The elephant in the Capitol parlor is not the new GOP majority but the state budget — just how are lawmakers going to make ends meet with a deficit of $5 billion or more? Last week the Center for Public Policy Priorities took up the challenge, issuing a report titled The Texas Revenue Primer: Finding a Way to Pay. The primer (available at www.cppp.org) analyzes the state’s tax system and outlines options to increase revenue. “Texans have sent generations of fiscally conservative leaders to Austin,” said F. Scott McCown, the center’s executive director. “The bottom line is that there is virtually no fat in this budget.”
The center argues that instead, “the state could choose from a number of options that would generate substantial amounts of revenue to help balance the budget without detrimental economic consequences,” said McCown. A state income tax is often mentioned (and just as often rejected) as an eventual option, but the center points out that an income tax would require a referendum before the 2005 session — and the state needs money now.
The report makes several recommendations — most importantly, expanding the sales tax base to business and professional services while actually lowering the sales tax rate. In one example of possible reforms, by also closing franchise tax loopholes, raising the cigarette tax, and spending a portion of the “Rainy Day Fund,” the state could raise $6.7 billion, and eliminate the currently estimated deficit. Associate Director Patrick Bresette described the alternative: “If state lawmakers don’t turn to reasonable revenue options, Texas will be paying for its budget with misery, as thousands of working Texans lose critical health and social services, public education continues to be strangled, and all state services stagnate.”
The center advocates on behalf of low- and moderate-income Texans — in other words, most of the state. McCown, a Travis Co. district judge for 14 years, stepped down this year to assume the CPPP directorship. Asked how things look from this side of the bench, he said, “The policies look exactly the same — I retired early because as a judge, I couldn’t speak out on these problems.” McCown described the state’s regressive tax system as “not only not fair, it’s not good public policy. If people can’t afford basic social services, they can’t save, they can’t buy houses or cars, and they can’t move up the economic ladder — and it keeps the state poor.”
This article appears in December 13 • 2002.
