1. Center for Public Policy Priorities www.cppp.org 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

2. Center for Public Policy Priorities www.cppp.org 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

3. Center for Public Policy Priorities www.cppp.org Houston Revenue Is Declining City of Houston – Per Capita Revenue

4. Center for Public Policy Priorities www.cppp.org Harris County Revenue Is Declining Harris County – Per Capita Revenue

5. Center for Public Policy Priorities www.cppp.org Estimated General Revenue shortfall of $15.6 billion for 2004-05 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 2004-05 Budget: $7.5 billion The State has Not Recovered from “Balancing” the State Budget in 2003 for 2004-05

6. Center for Public Policy Priorities www.cppp.org State Spending (Excluding Federal Aid) Still Lower Than in 2002

7. Center for Public Policy Priorities www.cppp.org Special Session Created Serious Budget Hole In billion $2008-092010-11 HB 3 (business tax) 6.87.7 HB 4 (used cars)0.1 HB 5 (cigarettes) 1.4 1.3 TOTAL REVENUE8.39.1 Cost of HB 1-18.8-20.2 Gap between HB 1 and HB 3, 4, 5 -$10.5 B-$11.1 B

8. Center for Public Policy Priorities www.cppp.org Cost of Reducing Property Taxes Compared to New Revenue

9. Center for Public Policy Priorities www.cppp.org 2008-09 Budget Will Be Very Tight State Own-Source Spending and Revenue

10. Center for Public Policy Priorities www.cppp.org 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

11. Center for Public Policy Priorities www.cppp.org 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?

12. Center for Public Policy Priorities www.cppp.org Use of This Presentation The Center for Public Policy Priorities encourages you to reproduce and distribute these slides, which were developed for use in making public presentations. If you reproduce these slides, please give appropriate credit to CPPP. The data presented here may become outdated. For the most recent information or to sign up for our free E-Mail Updates, visit www.cppp.org.www.cppp.org Center for Public Policy Priorities 900 Lydia Street Austin, TX 78702 Phone 512-320-0222 Fax 512-320-0227