The Dallas Morning News reported over the weekend a “possible $25 billion budget gap” facing state lawmakers as they gavel in next session. At this point reports are estimations that can only be exacted once the Comptroller releases her biennial revenue estimate in January. Many have estimated whatever the final amount, it will still be significant, especially when considering out of the current $182 billion state budget – $87 billion was general revenue. Reporter Peggy Fikac in July 2010 wrote in regards to the last budget cycle, “Even within the state general-revenue pot, all but about $17 billion was influenced or dedicated by the Texas Constitution, laws, regulations, court orders or funding formulas, according to the Legislative Budget Board.”
“I’ve been in the legislature 13 terms and we’ve never encountered a deficit of this magnitude,” Representative Rene Oliveira, Chair of the House Ways and Means Committee told Stateline for a recent article. “That sum is just mind-boggling to us.” Oliveira says he’s working on a plan to close certain tax loopholes but has yet to offer details.
The Dallas Morning News further reported that two officials familiar with the budget process, who said they were not authorized to speak publicly about current deliberations, said the introductory spending blueprint will be vast, affecting many Texans. “There are going to be entire agencies zeroed out and a lot of employees and programs cut to unsustainable levels,” one official said to the Dallas Morning News.
Speaker Joe Straus has instructed the Legislative Budget Board (LBB) to honor four principles when preparing the base budget: no use of the rainy day fund, stay within available revenue, don’t raise taxes, and limit government.
Although Straus argues against use of the rainy day fund as one of his principles for preparing the budget, others in the legislature have pointed to the possibility of using a portion of the estimated $9 billion in Rainy Day Fund to help shorten the predicted budget gap.
Senator John Carona recently pointed out in his October email update that in order for the Legislature to access this money to plug a budget hole, both the House and Senate must record a 3/5 favorable vote of members. If the Legislature wants to use the money to fund something other than a shortfall, it must obtain a 2/3 favorable vote of members in both the House and Senate.
Carona further points out that the Rainy Day Fund is also linked to our bond rates, “While some may be tempted to drain the Rainy Day Fund to address the projected budget shortfall, maintaining a reserve balance of at least 5% of the general revenue funds spent next session will ensure Texas holds on to its AAA bond rating.”
To view complete articles in headlines on an expected budget gap, please visit:
The deficit Texas didn’t see coming – http://stateline.org/live/details/story?contentId=521130
Legislature likely to cut deep to meet possible $25 billion budget gap – http://www.dallasnews.com/sharedcontent/dws/dn/latestnews/stories/1024dntexbudgetmess.274b11d.html
Legislators limited when it comes to trimming the budget – http://www.chron.com/disp/story.mpl/metropolitan/7114051.html
Federal Economy Outlook – It is expected the national economy will grow slowly into next year. The Conference Board’s index of leading economic indicators increased 0.3 percent. “More than a year after the recession officially ended, the economy is slow and has no forward momentum,” said Conference Board economist Ken Goldstein. He said the index suggests that the pace of economic growth in early 2011 will be similar to the rate of growth right now.