Texas Legislature and the BudgetPosted: 12 Jan 11
The 82nd session of the Texas Legislature opened yesterday and the excitement is palpable. Or maybe I’m exaggerating, but there is certainly a lot of attention being paid this time around since we’re about $27 billion short of fully funding all of our existing programs.
In such a situation, I do think its helpful to look at micro-economics–for instance, a single household–for analogies. So, say you knew that your income for the year was going to be short of what you took in last year. What would you do? Yes, cutting back on spending is a prudent thing to do, and things like cable TV and dining out are definitely prime places to cut. But do you skimp on the rent? Groceries? Can you really live without a phone? Depending on what your shortfall is, closing the gap with just spending cuts might not be doable.
So what else can you do? You can try to supplement your income. The analogy to the State government is raising taxes. Obviously not a popular choice, but in my opinion, absolutely precluding the possibility ties one hand behind your back. Fortunately we have a third hand.
As a household, I can dip into my savings. Obviously, I want to be careful about this, but if I have any confidence that my income will be back to normal soon, it might be worth it to pay rent out of savings rather than moving to a cheaper apartment. Paying a mortgage out of savings will protect the equity I’ve already built in my house. Not to put to fine a point on it, this is why I had savings in the first place, to use in case of emergency.
Now, in Texas, our Governor doesn’t seem to think like I do. He is against using the Texas Rainy Day fund to fill our budget gap. Let me let him say it in his own words as quoted in the Austin American-Statesman: “‘Why spend the money during a period of time when we see a national recession having an impact on the state?’ Perry said. ‘Why in the world would we want to spend dollars just because they’re sitting there, when those are going to be ongoing expenses?'”
It’s been a day since I saw this and it still boggles my mind. He knows that a national recession is having an impact on the state, so he’s not completely clueless. But how does it make sense to question the wisdom of spending the Rainy Day fund in that situation? Is he claiming that the impact is minor? Or does he not understand the concept of the Rainy Day Fund? It seems to me that the whole point of having the Rainy Day Fund is to make sure that your ongoing expenses keep going on. I haven’t yet heard anyone suggest that we should create any new programs or start any new spending. Everyone knows that’s not going to fly. So I really don’t know what to make of the Governor’s questions.
One possibility is that the Governor is living in denial. That would be consistent with his campaign rhetoric that the estimates of a $12-24 billion shortfall were overblown or fanciful. He’s been proven wrong on that count, so now he wants to dismiss our ongoing budget as wishful thinking. Again, in his own words: “I’ll let somebody else talk about that, because that’s not reality. I don’t get to deal with a wish,”
I’m sorry, but if a national recession, the consequences of which are still echoing, isn’t a rainy day, I don’t know what is. And if the Governor wants to lead the charge on spending cuts, I have a suggestion for the first cut. Let Mr. Perry pay his own rent on the luxury mansion he is currently occupying. Most of us don’t have the opportunity to let the state pay for five bedrooms and swimming pool, or whatever it is that Perry is living in while the Governors’ Mansion is being repaired. That would be real leadership, indicating that no one is too big to share the sacrifice. Plus, I believe the man is rich enough that it wouldn’t be that much of a sacrifice. It’s a win-win.