Texas Taxpayers and Research AssociationNovember
13,2009
Talking
Points
One of the most critical issues we'll face next Session is how we deal with the structuralshortfall. In recent weeks it has been estimated that the structural shortfall could beanywhere between $9- 16 billion (depending on the methodology used.)Let me stick to the facts as we know them today. First, the Comptroller has said that, fornow, she is sticking with her revenue estimate of near zero percent growth in 201 0,followed by
4%
growth for 201 1. There are inany people concerned about the drop insales tax collections the last two months.But according to most economists, thefundamentals are in place for consumer spending to slowly increase over the next year,meaning a rebound in sales tax collections. Said differently, it's too early to panic. Wehave enough tools in our tool box to balance our budget.Second, some math. Let's start with the "big ticket" items in our current budget. This2009 Session. we appropriated $3 billion from the Property Tax Relief Fund, which we setaside in 2007, to continue local school property tax cuts we first adopted in 2006. Thiswas a one-time funding source.We also used $2 billion in General Revenue balances this year, and approximately $6billion in federal stimulus funds, also one-time funding sources. Adding up those items,along with assuming up to $5-6 billion in spending growth in FY 2012-2013, we couldneed as much as $1
7
billion in 201
1
to balance our budget.However, that takes nothing into account on the revenue side.You know we have savedbetween $8-9 billion in the Rainy Day Fund because we all knew the economy would stillbe sluggish leading up to FY2012-13, and that the 2009 federal stimulus funds wouldprobably be a one-time source of funding. In addition, because the Rainy Day Fund isbased on oil and gas tax receipts, at current prices we anticipate up to
$1
billion per yearrevenue stream into the Fund. That means the $8-9 billion we left in the Rainy Day Fund,plus an additional $2 billion in revenue growth for FY2012-13, could result in close to $1
I
billion in the Rainy Day Fund available to help balance the budget next Session.The Comptroller does forecast flat revenue growth in 201 0, but she also expects
4%
growth in 201 1 and beyond. And any growth in revenues in 201 1-201 3 would be availableto balance the budget next Session. Three to four percent revenue growth over that timeperiod would result in a $4-6 billion increase in revenues. When added to our Rainy DayFund balances, we could have between $15-17billion in total revenues available to balancethe FY 20 12- 13 budget.
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