How Texas conservatives are manipulating a budget crisis of their own creation

By Forrest Wilder, Texas Observer

 

What's Kerr so excited about? Oh, just Texas' little old $27-billion budget hole.

Conventional wisdom holds that tax increases are "off the table" and that violent cuts to core government services must be made. State lawmakers across the political spectrum almost unanimously lament the "painful" choices they will have to make this session. They make it sound like the butchery they are contemplating is inevitable. It's not.

Legislators could build new revenue streams from the immense wealth in this state. They might, for example, devise a state income tax, as 43 other states have, which would also make the regressive state tax code more equitable. They could maintain essential state services, including public education, health and human services and higher education. It is unlikely that any of that will come to pass. Instead, we hear that "everyone will have to do their part" and "all options are on the table" -- platitudes that the powerful use to signal an unpopular decision has already been made. The public hears this kind of thing from leaders when they are preparing for war -- whether it involves tanks and bombers or a full-frontal assault on one's own government.

For many Texas legislators and conservative activists, the budget crisis is a thing of wonder -- a once-in-a-generation chance to drown government in the bathtub, to use anti-tax crusader Grover Norquist's infamous phrase. As Lt. Gov. David Dewhurst succinctly put it in his inaugural speech: "We pronounce the word 'C-R-I-S-I-S' as 'opportunity.'"

If you're looking to understand this legislative session, look no further than the Shock Doctrine. In a 2007 book by the same name, Naomi Klein argues that acolytes of far-right economic theory use "moments of collective trauma to engage in radical social and economic engineering."

Whether it was post-apartheid South Africa, Chile after the coup that toppled socialist Salvador Allende, or New Orleans after Hurricane Katrina, the engineers of Milton Friedman-style economics swooped in with a three-prong agenda of privatization, government deregulation and deep cuts to social spending. Disasters, natural and manmade, create the conditions for changes that couldn't otherwise happen -- an economic shock-and-awe campaign so swift that nobody notices until it's too late.

You can see it at work in Texas now.

First, the numbers: Maintaining current services for the coming biennium requires about $100 billion. That sounds like a lot until you consider that Texas already spends less per capita than almost any other state, despite a diverse, booming population with complex needs, not to mention a variegated economy, vast infrastructure and intractable problems. The state is short $27 billion, more than one-quarter of the state's $100 billion discretionary budget. About 91 percent is consumed by public schools, higher education, and health and human services. That means "devastating" cuts are all but certain.

In case anybody's looking for a culprit, Gov. Rick Perry said Texas' deficit was "reflective of the national recession's lingering impact on state revenue." In fact, the recession has little to do with the $27 billion shortfall. Back in 2006 the Legislature concocted a Rube Goldberg-style measure that simultaneously cut property taxes, imposed a new "margins" tax on business and rejiggered the way public schools are financed. Wowee zowee -- three birds with only one stone! Problem was, as the state Legislative Budget Board pointed out at the time, the plan's math didn't wash because the margins tax wouldn't bring in as much as the Legislature thought. In fact, the board said, it would leave a $5 billion hole in the state budget every year. The upshot: Perry, who pushed the swap, knew full well he was helping to create today's "crisis."

 

The budget shortfall is not the cause of the pain. It's the justification. For 30 years, antigovernment forces have been in the ascendancy with a platform of free markets, deregulation, privatization, the evisceration of social programs and the systematic debasement of the greater good. In Texas, where Republicans control more than two-thirds of the state House and a little less than two-thirds of the state Senate, this ideology now has its moment in the sun.

"The bottom line is there are no excuses now," Republican Sen. Dan Patrick of Houston, the right-wing radio talk-show host and founder of the Tea Party Caucus, told the Associated Press in January. "It's a perfect storm, in a positive way, for conservatism."

Free market fundamentalists are champing at the bit to slash into the marrow of state government. The influential Texas Public Policy Foundation, which carries the mantle of Milton Friedman-style economics, is not shy about its agenda. It sees an opening to privatize state-supported living centers; cut the state's Medicaid program with a reckless goal of allowing "the quality of Medicaid-covered health care services to deteriorate in order to prevent the crowd-out of private health coverage"; and eliminate the state's successful Renewable Portfolio Standard, which has made Texas the nation's leader in wind energy.

The foundation's wish list isn't likely to be enacted in full. But take a stroll through the news in the past few months, and you see that the Texas Shock Doctrine is in full effect. Things once unthinkable, such as savage cuts to public schools, are now imminent.

Schools consume 44 percent of the state's general revenue, making it virtually impossible to spare schools from the ax. Austin lawyer Buck Wood, a veteran of school finance lawsuits, told the San Antonio Express-News that a 5-percent cut in education funding would mean $30 million less for San Antonio's Northside school district, forcing larger classes and staff reductions. "School districts right now are in a state of shock," Wood said. "Things are much worse than even I thought just a few months ago."

A draft budget floated by chief House budget writer state Rep. Jim Pitts, a Waxahachie Republican, whacks state community mental health funding by 40 percent. Texas already spends the least of any state on mental health, and those in the field warn that further cuts could lead to a permanent crisis, with mentally ill people off their meds and literally wandering the streets. Untreated mentally ill people often commit crimes. Jail, never a cheap prospect, ends up being the de facto mental ward.

Another prime target: colleges and universities. At minimum, drastically reduced state funding for higher education will translate into higher tuition and fees, and less financial aid. In 2003, the last time we had a budget deficit in Texas, the Legislature "deregulated" tuition, allowing governing boards of universities to raise it unilaterally. Legislators can't "deregulate" again, so the assault on colleges and universities will be more direct: faculty layoffs, bigger classes, a construction freeze and the elimination of courses, perhaps whole programs. The House draft budget proposes to cut state funding for four community colleges.

University leaders expect the austerity measures to become a permanent fixture.

"State support at the level we have enjoyed for the last 15 or 20 years is never coming back," Stanton Calvert, Texas A&M University's vice chancellor for governmental relations, told regents earlier this month. "There will almost surely be less money for a long time going forward."

 

The Shock Doctrine "relies heavily on the element of surprise," writes Klein. "A state of shock, by definition, is a moment when there is a gap between fast-moving events and the information that exists to explain them." That's where Texas is right now.

Sen. Kirk Watson, a moderate Austin Democrat, has proposed one modest fix: the Honesty Agenda. Watson's idea is to force legislators to be transparent about accounting gimmickry, hidden taxes and structural deficits. Watson warns that this might be the last chance to fix state finances before "our budget crises become chronic," consigning Texas to a future of second-rate schools, health care and infrastructure.

Most of Watson's plan involves changes to the process: requiring five days to "lay out" the final budget before voting on it; abandoning taxes and fees that don't go toward their advertised purpose; and eliminating unfunded mandates. "In a sane world, they wouldn't be controversial at all," Watson said in a December speech.

We don't live in a sane world. Conservatives have a simple story: Government is bad, and taxes are bad, so we must balance the budget by cutting spending. If progressives and moderates find a compelling counternarrative to explain why bombing state government is bad in the short term and worse in the long term, then perhaps some of the damage in store for Texas can be mitigated. Sometimes cooler heads need to be fiery.

(Photo of Gov. Rick Perry from the Texas Office of the Governor.)