15 billion.
Budget cuts are already in the offing. State leaders are expected to pull the trigger soon on about $1 billion in spending trims, which could include prison guard layoffs and reduced payments to doctors and other Medicaid providers.
But budget watchers say it is unlikely that legislators will be able to cut their way out of the hole when they return to Austin in January.
"History would suggest that budget cuts won't be the sole solution," said Dale Craymer, president of the business-backed Texas Taxpayers and Research Association. While urging caution, Craymer said legislators "have to look at what they can do to raise revenues."
Leading the search for new money is state Rep. Rene Oliveira, chairman of the House Ways and Means Committee, which has begun hearings on the issue. All revenue-raising bills must originate in the House.
Oliveira, D-Brownsville, said across-the-board tax hikes are a non-starter.
"I'm not going to waste time on tax increases … if the votes aren't there and the governor is going to veto them," Oliveira said.
Many lawmakers, including Gov. Rick Perry, have signed an Americans for Tax Reform pledge that binds them to oppose "any and all tax increases."
But exactly what constitutes a tax increase will be a matter of much hand-wringing next year, Craymer said.
For now, Oliveira's committee is scouring the tax code for exemptions, exclusions and credits that could be scratched to generate a little scratch.
The severe budget crunch has also opened the door a touch wider for expanded gambling, including casinos and slot machines.
"Is it good for the Texas economy? Is it good for the Texas budget? It is certainly a more palatable alternative to tax increases, which are going to be extremely difficult to pass with this economy and this Legislature," Oliveira said.
Gambling, however, would not be a panacea for the state's long-term budget woes, Oliveira said.
Nor is the rainy day fund, now an $8 billion emergency reserve that is brimming with taxes paid by oil and gas companies during their boom production years of 2007 and 2008.
Experts have warned that the 2014-15 budget could be even more snarled if legislators drain the rainy day fund and use other one-time measures to get them through the immediate crisis next year.
But legislators will probably have to exhaust all of those options in 2011 before swallowing a politically unpopular tax bill or other revenue measure, Craymer said.
"Good money management is not always good politics," Craymer said. "And vice versa."
http://www.statesman.com/news/texas-politics/where-will-texas-find-money-to-fill-budget-522870.html
It is too soon to say how much extra will be needed to help close the projected shortfall in the state's 2012-13 budget. Estimates of the budget hole range from a very conservative figure of $11 billion to more than $15 billion.
Budget cuts are already in the offing. State leaders are expected to pull the trigger soon on about $1 billion in spending trims, which could include prison guard layoffs and reduced payments to doctors and other Medicaid providers.
But budget watchers say it is unlikely that legislators will be able to cut their way out of the hole when they return to Austin in January.
"History would suggest that budget cuts won't be the sole solution," said Dale Craymer, president of the business-backed Texas Taxpayers and Research Association. While urging caution, Craymer said legislators "have to look at what they can do to raise revenues."
Leading the search for new money is state Rep. Rene Oliveira, chairman of the House Ways and Means Committee, which has begun hearings on the issue. All revenue-raising bills must originate in the House.
Oliveira, D-Brownsville, said across-the-board tax hikes are a non-starter.
"I'm not going to waste time on tax increases … if the votes aren't there and the governor is going to veto them," Oliveira said.
Many lawmakers, including Gov. Rick Perry, have signed an Americans for Tax Reform pledge that binds them to oppose "any and all tax increases."
But exactly what constitutes a tax increase will be a matter of much hand-wringing next year, Craymer said.
For now, Oliveira's committee is scouring the tax code for exemptions, exclusions and credits that could be scratched to generate a little scratch.
The severe budget crunch has also opened the door a touch wider for expanded gambling, including casinos and slot machines.
"Is it good for the Texas economy? Is it good for the Texas budget? It is certainly a more palatable alternative to tax increases, which are going to be extremely difficult to pass with this economy and this Legislature," Oliveira said.
Gambling, however, would not be a panacea for the state's long-term budget woes, Oliveira said.
Nor is the rainy day fund, now an $8 billion emergency reserve that is brimming with taxes paid by oil and gas companies during their boom production years of 2007 and 2008.
Experts have warned that the 2014-15 budget could be even more snarled if legislators drain the rainy day fund and use other one-time measures to get them through the immediate crisis next year.
But legislators will probably have to exhaust all of those options in 2011 before swallowing a politically unpopular tax bill or other revenue measure, Craymer said.
"Good money management is not always good politics," Craymer said. "And vice versa."
http://www.statesman.com/news/texas-politics/where-will-texas-find-money-to-fill-budget-522870.html