Rising Medicaid costs and a slowing economy have helped create a $9.9 billion budget hole, twice as large as expected, state Comptroller Carole Keeton Strayhorn said Monday.
When lawmakers gather for the start of the 140-day legislative session Tuesday, they will find a $1.8 billion deficit in the current $114 billion, two-year budget that ends Aug. 31. The state constitution prohibits deficit spending, so they must balance that budget before crafting another.
The shortfall is mostly due to higher-than-expected enrollment in Medicaid, and other health and human services, Strayhorn said.
Just to maintain existing services, lawmakers will need to find an estimated $8.1 billion more than Strayhorn says the state will have.
That makes the combined $9.9 billion shortfall a Texas-sized headache.
The amount is enough to run the $4.8 billion state prison system -- twice. It's 14 times larger than the $706 million spent to run the 50,000-student University of Texas at Austin this budget cycle.
Republican Gov. Rick Perry has already warned that nothing is safe from cuts. "In tough economic times the focus must be on government spending less, not on taxpayers paying more," he said.
For the past two years, Strayhorn has said the shortfall would be $5 billion but increased the projection when taxes from recent holiday sales were lower than expected.
"Nobody said it was going to be easy. And it's just become more difficult," said Republican Lt. Gov.-elect David Dewhurst. "The focus should now be on cutting spending."
The slowdown in tax collections comes after six years of revenue surplus in Texas, a state of 21 million people.
"The last several revenue estimates have begun to look a lot like Christmas," Strayhorn said. "This year, the stockings are empty."
Texas, which has neither an income tax nor a statewide property tax, gets most of its revenue from sales, business and automobile taxes. When the economy slows, people spend less, and that means less money for the state.
About $54.1 billion in state money will be available for the next budget, Strayhorn said, down from the $61.5 billion in the current spending plan. That does not count federal money and other revenue.
Rep. Talmadge Heflin, the Houston Republican who's expected to be the next chairman of the budget-writing Appropriations Committee, is among the GOP leaders who will take over both chambers for the first time since Reconstruction.
He, like others in his party, promised lawmakers would pass a budget during the regular session without raising taxes. He didn't rule out using the $1 billion "Rainy Day Fund" to balance it.
"If I run out of money at home in the middle of the month, I'm not going out and hiring somebody to cut the grass," Heflin said. "Even if I had somebody cutting it before, I'll go out and push some more myself."
A hiring freeze for state employees and reductions or more efficient spending in schools and health care programs could help, he said. But Democrats stand prepared to block deep cuts to social services and other programs.
"It's not like Texas is a big, fat government handout state," said Rep. Craig Eiland, D-Galveston. "We've got to ask, are you cutting responsibly and efficiently and intelligently? Because if you're not, you're hurting the people who can't afford to be hurt."
Republican Strayhorn repeated her claim that the shortfall is worse because the Democrat-led 2001 Legislature spent more money than it should have, leaving nothing in savings.
Sen. Rodney Ellis, a Houston Democrat who chaired the Finance Committee two years ago, disputes that. Lawmakers from both parties passed the budget that Perry signed and Strayhorn certified, he said.
Texas is not alone in its budget woes.
In California, Gov. Gray Davis has called for heavy cuts in services and $8.3 billion in tax increases to help close a nearly $35 billion budget deficit over the next 18 months.
In New York, a deficit of up to $2.5 billion is expected for the budget year ending April 1 and $10 billion in the 2003-04 fiscal year.
Florida lawmakers, meanwhile, closed a $1 billion budget shortfall in this year's budget and are projecting a $1 billion gap next year.
Be the first to comment on this article!