Transcript Slide 1

A Balanced Approach
To Meeting the Needs of Texas
F. Scott McCown, Dick Lavine, Eva DeLuna Castro
[email protected], [email protected], [email protected]
The Texas State Budget for 2010-11
Biennial Total: $182 billion
Property tax
cut, 8%
K-12 Ed.
14%
Federally funded = shown in white;
other areas are General Revenue,
GR-Dedicated, & “Other” State Funds.
HHS
20%
Higher Ed.
12%
Federal
36%
Highways
6%
K-12 Ed.
8%
Highway 4%
Other Fed. 4%
Prisons
3%
Other
8%
HHS
13%
We’re Still In the Hole Created in 2006
In billion $
2008-09
2010-11
5/06
Fiscal Note
11/09
Cash Report
5/06
Fiscal Note
11/09
Certification
Franchise tax
6.8
3.0
7.7
3.4
Tobacco tax
1.4
1.9
1.3
1.8
Used car, interest
0.1
0.0
0.1
0.1
TOTAL
REVENUE
8.3
4.9
9.1
5.4
Cost of property
tax cut
-14.2
-14.2
-14.9
-14.9
SHORTFALL
-$5.9
-$9.3
-$5.8
-$9.5
The Recession
Reduced Sales Tax Revenue
Billion $
$2.1
$2.0
Fiscal 2008
$1.9
$1.8
$1.7
$1.6
$1.5
Fiscal 2010
Fiscal 2009
$1.4
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May June July Aug
“One-Time” Money
Balanced the 2010-11 Budget
General Revenue
ARRA Used for GR
Cash on hand
Property Tax Relief
Fund carryover
Permanent School Fund
TOTAL GR BUDGET
GAP
Current
Budget
$75.0 billion
$6.4 billion
$2.6 billion
$3.0 billion
2012-13
Budget
$75.0 billion
$0
$0
$0
$0
$1.2 billion
$87.0 billion
$76.2 billion
$10.8 billion
Funding a Balanced Approach:
Easy Money
Potential Revenue for
2012-13
Economic growth with no
change in revenue system
Accounting Adjustments
Payment delays, etc
$800 million for
each 1% growth
$2.0 billion
Funding a Balanced Approach:
Spend the Rainy Day Fund
Beginning balance
Potential Revenue
for 2012-13
$8.2 billion
Growth during 2012-13
$1.0 billion
Total Rainy Day Fund
Available
$9.2 billion
When Can the Rainy Day Fund
Be Spent?
• 1) If GR forecasted for the rest of a
biennium is less than the GR appropriated,
RDF can be used to cover the shortfall –
vote of 3/5 of members present (up to 90
in House; 19 in Senate)
• 2) RDF can be used “at any time and for
any purpose” – 2/3 of members present
(up to 100 in House; 21 in Senate)
Sources of State Revenue 2009
Total $84.3 billion
Other
5%
Interest/
Investment
Income
2%
Taxes
45%
Federal Funds
37%
Licenses,
Fees, Fines,
Penalties
Lottery
9%
2%
Source: Comptroller of Public Accounts, Annual Cash Report
Major State & Local Taxes in Texas 2009
School District
20%
Other State
Taxes
25%
Sales
Tax
35%
State
27%
Property
Tax
40%
City
8%
County
8%
Special District
6%
Local
8%
Sources: Comptroller of Public Accounts, Biennial Revenue Estimate 2008-09, January 2007; Annual
Property Tax Report. Forecast by CPPP.
State Tax Collections 2009
Total $37.8 billion
Motor Vehicle
Sales and
Rental
7%
Motor Fuels
8%
Sin (Cigarette,
Tobacco, Alcohol)
6%
Franchise
11%
Sales
56%
Gas/Oil
Production 6%
Insurance
3%
Other
3%
Source: Comptroller of Public Accounts, Annual Cash Report.
How the 2004-05 State Budget was “Balanced”
Cuts to 2003 Budget: $1.4 billion
Cost shifting: $1.9 billion
“Smoke and mirrors”: $1.2 billion
Estimated
General
Revenue
Shortfall of
$15.6 billion
Rainy Day Fund: $1.3 billion
Federal Fiscal Relief: $1.4 billion
Revenue Measures: $1.8 billion
Cuts to 2004-05 Budget:
$6.6 billion
Unfunded Items in the 2004-05 State Budget
General Govt,
Workforce
Comm., Lottery
5%
Cost shifts
23%
K-12 schools
20%
State employee
health care
3%
Natural
resources
2%
Higher Ed 14%
Public Safety &
Prisons 7%
System Benefit
Fund 5%
HHS Provider
rate cuts 4%
Other HHS Cuts
& unfunded
caseload growth
17%
Budget Scenario for 2012-13
$100
Additional
GR Needed
$7 b
ARRA instead of GR
$75
$1 b
GR for Higher Ed
None
Local School Tax Cut
(GR and PTF)
$3 b
$50
Other GR for K-12
$3.3 b
$25
GR for HHS
$300 m
GR for Prisons
Other GR
$0
2002-03
2004-05
2006-07
2008-09
2010-11
$700 m
2012-13
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