So I’ve been considering putting our house on the market. If I wasn’t a ridiculous optimist it would be right now. Why you ask?
Because I believe Texas is poised for a spectacular financial implosion. Republicans in Texas have gotten off claiming that times are bad all over, so the budget here is nothing special. Except that our current budget shortfall isn’t the product of a bad economy. In fact Texas’ economy is pretty good. State Comptroller Susan Combs recently released news that sales tax receipts were up. That’s good news. The economy is getting better and better. The problem is that in a year of fantastic growth tax receipts only increase in the millions of dollars. The current budget shortfall is in the billions.
So what went wrong? In 2006 Perry and the Republican legislature passed “property tax relief”. This cut was supposed to chop 33% off of property tax bills. But all it ended up doing was chopping 33% of the states property tax revenue off. After all was said and done this property tax cut actually ended up increasing most citizen’s tax bills by 5%. The Texas legislature meets every two years (bienium). In 2008 when they met the federal government was handing out block grants for all sorts of programs. Perry and the legislature took that money with open arms and used it to plug the massive budget hole. So now we’re in 2010 (yes, yes I know it’s now 2011, but they’ve been messing around with silly bills for a few months now). There’s no more federal stimulous money. And there is a fundamental hole in revenue for the state.
The problem with cutting property tax revenue by 33% is that Texas is not going to get more property. And the value of property does not increase fast enough to cover that 33% hole. So now we have a $25 billion budet shortfall every bienium. Not just this bienium. It’s not going to go away because it’s a fundamental hole in the state budget. Sales tax revenue might go up. Property values might go up. But they’re going to increase in millions. Not billions.
And that’s why I don’t support using the rainy day fund. Because you’re doing the same thing that was done with federal money in 2008. There is a massive fundamental hole in the budget. And patching it with savings is not going to close it in 2012. To put the $25 billion in perspective. Austin ISD’s share of the budget shortfall is the same as the entire state of Wisonsin’s budget shortfall.
don’t see the leadership to close that hole. Without that leadership the state is going to implode. Currently there are 977,600 people on unemployment in Texas. Expectations are that after cutting 189,000 teachers to fix the budget and the rest of the cuts to the public sector, that number will swell by 250,000. Obstensibly many of those teachers are going to leave and look for work in another state, potentially taking a college educated spouse with them. The construction industry will take a hit as Texas can no longer afford to build using bonds. No more new roads. No more new schools or stadiums. Texas’ net migration will slow and eventually turn downward as Texas begins to look less like California with cheap taxes, and more like Michigan.
So, you say, Michigan is still around. There are pockets that are really turning around. Michigan has an income tax. Maybe we should all move there.
I don’t see how there is any future for this state without a politician who is willing to suggest a tax increase that will provide $25 billion in revenue. And I’m not willing to raise my kid in a state where the schools are so poorly funded that there are no electives, languages, or advanced placement classes in the high schools. We’ll see if they can fix it.
But if they can’t I’m moving to a state where polticians and voters can do basic math.