From the Senator's Desk . . . | Senator Eliot Shapleigh

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From the Senator's Desk . . .
November 25, 2009

Today in Texas, robbing Peter to pay Paul is official state policy. Just how does that work?

First, let’s take your family budget. For most of us, we see how much we make-then we pay for the basics. Food, housing, kids come first. If ‘la suegra’ needs to move in during tough times—we make do. If you take from the kids to buy a new plasma TV, something won’t add up. Sounds like family finances 101—right? So how does it work in Austin?

Written by Senator Eliot Shapleigh, www.shapleigh.org

"Robbing Peter to Pay Paul"

Today in Texas, robbing Peter to pay Paul is official state policy. Just how does that work?

Here’s how it should work. Responsible elected leaders let people know why they pay taxes. If we need money to pay for qualified teachers, then let people know why, how to raise it, and what the money goes to pay. Under Rick Perry, instead of firm foundations to finance basics, in agency after agency, one budget is raided to pay for another, and the people never know. Let’s take a look at TXDOT.

Right after World War II, with 12 million men and women home from war and looking for work, President Franklin Roosevelt appointed a National Highway Committee to develop plans for a national system of expressways. Congress designated the 40,000-mile National System of Interstate Highways in 1944, but it was not funded until President Dwight Eisenhower made it a cornerstone of his domestic agenda in 1956.

More than half a century later, Eisenhower’s plan has become the most successful public works project in our nation's history. With over 42,000 miles built, at a cost of $128.9 billion, the highway system put millions of WWII service men and women back to work and provided the infrastructure for the movement of people and products that fuels our economy today. A gas tax at the pump paid for highways from ports to plains.

In Texas, 77,000 miles of state and federal highways have been constructed since the Texas Highway Department was created in 1917. Our road and bridge system was once described as the crown jewel of the 50 states. But after fifteen long years of Grover Norquist-style leadership, Texas highways are now a mess.

Nearly a quarter of a century ago, a handful of lawmakers embraced the Norquist philosophy of starving government. Calling themselves the “Pit Bulls", they set out to cut taxes for the wealthy, and then cut budgets for Texas. One key mantra of the Pit Bulls was to privatize whatever government function or service possible. Years later, dozens of House members have now signed the Norquist pledge to “never raise taxes.” Two of these Pit Bulls were Governor Rick Perry and the late TxDOT Commission Chairman, Ric Williamson.

Today, years after the Pit Bulls first pledged to “drown” government, the Texas highway system is itself under water.

In a recent report, titled “Moving Texas to the 21st Century,” Cambridge Systematics, a leading U.S. consulting group on infrastructure, reported that Texas highway funds are at least $8 billion short each year from meeting the basic needs of a growing state.

Here below, in Chart 1, you can see how much Texas needs to spend to build the transportation and infrastructure we need:

Click here to view larger image.

Chart 2 shows how much money we actually have:

Click here to view larger image.

With Texas set to grow up to 49 million inhabitants by 2050, we are $256 billion short of meeting mobility needs, or $8 billion each year. Remember, basic infrastructure is the key to a competitive economy—without the ability to move people and products, manufacturers and others will go to states and countries that can.

So what happened here? What happened was Rick Perry robbed Peter to pay Paul. Instead of carefully explaining the needs of a growing state, and responsibly raising the revenues to move Texas forward, Grover’s disciples diverted highway money to pay for other budget needs for a decade.

Approximately $2.9 billion of gas tax money designated for roads is diverted every biennium to pay for “other services. For example, $1.144 billion goes to fund the Department of Public Safety, and another 25% of the gas tax goes to pay for public schools. Another $100 million goes toward buying helicopters and other equipment to patrol border counties, and even the Commission of the Arts gets $1.34 million. Over the last decade, more than $11.2 billion has been robbed from the highway fund to pay for other things—and TXDOT is now flat broke. In April, Perry’s appointee to chair the Commission had to admit via letter to the Senate Committee on Homeland Security that by 2011 there will be ‘no more money to build new roads.”

Here's another example. In recent months, as the debate on national health reform has raged, the eyes of America are on Texas. By any measure, Texas is ground zero of the uninsured. Not a single Texas city meets the national average in citizens covered with insurance—not Austin, not Dallas, not Houston. Meanwhile, Perry has repeatedly claimed that Texas is the envy of the nation. What can a Governor whose leadership has produced more than 6.7m uninsured Texans (more by number and percentage than any state in America) possibly mean by that statement? What he means by that is you too can balance your state budget if you leave one in four with no health insurance and will rob Peter to pay Paul for the few that do.

Let’s review some Perry history on healthcare. Last regular session, when it looked likely that the popular Children's Health Insurance Program (CHIP) was set to insure more Texas children via a bill filed by Senator Kip Averitt (R-Waco), Perry killed it by trumpeting to the media that he was opposed to any expansion of CHIP. That bill passed the Texas Senate by a vote of 29 to 2, but died in the House.

In 2003, Perry intentionally kicked over 230,000 Texas children out of CHIP and another half a million out of Medicaid. Then, he went to the Bahamas with Grover Norquist to brag about it. As you know, the federal government pays for the majority of CHIP. In Texas, for every total $1 spent on CHIP, the federal government pays 72 cents while the state pays the remaining 28 cents. So, instead of using the nearly $1 billion that the federal government set aside for Texans to expand CHIP to cover as many Texas children as possible, Gov. Perry sent scarce taxpayer dollars back to the federal government so that other states like Illinois could cover all of their children.

So how does Perry now propose to solve the Texas health care crisis? You guessed it, by robbing Peter to pay Paul, only this time—it is Paul’s insurance company. Under Rick Perry’s scheme (called the Health Opportunity Pool) scarce health dollars already used by Texas hospitals to pay for indigent health care are re—directed to insurance companies to buy insurance policies to cover health. In other words, Medicaid dollars that use 8 cents for overhead and 92 cents for health care will be routed by Rick Perry to insurance companies to use 29 cents of every dollar for denial management and profit. Great deal for insurance companies—but how about Texas? Even George Bush’s Medicaid folks did not buy that plan.

So what’s the bottom line? Last session, Rick Perry used more Obama stimulus money than any other Governor to balance the Texas budget, thus setting the stage for a record deficit in 2011 when Obama money might not be there to rescue Rick.

The bottom line is this—robbing Peter to pay Paul is no way to run state government. Responsible leaders pay as we go—and let the people know.