By F. Scott McCown
Maybe you’ve heard that our state is short of money because of the recession. Perhaps you think the state can just cut spending or that the problem doesn’t affect you. Well think again.
Our state isn’t just a little short of money. Merely to maintain critical public services, at their current levels, costs at least $27 billion more than we have. In other words, we only have three-fourths of the money we need.
If you try to fill this big of a hole with only cuts in spending, you cut into the state’s muscle and bone.
Instead, Texas needs a balanced approach. That means that instead of only cuts in spending we need to use the state’s Rainy Day Fund while adopting some modest new state revenue measures.
Unfortunately, legislators so far have proposed nothing but cuts. They would rather fire teachers and crowd classrooms and deny financial aid to all new applicants at community colleges and state universities.
Legislators would even make deep cuts to health care for children, the elderly, and people with disabilities. They would reduce payments to doctors, hospitals, and nursing homes -- compromising care and forcing local taxes and private health insurance premiums to go up.
The proposed state budget doesn’t just shortchange education and hurt folks who can’t help themselves, such as the elderly in nursing homes or abused children in foster care. It also seriously undermines the Texas economy -- today and far into the future.
For one thing, the proposed budget would substantially increase unemployment, and not just in the public sector. Cuts this big send a wave of job loss throughout the economy, as the state cancels contracts and reduces payments to people with whom it does business. Before long, folks who think they have no connection to state government are laid off because all of the other newly unemployed are buying fewer goods and services.
We’re talking about a lot of jobs here. Dr. Ray Perryman, a renowned Texas economist, estimates that every job directly lost as a result of state budget reductions takes with it roughly 1.5 more jobs.
The proposed state budget would eliminate over 9,200 state jobs right off the top. Then the chain reaction starts. Reduced state support to school districts, community colleges, and state universities means they too throw people out of work. School districts alone would lay off as many as 100,000 people, one of the state’s leading school finance experts calculates. Using the Perryman formula, this means that merely from reduced spending on public education, 250,000 Texans would be in the unemployment line. That’s enough to push the state’s jobless rate up to over 10 percent (it’s 8.3 percent now). And that’s without even figuring in jobs lost in higher education or health and human services.
The proposed cuts-only budget doesn’t just hurt us today, though. It also fails to create opportunity for tomorrow. When we refuse to raise the money needed for things like public education and higher education, we undermine economic growth and our future as a great state.
If the legislature takes a balanced approach, though, we can both avoid an economic disaster today and promote economic growth tomorrow. The state’s Rainy Day Fund can cover about a third of the shortfall. Some of the rest can come from new revenue, for example, increasing the cigarette tax by a buck a pack. Regardless of what politicians say, raising a little new revenue is vastly preferable to deep cuts in education or health and human services.
Of course, politicians say we have to keep taxes low to attract business. But, businesses care about more than just taxes. They need an educated workforce and a good transportation system, for example -- and Texas is proposing spending cuts so deep that the state’s ability to provide these sorts of economic building blocks would be severely compromised. Besides, Texas businesses already pay lower taxes than in almost any other state, so low that there’s ample room for increases without endangering our competitive advantage.
In the end, our elected officials will do what Texans say they want done. In the last several months, lawmakers have heard mostly from those who offer the bromide that we can balance our budget with cuts alone. But this is one bromide that will kill us. It’s time for the rest of us to make our voices heard. We need to demand a balanced approach.
McCown is executive director of the Center for Public Policy Priorities.
Copyright (C) 2011 by the Texas Lone Star Forum. 2/11