Perry requests spending on his priorities

AUSTIN - Gov. Rick Perry asked lawmakers Tuesday for about $2 billion in state funding, including money to lure new business to Texas and respond to hurricanes and other disasters.

Perry acknowledged that the 2010-2011 state budget would be tight as the national recession seeps into Texas. But he said restrained spending has left Texas in better shape than most other states and asked lawmakers to fund his priorities.

"As we wrestle with lowered revenue estimates, we must stay committed to the proven policies that have brought us so far, and resist any calls to panic," Perry said in his biennial state of the state address.

Lawmakers have a long way to go before there's a final state budget, but it's almost certain that they'll either have to borrow from the so-called Rainy Day Fund or cut state services. Funding Perry's priorities would tighten the squeeze.

Texas governors are required to propose a two-year state budget at the beginning of every legislative session. This year, Perry put forth the same draft already proposed by the Legislative Budget Board, and gave lawmakers a list of items he'd like to see added.

The approach was a bit different from previous years, when Perry's office presented a budget independent from other state agencies.

The list includes Perry's usual pet projects, like $260 million for his Texas Enterprise Fund, to encourage businesses to relocate to Texas and $135 million to boost border security efforts.

But this year, Perry also asked for $150 million for a Disaster Recovery Fund, to help pay for recovery efforts from unexpected disasters like the three hurricanes that battered the Texas coast last year. And he proposed $10 million to tackle the state's rising obesity rate with a new incentives-based health and fitness pilot program for middle and high school students.

"If we don't tackle this problem, not only will this generation of children be the first to have a shorter average lifespan than their parents, we will never get a handle on the costs of preventable diseases like diabetes, heart disease and even some forms of cancer," Perry said. "Let's address obesity where it will make the most difference, most quickly: with our schoolchildren."

Lawmakers will start the budget period with about $6.7 billion in the Rainy Day Fund. Spending from the fund, which is estimated to grow to $9.1 billion by the end of the 2010-2011 budget cycle if left untouched, requires a two-thirds vote of both chambers of the Legislature.

Perry urged lawmakers not to borrow too much from the savings account.

"As you go about your business in the next few months, you may be tempted to dip into our rainy day fund," he said. "If you do, let's limit our use of those funds to significant one-time expenditures, not recurring items."

Among Perry's other requests:

_ $110 million for the Texas Grants, a financial aid program for economically disadvantaged students;

_ $169 million to continue higher education incentive funding;

_ $97 million for the Texas High School Project;

_ $203.5 million for the Emerging Technology Fund for economic development; and

_ $60 million for the Texas Film Incentive Program to encourage filmmakers to come to Texas.

Comptroller Susan Combs has projected $80.1 billion in state revenue available for spending. Lawmakers also will get money from the federal government and other sources.

State law does not allow deficit spending.

The two-year state budget is the one piece of legislation lawmakers are legally required to adopt during the biennial legislative session, which convened earlier this month and adjourns in June.

Projected state revenue over the next two-year budget cycle is down as a result of weaker consumer spending.

Perry also recommended raising the business tax exemption for small businesses from $300,000 to $1 million. Combs estimates the change would cost $83 million.

"It appears that Perry's budget proposals keep state spending in check, while reallocating funds based on priorities," said Michael Sullivan, president of the conservative group Texans for Fiscal Responsibility. "We can debate the merits of the specific activities he proposes, such as continuing the movie industry subsidies, but this approach should be modeled throughout the session as legislators address the budget knowing taxpayers simply cannot afford to pay more for government."

Public education and health care services are the most expensive state-funded programs.

The Center for Public Policy Priorities, which advocates for lower-income Texans, criticized Perry's proposal, and argued that trimming spending during a recession would only do harm.

"Cutting programs such as education would undermine long-term economic prosperity, and cutting health and human services would leave vulnerable children and families unprotected during an economic recession," the CPPP said in a written response to Perry's proposal.

Sales tax receipts, which make up the biggest chunk of state revenue, are still growing, but at a slower pace.

"I believe Texas is best served if the governor and the Legislature work together over the next 126 days to jointly craft a budget that reflects our principled commitments to this state," Perry said. "I look forward to working with lawmakers to finalize a responsible budget that keeps Texas a great place to live and work, and ensures we will weather the nation's financial crisis with the strength and vision characteristic of this great state."


On the Net:

Comptroller Susan Combs: