The State Budget Crisis and Education

Rev. Ed Brock

State Representative Donna Howard

Bee Morehead, Executive Director of Texas Impact

March 6, 2011

This sermon is available on audio. Click the play button below to listen.

Donna Howard’s comments:

Though I typically prefer speaking extemporaneously, with limited time I decided to script my comments. I’m going to try to convey what’s happening with our state’s budget in 5 minutes or less. So, let’s get started.

Texas is an overall low-tax-burden state. In fact, we’re 48th in the nation in terms of local and state taxes combined per individual. That doesn’t mean our tax bills are actually low because we are overly dependent on sales and property taxes to fund government. We’ve got some of the highest sales and property taxes in the nation. At the same time, according to a 2010 report of the Legislative Budget Board (our state’s version of the federal CBO) we are 50th in the nation in terms of expenditures per capita.

Our current biennial budget is about $182 billion, but we only have discretion over about $87 billion. Of that, about 85% goes to public and higher education, and health and human services. We have a shortfall of $27 billion. That means, in order to balance our budget-which we’re constitutionally required to do-and, in order to balance our budget using only cuts-which those in power have determined is the route we must take-we have to make serious cuts in basic education and health and human services.

You may have heard our shortfall is “only” $15 billion. Both figures are correct. To provide the same services we currently provide leaves us $15 billion short. To provide the same services we currently provide AND to include population growth and increased demand for services results in a $27 billion shortfall. To give some perspective, we grow about 80,000 new students in Texas every year-essentially a new Austin ISD every year. But our budget will not provide schools with the necessary increases in dollars to teach those students even though we require them to educate every student who comes through their doors-and to provide each and every one of them with a quality program that addresses all their needs so they can be college and career ready.

How did we get here? The perfect storm, if you will, includes the recession which seriously impacted the state’s major source of revenue-sales taxes make up about 55 to 60% of our state’s budget; the use of one-time federal dollars to the tune of $12.5 billion which were used to balance our current budget and which will not be available to us in the next biennium; and the so-called structural deficit which was caused by the 2006 compression of school property taxes without sufficient state dollars to compensate. Basically, we reduced property taxes by 1/3 from $1.50 to $1.00 which equaled about $14 billion. The state swapped other taxes to make up for the reduction-an increase in cigarette taxes, used car sales taxes, and a revised franchise tax-the margin tax (which has significantly underperformed). The problem was that it was not a revenue neutral swap, and we’ve been counting on surplus dollars to cover the swap. Of course, that only works when the state has a surplus.

To make matters worse, the amount of money a school district can raise per pupil was frozen at 2006 levels. So, any property value increases since then benefited the state as it realized a windfall of anything above the frozen target revenue. The deal was supposed to be that, if property values decreased, the state would make up the difference so that schools could always count on that frozen 2006 level. However, now that the state doesn’t have the funds-to the tune of $9.8 billion-the proposed budget calls for the legislature to change the school funding formula so that-abracadabra-we no longer owe that amount. That’s why you’re seeing all the headlines about every school district in this state grappling with how to cut their budgets, increase class sizes, and lay-off teachers and staff. And, to make matters worse for them, we’ve tied their hands regarding increases in local property taxes by preventing locally-elected school boards from accessing additional revenue without an election. But, even if they did get support from their taxpayers, this is really just the state shifting that burden to the local property taxpayers at the same time that we are claiming that our budget shortfall can be solved without new taxes.

So, what can we do? Our options are to cut the budget-by the way, we already asked many in state government to cut their budgets by 7.5% meaning that further cuts will probably result in large state employee layoffs-to find new sources of revenue (probably expansion of gambling which will only provide about $1 billion per year and not substantially address our budget problem), and to tap into the rainy day fund.

We’re finally hearing from the chairman of Appropriations in the House that we must use, at least, some of the rainy day fund which is projected to have about $9.4 billion in it at the end of the next biennium. But, of course, the $4.3 billion he’s proposing will only go so far in a $15 to $27 billion shortfall. Additional accounting maneuvers are being planned, such as pushing end-of-year payments into the next year which could save about $3 billion-though, of course, that would need to be covered in the subsequent biennium. And some are looking at closing loopholes in taxing.

So, there you have it, our current budget crisis in a nutshell. The bottom line is that we have to determine-and have honest conversations-about what we expect state government to provide, how much it should cost, and how we want to pay for it. We know that it’s important to have a business-friendly environment that attracts those businesses to our state to create jobs. But we must balance that with providing the necessary revenue for infrastructure that supports those businesses and the families they bring to our state-quality public schools, investment in higher education that creates the necessary workforce, transportation that allows us to get from our homes to school and work. The future of Texas and our economic prosperity-what we’re going to pass on to our children and grandchildren-demands that we behave like grown-ups and find a rational, balanced approach to addressing our budget crisis.

Ed Brock’s Sermon

The State Budget Crisis and Education: A Moral Perspective

I see the specific issue of the state budget crisis and anticipated education budget cuts in a larger context.

This larger framework is that our government at the state and national levels is controlled by powerful financial interests whose aims do not coincide with the public good.

These interests, representing concentrations of wealth, appear to have the sole goal of increasing their wealth ad infinitum; they exert their influence through an army of lobbyists and the ultimate weapon of either extending or withdrawing the financial support which spells life and death to political careers.

There are many excellent articles and books which describe in undeniable detail this pattern of private financial interests overriding and negating a reasonable concern with public good. An article in the August 30, 2010 issue of the New Yorker, written by Jane Mayer, is an example of this. Mayer traces the influence of two extremely wealthly brothers on our national political process.

There are many other examples of such exposes. The point is that this belief that concentrations of wealth are dominating our political system is not science fiction, the product of conspiratorial minds, or an outpouring of wild speculation but is real, based on facts and can be discerned by anyone willing to take the time to connect the dots.

Wealth is being concentrated in the hands of fewer and fewer people; the gap between the super-rich and everyone else is widening. Some members of the super rich class, like those described in Mayer’s article, are exerting their influence in ever more bold and sophisticated ways.

There is a gap between these interests of concentrated wealth and what the vast majority of people actually believe government should and should not be doing and this gap is showing up, again and again, in the wide divergence between what the American public wants and what our law makers nationally and locally do.

For example, according to a 60 Minutes/Vanity Fair poll released recently, a strong majority of Americans think the United States should raise taxes on the wealthiest members of society or Cut Military spending to balance the budget.

Yet, the politicians in power in Washington want to extend tax cuts “permanently” for wealthier Americans while also demanding spending cuts to curb the $1.3 trillion deficit.

Sixty-one percent of Americans polled would rather see taxes for the wealthy increased as a first step to tackling the deficit. And the next most popular way of dealing with our country’s fiscal needs — chosen by 20 percent — was to cut defense spending.

The findings of this poll reflect a contrast which holds true across a wide number of issues. There is a clear, unambiguous divergence between what people say they want and what our leaders are doing.

At the heart of this divergence, again and again, are centers of concentrated wealth driving our political system.

It is possible to say, well, this is how it has always been. Yet that is not exactly so.

As the New Deal took hold, and as FDR prepared to run for re-election in 1936, an organization called the Liberty League launched a major effort to unseat him. Characterizing the League as a tool of what he called “selfish big business,” FDR stated that the wealthy interests behind such groups “…consider the Government of the United States as a mere appendage to their own affairs.” He went on to say that based on the experience of the late 20s and early 30s, we “know now that Government by organized money is just as dangerous as Government by organized mob.”

The forces that arrayed against FDR reappeared in the late the 1970’s and from that point became ever more sophisticated in their orchestration of political forces in their favor.

The Citizens United v Federal Election Commission case in which the United States Supreme Court up held that corporate funding of independent political broadcasts in candidate elections cannot be limited under the First Amendment, represents the triumphal ascendency of the interests of concentrated wealth.

Now we are seeing, in state after state, as well as at the national level, the consequences of living in a political context in which financial interests dominate.

Consider for a moment the issue of education and the current budget crisis. Any action which leads to the decreasing of the quality of education, for a city, a state, or a nation, is profoundly destructive to the long term well-being of its people.

The role as teachers is one of the most, if not the most, important role in society.

Teachers give our young the priceless gift of learning; to learn, to acquire knowledge, is to be human; so in a sense, teachers give our children the gift of a human life. The level of civilization rises and falls with the level of education.

Teachers also play a more important role in a country’s or state’s economic development than anybody on Wall Street or Washington. The work of teachers reaches into everything, from the numbers of people able to do basic science to the capacity of the people to be informed citizens.

How could leaders seriously consider draconian cuts to education and also care about the future of the people of the state?

Under the paradigm by which our political system operates, in which the ultimate good is the infinite increase of the already vast wealth of the rich, it is inevitable that the “solution” to tight budgets is to cut funding for education.

But if we look at this issue in terms of the value and importance of education, and the good of the majority, and the well-being of people, and the future of our children, the approach becomes, “We will find the money because the value of education for our children and youth, and the well-being of society and the assurance of a better future, demands it. We will find the money even if it means thinking out of the box of how we have thought about sources of revenue.”

I have learned to ask whenever confronted by a problem or controversy, “what part do I play in this?” I have found that this is a much more productive approach than blaming or taking the position of a victim or demonizing others.

And I would say that what you and I and other ordinary people have contributed to this problem is passivity.

Our passivity is making it very easy for the persons and groups that represent the interests of concentrated money to do what they are doing. Someone has said “don’t ever waste a good crisis.”

So I ask you not to waste this crisis, but to use it by taking action. I ask you to join with others, from across the state, to join the Save Texas Schools Rally.

I ask you to call every friend, every relative, and every warm body you may know, and ask them to join you in this march.

I ask you to use every social media instrument you have at your disposal, to get the word out about this march.

Join your fellow church members as they show support for full funding of public education in Texas.

Will it help? I don’t know.

Will it make a difference? I don’t know.

But by taking action you will know that in this hour when the concentrations of wealth that rule society tried to put money before education, you stood up; you let your voice be heard. You acted. And that is all any of us can do.

Participate in the march for education; let your voice be heard.