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Revenue estimate puts shortfall at $27 billion

By Kate Alexander | Monday, January 10, 2011, 10:00 AM
Texas is expected to collect $72.2 billion in taxes, fees and other general revenue during the 2012-13 budget, down from the $87 billion used in the current two-year budget, Comptroller Susan Combs announced Monday.

That puts the shortfall at $27 billion given that maintaining services would run $99 billion for biennium.
Collections for the current budget will come in $4.3 billion less than budgeted.


Combs’ estimate dictates how much the Legislature will have to spend in the upcoming budget on education, prisons, health and human services and a slew of other state functions.

Even with the $9.4 billion rainy day fund, the state would still not have enough to maintain services at their current levels, which would run $99 billion according to agency budget requests.

There's One Huge State Budget Crisis That Everyone Is Refusing To Talk About

Read more: http://www.businessinsider.com/texas...#ixzz1DVBZVTjJ

You know the story and you know the names: states like Illinois, New Jersey, New York, and California are supposed to be in huge financial trouble thanks to bloated governments, business-unfriendly regulations, and strong public sector unions.

After a crisis-free 2010, investors are expected to punish these hotbeds of bad governance in a muni bond market rout, at least if pundits like Meredith Whitney are correct.
But there's one state, which is fairly high up on the list of troubled states that nobody is talking about, and there's a reason for it.

The state is Texas.

This month the state's part-time legislature goes back into session, and the state is starting at potentially a $25 billion deficit on a two-year budget of around $95 billion. That's enormous. And there's not much fat to cut. The whole budget is basically education and healthcare spending. Cutting everything else wouldn't do the trick. And though raising this kind of money would be easy on an economy of $1.2 trillion, the new GOP mega-majority in Congress is firmly against raising any revenue.

So the bi-ennial legislature, which convenes this month, faces some hard cuts. Some in the Texas GDP have advocated dropping Medicaid altogether to save money.

So why haven't we heard more about Texas, one of the most important economy's in America? Well, it's because it doesn't fit the script. It's a pro-business, lean-spending, no-union state. You can't fit it into a nice storyline, so it's ignored.

But if you want to make comparisons between US states and ailing European countries, think of Texas as being like America's Ireland. Ireland was once praised as a model for economic growth: conservatives loved it for its pro-business, anti-tax, low-spending strategy, and hailed it as the way forward for all of Europe. Then it blew up.

This is the sleeper state budget crisis of 2011, and it will be praised for doing great, right up until the moment before it blows up.