1/11/2011 3:48 PM
The speech of the President Pro Tempore in the Texas Senate on Day One of the Legislative Session is conventionally long on pleasantries and graciousness and short on cold hard policy. Today, it was not conventional.
Sen. Steve Ogden (R-Bryan) arguably set the tone for the coming session by 1) calling for the Legislature to call a national constitutional convention to require the federal government to balance its budget, and 2) laying out a list of things the Legislature must fix, particular in education and health and human services funding, in order to address the budget shortfall.
“One of the things that I think has made our state better and stronger than other states and to a certain extent the federal government is that in our constitution we are required to balance our budget and we also in our constitution generally have asked people for permission before we borrowed their money,” Ogden said. “The federal government has neither of these requirements; it needs to change. The federal budget deficit is over $14 trillion. Trillions are numbers that are so big it’s hard to imagine. We associate them with space travel. And the reason that we don’t use trillions in space is that it’s too big. We use light years. A light year by the way is $5.6 trillion miles.”
On the state level, Ogden said it would be impossible to balance the state budget without making cuts in Art. II and Art. III, health and human services and education, respectively. He said the biggest problem in education finance was “target revenue” which was designed to hold school districts harmless in the face of the property tax cuts of 2006. Holding those districts harmless costs the state’s school foundation program $5.5 billion.
He observed that the all-funds budget (which includes general revenue, federal dollars etc.) is $177.8 billion, which is actually about $10 billion more than the all-funds budget last session. He said that with $177.8 billion and $9.2 billion in the Rainy Day Fund, “we can get the job done.”
But, he said, the state will have to deal with Medicaid, which “cries out for reform.” He said saving Medicaid was the first job of the Legislature because there won’t be any stimulus money for it this time around. He said that if Medicaid was changed to a managed care program, the state could save $4 billion.
He also said the state would have to find some way to fix the gross margins receipts tax, which he said has underperformed by huge amounts since it was enacted in 2006 to pay for the property tax cuts. While “none of us were elected to raise taxes on anyone,” he said, the Senate will have to fix target revenue and the margins tax if they want property taxes to stay where they are. That would, at least in theory, mean finding a way to get the margins tax to produce more revenue, or replacing it with something else. Sen. Dan Patrick (R-Houston) told reporters that in the past he has pushed for replacing it with something fairer.
Shapiro told reporters following Ogden’s speech that she is on board with fixing target revenue but no specific solutions have been discussed yet. She emphasized that target revenue was designed to be a temporary fix.
Patrick said he spent the entire last session trying to replace the franchise tax system with a better fairer system.