May 25, 2011

New Tax Report: State Budget Easy to Balance

AUSTIN, Texas - As Texas lawmakers struggle to balance the state's books by cutting public education, health and human services and other popular programs, a new study says there is a simpler and far less painful way to turn deficits into surpluses.

The study released today suggests flipping the state tax structures so that the wealthiest pay the rates low-income wage earners are now paying, and vice versa. That would immediately wipe out Texas' $27 billion budget shortfall, according to report author Karen Kraut, an analyst with United for a Fair Economy, who says Texas has the nation's fifth most regressive tax structure.

"The top 20 percent of taxpayers pay 4.4 percent of their income in state and local taxes, whereas the lowest-income taxpayers pay 12.2 percent of their income in state and local taxes."

Reversing those figures, she says, would raise $72 billion for state coffers. It would require a state income tax, which Kraut acknowledges would be a hard sell politically. However, she thinks Texans would warm to the idea if they learned it would be accompanied by big reductions in property taxes.

Texas wouldn't be alone in benefitting from progressive taxation, the report says. According to Kraut, Inverting tax structures would bring states across the nation $490 billion in new revenues.

"Every single state in the nation has a tax system that is regressive, that taxes the lowest-income families at a greater share of their income than the most wealthy families."

Wealthy people should not fear progressive taxation, she says, because with greater fairness comes greater overall economic stability and growth.

"When low- and middle-income people have more money to spend in the economy, they purchase things, and the economy gets revved up, and the people who own businesses - and the people who invest in the stock market - gain from those economy-enhancing activities."

Today's political culture has contributed to the misperception that the wealthy pay their fair share - if not more - in taxes, Kraut says. She thinks that's because tax debates tend to center on the federal income tax.

"Pretty much every other tax - especially taxes at the state and local level - hit the lower- and middle-income folks a lot harder than the wealthy."

Wealth has been redistributed during the past three decades, Kraut says, because of increasingly regressive tax systems. She says that's one reason that top incomes have soared while lower incomes have stagnated.

The study is online at faireconomy.org.

Peter Malof, Public News Service - TX

February 8, 2011

Statement From Texas Forward on the Governor’s State of State Address

(AUSTIN, Texas)­ — Texas Forward, a broad coalition of groups from across Texas urging a balanced approach to the state’s revenue crisis, released the following statement regarding the governor’s State of the State address.

“The Governor appears to be in denial about the severity of our fiscal crisis—a revenue shortfall even bigger than California’s as a percentage of the budget. There is no issue facing Texas that is a greater emergency than the imminent danger that Texas grandparents will be turned out of their nursing home beds, that higher education will be out of reach for millions of college-ready Texans, and that the 2011-12 school year will have fewer schools, fewer teachers, and more children jammed into crowded classrooms across the state.

“The members of the Texas Forward coalition call on the Governor and Legislature to take a responsible, balanced approach to balancing our 2012-13 budget so Texas can move forward instead of taking a giant step back. Such an approach should include:

1. Use all of the Rainy Day Fund, estimated to have $9.4 billion available for spending in the 2012-13 budget.  The constitutional purpose of the fund is to maintain vital state services during economic downturns.
2. Maximize use of all available federal funding.
3. Create new sources of revenue that are equitable and can grow along with the growth in need for public services, for example, eliminating unwarranted tax exemptions.”

January 19, 2011

HOUSE BUDGET BILL WOULD CUT TEXAS' FUTURE SHORT

(AUSTIN, Texas)  —  TexasForward, a broad coalition of groups from across Texas urging a balanced approach to the state’s revenue crisis, released the following statement on the filing today of the House budget bill.

“A state budget that spends only what the Comptroller tells us will be available ($72 billion) would take us back to levels of investment not seen since the 2006-07 budget. Today, Texas has hundreds of thousands more children who need schooling or health care than it did in 2006, and millions more people using its roads and infrastructure every day.

“A cuts-only approach could cost Texas hundreds of thousands of jobs - public sector jobs in schools and private sector jobs in health care - and jeopardize the moderate economic recovery that the Comptroller is predicting. In addition, the needs of many harworking
Texans will go unmet.

“We need to move Texas forward by taking a balanced approach that protects working families, advances our economic recovery, and secures a prosperous future. That means we must spend the Rainy Day Fund and find other revenue to continue to meet current needs and investments in schools, health care, and roads.”

To learn more about TexasForward, visit www.txforward.org.

The Texas Omen

By PAUL KRUGMAN

These are tough times for state governments. Huge deficits loom almost everywhere, from California to New York, from New Jersey to Texas.

Wait — Texas? Wasn’t Texas supposed to be thriving even as the rest of America suffered? Didn’t its governor declare, during his re-election campaign, that “we have billions in surplus”? Yes, it was, and yes, he did. But reality has now intruded, in the form of a deficit expected to run as high as $25 billion over the next two years.

And that reality has implications for the nation as a whole. For Texas is where the modern conservative theory of budgeting — the belief that you should never raise taxes under any circumstances, that you can always balance the budget by cutting wasteful spending — has been implemented most completely. If the theory can’t make it there, it can’t make it anywhere.

How bad is the Texas deficit? Comparing budget crises among states is tricky, for technical reasons. Still, data from the Center on Budget and Policy Priorities suggest that the Texas budget gap is worse than New York’s, about as bad as California’s, but not quite up to New Jersey levels.

The point, however, is that just the other day Texas was being touted as a role model (and still is by commentators who haven’t been keeping up with the news). It was the state the recession supposedly passed by, thanks to its low taxes and business-friendly policies. Its governor boasted that its budget was in good shape thanks to his “tough conservative decisions.”

Oh, and at a time when there’s a full-court press on to demonize public-sector unions as the source of all our woes, Texas is nearly demon-free: less than 20 percent of public-sector workers there are covered by union contracts, compared with almost 75 percent in New York.

So what happened to the “Texas miracle” many people were talking about even a few months ago?

Part of the answer is that reports of a recession-proof state were greatly exaggerated. It’s true that Texas job losses haven’t been as severe as those in the nation as a whole since the recession began in 2007. But Texas has a rapidly growing population — largely, suggests Harvard’s Edward Glaeser, because its liberal land-use and zoning policies have kept housing cheap. There’s nothing wrong with that; but given that rising population, Texas needs to create jobs more rapidly than the rest of the country just to keep up with a growing work force.

And when you look at unemployment, Texas doesn’t seem particularly special: its unemployment rate is below the national average, thanks in part to high oil prices, but it’s about the same as the unemployment rate in New York or Massachusetts.

What about the budget? The truth is that the Texas state government has relied for years on smoke and mirrors to create the illusion of sound finances in the face of a serious “structural” budget deficit — that is, a deficit that persists even when the economy is doing well. When the recession struck, hitting revenue in Texas just as it did everywhere else, that illusion was bound to collapse.

The only thing that let Gov. Rick Perry get away, temporarily, with claims of a surplus was the fact that Texas enacts budgets only once every two years, and the last budget was put in place before the depth of the economic downturn was clear. Now the next budget must be passed — and Texas may have a $25 billion hole to fill. Now what?

Given the complete dominance of conservative ideology in Texas politics, tax increases are out of the question. So it has to be spending cuts.

Yet Mr. Perry wasn’t lying about those “tough conservative decisions”: Texas has indeed taken a hard, you might say brutal, line toward its most vulnerable citizens. Among the states, Texas ranks near the bottom in education spending per pupil, while leading the nation in the percentage of residents without health insurance. It’s hard to imagine what will happen if the state tries to eliminate its huge deficit purely through further cuts.

I don’t know how the mess in Texas will end up being resolved. But the signs don’t look good, either for the state or for the nation.

Right now, triumphant conservatives in Washington are declaring that they can cut taxes and still balance the budget by slashing spending. Yet they haven’t been able to do that even in Texas, which is willing both to impose great pain (by its stinginess on health care) and to shortchange the future (by neglecting education). How are they supposed to pull it off nationally, especially when the incoming Republicans have declared Medicare, Social Security and defense off limits?

People used to say that the future happens first in California, but these days what happens in Texas is probably a better omen. And what we’re seeing right now is a future that doesn’t work.

PRESS RELEASE

FOR IMMEDIATE RELEASE

Wednesday, January  5, 2011

CONTACT:  Brian Stephens
512-320-0222 x112 (office)
512-565-0506 (cell)

New Coalition Urges a Balanced Approach to Move Texas Forward

(AUSTIN, Texas) — A new coalition of Texans today urged the Legislature to spend all of the Rainy Day Fund as a balanced approach to bridging the state’s anticipated revenue shortfall and fueling new economic growth.

Texas Forward, whose 37 member organizations represent educators, health and human services nonprofits and others dedicated to better lives for all Texans, believes this is not the time to cure budgetary problems with cuts alone. Texas children and their families need more help, not less, in these difficult economic times.

“The Rainy Day Fund, which is expected to include more than $9 billion by the end of the current fiscal year, was created to help lawmakers meet financial emergencies. And, this emergency is of monsoon proportions,” said Reverend T. Randall Smith, president of the Board of Directors of Texas Impact.

Janet Ketcham, ceo/president of Child Advocates of San Antonio (CASA), said a practical, balanced approach to drafting a new state budget also will require some carefully targeted cuts. But they must be combined with spending all of the Rainy Day Fund, maximizing the use of federal dollars and creating new revenue streams that treat all individuals and businesses equitably.

“The health, safety and, in some cases, even the lives of millions of Texans are at stake,” she added.

Click here to view the full release...

ACTION ALERT |  Help Save Our State -- Call the Budget Conference Committee TODAY

Help us call for a balanced approach to a balanced budget by signing our petition!