The Texas Constitution instructs the state Legislature to pass a balanced budget. So now that State Comptroller Susan Combs has announced the state is already short about $4.3 billion in tax revenue, lawmakers have a slightly clearer idea of how apocalyptically bad their finances will be for the next two years.

On Jan. 10, Combs released her revenue estimate for the 2012-13 biennium. In addition to the roughly $100 billion the state will receive from the federal government and dedicated fees, another $77.3 billion in revenue will be generated from taxes, nondedicated fees, and other income. But that doesn't represent how much money is actually available. Combs also announced that the state goes into the next session $4.3 billion in the hole due to collapsing sales and gas taxes. And more than $800 million will go to swell the Rainy Day Fund from its current high of $8.2 billion to a colossal $9.4 billion in 2013. Com­bined, that means there will only be $72.2 billion available for general revenue spending, down from $77.1 billion in 2009.

The big question now is how much that shortfall contributes to the total deficit – but don't ask Combs for the answer. "We don't do estimates of spending," she told the Capitol press corps. "We do estimates of revenue."

Working from legislative appropriations requests for the six largest agencies, the Center for Public Policy Priorities is estimating a $27 billion shortfall next biennium. CPPP senior fiscal analyst Dick Lavine has called for lawmakers to fill the gap by tapping the Rainy Day Fund and to revise broken and underperforming parts of the tax code. Sales and gasoline taxes rose in the late 1990s, he said, "and even with higher taxes, the state did extremely well."

However, Texas Public Policy Foundation President Talmadge Heflin railed against tax reform, instead proposing cuts, cuts, and more cuts. In a statement, he said, "This session's budget writers must recognize that just as Texans' family budgets have shrunk, so now must the state's." He lauded the radical spending cuts of 2003, when the Lege filled a $10 billion shortfall with mass layoffs of state employees and Medicaid cuts. House Appropri­ations Committee veteran Rep. Dawnna Dukes, D-Austin, on the other hand, described the 2003 process as "extremely grueling, and it was extremely depressing." This time around, she warned, "We will see massive levels of unemployment as a result of a policy position of 'Cut without finding new revenue.'"