It’s an odd-numbered year. The Christmas decorations are packed away, and the bowl games are over. That can only mean one thing—the Texas Legislature is back in session!!
This year’s 140 days (at least) promises the usual unpredictability, but involves a somewhat different set of parameters than the last time around. Twenty-four months ago, the gavel came down with Texas facing a sluggish economy and a $10 billion budget deficit. This time around, business activity is more robust and, according to current estimates (which are sure to be revised), there is a scant $400 million surplus if current services are maintained (a lot of money to you or me, but close to “round off error” in the world of State government finance).
In essence, we start out even. (There is actually projected to be $6.4 billion more in general revenue over the next biennium, but with inflation and larger population, it takes $6 billion just to stay where we are.) It must be remembered, however, that the balancing act of the last session brought on significant cuts in indigent healthcare and led to substantial dislocations and hardships (and the loss of more than $1 billion in federal money). Higher education also felt the crunch of the state’s budget ax. In addition, the governor has designated public school finance and child and adult protective services as “emergency” items. None of these are cheap.
The primary focus of the Session is likely to be the funding of elementary and secondary schools. Property tax reduction is a high priority, and many are concerned with the “Robin Hood” concept which underlies our current approach. There are also court mandates regarding the adequacy and solvency of the system. While the final resolution of the litigation remains in the appellate process, there is no doubt that (1) Texas school spending per pupil lags that of most other states and (2) there is a disproportionate reliance on local revenues. I try to stay as close to economics and as far away from politics as possible, but this topic is infused with election intrigue and may very well be the litmus test for who runs for what against whom in 2006. To reduce property taxes and at the same time increase education funding is going to demand that a new source of revenue be found—and we all know how popular that is! This subject alone is more than sufficient to keep the fireworks exploding this session, I’m sure.
During the 2003 session, the governor and the Legislature did an excellent job of enhancing our economic competitiveness. Judicial reforms brought a more equitable and predictable legal climate, and the creation of the Texas Enterprise Fund and other development initiatives transformed the Lone Star State from an also-ran to the top location for new activity in the country. In 2005, there will be a concerted effort to continue the Enterprise Fund (which is funded through the “rainy day fund”) and to create a similar vehicle to support major initiatives aimed at commercializing new research and technology. All of us have a huge stake in these and other proposals that keep Texas expanding in the global marketplace. The challenge will be finding the money to accomplish these goals.
In the midst of all of this brouhaha, a budget must be fashioned which accommodates highways, public health and safety, the environment, the judicial system, and a host of other priorities. The challenges are notable indeed, and for all of the criticism they sometimes endure, I can assure you that many of our lawmakers from both parties work long and hard trying to do the right thing. They may disagree on the answers, but they step into the arena seeking to make Texas stronger for all of us. There will be some surprises, rest assured, and none of us (including me) will like everything that happens. I wholeheartedly encourage all of you to not only enjoy the show, but also participate in the process.