Texas comptroller says cuts will not solve deficit

March 3, 2011 1:29:31 PM PST
The Texas comptroller told the House Appropriations Committee on Thursday that she can't imagine solving the current budget crisis through cuts alone. Susan Combs spoke at a hearing designed to be a reality check for conservatives who think the budget can be balanced by slashing state services. The current two-year budget cycle is $4.3 billion short and, under the Texas Constitution, that deficit must be made up by Aug. 31.

The state is also facing another projected $27 billion shortfall in the next two-year budget, but that was not the subject of Thursday's hearing.

Committee Chairman Jim Pitts, a Waxahachie Republican, asked Combs to testify after he introduced a bill to spend $4.3 billion from the state's Rainy Day Fund to cover the deficit. In opening Thursday's hearing, he tried to communicate the gravity of the problem, which left lawmakers silent and stone-faced.

"The budget adopted by the Legislature last session, and signed by the governor, exceeded the comptroller's measure of available revenue," Pitts said. "This committee, and this Legislature, has very limited options: the use of the Rainy Day Fund, further reductions ... or deferring payments into the next biennium."

While Combs never called on the committee to dip into the Rainy Day Fund, she presented a detailed history of how it had been used in the past and how spending it would not hurt the state's credit rating. She also examined the other options.

"I don't know how you can get to $4.3 billion in cuts," Combs said. She warned that even if the recession ends, that doesn't mean revenues will return to levels seen in 2005, when the Texas economy was booming.

When some lawmakers tried to compare the situation to 2003, the last time they tapped the Rainy Day Fund, the Democratic vice chair chastened them.

"I wish this was 2003. But if anyone tries to compare 2003 to what we are going through now, and saying they are similar, you are not facing reality," said state Rep. Sylvester Turner, D-Houston. "This situation is far worse."

Combs acknowledged that the recession that began in 2007 was the worst since the Rainy Day Fund was created. But she warned that lawmakers should think about the next four years, not just the next two, when considering how much of the fund to spend or how to fix a business tax that has never raised as much money as expected.

She also pointed out that if lawmakers did not make funds available to cover the deficit, she is obligated under the state constitution to borrow money from the Rainy Day Fund to pay the state's bills.

Conservative groups, including tea party activists, have consistently called on lawmakers to leave the Rainy Day Fund alone. Some have threatened legislators that they will face conservative opponents in the 2012 election if they tap the fund.

Pitts was clearly laying the groundwork to pressure the 101-member Republican supermajority in the Texas House to spend some of the Rainy Day Fund. Pitts' bill would require three-fifths of the lawmakers present to authorize using it.

Some state Senate leaders have also expressed a readiness to tap the fund. Gov. Rick Perry said Thursday he remains opposed to spending the fund, "which would only delay tough decisions and leave us unprepared to handle bigger emergencies in the future."