Texas has weathered many a budgetary crisis before, and while we don’t know how deep this downturn will be, we know the strength of the Texas spirit and our state’s determination to secure a better future for our children.
In a recent interview with the Texas Tribune, Texas Comptroller Glenn Hegar said the one-two punch of an oil price war between Russia and Saudi Arabia, combined with the COVID-19 pandemic, is going to hurt.
“We know we’re in recession,” he said. “We just don’t know how deep or hard it’s going to be.”
What we do know is that state revenues will be down across the board. The temptation will be great to raise taxes and fees to recoup that revenue. But that would put additional pressure on Texans who are already struggling.
The time to start bracing for the blow is yesterday. I learned that in 2003, when as chairman of the House Appropriations Committee, I helped our Legislature navigate a $10 billion budget shortfall.
It wasn’t easy, but we dealt with the shortfall through targeted budget cuts, and avoided raising taxes on already hard-pressed Texas families. More on that in a moment.
We can begin the belt-tightening by asking the heads of Texas state agencies to look for ways to cut their current budgets. Hegar says he’s already doing that in his agency.
“At least in my office we’re freezing hires, not doing salary adjustments, postponing projects and looking for ways to save money in our budget,” he told Ramsey.
Those practices should be formalized as an official order and adopted by every state agency — now.
Given what we know now, it’s reasonable to ask agencies (with some exemptions, such as Medicaid), to find 15 percent of their current budgets to cut.
Next, we should take a page from the playbook we ran in 2003, when we adopted a zero-based budgeting philosophy. Gov. Rick Perry sent the Legislature a budget with zeros next to each agency’s line items, and he publicly stated that he would veto any bill making it to his desk that included a tax increase.
With zero-based budgeting, agencies were funded first based on any constitutional requirements, then on statutory authority, and finally according to expenditures in a priority list.
Using this technique, we were able to get a detailed picture of each agency’s spending requirements and propose intelligent solutions to the state’s budget problems — like consolidating 12 health and human services agencies into five, at a savings of about $1 billion per year.
That Legislature also cut general revenue spending for the first time since World War II and helped create an environment of low taxes and spending that spurred the Texas economy for the rest of the decade.
Agency heads know, much better than legislators, how to deliver services defined in the Texas Constitution and general law. I will always give the agency leadership equal credit with the Legislature for being able to establish spending priorities in 2003.
Going forward, the Legislature should commit to a conservative Texas budget — which we at Texas Public Policy Foundation define as a budget that increases no faster than population plus inflation. In other words, the budget shouldn’t grow at a more rapid rate than Texans’ ability to pay for it.
It’s easier to make that commitment in a year when we’re all talking about cutting, not spending new revenues.
The fundamentals of the Texas economy are strong; we can weather this storm. It just takes determined leadership.