Center for Public Policy Priorities Hobby Policy Conference: Strong Public Structures October 13, 2006 F. Scott McCown, Executive Director Anne Dunkelberg, Associate Director Dick Lavine, Senior Fiscal Analyst Eva DeLuna Castro, Senior Budget Analyst Don Baylor, Senior Policy Analyst

Center for Public Policy Priorities Local: 10 th (7.3%) State: 49 th (6.7%) 1% of PI = $7 B Texas is a Low-Tax State State and Local Own-Source Revenue as a Percent of Personal Income, 2004

Center for Public Policy Priorities Houston Revenue Is Declining City of Houston – Per Capita Revenue

Center for Public Policy Priorities Harris County Revenue Is Declining Harris County – Per Capita Revenue

Center for Public Policy Priorities Estimated General Revenue shortfall of $15.6 billion for Cuts to 2003 Budget: $1.4 billion Cost shifting: $1.0 billion “Smoke and mirrors”: $1.2 billion Rainy Day Fund: $1.3 billion Federal Fiscal Relief: $1.4 billion Revenue Measures: $1.8 billion Cuts to Budget: $7.5 billion The State has Not Recovered from “Balancing” the State Budget in 2003 for

Center for Public Policy Priorities State Spending (Excluding Federal Aid) Still Lower Than in 2002

Center for Public Policy Priorities Special Session Created Serious Budget Hole In billion $ HB 3 (business tax) HB 4 (used cars)0.1 HB 5 (cigarettes) TOTAL REVENUE Cost of HB Gap between HB 1 and HB 3, 4, 5 -$10.5 B-$11.1 B

Center for Public Policy Priorities Cost of Reducing Property Taxes Compared to New Revenue

Center for Public Policy Priorities Budget Will Be Very Tight State Own-Source Spending and Revenue

Center for Public Policy Priorities Leaving Unfunded an Additional $3 Billion HHS: restore Medicaid/CHIP rates, replace non-recurring Intergovernmental Transfers, fund hospital financing for IGT, Graduate Medical Education; reduce HHS waiting lists; expand family violence programs; mental health community services; anti-smoking programs; abuse/neglect prevention programs K-12 Existing Debt Allotment and Instructional Facility Allotment for school buildings, Student Success Initiative, Educator Excellence Fund Higher education financial aid and other Prisons/corrections 1,000 new medium- security beds, 150 halfway house beds, 250 probation beds, 250 SAFP treatment beds, contractual per diem adjustments, basic supervision

Center for Public Policy Priorities Where Do We Go From Here? Can we afford to reduce school district property taxes for operations to $1.00 per $100 FMV? Are property tax appraisal caps good public policy? Are revenue caps on cities and counties good public policy? Are we adequately funding our public structures? If not, what sort of tax system do we need?

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