Not every school district is broke

It turns out that not every story coming out of Texas public education is about budget cuts. The New York Times has a nice story (“A $60 Million Palace for Texas High School Football“) about one city that found some money for schools. Of course, a big chunk of it is going to build a new football stadium.

The Perils of Pipelines

The LA Times has a good story on the troubles a proposed pipeline is posing for many Texans. We think of the oil companies as allied with conservative causes. Texans also generally think of conservatives leading the charge on eminent domain issues. However, Texas is seeing rural conservatives working with the Sierra Club to keep a pipeline from coming across their properties.

Americans love cheap oil. However, sometimes a relatively few citizens pay a price for oil that most of us know nothing about. How much can we expect them to bear?

Transportation troubles

A San Antonio Express News story reflects how Texans are only now being told that the state is facing the transportation funding crisis. Of course, there are people who are saying, “What crisis?” However, you can’t brag about Texas’ growth and then turn around and pretend that adding all those new Texans does not bring some costs related to transportation. Those people did not come to Texas to sit at home all the time. The Texas Department of Transportation needs to build new roads for new Texans and new businesses.

The funding is complicated. With our vehicles getting more miles to the gallon that tax we put on each gallon of gas gives us less money to pay for the same number of cars and miles driven. At the same time, Texans are sick of toll roads.

It was much more fun during the campaign to talk about expanding education, tossing money at high-tech firms, and endeavors more glamorous than roads.

Now, governing requires that we tend to our infrastructure needs. The question is: who will step up and lead?

Scary stuff from the states

The New York Times is reporting that some people in Congress are looking at ways to facilitate states declaring bankruptcy.

My two biggest concerns are reflected in one paragraph:

Bankruptcy could permit a state to alter its contractual promises to retirees, which are often protected by state constitutions, and it could provide an alternative to a no-strings bailout. Along with retirees, however, investors in a state’s bonds could suffer, possibly ending up at the back of the line as unsecured creditors.

So, here are the two alarming aspects of this move:

1. Once you start talking about ditching your financial obligations, everything you do becomes more expensive. States embracing a right to walk away from financial obligations is going to drive up their costs of bonds, etc. It’s bad business. Bankruptcy is already too common in the private sector. Why should private citizens avoid bankruptcy once  state governments start to embrace this escape?
2. It’s not fair to take out the state’s fiscal problems on retirees. I agree that states have often been too generous in the retirement packages they’ve offered. However, the states need to honor their promises–especially to those people least able to take care of themselves.
   Cut my salary, the governor’s, everyone in the state before taking money out of the hands of people who have no choices. If you cut my salary (there is talk of cutting every the salary of state employee by 10%) I can quit, seek a “promotion” (administrative positions in universities pay higher but I don’t consider them higher positions), or make some kind of change. Retirees don’t have choices. They can’t go back to work. They can’t go back and change the employer they trusted to honor commitments.
   Certainly, there are some former state employees living the good life in retirement. However, many are not. Their payments from the state may seem high but so are their expenses. Getting old is not cheap when you need extensive nursing care, medical procedures and/or medication.

I understand that many politicians do not want to break pledges like “no new taxes” or “no pay cuts.” Campaign promises are important. However, elected officials have to consider honoring the commitment that they and their predecessors made every day of every year as employees labored under agreements that they honored for decades. Those state employees taught our children, protected us from crime, and labored on our behalf under commitments that our government pledged to honor. Saying that “things have changed” is too easy.

The campaign pledges made in the heat of the campaign may be fresh and make good politics. However, the easiest and most convenient answer is not always the right answer.

The best legislature money will not buy

The Texas House voted unanimously to cut their spending by 10%. The Senate decided earlier that week to continue a 5% reduction that was implemented in July. These moves were widely praised by some. Let me be one of the few to express doubts. Tea party members might want to wonder why the lobbyists in the gallery were also cheering this vote.

Who will help legislators make decisions on important issues? Before we flatter ourselves by suggesting that it will be citizens like us, we need ask how much citizens really know about issues facing the legislature. You might have general opinions about what you want from government. That doesn’t mean you have any idea what current law is and how proposed legislation will actually impact that.

Lobbyists do. And, there are lots of them just sitting and waiting to give legislators advice.

Legislators could also get information on policy changes from state agencies. There are a lot of bureaucrats in Austin.

So, your legislator can either listen to legislative staff, lobbyists, or bureaucrats. When you cut staff you necessitate increased reliance on the other. One member of the House conceded in a private that cutting staff would help the lobby.

I don’t regard bureaucrats or lobbyists are inherently evil. I am sure that they are inherently biased.

So, the Texas House just bought itself more ignorance in order to take a symbolic stand. What business would cut R&D (research and development) as it moved into its decisions on how to invest billions of dollars? Texans are going to end up paying lots of money down the road for bad advice that will be taken over these 140 days.

Sometimes you have to spend money to save money.

The Comptroller’s revenue estimate

Word of the Comptroller’s Biennial Revenue Estimate (full report in .pdf) spread quickly through the Texas Capitol Monday. That report was one of the biggest stories of the day because her revenue estimate became the spending ceiling for the Legislature this session. According to Comptroller Comb’s estimates, the state has a shortfall of about $27 billion over the next two years. Some of that is the expected gap between what we’ll take in and what the state would have to spend to keep services at the current level. However, about $4.3 billion results from the amount state spending exceeded expected revenue. That demonstrates the reality that while the Texas Legislature must approve a budget that is balanced, it is still possible to run a deficit if, for example, tax revenue drops below the Comptroller’s estimate.

Figure 1 of the Comptroller’s report summarizes the basic revenue picture:

The response (so far) hasn’t been promising because very few people want to talk about how the state can deal with the shortage of money.
Governor Perry declared the issues of eminent domain and sanctuary cities emergency items to expedite consideration of legislation on those issues (you can check out the Texas Tribune’s brief explanation of  “emergency items”). Clearly, Perry is in no rush to tackle the tough choices coming. In fact, Perry plans on escaping the state several time in the next few months as he keeps himself busy not running for president.

The Texas Public Policy Foundation (TPPF) has attempted to declare the shortfall a myth.  However, their analysis is based on silly notions that reveal why I have quit taking any of their “research” seriously. They got a well-deserve “False” on the Truth-O-Meter because want the Comptroller to toss aside factors like the state’s growing population and increased health care costs in estimating future state spending. Like similar groups on the far left, the TPPF try to get citizens to forget about real world costs in order to sell their vision. Anyone who tells you this isn’t a serious problem shouldn’t be taken seriously.

So, the situation in Austin is very much like the situation in Washington, DC (maybe worse). Everyone wants to talk about the problem–no one is ready to talk about solutions.

One of the people in the Texas Capitol willing to talk realistically about the issue. Senator Steve Ogden (Republican-Bryan) was elected president pro tempore of the Texas Senate and spoke directly to the tough decisions ahead. As Paul Burka pointed out in “Day One: A Tale of Two Styles,” Ogden will probably serve another term as chair the Senate Finance Committee. Texas desperately needs leadership on the budget and Ogden seems ready to address the budget shortfall in realistic terms.

In an interview with the Texas Tribune, House Appropriations Chairman Jim Pitts (R-Waxahachie) said that he is going to propose a budget soon. That budget will be based on no new taxes and not tapping into the state’s “rainy day fund.”  His idea is to specify the tough choices facing Texas in hopes of getting legislators to start thinking about the implications of every cut. Pitts should be credited with having the courage to talk about specific cuts and move the state toward a constructive dialog.

The leadership out of Austin between sessions contributed to the state’s problems. For example, by the time that universities received word in December of 2010 on the 2.5% reduction, spring classes were set and students were enrolled in the classes. That effectively mandated that most savings be through summer courses. Had state leaders been more forthcoming or less timid, better planning would have allowed more effective savings. Decisions fall to bureaucrats when elected officials delay and avoid tough decisions. This isn’t always a bad thing. It may be best to leave decision about the cuts in priorities in the hands of others. However, claims of “leadership” should be backed up occasionally with real decisions. Such was not the case. However, now that Ogden and Pitts have stepped up, Texas may be ready to move ahead.

Why the government spends

A new poll of Texans reveals, even voters in a “conservative” state favor most government programs.

The new survey done for the San Antonio Express-News and other major state newspapers found 70 percent of Texas adults opposed any cuts to public education and 62 percent opposed cutting health care programs for children. Fifty-three percent backed some level of cuts in higher education.

Basically, Texans are not interested in cutting the most expensive programs. They are willing to cut higher education (I’m guessing they will still want to keep college tuition low).

On the other hand, Texans were somewhat willing to support slot machines or an increase on the tax on tobacco. Neither of these will generate significant revenue.

You can imagine the dilemma for our elected representatives when the Legislature convenes on Tuesday. There is a budget shortfall of over $20  billion and voters show no interest in making cuts or raising revenue.

Maybe it is time that Texans accepted the responsibility for spending that the government does. Those programs are here because they’re popular. It’s easy to complain about taxes. It’s much harder to identify spending cuts that Texans are willing to support. Again, we have met the enemy and he is us.

Perry’s personal stimulus program

Rick Perry took a break from railing against federal spending to announce putting $4.5 million from the Emerging Technology Fund into a company (Convergen LifeSciences Inc.) headed by David Nance.  As the Austin-American Statesman pointed out, this had been an issue in the 2010 gubernatorial campaign because Nance was a Perry contributor.

This subsidy is especially troubling for those of us at state universities who recently received word that we would have to identify an additional 2.5% in savings (on top of the 5% we were told about last summer) from the current budget year (we’ve been told to expect a 10-20% reduction in next year’s budget). These latest cuts are especially difficult since the state’s leaders waited until the spring semester was already set and few places remain to make cut without eliminating course offerings for students. Difficult cuts will also have to be made in prisons and other state agencies. Most of the faculty and state employees I’ve talked with accept that these cuts are needed in tough economic times. Still, we wish that the state’s leaders had not waited so late to let us know.

What makes the Governor’s announcement ironic is that he continues to run his own stimulus program out of his office while attacking federal stimulus programs. I have already written about how Perry’s office has used the Emerging Technology Fund, Texas Film Commission, and other programs to subsidize everything from the Super Bowl to video game production. Now that we’re seeing state employees laid off and college classes cancelled, the jobs allegedly created by these subsidies to already profitable endeavors looks even more questionable.

Government officials often talk about “economic development” without considering the degree to which these programs violate  free market principles or whether or not they create as many jobs as we hope. How much do we want government involved in running Texas businesses and what should we do to keep these millions becoming the newest form of patronage?