Tuesday, January 4, 2011

A Budget Crisis The Size Of Texas

Very few Villagers are talking about the biggest red state with a massive budget crisis, Texas.  Sure, people mention California, Michigan, and Illinois all the time.  But Texas has a massive fiscal hole...and a GOP super-majority that won't raise a dime in revenues.

This month the state's part-time legislature goes back into session, and the state is starting at potentially a $25 billion deficit on a two-year budget of around $95 billion. That's enormous. And there's not much fat to cut. The whole budget is basically education and healthcare spending. Cutting everything else wouldn't do the trick. And though raising this kind of money would be easy on an economy of $1.2 trillion, the new GOP mega-majority in Congress is firmly against raising any revenue.

So the bi-ennial legislature, which convenes this month, faces some hard cuts. Some in the Texas GDP have advocated dropping Medicaid altogether to save money.

So why haven't we heard more about Texas, one of the most important economy's in America? Well, it's because it doesn't fit the script. It's a pro-business, lean-spending, no-union state. You can't fit it into a nice storyline, so it's ignored.

But if you want to make comparisons between US states and ailing European countries, think of Texas as being like America's Ireland. Ireland was once praised as a model for economic growth: conservatives loved it for its pro-business, anti-tax, low-spending strategy, and hailed it as the way forward for all of Europe. Then it blew up.

The comparisons of Texas to Ireland are apt:  both said austerity is the answer, and both racked up massive deficits anyway.  Now both face massive, across-the-board social spending cuts.   And the reason nobody's talking about it is because it doesn't have any public employee unions...or unions at all.  The blame here clearly comes from Texas slashing business taxes to attract companies, and losing massive revenue as a result.  Business costs are about as low as they come in the Lone Star state...and that's exactly why Texas faces a two-year budget hole of $25 billion, more than a quarter of its total budget.

Texas has already made noises about pulling out of Medicaid and replacing it with a state program that would cut off millions of the poor from getting health care.  They wouldn't qualify.  Hey, if they die, Texas is off the hook for keeping them alive, right?  Poor don't vote Republican anyway.  No harm, no foul...

15 comments:

  1. What a typical load of crap.

    The comparisons of Texas to Ireland are apt: both said austerity is the answer, and both racked up massive deficits anyway...The blame here clearly comes from Texas slashing business taxes to attract companies, and losing massive revenue as a result.

    Try again to come up with the right answer.

    Texas has already made noises about pulling out of Medicaid and replacing it with a state program that would cut off millions of the poor from getting health care.

    That's because the federal government has continually cut the amount of money for Texas' Medicaid program, thus requiring Texas to spend more on it. Maybe you should read the pieces you link to instead of using leftwing illogic to come up with your "analysis". Besides, what the hell is your definition of "poor"? According to the S-CHIP expansion, that's someone who has an income at more than four times the poverty level.

    One other thing. One of the things that will close that deficit is people getting jobs. Did you know that Texas added 192,000 jobs between November, 2009 and November, 2010, more than every other state? Maybe Texas isn't as bad off as you lefty shriekers say it is.

    Hey, if they die, Texas is off the hook for keeping them alive, right?

    What do you care? You admit that you think the American people only exist as fodder for federal government control, not as people.

    ReplyDelete
  2. Texas's $25 billion budget hole is a load of crap?

    I agree.

    Especially since there's no unions to blame and a supermajority of the GOP.

    So who will bear the brunt of those $25 billion in cuts? Because that's the cost of those 196,000 jobs that Texas won through state tax breaks for corporations.

    ReplyDelete
  3. Texas's $25 billion budget hole is a load of crap?

    Your post is a load of crap.

    So who will bear the brunt of those $25 billion in cuts? Because that's the cost of those 196,000 jobs that Texas won through state tax breaks for corporations.

    Like I said, you didn't bother reading any of the items that are linked. It sure as hell wasn't tax breaks that created this problem.

    So, in your mind, it's better to give the government the money and not have those 192,000 (or 196,000) taxpayers working? Then you pay those people who are not working money so they don't have to work, right? Gee, who'd've thunk it? Got any more "brilliant" ideas?

    ReplyDelete
  4. No, you wouldn't bother to read any of the links because they would present you with information that you don't want to believe in, and that would counter your reality bubble.

    But that's cool. Texas supposedly weathered the housing depression, spent lean, ran a business-friendly union-free economy and is home to 64 of the Fortune 500. it's the very model of the GOP economic theory that if you cut taxes enough you'll generate business.

    Yet the state has a massive budget hole.

    Hmm.

    ReplyDelete
  5. No, you wouldn't bother to read any of the links because they would present you with information that you don't want to believe in, and that would counter your reality bubble.

    I tell you you didn't read any of the links, and you counter by projecting, by saying I didn't read the links. Which I did. Amazing.

    Yes, I did read the items you linked to. All of them. Maybe you should re-read the one from the Texas Tribune:

    State government gets about 60 percent of its revenue from sales taxes, so when there's a dramatic drop in state revenues, or collections, there's less money to spend...

    Some budget watchers say lawmakers created a "structural" deficit in 2005, when lawmakers cut school property taxes by one-third and
    expanded the business tax to make up the difference. But the business tax brings in billions less each year than the property tax did, meaning that with every new budget, lawmakers must find more and more extra money to make up the difference.

    There you go. The problem has nothing to do with business taxes, despite your attempt to say so. In fact, business taxes were increased, but it didn't help. Gee, who would have guessed that? Oh yeah, everyone who doesn't use the Communist Manifesto as an economic guide.

    So, yes, I did read them. You didn't. It's obvious you didn't.

    You better hurry up and close this thread before I start citing further facts you conveniently ignore.

    ReplyDelete
  6. The blame here clearly comes from Texas slashing business taxes to attract companies,...

    As is obvious, this is a complete falsehood. Just like this statement:

    Because that's the cost of those 196,000 jobs that Texas won through state tax breaks for corporations.

    And:

    Business costs are about as low as they come in the Lone Star state...and that's exactly why Texas faces a two-year budget hole of $25 billion, more than a quarter of its total budget.

    Oh, and what is happening in Texas bears no resemblance to what is going on in Ireland no matter how hard you and the liars from TPM try to make it out to be. Just like car insurance isn't analogous to the health insurance mandate.

    ReplyDelete
  7. Let me introduce you to something.

    It's called the Texas Economic Development Act of 2001.

    What it does is allows school districts to vote to give Texas businesses in their area a massive tax break from paying school district property taxes.

    Business taxes indeed went up overall, but the school district tax breaks ended up being so much larger than the business tax increase that it wiped out the state's revenues as school districts cut their own throats in order to attract jobs.

    The result is Texas's massive budget hole, caused by revenue loss from property tax breaks to businesses.

    That's the truth of what happened in Texas. Not the unions. Not Medicaid. Property tax breaks for businesses wrecked the state's economy, period.

    Just because you don't want to pay attention to the facts doesn't mean they don't exist.

    But go ahead and whine. Nobody gives a shit.

    ReplyDelete
  8. Business taxes indeed went up overall, but the school district tax breaks ended up being so much larger than the business tax increase that it wiped out the state's revenues as school districts cut their own throats in order to attract jobs.

    That doesn't even make any sense. How can the state get an increase in tax revenues from businesses yet the state lost revenue from business taxes? Come on. That spin is so bad even a con man couldn't sell it. Besides, you don't even address what Texas did in 2005 (which came AFTER 2001), which was to cut property taxes (I assume the rate) by 1/3 at the same time Texas expanded business taxes. While it may sound like a bad idea, lower property taxes encourage people with money to move to Texas, and then you have an increased number of taxpayers; it's one of the reasons I left Illinois for Arkansas, massively lower property taxes.

    You still haven't made any kind of case that you are right, and I've shown plenty of stuff to prove you wrong. Repeatedly. Try again.

    ReplyDelete
  9. OK, now you're being dense on purpose.

    Texas raised the taxes specifically on businesses, specifically business property taxes. Businesses also pay property taxes to support school districts in Texas, as do residents.

    Those were cut drastically, more than the additional levy on business property taxes themselves.

    Total taxes on businesses went down dramatically, as did revenues, as individual school districts dropped as large of a tax break as they could to lure businesses and jobs in.

    Voila. 25 billion hole over the next two years to fill.

    Now Texas is considering giving the school district tax break decisions to the Comptroller of the State, which is meeting heavy resistance. Texas wants smaller government, you see.

    They are getting exactly what they ordered.

    ReplyDelete
  10. You still don't make any sense:

    Texas raised the taxes specifically on businesses, specifically business property taxes. Businesses also pay property taxes to support school districts in Texas, as do residents.

    First you say business tax revenues to the state increased.

    Total taxes on businesses went down dramatically, as did revenues, as individual school districts dropped as large of a tax break as they could to lure businesses and jobs in.

    Then you say business tax revenues to the state decreased.

    Which is it?

    Voila. 25 billion hole over the next two years to fill.

    And this was the cause of the entire $25 billion shortfall? You can't even agree with yourself whether revenue from business taxes (including property taxes) increased or decreased. You're guessing. Badly.

    Give it a rest.

    ReplyDelete
  11. One tax went up. One tax went down by a significantly higher number. That significant number resulted in lost revenue.

    Period.

    ReplyDelete
  12. SteveAR...you don't make any sense. You say that Zandar is wrong in his analysis but you provide no proof. You are a troll. I bet SteveAR is really the insane governor from Texas trying to troll. Is that you Perry?

    ReplyDelete
  13. Stupid troll SteveAR can't even pull statistics out of his ass to support his argument.

    ReplyDelete
  14. Job growth numbers for 2009-2010 are a silly way to estimate the value of a long-term policy like lowering business taxes. For the record, Texas's job growth has only kept pace with population growth, and liberal bastions such as New York and Massachusetts have actually reduced their unemployment rates more over the past year.

    ReplyDelete
  15. ...pardon me, but I do not think SteveAR is a troll. I think he has made many valid points and arguments. Zandar appears to be spinning and grasping to drive a point that did not have much depth of substance. I am an Independent in Texas (not Dem or Repub). Texas is not pefect. We have a lot of work to do. But why are you trying to make an example out of us (without merit)? Work on each of your own states first, show success, then ask if we need your help to fix our issues.

    ReplyDelete