[Jack.Kerr]

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It Wasn't Just the Recession

Updated January 20, 2011, 02:34 PM
F. Scott McCown, a retired judge, is executive director of the Center for Public Policy Priorities, based in Austin, Tex.


At his inauguration on Tuesday, Gov. Rick Perry touted the Texas Century. Hours later the proposed state budget was released, underfunding public education formulas by almost a quarter; slashing higher education and financial aid; and reducing already inadequate payments to health care providers.

The budget directly eliminates 10,000 state jobs, and indirectly will cost many private sector and local government jobs.

Overall, Texas is short at least $27 billion, or about a quarter of the revenue we need to continue doing merely what the state does now. And Texas doesn’t do much, ranking last in state spending per person.

What happened? The Great Recession hurt Texas like other states, even with our oil and gas sector. Unemployment went up, property values went down, and sales taxes plummeted. Unlike other states, though, we have a two-year state budget, which hid our problem until now.

But the recession isn’t the only cause of our problem. About a third of our shortfall comes from an ill-advised $10 billion net tax cut in 2006. As a state that ranks near the bottom in taxes collected per person, but has lots of kids to educate and lots of people without health insurance, we simply couldn’t afford to cut taxes. But we did. Our folly is only now coming to light because Texas covered the tax cut with one-time savings and federal Recovery Act stimulus money — all of which is gone.

Texas needs a balanced approach to our current revenue crisis that includes 1) using our $9.4 billion Rainy Day Fund (generated by high oil prices and increased demand for natural gas, not from any Texas miracle) and 2) adding several billion in new revenue. For example, we could increase our cigarette tax by a dollar a pack. Or we could expand the sales tax base by eliminating unwarranted exemptions or exclusions or temporarily increasing the rate.

What Texas will do remains to be decided. But to truly be successful in this new century, Texas needs to invest in Texans to create opportunity and ensure prosperity.