Texas Undermines Core Services To Cover Budget Shortfall

Facing huge budget shortfalls for the coming fiscal year, states must decide whether to rely exclusively on spending cuts or pursue a balanced approach that also includes raising new revenue.  Look no further than Texas to see the consequences of a cuts-only approach.

The Lone Star State faces a nearly $23 billion shortfall for the two-year budget period that begins September 1.  At 26 percent of the state’s 2011 budget, this gap is one of the country’s largest.

The Texas Senate released a proposal last week that, like the budget plan that the state House of Representatives released last month, almost entirely avoids raising new revenue. It ignores the Texas-sized reserve fund of more than $6 billion—just about the biggest such fund in the country.  The Senate proposal avoids many of the much deeper cuts that the House proposed by using various budget adjustments, such as deferring a payment to schools for a month to move it to the next budget cycle. Still, the Senate plan would damage Texas’ long-term economic potential and hit hard at families and communities still struggling in a difficult job market.  Among other things, the proposal would:

• Cut K-12 education funding to a level that’s 9 percent below the minimum that state law specifies. Texas already has below-average K-12 funding compared to other states. This cut would further depress that low level even as the state’s school enrollment is growing.  As a result, school districts would likely have to lay off teachers, increase class sizes, and take other measures that undermine the quality of education and damage the state’s long-term economic potential.
• Eliminate funding for pre-K programs that serve almost 100,000 mostly at-risk children — over 40 percent of the state’s pre-kindergarten students.  Extensive research suggests that pre-K programs are an effective way to prepare children for school, especially disadvantaged children.
• Cut public college and university funding by 19 percent. This cut would likely lead to tuition increases, reductions in course offerings, and layoffs.  Over the next two years, the proposal would also reduce by about one-third the number of financial aid awards by the Texas Grant program, which currently helps 87,000 students with financial need and good academic records.  The proposal’s education cuts would make it more difficult for Texas to train the well-educated workforce it will need to compete in an increasingly global economy.

• Weaken the economy by eliminating thousands of public- and private-sector jobs. For example, the cuts in state support for education likely will lead school districts to lay off workers. Though the precise number is not yet known, the rollbacks are equivalent to about 49,000 layoffs in school districts.  The Senate plan also would eliminate almost 5,300 state jobs, including prison guards and child protective service investigators.  Many private companies that have state contracts also would have to eliminate jobs, as would local governments that rely on state aid.  This large-scale job loss would weaken the state’s economy by reducing the demand for goods and services that Texas businesses produce.

As damaging as the Senate’s proposed cuts would be, they are dwarfed by the cuts in the House plan.  For example, the House plan funds K-12 education at 18 percent below the minimum standard – twice as deep a cut as the Senate plan. Because the two chambers must negotiate a final budget, the cuts may well be harsher than the Senate has proposed.

The Texas budget debate revolves around painful choices that rely almost exclusively on spending cuts to core services. Instead, legislators should have pursued a balanced approach that includes raising additional revenue and taking advantage of the state’s large reserve fund.