Grading Texas

There is still a very long way to go in the Legislature’s budgetwriting process, but eversosteadily, a sense of sanity (or political preservation) is growing under the Capitol dome. (At least under the legislative portion of the dome, anyway.)

The latest example occurred this morning with Rep. John Zerwas, the point man for health and human services on the House Appropriations Committee, said he would spend most of the Rainy Day Fund to lessen cuts in health care, education and other critical public services.

During a Liveblog appearance with The Texas Tribune, Zerwas said he would come close, perhaps within $1 billion, of spending all the Rainy Day Fund because “it’s raining.” With the fund projected to have a record balance of $9.4 billion by the end of the next budget cycle, Zerwas presumably is talking about spending about $8 billion.

TSTA believes the Legislature should spend all $9.4 billion as well as find additional revenue to minimize the potential spending reductions that threaten the jobs of thousands of educators, the quality of classroom instruction and the health of tens of thousands of school kids.

But Zerwas is making a big step in the right direction.

The governor, when last we heard, was still preaching cuts, cuts and more cuts, while talking about “protecting” the Rainy Day Fund, rather than spending it. Protect it from what?

If he goes home after passing a budget with devastating service cuts, while leaving most of the Rainy Day Fund in the bank, Zerwas said, “I’m going to get a spanking.”

And so should they all.

http://www.texastribune.org/texashealthresources/healthreformandtexas/liveblogreformorbust/

You may have noticed there was another voice chiming in about the need for Texas to adopt a balanced approach to bridging its revenue shortfall, a balanced approach that includes finding new revenue as well as imposing some budget cuts.

And, this was not TSTA or another proeducation or public advocacy group that Gov. Rick Perry has politically and erroneously labeled as special interest whiners or doomsday predictors.

The latest call for a sensible, balanced approach to setting the Texas budget comes from Standard & Poor’s, the major bond rating agency.

“We believe that a balanced approach that includes both revenue enhancements and expenditures cuts has a higher potential of success in preserving the state’s longterm structural budget balance than a strategy that relies solely on expenditure cutbacks,” said S&P credit analyst Horacio AldreteSanchez in a new report.

His comments were reported yesterday in the Austin AmericanStatesman.

AldreteSanchez also noted that Texas’ budget hole is not a onetime problem that will disappear as the economy improves. Remember that $10 billion “structural deficit” in the public education budget, thanks to the Legislature’s failure to fully fund Perry’s 2006 reelection year property tax cuts?

Perry, so far, is insisting that the Legislature fill its $27 billion budget hole with spending cuts alone, without even spending part of the state’s $9.4 billion Rainy Day Fund. Such deep cuts would be felt particularly hard in a state that already has a low level of percapita spending, the analyst also noted.

Is the governor listening? Or, can he hear over his own political rhetoric?

http://www.statesman.com/blogs/content/sharedgen/blogs/austin/politics/entries/2011/02/21/more_balance_needed_in_texas_b.html

Although it still is unclear if he will get any support from the governor who portrays the state’s financial crisis as a mere hiccup, Senate Finance Chairman Steve Ogden apparently still is looking at some kind of fix to the state’s underperforming business tax.

This is the broaderbased tax, also referred to as the margins tax, enacted in 2006 to replace the old franchise tax and supposedly help pay for the school property tax reductions ordered by the governor and the Legislature that year. But, as we know, the new tax fell short and is a significant reason the state is now about $10 billion short of paying for those property tax cuts during the upcoming budget cycle.

Ogden, RBryan, who also is the Senate’s president pro tempore, was talking on the session’s opening day about correcting problems with the new tax. Unlike Gov. Perry, he also advocates spending part of the $9.4 billion Rainy Day Fund to reduce the need for budget cuts.

Ogden was discussing the business tax again yesterday, this time with Comptroller Susan Combs during Combs’ appearance before the Senate Finance Committee. According to Jason Embry in today’s Austin AmericanStatesman, the two discussed the fact that the broad definition of cost of goods sold was one reason why the margins tax has produced significantly less revenue than projected.

Cost of goods is one factor that lowers a business’ tax liability.

Asked if the cost of goods definition should be changed, Combs replied that that possibility was “a conversation you might want to have.”

Ogden and the Senate can’t do much about squeezing more money from the margins tax or spending any of the Rainy Day Fund without some cooperation from the House and some give from the governor. But it would be refreshing to see some serious debate over the margins tax and the Rainy Day Fund start competing with news of looming teacher layoffs and school closures.

Any effort to raise much new revenue from the business tax, of course, would be greeted with howls of protest from many business people. But they should know better than most people that sound investments in education and health care are essential to a welleducated, healthy work force.

Those investments aren’t going to come from budget cuts – or thin air.

You Texas chauvinists who would rather wave the state flag than face up to reality may not want to read any further because you may be offended. Not that I really care, but I am just trying to save you some time.

I (a Texas native, for the record) hope the rest of you have had the opportunity by now to have read or heard something about the state’s latest report card. Not the rosetinted one from the governor’s office, but the realistic “Texas on the Brink” report released yesterday by the Legislative Study Group. If you haven’t, click on The Texas Tribune link at the bottom of this post.

It is realistic, but not pretty. Similar to previous reports that used to be compiled periodically by former state Sen. Eliot Shapleigh of El Paso, the latest report shows Texas at or near the bottom in just about every quality of life category that can be considered good and leading or near the front of the pack in most categories that are bad or ugly.

For longtime observers of state government, of course, this really isn’t much in the way of news. It just reinforces the reality that Texas – despite all the bluster of its political leaders – is a very difficult, even dangerous, place for millions of people to call home. And this is before all the proposed cuts in education and health care that have been laid out for lawmakers during this legislative session.

Without reciting all the statistics, I will note one that should be particularly galling for parents and business people, including some of the governor’s top political donors. Texas is 50th – dead last among the states in the percentage of its population 25 and older with a high school diploma.

This clearly is not the fault of teachers, school administrators or anyone else in the education profession. This ultimately is the fault of the state’s political leaders who, despite tons of rhetoric, have refused to adequately and equitably fund the state’s school finance system. And, if the governor and legislative leaders have their way, they will retreat even further from that responsibility this session.

Yes, education requires more than money. It also requires dedicated teachers, strong curricula and administrative efficiency. But dedication doesn’t pay the teachers’ bills, build classrooms, buy textbooks, purchase computers and equip science labs. And efficiency goes only so far.

It is not part of this report, but Texas ranks 37th among the states in perpupil expenditures on public education.

Texas’ horrible graduation rate also is directly impacted by some of the other poor statistics on the state’s report card, notably the fact that Texas leads the nation in the percentage of children without health insurance and is fourth in the percentage of children living in poverty.

Simple survival – not a high school diploma – is the No. 1 priority of children and families constantly struggling with illness and hunger.

Not so incidentally, Texas ranks 47th among the states in tax expenditures per capita. That may make some shortsighted politicians proud, but it is shortchanging millions of their constituents their taxpaying constituents.

-From The Texas Tribune