September 7, 2010
Sen. Kirk Watson wrote a pointed, six-page letter to Comptroller Susan Combs last week, asking her to provide “badly needed information” about the state’s fiscal health.
Combs has provided little official information about the severity of the state’s fiscal outlook, which has raised suspicions that she is trying to protect Gov. Rick Perry until the November elections. But Watson, D-Austin, told her on the first day of the 2011 fiscal year that Texans, and lawmakers, need answers now.
“The state’s budget preparations have become defined by uncertainty, both for the current 2010-11 biennium and the next one in 2012-13,” Watson wrote. “For example, projections for the 2012-13 revenue shortfall have ranged from as low as roughly $10 billion to as high as $18 billion. … I am respectfully asking that you, as the state’s Chief Financial Officer, provide badly needed information about the state’s finances, for both the current biennium that Texans are coping with and the next one that legislators are preparing for. At the very least, I suggest that you update the revenue estimate for the 2010-11 biennium, as the Texas Constitution clearly contemplates — and, I believe, requires you to do during times of such fiscal instability and uncertainty. I also urge you to provide additional information, particularly about the budget difficulties legislators are likely to face in balancing the 2012-13 Texas budget — if only because it would be such a poor business practice not to.”
Watson pointed to the section of the Texas Constitution that discusses the comptroller’s duty to produce the Biennial Revenue Estimate. It says, “Supplemental statements shall be submitted at any special session of the Legislature and at such other times as many be necessary to show probable changes” to the revenue estimate.
Watson wrote, “I think most would agree that there have been ‘probable changes’ to the state’s revenue picture since January of 2009.”
He noted three budget outlooks noted in the press just during the last month: An Aug. 11 Associated Press piece in which Combs says there have been substantial shifts in state revenue sources but that a new revenue estimate is not needed; a Quorum Report posting on Aug. 16 that said Combs told bond-rating agencies that the General Fund balance was off by more than $3 billion compared to previous projections; and, in the same Quorum Report piece, House Ways and Means Committee Chairman Rene Oliveira’s prediction that the budget deficit for the current biennium is $4.5 billion.
Watson told Combs she should “embrace this opportunity to provide basic transparency, accountability and clarity.”
“A private business of any size should never fly into a fiscal storm blindly, and neither should Texans or their elected officials,” Watson said. “Without a clear picture of the state’s financial condition, we find ourselves in the situation of of working on a problem that has not yet been actually defined.”
Along with an updated biennial revenue estimate, Watson asked Combs for a five-year forecast for revenues, expenditures and Rainy Day Fund projections; an update on the state’s debt situation; a status report on the Rainy Day Fund; an update on the franchise tax and an explanation on why it has underperformed so drastically since it was first proposed; and a report on how much money sitting in General Revenue-Dedicated accounts is being used for purposes other than what it’s supposed to be used for (this is a pet peeve of Watson’s).
Will be interesting to see how Combs responds. The number that is often talked about regarding the budget shortfall facing the next Legislature is $18 billion. I heard last week that some folks at the Capitol are now talking about a $21 billion shortfall.
This kind of uncertainty seems to be at the heart of Watson’s concern.