Texas Republicans deny budget crisis exists

By CHRIS TOMLINSON Associated Press

AUSTIN, Texas — How bad is the budget crisis in Texas? Ask the Republicans who run the state, and they'll tell you it's in the eye of the beholder.

The $8 billion drop in state revenue? Solved with some belt tightening. The $7 billion loss in federal stimulus funding? Well, that was expected. As for the roughly $12 billion more that state agencies say they need to maintain the status quo? Republicans say that wish list won't come true.

Voila, the $27 billion shortfall is gone.

"There's no shortage of commentators saying that we're on the verge of budgetary armageddon," Gov. Rick Perry recently told reporters. "The fact of the matter is that's just not true "

Texas is not alone in facing tough choices. In Illinois, California and Georgia, governors and legislators are ready to raise taxes as much as 75 percent. Here, lawmakers are cutting deep into state services to include education and health care and have promised not to raise taxes.

Lt. Gov. David Dewhurst, who presides over the state Senate and decides what legislation gets voted upon, spent a lunch with the Capitol press corps trying to convince them they've got the story wrong.

"There is not a $27 billion deficit, and I don't think there is even a $15 billion deficit," Dewhurst explained. He went on to express his faith in the rebounding economy to bring in more revenues, and the Legislature's ability to address the problem efficiently.

But it's easy for Perry and Dewhurst to talk; they don't draft the two-year budget. That job falls on the chair of the House Appropriations Committee, Rep. Jim Pitts, a Republican from Waxahachie.

"There is no shortfall, because we know we don't have the available funds to do what we did last time," Pitts told a conservative conference on Thursday.

Politicians are careful with words, and technically, these Republican leaders are correct. There is no deficit or shortfall as long as there is no budget, and Pitts said he won't reveal his first draft until he files it this week.

That is no comfort to Texas state agencies, or those who depend on them for employment or services. The state comptroller says Pitts has $72.2 billion in state money to spend, which is about $15 billion less than he had when he drafted the last budget in 2009.

These agencies generally expect the same amount of money every two years. If they are lucky, they get a slight boost to make up for inflation and increases in the population. They don't have the luxury of starting from a blank slate every two years the way state lawmakers do. Outsiders say the last budget was already bare bones, and these cuts will be devastating.

"Texas is short $27 billion to keep doing what we're doing," said F. Scott McCown, the executive director of the Center for Public Policy Priorities, an organization that advocates for the poor. "If you won't want to educate all of our kids, if you don't want to provide financial aid to worthy students in higher education, if you don't want to meet the critical needs of Texas families struggling to deal with the recession, then we're not short $27 billion."

Those who deny there is a budget crisis don't dispute there will be spending cuts. The Texas Constitution requires a balanced budget, and Perry has said he will veto any budget that raises taxes.

Dewhurst said he expects the state will eliminate 8,000 jobs, but promised that most of those positions are vacant. Every section of the budget will be cut, Pitts said, including public education, health and human services, higher education and the Legislature's budget. He has refused to discuss any other details.

"We went through every agency and every program that those agencies performed. We looked at the core functions of those agencies and we'd see what we need to fund out of that core function," Pitts said. "If it wasn't their core function, we made a decision in the House that we may not fund those other things."

Rumors of specific cuts whirl around the Capitol. Higher education may take a major hit, with community colleges taking the biggest cut. Public education could lose at least $500 million. State employees who make over a certain amount could face mandatory salary cuts.

Legislators do have a few options to minimize the cuts, though they are reluctant to use them.

First is the "rainy day fund," a $9 billion savings account created for just this kind of situation. But Republican lawmakers, who comprise a 101-49 majority in the House, say they won't touch it.

And then there is the Texas Franchise Tax, a business tax created in 2006 so that lawmakers could cut property taxes. The franchise tax has failed to meet revenue targets. Dewhurst and at least one prominent Republican senator have said it may need to be "refined" to make it perform as intended.

Would that represent a tax hike? Texas' top Republican dodged the question.

"Getting bogged down in the semantics of, `Oh yes, that is a new tax,' or, 'Yes, that