Friday, May 28, 2010
By Joe Straus, Texas House Speaker
AUSTIN AMERICAN-STATESMAN
Straus: Facing $18 billion shortfall, Texas can't afford business as usual
I am both optimistic about the future of Texas and realistic about the many challenges we face, especially in light of our current fiscal situation.
The deep and prolonged national recession has led to fiscal crises in most statehouses across the country. The good news is that Texas is doing better than most other states. Our business climate is widely considered the best in the nation. Yet we have not been immune from the effects of our country's economic downturn.
Our primary source of state revenue — sales tax collections — began falling short of what was projected last summer and has continued to be lower than expected. We had some positive news in April, when sales tax revenues increased slightly compared with the same month last year, but this comes after more than a year of declining sales tax revenues.
The combination of declining revenues and a growing population will make the job of balancing our state budget more difficult in the upcoming legislative session, beginning in January. Recent estimates project the state budget shortfall could be as much as $18 billion.
Over the next few years, Texans will face higher federal income taxes and other increases in federal tariffs, including Social Security and Medicare, as a result of federal health care legislation. These demands imposed by the federal government make it all the more imperative that the Legislature address the budget shortfall without raising taxes. Tax increases harm economic growth and hinder our ability to create jobs.
To achieve our goal of a balanced budget with no new taxes, we can't afford business as usual. Our so-called rainy day fund, designed for emergencies and unexpected contingencies, should reach $9 billion by next session.
However, even if legislators decide to spend part of the fund, it will not be enough to cover the shortfall. I am confident that the next Legislature can make thoughtful, responsible decisions to balance our budget, but this will require tough choices, significant cuts in some areas and perhaps totally new thinking in others.
Because of the challenges that we are facing and the long-term threat they pose to our state's economic health, I have asked the House Appropriations Committee to examine every possible option to lower or restrain state spending for the current budget cycle and the next biennium.
The 5 percent budget cuts we just announced were an important first step, absolutely necessary but not sufficient. Going forward, we might consider a blanket moratorium on new spending.
We could freeze higher-level salaries and limit hiring to only certain mission-critical positions. Other ideas that should be analyzed include re-evaluating the state's responsibility for administering various programs, including federally-sponsored programs; assessing the feasibility of adopting periodic unpaid furloughs for state employees; and justifying the need to increase bonded indebtedness that creates a draw on future revenues. We should also look at the cost savings adopted by other states to determine whether any of them make sense for Texas.
I am confident that, in the long run, the process of identifying cuts, savings and greater efficiencies will make our state stronger. I know we will emerge from the recession and begin to grow again, and making the right decisions now will prepare us for continued growth and prosperity in the future.