Texas braces for budget impact

Budget deficit looming -- Perry, Dewhurst, Straus ask agencies to submit plans to cut spending

By ARTHUR HAHN/Managing EditorA state budget crunch is barreling toward Austin, and top lawmakers are trying to get a headstart in easing the pain by asking agencies to submit plans for reducing their budgets.

Gov. Rick Perry, Lt. Gov. David Dewhurst and House Speaker Joe Straus have sent letters to agency heads, asking them to outline ways to reduce expenditures by 5 percent.

Responses are due no later than Feb. 15.

The state operates on a two-year budget, with the latest hammered out during last year’s session. It allocated about $87 billion in state money to agencies.

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The letter says:

“In Texas, we have been fortunate that our economy has fared better than most other states during the current national recession. Nevertheless, Comptroller Susan Combs noted in her November 2009 economic update that our revenues have ‘weakened substantially as the national recession began exerting its full influence on Texas.’

“Due to the uncertainty of the state’s short-term economic future, as well as potentially substantial long-term costs associated with the passage of federal legislation currently being debated in Washington, D.C., we are asking each state agency to thoroughly review all planned expenditures for the remainder of the biennium.

The letter also says, “Texas has a balanced budget and comparatively sound economic conditions. However, we owe it to the taxpayers to be especially prudent with their hard-earned dollars during these difficult times.”

State Rep. Lois Kolkhorst (R-Brenham) said estimates are that the state will be facing a deficit of $12 billion to $16 billion when lawmakers sit down next year to develop the budget for the next biennium.

State leaders feel it is prudent to start finding ways to save money now, said Kolkhorst.

“What I think they’re trying to do is to start identifying areas where we can save money. Budgets can ebb and flow, and costs and expenses can ebb and flow,” she said.

“We know we are going to face a huge budget deficit next session, and that’s before health care reforms ... a shortfall of between $12 billion and $16 billion. And then the question becomes, do we use the ‘rainy day’ fund and how much do we use?’ That will certainly help lessen the impact.”

Kolkhorst said there are “warning signs ... that we have some issues here,” including a slowing of sales tax revenues.

“I think what they’re saying (Perry, Dewhurst and Straus) are saying now is that we’re about to hit really tough times and you need to put the brakes on now,” she said.

“Everyone agrees there will be a budget deficit and it will be much bigger than in 2003 (when lawmakers also faced a deficit). But it’s better than 2003 because we did not give them this much warning.”