Texas faces a budget deficit of at least $15 billion

Marketplace Staff Jan 10, 2011
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Texas faces a budget deficit of at least $15 billion

Marketplace Staff Jan 10, 2011
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STEVE CHIOTAKIS: Lawmakers in Texas gather today for a new legislative session. And they have a Lone Star-sized problem: a budget deficit of at least $15 billion. It’s a different economic picture these days for Texas. In the early days of the recession, the state was seen a bright spot.

From station KUT in Austin, Ben Philpott reports.


BEN PHILPOTT: In 2008, as some states were shedding thousands of jobs — Texas was still adding. In 2009 — when millions and billions of dollars were being cut from many states budgets Texas increased spending. Talmadge Heflin says the state is doing great.

TALMADGE HEFLIN: …as compared to other states. And many times they won’t say that — they will just say, Ha — Texas is doing so good.

Heflin writes budget policy at the conservative think tank, The Texas Public Policy Foundation. That idea of “Super Texas” got a boost during the 2010 elections — as Governor Rick Perry campaigned on a message of economic success.

RICK PERRY: We’ve cut taxes for small business, balanced our budgets, set aside $8 billion for a rainy day.

What Texans didn’t hear in November is that $8 billion isn’t enough to replace the federal stimulus dollars the state received in 2009. And Texas doesn’t have a state income tax. Dick Lavine says that means Texas relies heavily on sales taxes. Which he says leads to boom and bust revenues. Lavine is with the Center for Public Policy Priorities, a progressive think tank.

DICK LAVINE: The trouble is that those taxes don’t grow naturally with the economy. They don’t grow as quickly as our growth in need — especially given our unusually young population.

What the state does to get out of its very real budget crisis could compound the problem. Cut too much from the budget and some fear basic infrastructure and social safety nets will crumble in an already low spending state. Raise taxes too much and the economic engine that creates jobs could seize up. Heflin again says it’s all relative.

HEFLIN: We didn’t escape the downturn. But, I still say the bloom is not off the rose — it’s still there.

So the rose, yellow of course, blooms on.

I’m Ben Philpott for Marketplace.

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