First Senate Finance Hearing Shows Cuts-Alone Budget Won’t Work

Barely two minutes into this morning’s hearing of the Senate Finance Committee, the vice-chair of the committee spoke out against the cuts-alone approach taken in the draft version of the state budget. Sen. Juan Hinojosa, Democrat of Mission, said:  “I know the mantra is no new taxes, no new revenue, but if we don’t take a balanced approach, costs will be passed on to the local communities, our property tax payers. We as a state have a lot more tools to pass a lean budget, not a mean budget.”

It was one of several encouraging moments in an otherwise dismal discussion of the damage that would be done if this budget were to pass as is. Another positive development was the public acknowledgment by the state comptroller’s office that the state’s revenue problem is not just a result of the recession—rather, an ongoing “structural” shortfall of $10 billion per biennium has been created by the legislature. The structural shortfall came about when the legislature cut local school taxes deeply in 2006. The revenue was to be replaced dollar for dollar, legislators said, primarily by a revised business franchise tax, known as the margins tax. But even at the time it was apparent to many observers, including then-comptroller Carole Keeton Strayhorn and Texas AFT, that the revenue swap would not produce enough replacement revenue. Now at last this foreseeable and foreseen revenue shortfall is being recognized by legislators as the legislature’s own handiwork.

As the saying goes, the first step to recovery is admitting you have a problem. Lawmakers now need to move on rapidly to some next steps–examining their past errors and making amends.