Most state budgets including Texas, OTOH, must balance themselves or else request specific debt approval from voters in bond elections, so state budgets by far are hit harder when tax revenues level off or decline in tough times. The Houston Chronicle's April Castro had a good piece yesterday what Texas' state budget picture might look like ("Lawmakers await comptrollers revenue announcement," Jan.6), predicting a modest $2 billion surplus over the last biennium:
Texas will likely have to pay up to $2 billion for its share of costs from Hurricane Ike, rapid growth in Medicaid costs and enrollment, lower oil prices that might mean less income in the state's Rainy Day Fund, slowed consumer spending and lower-than-projected revenues from the state's new business tax in the fund intended to pay for public schools.
The Ike and Medicaid enrollment growth could cost together as much as $3.2 billion in the 2008-2009 budget before lawmakers even get started on the 2010-2011 budget, Lt. Gov. David Dewhurst and current House Speaker Tom Craddick have estimated.
The so-called surplus is made up of three parts:
_ $5.7 billion in the Rainy Day Fund from taxes that companies pay for producing oil and gas. That fund can only be tapped with the approval of a super-majority of the Legislature.
_ $3 billion set aside two years ago to give to schools to make up for property tax cuts.
_ $2 billion left over for lawmakers' discretionary spending.
Further exacerbating budget uncertainties, health care costs are rapidly rising and enrollment in entitlement programs is expected to grow with the economic slowdown.
Even with $3 billion stashed away for schools, a fund used to replace some school property tax money will fall at least $5 billion short of the $14 billion hole lawmakers created two years ago when they lowered school property tax rates by a third. That's mostly because revenues from the new business tax — revamped to replace some school property taxes in education funding — aren't as much as expected.
This year, it appears that money will be available without having to cut from other state spending. But it will take a bite out the state's economic growth that would have otherwise padded the surplus.
That's better than most states who're in the red, but a lot less to work with than had been suggested in previous official estimates. If these data are accurate they'll pit other areas of government against the criminal justice system, which faces some big ticket items on its plate, some of which are necessary to prevent even greater costs:
Increased pay for prison guards: Approximately $460 million to raise pay at TDCJ by 20%. The agency is currently around 3,000 guards short with high turnover rates and major problems at some units with guards making extra money on the side smuggling contraband. TDCJ shut down wings at two units (in Dalhart and Fort Stockton) last year in response to critical understaffing. For all exceptional items including the proposed pay hikes, TDCJ's legislative appropriations request (pdf) projects more than $1 billion in increased costs for the biennium just to keep inmate numbers at current levels.
Outpatient competency restoration: The Department of State Health Services last year funded five pilot programs aimed at providing outpatient competency restoration using "emergency" money given it by the Legislature in 2007. These pilots have been highly successful in reducing needless, costly state hospital commitments which often took up beds needed by regular, non-offender taxpayers with mental health needs.
While the Department of State Health Services' LAR (see page 53 of the pdf) contemplates keeping funding near current levels for these programs (actually cutting it slightly now that initial startup costs are complete), truly it's penny wise and pound foolish if these pilots aren't fully funded and expanded to every urban center. Such a move which would reduce pressure to build even more expensive state hospital beds - a likely outcome of pending litigation before DSHS rolled out this new initiative - and relieve pressure on county jails who must house the inmates until a state hospital bed comes open. This really is a pay me now or pay (more) later kind of deal.
Expanding Governor Perry's Border Initiative: At Gov. Perry's insistence, in 2007 the Legislature spent $140 million over the biennium on "border security" in the 16 Texas counties along the Rio Grande - mostly for overtime and equipment at those 16 county sheriff's departments. This year he wants to continue that funding and expand the grants to include grants to urban areas, an idea that seems to me similar to Bill Clinton's federal COPS program.
Paying for TYC Improvements: While the Sunset Advisory Commission suggested it might be possible to save money by merging the Texas Youth Commission and the Juvenile Probation Commission, there are many problems at both agencies that can only be addressed by expanding services - particularly special ed and mental health services, along with moving to smaller, rehab-oriented facilities and improving reentry programming.
In addition, if counties must pay private vendors to house commitments TYC previously took, the cost of those grants - including adequate state oversight - will not be significantly less than if a state agency does the job. Breaking even would be getting off cheap at TYC. In fact, given the agency's current, barely out of crisis status, reducing spending risks underinvesting in critical educational and anti-recidivism components that, from a public safety perspective, deserve more attention in Appropriations, not less.
Will UTMB move their prison hospital in the wake of Hurricane Ike? If so the state must pay to reconstruct a new facility elsewhere while suffering serious medium-term dislocations in what was already a poorly functioning care-delivery system. Relatedly, no word on how the hurricane and massive layoffs affected UTMB's telemedicine program, which provides much inmate of the specialty and psychiatric care both at TYC and TDCJ. How much new investment will be required to get everything back up to speed?
Funding "Innocence" Work: The Fort Worth Star Telegram said on Sunday that post-conviction work Texas law shool innocence clinics should receive a modest budget boost to help finish vetting outstanding DNA claims - in part to offset the effects of the Madoff scandal on my employers at the Innocence Project of Texas. The Startlegram emphasized out that boosting funding for innocence work by $1 million would cost just more than 1/500 of the proposed pay hike for guards.
More on this when we get official numbers from the Comptroller next week.
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