Measuring the Damage of State Budget Cuts

There’s no doubt about the sweeping damage that proposed state budget cuts would do to public education and other core public services. But the harm doesn’t stop there. You also have to consider the collateral damage to the state’s economy.

Thanks to Rep. Mike Villarreal’s amendment to the rules of the Texas House, passed yesterday, the legislature’s budget experts will be required to calculate the number of public and private-sector jobs that will be lost as a result of any budget cuts. The San Antonio Democrat said, “We need to make sure legislators understand the impact of the budget before they vote on it.” He contended that the proposed cuts “would destroy thousands of jobs as Texas families still struggle with a high unemployment rate.”

In fact, by the best measures available, the proposed House budget would kill 1.4 private-sector jobs for every public-sector job that is eliminated. The budget plan as introduced in the House last week would directly eliminate nearly 10,000 state jobs; another 14,000 private-sector jobs would be eliminated as the state job losses result in reduced demand for privately produced goods and services. In public education, one of the state’s top school-finance experts says, school districts could be forced to cut 100,000 jobs statewide as they absorb the blow of a reduction of $10 billion in state aid. That translates into 140,000 additional private-sector job losses.

The combined total of all these public and private-sector job losses would be more than 260,000. By killing so many jobs, the proposed budget would send the Texas unemployment rate soaring above 10 percent (from the current 8.3 percent) and would pitch the state back into severe recession.

The economic dangers posed by this dire budget prospect have not been lost on the Texas business community. Perhaps that’s why the head of the Texas Association of Business, a former Republican state representative not exactly known for embracing spending initiatives, has said the state must use its robust Rainy Day Fund (worth $9.4 billion) to close the revenue gap. Said he:  “We think that it’s raining, and the money has been put aside for just this situation. Let’s man up and take the hard vote.”