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A Balanced Approach for 2012-13
United Methodist WomenJanuary 24, 2010
Eva Deluna Castro, [email protected] Dick Lavine, [email protected]
F. Scott McCown, [email protected]
www.cppp.org
“Truly I tell you, just as you did it to one of the least of these who are members of my family, you did it to me.”
---Matthew 25: 40
Matthew 25: 31-40 is called the Converting Ordinance by John Wesley in his Journal in 1760:
It is far better “to carry relief to the poor, than to send it” because this is “far more apt to soften our heart, and to make us naturally care for each other.”
Budget Scenario for 2012-13
$0
$25
$50
$75
$100
2002-03 2004-05 2006-07 2008-09 2010-11 2012-13
Local School Tax Cut (GR and PTF)
GR for Higher Ed
ARRA instead of GR
Other GR*
GR for HHS
Other GR for K-12
GR for Prisons
Additional GR Needed
$7 b
$1 b
None
$3 b
$3.3 b
$300 m
$700 m
5% Cuts to GR and GR-D for 2010-11
Of the $87 billion (GR and GR-Dedicated) appropriated for 2010-11, only $41.6 billion is “on the table” for 5% cut proposals to be submitted by state agencies
If 5% proposal cuts were implemented for the entire biennium: $2.1 billion in cuts
Social Security
ERS/TRS Retirement
Higher Ed Fund
Debt Service
Other HHS
TDCJ
All Other
Group Health Insurance
UT Austin
CHIP, Foster Care, Elig. Staff
High Ed Coord Brd
Community/ Jr Colleges
Texas A&M College Station
Medicaid
Foundation School Program
Exempt Areas of Potential Cuts
Major Areas of 5% Cuts for 2010-11, continued
Maximum GR/GRD cut, if implemented for 2010-11
Other HHS (child protective services staff; community care waivers; state schools and hospitals)
$513 million
Texas Department of Criminal Justice $296 million
Public community/junior colleges $93 million
Higher Ed Coordinating Board (mostly financial aid) $77 million
UT Austin $39 million
Texas A&M College Station $36 million
UTMB Galveston $30 million
UT MD Anderson Cancer Center $20 million
Attorney General (mostly child support enforcement) $27 million
Group Health Insurance (for state and higher ed employees, TRS retirees)
$156 million
A Balanced Approach Is Essential for Economic Recovery• Every dollar of state spending generates
$1.41 of economic activity.• 88 cents of that activity is in the private
sector.• Raising taxes reduces economic activity
between 32 cents to $1.02.• Cutting spending hurts the state economy
more than increasing taxes, especially on those with higher incomes.
Best Case ScenarioAssuming revenue growth matches growth in expenses
Current Budget
2012-13 Budget
General Revenue $75.0 billion $75.0 billion
ARRA $6.4 billion $0
Cash on hand $2.4 billion $0
Property Tax Relief Fund carryover
$3.0 billion $0
Permanent School Fund $0 $1.2 billion
Other adjustments $0.2 billion -
TOTAL GR BUDGET $87.0 billion $76.2 billion
GAP $10.8 billion
Funding a Balanced ApproachEasy Money
Potential Revenue for 2012-13
Economic growth with no change in revenue system
$800 million for each 1% growth
Smoke and mirrorsPayment delays, etc
$1.5 billion
Funding a Balanced ApproachSpend the Rainy Day Fund
Potential Revenue for 2012-13 Biennium
Beginning balance $8.2 billion
Growth during 2012-13 $1.4 billion
TOTAL RDF AVAILABLE $9.6 billion
Funding a Balanced ApproachEliminate exemptions
Potential Revenue for 2012-13
Sales tax on business, professional servicesLegal, stock or real estate broker, accounting, management consulting – except health care
$5.6 billion
Eliminate high-cost natural gas exemption
$2.3 billion
Eliminate recognition of optional percentage homestead exemption
$1.0 billion
Funding a Balanced ApproachEliminate exemptions
Potential Revenue for 2012-13
Eliminate Freeport property tax exemption (constitutional)
$850 million
Eliminate 10% property tax appraisal cap (constitutional)
$650 million
Eliminate sales-tax timely filer and prepayment discounts
$425 million
Funding a Balanced ApproachEliminate exemptions
Potential Revenue for 2012-13
Eliminate sales tax holiday $100 million
Eliminate gasoline-tax collection allowance
$100 million
Eliminate CAPCO credits $100 million
Eliminate ineffective tax exemptions
$100 million
Eliminate reimbursement of school taxes for local tax abatements
$20 million
Funding a Balanced Approach Raise Existing Taxes
Potential Revenue for 2012-13
Raise sales tax ½% to 6.75% state/8.75% total, with rebate for families in bottom 20% of income
8 states would have higher state rates
$3.0 billion
Increase franchise tax rate from 1% to 1.25%Retail from 0.5% to 0.625%
$2.1billion
Raise gasoline tax by 5 cents per gallon
From 20 cents to 25 cents – 23 states now at 25 cents or higher
$1.6 billion($400 million to Available School
Fund; $1.2 billion to State Highway Fund)
Funding a Balanced Approach Raise Existing Taxes
Potential Revenue for 2012-13
Raise cigarette tax From $1.41 to $2.00 per pack
15 states now at $2.00 or above
$1.2 billion
Raise motor vehicles sales tax by ½%From 6.25% to 6.75%
$450 million
Raise beer taxFrom 11 cents to 17 cents per six-pack
Last raised in 1984; 15 states would be higher
$100 million
Protecting Working FamiliesFrom Tax Increases
• “Working Families Tax Rebate” Enacted by State of Washington in 2008
• Adds 10% to federal Earned Income Tax Credit
• Available to working families with up to $43,300 annual income (3 or more kids)
• 2.4 million Texan families received EITC in 2007 – 21% of income tax filers
Funding a Balanced Approach New Taxes
Potential Revenue for 2012-13
Quality Assurance Fee 1% on revenues of hospitals, surgery centers
$350 million
Plus federal match of $550 million
Soda tax 1 cent per 12 oz can of sugared soft drink
$145 million
Funding a Balanced Approach Beyond this Session
Potential Revenue for Future Budgets
State personal income tax $14 billion net
(dedicated to education)
Eliminate school property tax abatements - Chap 313
$1.2 billion
Sales tax on Internet sales $550 million
Sales price disclosure $350 million
John Wesley, On Visiting the Sick:One great reason why the rich, in general, have so little sympathy for the poor, is because, they so seldom visit them. Hence it is, that, according to the common observation, one part of the world does not know what the other suffers. Many of them do not know, because they do not care to know: they keep out of the way of knowing it; and then plead their voluntary ignorance as an excuse for their hardness of heart. “Indeed, Sir,” said a person of large substance, I do not know anybody in the world that is in want.” How did this come to pass? Why, he took good care to keep out of their way; and if he fell upon any of them unawares “he passed over on the other side.”
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