AUSTIN — The nation may be on the verge of a recession, but the Texas
economy is doing well enough for Comptroller Susan Combs to predict
Tuesday
that the Legislature will have a $10.7 billion surplus when it convenes in
January.
Much of the extra money can be attributed to record oil prices. While
motorists are being socked with ever-increasing gasoline costs, oil and
gas
employment in Texas has been booming, the comptroller's office re****ted.
If Combs' early forecast holds up, Gov. Rick Perry would like to return
part
of the money to the taxpayers in the form of tax cuts or rebate checks,
spokesman Robert Black said. But those steps would need legislative
action.
Oil and gas employment in Texas grew by 7.5 percent between March 2007 and
March 2008, leading an overall increase of 214,000 Texas jobs,
comptroller's
spokesman R.J. DeSilva said.
Consequently, sales tax revenue, a major source of state government
income,
also continues to grow.
And, DeSilva added, Texas has been insulated more than other states from
the
sub-prime mortgage lending crisis. Texas, he said, avoided the housing
price
bubbles that hurt states like California and Florida.
Combs won't make her official revenue estimate until about the time the
Legislature begins in January. She made an early forecast when asked about
Speaker Tom Craddick's recent prediction, in a speech in South Texas, that
the surplus could be as high as $15 billion.
"Counting the Rainy Day (savings) fund, I believe we are about $10.7
(billion)," she said.
Her forecast is higher than the $10.1 billion surplus with which the state
ended the 2007 fiscal year last Aug. 31.
Combs said she believes the speaker's office "misread" a revenue figure.
"The comptroller is correct as things stand today," Craddick spokeswoman
Alexis DeLee said later. But she said the speaker still believes the
surplus
could be "significantly higher" by the time lawmakers convene.
'Some sort of tax relief'
Black said Perry was anticipating a large surplus as well.
"With a surplus of this magnitude, I know the governor believes we need to
look at some sort of tax relief, whether it be on property taxes, business
taxes or some type of actual rebate, like the federal government can do
but
we haven't been able to," Black said.
The last installment of school property tax cuts ordered by Perry and the
Legislature in 2006 went into effect last year, but much of the savings
already has been eroded by rising property values and appraisals.
An expanded business tax, enacted to help pay for the property tax
reductions, is still untried and under fire. Companies had until May 15 to
file their first re****ts under the new levy, and Combs recently extended
that deadline by 30 days.
Perry floated the tax rebate idea in the 2007 session, but it went
nowhere.
It would require a constitutional amendment, including a two-thirds vote
in
both the House and the Senate plus approval by Texas voters.
Black acknowledged that there will be a need for increased spending on
crucial needs, such as Medicaid and public education, including higher
fuel
costs for school buses, and the Legislature will have to balance those
demands.
But, he added, the governor wants to keep Texas' economic engine "going
and
growing."
In budget-preparation instructions this week, the governor's office and
the
Legislative Budget Board asked agencies to submit zero-growth spending
requests plus options for reducing spending by 10 percent.
Dick Lavine, senior policy analyst for the Center for Public Policy
Priorities, which promotes programs for low- and middle-income Texans,
warned that the rosy forecasts still may be premature.
'A lot of uncertainty'
Texas has weathered the economic downturn better than many other states,
he
acknowledged, but he added, "There's still a lot of uncertainty in the
financial markets."
And, Lavine pointed out, it will be next May before lawmakers draft a
final
version of the next two-year state budget.
"There is certainly no way to know" what the budgetary demands on
lawmakers
are going to be then, he said.
Legislative budget-writers also have expressed caution.
Sen. Steve Ogden, R-Bryan, chairman of the Senate Finance Committee,
recently warned that no one knows how well the new business tax will
perform
or whether a weakening economy will force the federal government to reduce
spending on programs, such as health care, that it helps the state to
fund.
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