Rick Perry Faces the Biggest Drop in Texas Revenue Since Oil Bust in 1980s

Business Week 1/11/11
Texas’s Perry Faces Record Budget Gap on Revenue Drop

Governor Rick Perry, after touting Texas’s growth while holding down taxes and spending, faces the biggest two-year budget gap in state history and a challenge some compare to the 1980s, when an oil bust roiled the economy.

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‘Structural Problem’

Texas cut property taxes by as much as a third in 2006 as part of a plan supported by Perry to shift the burden of school funding to the state from local authorities, Greenberg said.

The shift “caused a structural problem in the state budget,” said Hamilton, the former deputy controller. With less property tax revenue, the state relies more on sales levies, which slumped more than expected, he said.

Texas must trim spending by about 17 percent, Nick Samuels, a Moody’s Investors Service analyst in New York, said yesterday in a telephone interview. He estimated the deficit for the coming budget cycle at $15 billion and said the cuts assume that the Republican-dominated state leadership won’t raise taxes.

All statewide elected officials in Texas are Republicans, while the party holds commanding majorities in both legislative chambers.

Fort Worth Star-Telegram 1/12/11
GOP leaders say state budget can be balanced without tax hike

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"The good news is that the sky has not fallen yet," Perry said as the three Republican leaders met with reporters after their first meeting. "I don't expect it to fall over the next 140 days or the next 24 months."

Perry declared that the state is not on the verge of a "budgetary Armageddon" despite warnings that the shortfall could reach $27 billion if lawmakers try to maintain state services at current levels. But all three leaders, as well as many Republican lawmakers, say deep reductions in services may be necessary to bring spending in line with revenue.

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Straus said lawmakers will unveil a base budget next week that he said will be built on current revenue without net new taxes or tax increases.

AAS 1/13/11
Perry agenda picks up where campaign left off

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Perry talked repeatedly in his re-election campaign about sanctuary cities, which are cities where local law enforcement officers do not ask people about their immigration status. One of his closing television ads against Democratic challenger Bill White was a tough spot that suggested White's immigration policies as mayor of Houston led to the murder of a police officer by an undocumented immigrant.

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Having said that Texas does not need an Arizona-style immigration policy that requires police to question the immigration status of suspects if they have "reasonable suspicion" that they are in the country illegally, Perry may sense the need to prove that he's not soft on immigration.

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Democrats were quick to charge that Perry was using the issue of sanctuary cities to distract from the fact that lawmakers begin the session about $27 billion short of the money they would need to keep providing the services the state now provides.

"Law enforcement officers across the state understand that crime victims and witnesses are their most important resources for solving crimes," said Rep. Armando L. Walle, D-Houston. "We cannot afford to alienate anyone who could be of assistance."