AUSTIN – House Speaker Joe Straus warned Tuesday that a 5 percent budget cut imposed on state agencies was "just the beginning" as he called on lawmakers to look at all available options to confront a multibillion-dollar shortfall when they meet next year to start writing the state budget for the next two years.
"Every cost savings idea should be on the table," the San Antonio Republican said as he made a brief appearance before the House Appropriations Committee to underscore the budget challenges confronting lawmakers. He also insisted that lawmakers reject the option of new taxes, which he said would restrain economic growth and efforts to create jobs.
Straus made no specific recommendation but mentioned a number of possibilities for lawmakers to consider, including unpaid furloughs for state employees, a four-day workweek, freezing top-level state salaries and imposing a moratorium on proposed programs that would add to the state's spending needs.
State agencies, universities and appeals courts have spent the last several months reigning in expenditures for the 2010-2011 biennium to meet a top-level edict to reduce current spending by 5 percent. Straus, Gov. Rick Perry and Lt. Gov. David Dewhurst issued the order in January and have been reviewing agency plans for meeting the 5 percent reduction mandate.
The 5 percent reduction, Straus said Tuesday, "was absolutely necessary but not nearly sufficient."
Wayne Pulver of the Legislative Budget Board, under questioning by lawmakers, confirmed that the projected shortfall could be in the range of $15 billion to $18 billion because of declining revenue and increased budget demands, including growing caseloads in Medicaid and children's health insurance.
Straus' warning confirmed fears that more drastic steps may be necessary to meet the state's budget crunch. The three state leaders are likely to call for further retrenchment in the next several weeks when they issue their budget instructions to state agencies for the 2012-13 biennium that begins Sept. 1, 2011.
A number of state agencies have already begun to implement their plans to meet the 5 percent spending reduction for the current biennium. But others, including several major agencies, have asked for exemptions to avoid what they contend would be a severe blow to their operations and their ability to serve the public. Perry, Dewhurst and Straus have been reviewing the exemption requests and could begin issuing their decisions as early as this week.
The state's gloomy budget picture is largely the result of tumbling state revenue because of the nation's economic downturn. But John Heleman, the chief revenue estimator for State Comptroller Susan Combs, offered "modest good news" when he told appropriations committee members that sales tax collections for April had increased by 1.4 percent, compared to the same month a year ago.
Heleman said the increase was a "heartening number to see" after 14 months of declining sales tax revenue. But he acknowledged that the increase was relatively small compared to the $1 billion total fall-off in sales tax revenue since the state began weathering the effects of the recession more than a year ago.
Pulvers said that a total of $6.4 billion in federal stimulus money that lawmakers used to fund programs during the current biennium will be unavailable during the 2011 Legislature that starts in January.
Lawmakers will also be forced to find ways to pay for state-mandated property tax relief and could be faced with demands to increase state school aid because of declining school property tax revenue at the local level.
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