Watson Wire

The Big (in the) Red One

Tuesday, January 11, 2011 |

Generally speaking, it’s a weird week at the Capitol when the opening of a legislative session isn’t the biggest news.  It’s weirder when those opening ceremonies might actually obscure the week’s biggest news.

And this ... is a weird week.

Yes, today begins the 82nd Texas Legislative Session.  Which might make it kind of a slow news day (though it does seem that some state representatives have done what they could to fill up the news cycle with a little Speaker's race).

Because yesterday, the Comptroller, at long last, released a revenue estimate to provide shape – or depth, anyway – to the budget hole we’ve all been talking about for a great many months.  More on this in a minute, but we can now say pretty clearly ... this will be a deep, ugly mess.

Also, in the next few days – maybe as soon as this week – we’ll all get our first glimpse at the proposed budget in all its grizzly grimness.

New rules ... tomorrow?

And as early as tomorrow, there could be a vote by the state Senate and/or House of Representatives to implement the rules that will govern the session.

As I wrote last week, I’ll propose that the Senate implement a rule to make sure the final draft of the budget is publicly available for five days before it’s voted on – a business week’s worth of budget honesty.  One simple business week to know what's in the budget of a multi-billion dollar enterprise called state government.  I’m hoping that the House will offer up the same rule and we’ll get the session off to a very open, very transparent start.

The proposal got a pretty good boost last week when two major policy groups that frequently work on opposite sides of budget-related issues came out in favor of providing more time to read the final budget draft – both in the context of the rule change.

From the right: Talmadge Heflin, of the Texas Public Policy Foundation, said, “In the spirit of transparency, it would give people more time to look at the budget ... We need to try to get more legislators to know what they’re voting on.”
 
And from the left: Scott McCown, of the Center for Public Policy Priorities, said,  “Having the final version of the budget lay out for five days would give the public time to learn what is, and what is not, in the single most important bill of the session – and ensure that Texans have time to communicate with their legislators before any votes are cast.”

You can read all about the love and happiness that budget honesty engenders if you click here. 
  
Also, on Sunday, the American-Statesman came out in favor of the rule change and other aspects of what I'm calling my Honesty Agenda -- a package of legislation designed to make the budget and state finances more open and honest.  You can see what they wrote here, and read up on the Honesty Agenda here. 

Finally, if you want to learn more about the rule change, click here to see the language and here for the letter I sent to my Senate colleagues about the proposal.

The bad news... waits

Now, about that Biennial Revenue Estimate ...

First some background: The Texas Constitution requires the Comptroller (the state’s elected Chief Financial Officer) to release a revenue estimate at the outset of a legislative session.  It’s sort of a declaration of what the credits side of the state’s ledger looks like.  This is known as the Biennial Revenue Estimate.

But the Constitution also allows – some would say “obligates” – the Comptroller to release updated revenue estimates “at such other times as may be necessary to show probable changes” to the last revenue estimate.

So back in September – at the start of the state’s new fiscal year, when it was pretty clear to everyone (except the occasional political candidate) that Texas is facing a budget crisis – I sent the Comptroller a letter suggesting that since there have probably been, y'know, “probable changes” to the state’s fiscal picture, it would have been a good time to get an updated revenue estimate.

And then ... hilarity ensued.  You can re-live it here and especially here.  But suffice it to say that while many words were written and spoken, none actually spelled out the true state of the state’s finances.

“Just wait four months for an update on our budget and fiscal picture,” the people of Texas were essentially told by their CFO – as though the phrase wouldn’t make 5-Hour Energy drink spew out of the noses of private sector CEOs when they heard that from their CFOs.

The bad news... arrives

Well, four months finally wound up yesterday.  And here’s what we now know

• The current (2010-11) General Fund budget is $87 billion.
• The state will probably collect about $77 billion for its largely discretionary General Fund budget in fiscal years 2012 and 2013 (the years this upcoming budget will cover).
• But then, you have to subtract about $4 billion from that to cover the projected shortfall in the current budget (though that deficit may shrink some due to budget cuts that are already happening).
• Based on appropriations requests from agencies and what have you, it’s reasonable to assume (as most budget watchers seem to be doing this week) that – given things like cost increases and population growth – it would cost roughly $99 billion for the state to continue doing all it’s been doing for the last two years without measures like increasing class sizes, slashing health care for seniors, or cutting back on border security.
• So based on this sort of pre-cuts math, the budget shortfall for 2012-13 now stands at something like $27 billion.
• If you were to count our savings accounts (especially what's known as the Rainy Day Fund) and the quarters you might find in every couch in the Capitol, you'd have about $9 billion or so in cash to fill that $27 billion hole.

Makes me long for campaign season, when some folks could, with a straight face, pretend that we didn’t have any problems.

What's wrong

But this revenue estimate – depressing as it is – does more than spell out our budget shortfall.  It also demonstrates the deficit of honesty and openness that has so thoroughly weakened our state’s finances.

The truth is, Texans deserve more respect.  After months of talk about the looming budget shortfall, only now – one day before the start of the legislative session – are we getting an indication of how big a hole we’re truly facing.

The state budget isn’t an insiders’ game. This money and the information about it belong to the people of Texas.

This is exactly why I proposed my Honesty Agenda – to address both the financial deficit and the deficit of transparency and accountability. Here are some other fundamental budget reforms that need to occur:

• Essential budget information, including more regular revenue estimates, must be made widely available to the public.
• Money that’s supposed to go – that was promised to go – to specific state programs should be spent only on those programs.
• Whenever Texas politicians threaten to cut Texans' basic necessities, they should declare who will be specifically impacted and how. They should reveal how Texas will maintain its commitments to essential priorities so that we can be economically competitive. And whenever they threaten to increase taxes or fees, they should tell taxpayers exactly what the money will be used for.
• Legislators should consider the short-term and long-term impact that budget decisions will have on Texas’ economy. Texas politicians need to start accounting for spending and performance.
• The state must create a comprehensive plan to sustainably balance the budget.

Texans should not accept any attempts to drain the state’s savings accounts, deprive our children and neighbors of necessities, or increase taxes or fees until reforms are in place.

I will not vote for a budget that perpetuates a lack of fiscal openness and budget honesty.

The timing of today's revenue estimate, and the bad news it contains, illuminate a deficit in budget honesty. Nothing about the holiday season – or the campaign season – should have forced so many Texans to wait so long for such critical information.