Tuesday, May 11, 2010
By ROBERT T. GARRETT
The Dallas Morning News
Texas House budget chief: Gambling could help close state's $18B gap
AUSTIN Lawmakers will have to close an $18 billion budget shortfall next session and should consider an expansion of gambling, not just deep cuts in spending, the House's chief budget writer said today.
"Gambling could help us on our budget," said Rep. Jim Pitts, R-Waxahachie, after his Appropriations Committee heard sobering testimony from revenue and budget experts this morning.
"I'm going to look at every revenue enhancer that we can get," Pitts said. "If you go across the border [to] Oklahoma and Louisiana, you're going to see Texas cars, and we need to grab that money."
Pitts' comments marked the first time a Republican state leader has said Texas' budget deficit could exceed $15 billion.
The Legislature's top budget-writing staff member has said the shortfall for the next two-year budget cycle will be at least $11 billion. For months, Democratic Sens. Royce West of Dallas and Eliot Shapleigh of El Paso have said the gap would top $18 billion, though GOP colleagues have remained mostly silent, hoping the state economy would rebound and lessen the fiscal pain.
Pitts said lawmakers ought to consider allowing slot machines at racetracks or even full-scale casino gambing, though he cautioned that wouldn't begin to repair next session's budget hole.
He said expanded gambling, which could require a vote of the people, "will not help us that much this next biennium. It will be helping us in the future and from what we've heard today, we'll be needing revenue in the future."
Pitts said casinos across the state eventually could generate as much as $4 billion a year in new state revenue. But he said the state's haul in the 2012-2013 budget cycle would be at best $1 billion annually, as new facilities were built and staffed.
Pitts also predicted lawmakers next year would spend about half of the state's "rainy day fund," which chief revenue estimator John Heleman of the comptroller's office today said should have $8.2 billion by September 2011.
Pitts also said he's open to considering higher fees. In 2003, faced with a nearly $10 billion budget gap, the Legislature extended a telephone tax that was to expire and raised other fees, which it insisted were merely "user fees."
"We've raised fees before and it was not considered new taxes,'" Pitts recalled.
His comments came shortly after House Speaker Joe Straus, in a rare move, appeared before the Appropriations Committee.
Straus, R-San Antonio, urged colleagues to avoid raising taxes and to consider tough fiscal medicine, so Texas can weather expected federal requirements to spend more for health coverage of its residents in coming years.
He said lawmakers ought to examine placing a moratorium on new programs and services funded with state taxes, "significant" spending cuts, a halt to state bond issues and even unpaid furloughs or four-day work weeks for state workers.
"I'm not advocating for any one of these choices in particular but I do know that every cost savings idea must be on the table," Straus said.
Heleman, a top aide to Comptroller Susan Combs, testified that the state economy has added about 33,000 payroll jobs since September.
He said last month's sales tax figures also were encouraging. Receipts in April increased by 1.4 percent over April 2009.
Heleman called that "a heartening number to see" after 14 months of declines. The April figure was $1.68 billion, compared with $1.65 billion a year earlier.
The 6.25 percent state sales tax is the state's revenue workhorse, producing 57 percent of state tax money and about a quarter of overall funds, including federal money.
Collections in the first eight months of the current fiscal year are nearly $1.5 billion, or 10.3 percent, behind fiscal 2009 levels. Combs, in her official revenue estimate, said they would grow this year by 0.5 percent, to nearly $22 billion.
Though Heleman said Combs is not prepared to change her two-year revenue forecast, on which the current budget is based, Pitts predicted revenues will fall $3.5 billion short of the $68.5 billion she estimated in January 2009.
Pitts wrapped that into his prediction of an $18 billion budget gap, which he said would be $19 billion if Congress doesn't pass a bill soon. The measure would extend a more generous federal match rate on spending in the Medicaid program for low-income pregnant women, children, nursing home residents and disabled adults.
Pitts said the current state budget includes $11 billion of one-time funds that won't be replaced federal stimulus money, money saved up to pay for school property taxes and a carryover in the treasury from an economic boom in 2005-2007.
He said he adds to that another $7 billion, reflecting the revenue shortfall he expects; cost pressures from health care programs; growth in public school enrollment; and a greater state burden for education funding as local property taxes fall.
"Surely things will get better" during the next budget cycle, he said, though he added, "It's going to be really painful."