Wednesday, May 19, 2010
By Dave Montgomery
Fort Worth Star-Telegram
Texas' $1.2 billion in budget cuts is only the beginning of the pain
AUSTIN -- The state's top three leaders announced $1.2 billion in reductions in current spending Tuesday in the opening round of cuts to deal with a projected budget shortfall of at least $18 billion.
The measures outlined by Gov. Rick Perry, Lt. Gov. David Dewhurst and House Speaker Joe Straus could be just a taste of the stringent remedies needed to balance the state budget over the next two years, fiscal experts warned.
"If you didn't like $1 billion, you're not going to like $18 billion," said Dale Craymer, president of the Texas Taxpayers and Research Association, a business-backed watchdog group.
The reductions announced Tuesday apply to spending already authorized for the current 2010-11 biennium. The leadership team is expected to call for further retrenchment during the next several weeks when it issues instructions to agencies preparing their next budgets.
Last week, Straus, R-San Antonio, suggested that lawmakers consider furloughs and four-day workweeks for state employees, a moratorium on new programs, and other cost-cutting measures as they prepare for their January session. He also ruled out tax increases to raise new revenue.
"The numbers they're talking about are really staggering," said Andy Homer of the Texas Public Employees Association, expressing concern that the state work force of about 150,000 may bear the brunt of the cost-cutting. "There are no easy things left."
In January, Perry, Dewhurst and Straus ordered state agencies, universities and appeals courts to submit plans to reduce spending by 5 percent. In announcing Tuesday's decision after a months-long review, the three Republicans agreed to spare some agencies from potentially harmful reductions, decreasing the potential savings from about $1.7 billion to about $1.2 billion.
One of the biggest cuts -- $64 million -- came from a 1 percent reduction in Medicaid rates paid to doctors, nurses, hospitals and other providers, though the leadership team backed away from a 2 percent cut on those who provide acute care for adults.
The leaders agreed not to cut 200 beds at four state hospitals in Terrell, Rusk, San Antonio and Vernon. Officials at the Health and Human Services Commission had described that proposal as among the most painful in their recommendation for meeting the 5 percent reduction.
The leaders also granted the request of the Texas Department of Criminal Justice, which oversees the state prison system. It was spared from cuts of at least 3,100 employees and reductions in vocational training and treatment services.
"We are extremely pleased and appreciative of the exemptions," said Brad Livingston, the agency's executive director. The exemptions -- the largest of those granted by the leaders -- totaled $239 million, reducing the prison system's total cuts from $294 million to $55 million.
The top officials also agreed to ease a potential hardship on state appeals courts, including the Fort Worth-based 2nd Court of Appeals, allowing them to reduce their current budgets by 2 percent instead of 5 percent. Some of the court systems, facing big caseloads, had expressed concerns that they might have to lay off staff attorneys.
A program to fund steroid testing in public schools was also left partially intact after proponents touted its deterrent effects.
More than $22 million in cuts was ordered for nearly 30 regulatory agencies that oversee and investigate a litany of services, including funeral home operators, geoscientists, plumbers, racing, the real estate industry and medical professionals. One of the most-far-reaching agencies, the Texas Public Utility Commission, sustained a $13.9 million cut.
Overall, about 75 agencies and other state entities were granted full or partial reductions, totaling $483 million, while nearly 160 will be required to meet the full 5 percent reduction.
With their review now complete, the leaders instructed the Legislative Budget Board to order agencies to begin implementing the savings plans. Some agencies that didn't seek exemptions have already begun putting their 5 percent reductions into effect.
"Every penny we save now in the 2010-11 biennium is one penny closer to balancing the budget in the next legislative session," Perry said. "These reductions reflect our state's ongoing commitment to keeping taxes low by limiting government spending, a key aspect of the continued strength of our state's economy."
Dewhurst said the belt-tightening "will protect taxpayers' hard-earned money while maintaining essential services vital to the people of Texas."
The budget crunch will likely dominate the 2011 Legislature as lawmakers write a 2012-13 budget that begins Sept. 1, 2011. Rep. Jim Pitts, R-Waxahachie, chairman of the House Appropriations Committee, said last week that lawmakers will likely face a shortfall of at least $18 billion, up from previous projections of $11 billion.
Many of the savings approved for the current biennium include delays in planned acquisitions, a hiring freeze and the reduction of positions via attrition.