As Texas music icon Stevie Ray Vaughan laid it out, "It's raining down in Texas and all the telephone lines are down." Heck, it's storming; a hurricane's hit; blizzards and ice storms are raging through. The bridges are down; cities and school districts are sinking. We are at the bottom of so many important indexes of civilized society and global competition we have to reach up to touch Mississippi and maybe even Guatemala. We're $16 billion to $27 billion off the budget mark for 2012-2013.
Even the disparity between those two numbers indicates real emergency. The first number maintains spending at the current level and the second maintains services at the current level. Neither includes about $3.3 billion shortfall in the current fiscal year, which must be addressed first, according to Center for Public Policy Priorities' senior fiscal analyst Dick Lavine. He added that the $16 million figure represents spending in 2010 and maintaining that level is just irrelevant in 2012-2013.
It's time to open up the Rainy Day Fund and it's time to raise taxes and fees in addition to making tough decisions on spending. It's time to seek the balanced approach that many organizations, including faith-based groups like Impact Texas and the broad-based coalition Texas Forward are advocating.
It's the economic policy equivalent of lambs lying with lions when F. Scott McCown of CPPP, Bill Hammond of the Texas Association of Business and State Sen. Florence Shapiro agree we need to open up the Rainy Day Fund. Trying to meet the state's constitutional mandate to balance its budget with cuts alone -- as Gov. Rick Perry and both your houses have proposed -- likely would collapse the economy. It certainly will cripple human services and education. And let us be clear, it is neither melodramatic nor alarmist to state that such severe cuts would cause great suffering and possibly deaths among the sick, children and the elderly.
State government and public education employees make some of the better middle class salaries in the state. Balancing the budget by cuts alone, what the Legislative Budget Board has planned in both houses' preliminary budgets, means lopping off about 25 percent of spending. To cut that much could mean a loss of nearly 9,000 state workers' jobs and nearly 100,000 public education jobs.
When economic development corporations and other entities project the benefit from creating a job, they attach a "multiplier" to each salary dollar. The estimate takes into account taxes paid, meals bought, housing purchased, all the things a person with a job buys. Multipliers range from about 1.5 to 7.
Any economic evaluation includes the point of diminishing return: That point at which cost begins to exceed benefit. What is the point of diminishing return of cutting 109,000 well-paid jobs with great benefits?
Recently Politifact, a non-partisan, economic-policy agnostic, fact-checking arm of the St. Petersburg Times evaluated Gov. Perry's statement that Texas created more jobs last year than all the other 49 states together. They looked at Sen. Kay Bailey Hutchison's claim that we lost 300,000 more jobs than we created last year. Both claims rang solid green "true" on Politifact's Truthometer.
Texas also is number one among the states in creating minimum wage jobs and 31st in offering jobs requiring bachelor's degrees. So what are the chances that the jobs we created paid salaries better than the ones we lost?
So please, dear legislators, think twice or 10 times before letting go of all those jobs. If Sherman's economic development guidelines were applied, creators of those 109,000 jobs would qualify for about $436 million in local incentives. Of course, Texas' economic development law doesn't allow investment in many 21st century jobs. We're still betting on 20th century manufacturing jobs and "call centers" (strong lobby?) and that's something you could change. If you truly believe that the private sector can handle all the health, education and human services responsibilities of our communities, then let us local folks decide whether to use our sales tax dollars to entice those jobs.
Hammond, although stating a belief that this budget can be balanced without raising taxes and fees, urges you not to be "penny wise and pound foolish."
Texas economist Ray Perryman, the man on whose opinion most Texas cities relied in getting local voters to pass sales taxes, has even stronger words for the legislators of the 82nd Session. He warned you in the Waco Tribune Monday, "Don't eat your seed corn foolishly." He said his firm has studied both Medicaid and the Children's Health Insurance Program, mental health and substance abuse services several times.
"Findings from these analyses have consistently shown that adequate funding can yield savings that are multiples of the state's investment," Perryman wrote.
"For Medicaid and CHIP, we found that cuts to the programs were a very inefficient way to achieve fiscal balance. Such reductions lead to loss of federal funds, higher costs to those who purchase insurance, more uncompensated care for hospitals and clinics, and reduced business activity."
In the past two sessions, you've produced all the "blue smoke and mirrors" budget razzle dazzle possible. And in so doing, you've created what Lt. Gov. David Dewhurst and others have called a structural deficit. You created most of the structural deficit when you swapped new business franchise tax dollars for property tax dollars in school funding to make good on your promise to lower property taxes by a third. The franchise tax brings in about $5 billion a year less than property taxes did.
You inappropriately appropriated $14.4 billion in federal stimulus money and about $8.2 billion more of stimulus money has come into the state coffers. Most of this you used to disguise the state's budget deficits in 2009, 2010 and 2011 rather than to stimulate the economy as intended.
Not one Texas Republican in Congress voted for the American Recovery and Reinvestment Act. Yet Republicans skated on that far-smoother budget picture into total control of Texas governance. Texas is at your mercy. I'm begging you: Please raise my taxes, open up my Rainy Day Fund and cut services and jobs with great care.
KATHY WILLIAMS is co-city editor of the Herald Democrat. E-mail: kwilliams@heralddemocrat.com.
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