Testifying before the House Appropriations Committee earlier this week, Legislative Budget Board (LBB) director John O’Brien told committee members that the state’s next budget will likely be awash in red ink.
On the low side, O’Brien told lawmakers to expect at least an $11 billion shortfall for the 2012-13 budget. But that figure could go as high as $15 billion if the economy and tax revenues performed below expectations. The shortfall’s main culprits: falling revenues, an ongoing structural deficit, and recurring expenses resulting from the stimulus act.
Making matters worse, Health and Human Services Commissioner Tom Suehs recently informed lawmakers that rising health care costs would add an additional $1.7 billion in cost to the current budget. The increased costs, in large part, stem from higher-than-expected enrollment growth in the state’s Medicaid program.
With the state’s budget outlook presenting a challenge, some are already beating the drums for higher taxes in order to close the shortfall. But just because Texas faces a multi-billion shortfall doesn’t mean higher taxes are a must. The 2003 legislative session is a perfect example of this.
Faced with a $10 billion budget shortfall-similar to the one we face today-Texas lawmakers held the line on spending and passed a balanced budget, without raising taxes.
How did they do it? They embraced zero-based budgeting and agency consolidation, while cutting out waste and fraud where they could.
And Texas is all the better for it.
Duplicating that 2003 effort won’t be easy, but considering the alternative-higher taxes, slower economic growth, and less money in your pocket-it is definitely the better approach.
As the time to write the 2012-13 state budget approaches, viewing the task as an opportunity, once again puts Texas in the position of leading the nation in strong fiscal policy.
– James Quintero