State Comptroller Susan Combs today officially estimated the state treasury will take in $77.3 billion in general revenue over the 2012-2013 budget cycle, but she also projected that more than $4 billion of that sum will be needed to cover a deficit that has developed in the current, 2010-2011 budget period. The upshot is that she sees a total of only $72.2 billion in revenue available for general purposes in the coming biennium.
To see just how deep the budget hole for the coming biennium will be, you can compare that $72.2 billion to the $87 billion in general revenue that was budgeted by the legislature for the current biennium. That’s a shortfall of nearly $15 billion. But meanwhile the state’s population has grown—its student population especially–and many costs of services, particularly for health care, have gone up. Our friends at the Center for Public Policy Priorities say that to keep up with costs and population growth, the state would need $99 billion in general revenue for 2012-2013. By that measure, the state is short of needed revenue by the whopping sum of $27 billion.
Measured either way, the shortfall is significant and daunting. But another official estimate made by the comptroller today points the way toward the beginning of a solution that would help avoid devastating budget cuts. Comptroller Combs said the state’s Rainy Day Fund will have $9.4 billion available for use in the 2012-2013 budget period. The purpose of the Rainy Day Fund is precisely to help the state get through an economic downturn without destroying needed public services. As the comptroller said today in answer to a reporter’s question, “It’s called the Rainy Day Fund, and this is a rainy day.”
Beyond the Rainy Day Fund, there are still other revenue sources the legislature could tap to cover the shortfall and avoid cutting into the muscle and bone of public education and other essential services. For instance, the state’s Permanent School Fund is projected to produce upwards of $1.6 billion in available investment income next biennium. Lawmakers could generate $5.6 billion more by getting rid of sales-tax exemptions for professional services (other than lifeline services like health care and child care)—exemptions so numerous and sizable that they make our state’s tax structure look like Swiss cheese. Nearly $3 billion more could be raised by ending other tax breaks that have long outlived any reasonable justification. For example, there’s a tax break that actually allows merchants to pocket $425 million per biennium of the sales-tax money they collect from you, the consumer—as a reward to the merchant for sending sales-tax receipts to the state treasury in timely fashion!
Many lawmakers who will take the oath of office tomorrow talk as if the voters in November ruled out any of these revenue-raising options. But new poll results released yesterday suggest that those lawmakers are seriously out of step with public opinion in Texas. An independent poll commissioned by the state’s major newspapers found that 70 percent of respondents said the legislature should not cut spending at all for public schools. And 61 percent said the legislature should not cut spending at all for health care for children and low- to moderate-income families.