Board puts stiff controls on state's next budget cycle
November 17, 2008
Despite an expected surplus, the Legislative Budget Board, led by Lt. Gov. David Dewhurst and House Speaker Tom Craddick, used what they called the lowest economic growth rate ever adopted — 9.1 percent — to limit state spending for the next two years.
Written by April Castro, The Associated Press
Lt. Gov. David Dewhurst
AUSTIN — In a sign that the economic meltdown is seeping deeper into Texas, top state leaders portrayed a gloomy economic outlook last week as they adopted their spending cap for the next two-year spending cycle.
Despite an expected surplus, the Legislative Budget Board, led by Lt. Gov. David Dewhurst and House Speaker Tom Craddick, used what they called the lowest economic growth rate ever adopted — 9.1 percent — to limit state spending for the next two years.
The LBB adopts a spending cap every two years that parallels the predicted growth of the state economy, based on personal income. Estimated growth for the 2010-11 budget cycle is down from 13.1 percent two years ago.
"I can almost guarantee you we would have a deficit between what spending demands are and available revenue," if not for about $7 billion left unspent two years ago, said LBB Director John O'Brien.
He urged lawmakers to again "save some money for what might be a rough 2011 session."
Lawmakers will write the 2010-11 state budget when they convene in Austin on Jan. 13.
The cap, which is required by a 1978 constitutional amendment, means the Legislature cannot spend more than 9.1 percent over the last two-year budget. The cap only governs about $80 billion. The cap doesn't apply to other money in the state budget, which two years totalled about $160 billion.
The board chose the economic growth rate provided by the state comptroller.
The lowest forecasted estimate "assumes a deep recession, similar to what we saw in the mid-1970s," O'Brien said. But, he said the comptroller's estimate is more recent and "is more in line with what we're seeing from some of the other economists."
While Texas so far has fared better than other states, recent trends have indicated that the economic downturn may finally be catching up to the Lone Star State.
"If the October report continues in that same trajectory, my fear is the (lower 7.7 percent growth rate) may be the one that looks more appropriate," said Rep. Dan Branch, R-Dallas.
Dewhurst reminded the board that even if the adopted rate turned out to be too high, spending will be restrained by the constitutional prohibition on deficit spending. That means the budget can't be bigger than the estimated revenue.
Comptroller Susan Combs will release her official revenue estimate before lawmakers meet in January.
The state's once-rosy budget picture also has faded somewhat as a result of slowed growth in the state's sales tax receipts and the plummeting price of oil and gas. Most of the 2008-09 budget comes from sales taxes. Texas has no income tax. Education gets the most state money, followed by health care programs. Courts and prisons also get a hefty portion of the state budget.
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