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While many states- like California with a $42 billion budget deficit- are facing major financial difficulties, Texas seems to be in relatively sound economic shape. A $9 billion surplus kicked off the2008-09 budget, and the same surplus was expected to start off the 2010-2011 budget. And when considering that over the last year our state tax revenue has increased sharply due to sky-rocketing oil and gas prices, one expects this year’s appropriations process for the 81^st Legislature to be pain-free. However, TX Comptroller Susan Combs projects a grim picture for Texas’ budget. She said that when factoring in the state’s growing population and demand for services, the state will actually have $9.1 billion less in state funds to spend over the 2010-11 biennium. Combs has projected less revenue available for state spending, because she says we can expect a slow-down of employment growth, as well as in the housing market. I guess the recession is going to catch up to us in Texas after all.

What’s important to understand here is that our state constitution restricts the Legislature from spending more than the Comptroller’s revenue projections. In other words, while the Legislature had $86.1 billion to work with last session, they’ll have $77.1 this session. So this means spending cuts! Or it could mean raising taxes, but that’s highly unlikely in Texas.

From where will the spending cuts come? If you could make such a decision, which agency’s budget would you slim down? Which services would you reduce? How would you choose between cancer research and early childhood education programs? Veteran’s programs or renewable energy research? Mental health services or highway safety? Legislators have inevitably tough choices to make because the budget cuts must be made.

Unless, you consider that Texas has a sizable Rainy Day Fund- sort of a savings account for emergencies only. By the end of the current fiscal year, our Rainy Day Fund will reach $9 billion. Hmmm…that equals our projected budget short-fall. When budget appropriations get under way, mounting pressure to keep agency funding levels steady will turn attention to the Rainy Day Fund. As you might imagine, the Legislature will be arguing over whether or not a $9 billion decrease in revenue, during one of the greatest recessions of our time, constitutes an emergency. Would it be irresponsible of our state to drain the fund to cover today’s needed services, rather than conserve for our future? Yes, responsible budgeting is crucial, especially in a state with the largest uninsured population, among other challenges…

However, I can’t help but wonder, when does saving for our future turn into hoarding? Some states manage without such funds at all. Also, Texas’ Rainy Day Fund is among the largest in the nation, rivaled only by Alaska’s oil and gas revenue-rich fund. So, is Texas teetering on becoming miserly with its appropriations?

The debate over tapping into the Rainy Day Fund will undoubtedly get heated throughout the next weeks. Stay tuned to LiveMom for further updates. As always, we want to hear from you.

Posted by livemom on Sunday, January 18th, 2009 at 9:20 am | 1 Comment » You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.