- The Washington Times - Monday, January 13, 2003

AUSTIN, Texas, Jan. 13 (UPI) — Texas Comptroller Carole Keeton Strayhorn reported Monday the state faces a $9.9 billion shortfall in the next 2-year budget cycle, nearly twice her previous estimate.

Speaking as legislators gathered for the opening of the 78th Texas Legislature on Tuesday, Strayhorn said the days of rosy revenue projections were over and she blamed reckless spending by the last session for some of the red ink.

"The last several revenue estimates had begun to look a lot like Christmas, with lawmakers eagerly awaiting to see how many sugar plums were stuffed into their stockings so they could merrily begin spending Texas tax dollars," she said. "This year, the stockings are empty."

In Texas, the Legislature meets every 2 years and the state government operates on a biennium budget. When the Republican comptroller certified the $114 billion budget passed by the 2001 session she warned of a $5.1 billion shortfall in 2 years.

"And the spendthrift decisions by the last Legislature to blow last session's $3 billion surplus stacked upon the passage of unfunded obligations have now collided with an anemic economy," said Strayhorn.

The comptroller said the last Legislature agreed to provide health insurance for all Texas teachers and public school employees, but provided funding for only 1 year. In addition, unanticipated healthcare costs are expected to add another $1 billion to state government costs in the next 2 1/2 years, she said.

"This leaves the current Legislature facing a shortfall of $9.9 billion if it wants to meet the obligations of the remainder of this fiscal year and complete a new biennial budget maintaining current programs and obligations," Strayhorn said.

The Texas economy remained "relatively resilient" through the economic woes of Sept. 11, 2001, the dot-com bubble, and the corporate scandals, she said, but two years of declining sales tax revenue has hit Texas the hard in the past few months.

Texas has no state income tax and state government leans heavily on sales and property taxes for operating revenues. The state ranks 49th per capita in the nation in state tax burden.

The total Texas revenue estimate for the next fiscal year is $114.2 billion, including $56.4 billion in state general revenues and $57.8 in federal dollars.

Strayhorn opposed a tax increase or a state income tax to make up for the shortfall.

"As for me, I say either of those ideas will only dig a deeper hole for Texas taxpayers, and I will fight against them both every day throughout this legislative session and for as long as I hold public office," she said.

Strayhorn has instead unveiled 179 recommendations that would save the state $3.7 billion.

Republican Gov. Rick Perry and the first GOP-controlled Texas Legislature in more than 100 years are expected to avoid tax increases and push for cuts in state spending.

"In tough economic times the focus must be on government spending less, not on taxpayers paying more," he said. "While some will interpret the comptroller's revenue estimate as a very challenging scenario, I believe the financial outlook presents us with the opportunity to re-examine the core responsibilities of government and how every tax dollar is spent."

Perry said the comptroller makes assumptions in her revenue estimates about spending and he said those assumptions will be re-evaluated by the Legislature during the upcoming 140-day session.

"Fiscal responsibility will be a hallmark of my administration while we continue to improve economic security and opportunity for all Texans," he said.

"While every state is facing tough economic decisions this year, we must also keep in mind that Texas remains in better fiscal shape than most states."

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(Reported by Phil Magers in Dallas)

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