Rick Perry's Balanced-Budget Illusion

Categories: Get Off My Lawn

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Now this is something I could really kick myself for. I can take being wrong. It's one thing to be accused of being too Pollyanna. (Not sure that has actually ever happened.) But the one thing I cannot forgive in myself is not being negative enough. That just should not been happening.

That's like ... what? Accusing Derek Holland of not being young enough? Mmm, maybe sort of. Bit of a reach.

But I did it. I wrote a piece for the October 6 newspaper, "Rick Perry's Manufactured Miracle," about the harsh truth behind some of Rick Perry's claims for the Texas economy. At one point I was trying to make the point that Perry and the Legislature create the illusion of small cheap government at the state level by pushing a lot of debt and obligation off on local governments.

Take things like schools and public infrastructure. Gotta have schools. Gotta have bridges. Somebody has to pay. If they shirk it in Austin, it just means we have to pick up the slack here at home.

Here's where I went way too soft. I cited some numbers from The Tax Foundation, a conservative think tank, showing that Texas has the next-to-lowest public debt per capita in the nation when you look only at state government. But when you add in local government debt, we jump up to 15th highest, putting us in the upper third of states with high public debt.

So guess what? A new study and some reporting by another newspaper indicate our debt situation in Texas under Perry is way worse than what I cited. Reporter Amantha Batheja has done a bang-up piece for the Star-Telegram uncovering all of the sleazy accounting tricks this last Legislature used to push its debt obligations out into the future while also collecting taxes ahead of schedule. One of her most striking findings has to do with that $7 billion Perry said he saved back for us in the state's Rainy Day Fund.

Nah. It's gone. The Perry budget didn't include $2 billion the state agrees it owes to schools and didn't include almost $5 billion the state and the feds agree Texas owes to Medicaid.

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Via.
So it's like this: Let's balance our household budget by pretending we don't have to make two car payments every month. Or, hey, let's pretend we're all astronauts and then pretend we've gone to a planet where we don't owe any money to anybody. Problems solved, eh, Mofo?

But the bigger nail in my insufficiently dark version of things in the Perry piece comes from a piece released yesterday by an outfit called State Budget Solutions.

I'm a tad wobbly on these guys, because they don't disclose a list of directors or even a mailing address that I could find on their web page.

They say they're a "non-partisan, positive, pro-reform" non-profit interested in "reality-based budgeting." But aren't we all? I sent them a request for a list of their directors. We shall see.

Here's what I like about them. They offer not just sweeping generalizations but also a peek at the data on which they base their conclusions. And at the bottom of their spreadsheet, they do cite their sources.

They say if you want to know what a state really owes, you have to add up all of what it owes to its own pension funds and other public obligations, as well as gimmicks like the ones reported in the Star-Telegram.

When you do that for Texas, we're in the top five debtor states in the country with California, New York, New Jersey and Illinois. We're actually in 48th place -- with California in 50th as the most debt-ridden. Our debt per capita ranking is not great -- 29th place.

Here's what I wonder. Could I get even more negative than these guys? Sure I can. As I say, I reported in my big Perry piece that the public debt per capita picture in Texas gets much worse when you expand your view to include local government debt.

It's the dark side of believing things are better left to local government. It just means the locals have to do the debt instead of Austin. Remember I said that local debt in Texas jumps us way up the list in terms of total debt per capita in the country?

So if you take this latest study showing us almost at the top of the list based just on state debt and then factor in local debt, we should we be way out ahead Number One in the nation for owing money.

In fact, I'm starting to wonder how Perry's Austin stacks up against that other place he likes to bash for not having its fiscal house in order -- Washington. Are we sure Texas does any better?

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Paul
Paul

Guvn'r Goodhair has done more to damage the State of Texas than anyone since or before Reconstruction.

His primary mantra of "no taxes" has been accomplished by 2 items.  The first is to mortgage our future.  This was done by taking tax streams for future items, primarily new highway construction, and shifting it to the current budget.  The gasoline tax used to be the sole pervue of TxDOT, but not anymore.  The gasoline tax now goes to the general fund, with a certain portion dedicated to education.  TxDOT now has to submit budget items for new highway construction, which guess what, there is no money available  because it has been spent elsewhere.  Because of the dedication to education of the gasoline tax, we now have the absurd situation of needing to raise

Does anyone remember the debacle over the proceeds of the SH121 toll road sale?  It was sold to us as the proceeds being used for roads in the NTX area.  But then it was, no this is paid into the general fund and the TxDOT expenditures will be paid out of the general fund.  Although there is a substantial amount of money being spent on roads in NTX, it is nowhere near the amount that was generated from the tollroad sales.

The other item that Guvn'r Goodhair has done is to take dedicated revenue streams and used them to balance the budget.

For example there is a dedicated tax that is supposed to go to TPWD.  let's say that this tax generates $1MM and the TPWD budget is $3MM.  Well guess what the TPWD budget is whacked by $1MM and then a freeze is put on the $1MM in order to balance something else.

When Ms. Strayhorn (Rylander or whatever her name is now) was comptroller many years ago, her office forecasted this problem.

The Texas budget is one big convoluted mess and the person who is responsible is Governor Perry.

"When I tell you not to vote for a Governor from Texas for President, will you listen to me?"-- Molly Ivins

Renegade
Renegade

Is it difficult to get true numbers on local debt?  Every time I see a pie chart in the DMN that purports to show where Dallas's budget is allocated, the chart leaves out one of the biggest catergories-- interest payments on loans made to the City. 

Paul
Paul

Technically, the City borrows very little, usually just for cash management.

What you need to look for is the bond servicing.

I think Mr. Schutze did an article on this a while back.

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154443

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Genboblee
Genboblee

Rick Perry I believe had a secret meeting with historian M. Bachmann Overdriveand decided to present a plan to honor John Brown with a humanity plate for an alternative to the Stars and Bars.  The will cause he big problem with the neo-confederate society in Texas and many will vote to kick out Perry/Berry.

Judd D. Bradbury
Judd D. Bradbury

It is possible that the state government (that Perry ran) has better policy than the local government (that democrats ran)? I remember Jim Schutze and Angela Hunt advocating for higher local taxes. It was a virtue! Are you guys changing your mind?

Perry is responsible for local debt decisions. Since when?

scottindallas
scottindallas

since he has failed to fund the cities as promised. 

Judd D. Bradbury
Judd D. Bradbury

Scott I have this great idea. States live in the policy they create and local municipalities live in the policies they create. And we avoid bailouts across the board where one entity with good policy is having to make up for another with bad policy. I think it keeps things cleaner that way.

RTGolden
RTGolden

Are cities in TX Home Rule Municipalities or Statutory Municipalities?  One would have no cause to cry foul at broken funding promises by the State, the other, would have great cause to cry foul.  Also, as Jim mentioned, a State mandated program should receive adequate funding from the State mandating it.This is always the problem with expanding Liberal social programs, everybody wants a piece of it, nobody wants to fund it.  Tax the rich doesn't work in recessions, because the majority of "tax the rich" largess comes from investment yields, which are negative in recessions.  California had a boon in the 90's with it's tax the rich budget, and was befuddled when all those dot com portfolios tumbled and the state collected reduced taxes.Regardless of what anyone says.  Currently, over 40% of the US population doesn't pay income taxes (through exemptions and deductions).  If that number hits 50% a political solution for tax reform is unlikely.  The time to fix it is now.  A flat tax, or realistically graduated tax, with no exemptions, no deductions and a very modest poverty level is what is needed.

Judd D. Bradbury
Judd D. Bradbury

Which unfunded state mandates are creating the budget issues? Deal with them, drive to the root of the problems. I agree with stopping the diversion issue and you heard me calling out Senator Corona about the red light camera funds diversion. I just don't buy the big pot theory any more. I don't think anyone in my generation is a big believer in it either. We have watched the big pot theory at work and the result is always the same. We spent all the current money and a whole bunch of future money. Shoulders shrug, hey were are retiring soon, so here is the big bag of problems we created with our "ideas". The private sector is a model of how to deal with multi-level budget issues. Corporations have global budgets, business unit budgets, and office level budgets. Corporations are efficient because they have accountability and independence at each level. They gave up the big pot theory a long time ago when they figured out that it did not work. Maybe we need a different model?

JimS
JimS

But, Judd,  remember when Jim Jackson was still in county government, all kinds of screaming about "unfunded state mandates." Has that gone away?  Then you have the diversion of dedicated funds, which we pay locally and are supposed to fund local at least some local needs, high-jacked instead to preserve the facade of fiscal restraint in Austin. Cities, in fact, are creatures of the state legally. It's hard for me to see how you would do the divorce in order to do the property settlement.

Brad Watson
Brad Watson

Hey, Jim  Aman Batheja is a superb and widely respected male reporter for the Star-T.  Unless his twin sister just joined the staff...

JimS
JimS

Shit. I'm such a parochial ass-hole. Thanks, Brad, for this. I needed to know.

Amy S
Amy S

I wrote last week about Senate Bill 1, which requires restaurants to prepay their sales AND mixed beverage taxes in August 2013.  This means thousands of dollars for even the smallest in the industry. Maybe my landlord will lend it to me.

Wonder if any legislators are planning to eat out that month. Let me be the first to invite them in, because I'd like to serve them a piece of my mind.

scottindallas
scottindallas

I thought, and many must think it's too absurd to believe.  If true, it's so screwed up, I don't know where my objections would even begin.

PLFarmer
PLFarmer

I think this bears repeating one last time.

Paul Gilding said it very well.“Our system of economic growth, of ineffective democracy, of overloading planetearth — our system — is eating itself alive. Occupy Wall Street is like the kidin the fairy story saying what everyone knows but is afraid to say: the emperorhas no clothes. The system is broken. Think about the promise of global marketcapitalism. If we let the system work, if we let the rich get richer, if we letcorporations focus on profit, if we let pollution go unpriced and unchecked,then we will all be better off. It may not be equally distributed, but the poorwill get less poor, those who work hard will get jobs, those who study hardwill get better jobs and we’ll have enough wealth to fix the environment. “What we now have — most extremely in the U.S. but pretty much everywhere — isthe mother of all broken promises,” Gilding adds. “Yes, the rich are gettingricher and the corporations are making profits — with their executives richlyrewarded. But, meanwhile, the people are getting worse off — drowning inhousing debt and/or tuition debt — many who worked hard are unemployed; manywho studied hard are unable to get good work; the environment is getting moreand more damaged; and people are realizing their kids will be even worse offthan they are. This particular round of protests may build or may not, but whatwill not go away is the broad coalition of those to whom the system lied andwho have now woken up. It’s not just the environmentalists, or the poor, or theunemployed. It’s most people, including the highly educated middle class, whoare feeling the results of a system that saw all the growth of the last threedecades go to the top 1 percent.”

Montemalone
Montemalone

Those unfilled jobs are not unfilled due to a lack of qualified workers, but rather due to falling wages. C suite guys keep giving themselves raises, bonuses, perqs, and everything else, but the hired help is expected to take less, work more, shut up, and be quiet.

Amy S
Amy S

I would point out that the minimum wage increased 41% in recent years (not that it wasn't needed, it was). It's the middle class that is being squeezed the hardest.

Montemalone
Montemalone

$7.25/hr X 2000 hrs (50 wks X 40/hr/wk, probably no paid vacation) = $14,500.00/yr.I think this is the wage goal for CEOs across America.

Judd D. Bradbury
Judd D. Bradbury

Yes lets raise the rate again so some more people will lose their jobs.

The99Percent
The99Percent

And it did not go from $5.15 to $7.25 in one year. Here are the min wage rates since 1980. Looks pretty pathetic to anyone with common sense:

Jan 1, 1980 $3.10Jan 1, 1981 $3.35Apr 1, 1990 $3.80Apr 1, 1991 $4.25Oct 1, 1996 $4.75Sep 1, 1997 $5.15Jul 24, 2007 $5.85Jul 24, 2008 $6.55Jul 24, 2009 $7.25

Amy S
Amy S

I'm not saying it shouldn't have been raised, it should have been raised earlier in the Bush administration it didn't have to have it go from $5.15 to $7.25 in one year. The smallest service businesses generally pay the lowest wage earners, eating up a greater share of their income. I doubt the minimum wage increase barely made a blip on the CEO's bottom line.

Montemalone
Montemalone

Perry's the kind of guy that makes you want to count the silver after he leaves.

Augie
Augie

Which piece are you referring to at State Budget Solutions? I don't see one released yesterday, October 24, 2011 or one with the stats you site.  

Matthew Gunter
Matthew Gunter

God, that is bad. Think they'll mention it on Fox News tonite?

scottindallas
scottindallas

We need highly trained workers to fill jobs that sit unfilled, yet state tuition at our universities has skyrocketed.  We need more highways and bridges and we can't raise the gas tax, though we can pay tolls on an increasing monopoly of highways.  We tout our low taxes, while our property taxes come due, come profit or loss.  We have mounting levels of debt, but where is infrastructure, and the investment to prepare this state for the future?  Where are the lakes?  Where are the highways?  Where is the mass transit?  Where is the electricity to keep us from blackouts?  Where is the investment?

Randy S
Randy S

The investment thing is exactly what drives me up the wall with all these people who say "Run the government like a business!!!" Well, what are businesses doing right now? Loading up on debt (because the rates make it so cheap right now) so they can invest back into their businesses with new technology, buildings, etc. 

Guest
Guest

"We need highly trained workers to fill jobs that sit unfilled, yet state tuition at our universities has skyrocketed."  Where are these unfilled jobs?  Otherwise, no concerns. 

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