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Constable's Notebook - January 2011

When State lawmakers return to Austin they will be confronted with an estimated $18-25 billion budget deficit that must be balanced by next September. How they do it will significantly affect all Texans. The current deficit exists in part because of the $6 billion structural deficit that was caused by lowering property taxes and substituting a business tax that came up short, using a one-time $6 billion in federal stimulus funds to help balance last session’s budget and a shortfall of more than $5 billion in lower sales tax revenues.

With tax increases and dipping into the nearly $9 billion Rainy Day fund deemed off the table by state leaders, substantial budget cuts will be required. Since more than half of the $182 billion bi-annual state budget is mandated spending, the bulk of any cuts would have to come from the remaining $80 billion which would fall heavily on education and health and human services programs. The Texas Tribune reports that Appropriations Committee Chairman Jim Pitts will recommend eliminating some state agencies, making budget cuts of 75 to 80 percent to other agencies and cutting state employees.

Since state leaders have not taken fee increases off the table one could expect them to take a hard look at increasing all manner of fees including hunting, fishing and professional licenses, entry to state parks, vehicle registration and inspection stickers, court costs, etc. While fees are not taxes, they do comprise about 10% of state revenues and increasing fees doesn’t sound as bad as does increasing taxes.

Another tool the legislature will likely use to balance the budget is to increase the financial burden on cities and counties to deliver state mandated services. Over the years state legislators have shifted more of the costs for many state mandated services including roads, jails, indigent health care, elections, visiting judges, funding federal mandates, etc. onto local taxpayers. For example, much of the work carried out by my office that includes enforcing child support orders, serving family violence protective orders and child abuse cases, criminal subpoenas and executing warrants is state mandated, but either unfunded or under-funded. Carrying out these state mandates for my office alone costs local taxpayers hundreds of thousands of dollars.

The decisions legislators make will have consequences whether it is cutting money for crime prevention, roads, education, mental health services, etc. In 2003 when they faced a $10 billion deficit, among the cuts was to kick more than 200,000 children off the Children’s Health Insurance Program (CHIP). Yes, they balanced the budget without increasing taxes, but one result was that many children who lost access to medical checkups, developed ailments that could have been prevented or treated. Many uninsured children who became seriously ill ended up at hospital emergency rooms cost tax payers far more than providing health insurance would have.

State legislators likely will balance the state budget deficit of $18-25 billion without raising state taxes but at what cost and to whom.

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