Senator Ellis Press Release

For Immediate Release
April 29, 2011
Contact: Jeremy Warren, 512-463-0113

Ellis: We Can Balance the Budget More Responsibly

Using more of Rainy Day Fund, closing loopholes, addressing structural deficit generates billions

(Austin, Texas)—Senator Rodney Ellis (D-Houston) today issued a statement outlining a way to more responsibly close Texas' $23 billion budget deficit. Ellis reiterated that deep spending cuts are a choice, not a necessity, stating that a combination of using more of the Rainy Day Fund, closing tax loopholes that benefit giant corporations and addressing the structural deficit now would generate billions and lessen the need for reckless cuts.

"Texas is choosing to irresponsibly cut vital services for Texas families to the bone. We don't have to cut so severely. Those in charge are choosing to sacrifice our children's educational opportunities and kick the elderly out of nursing homes, while continuing multi-million dollar corporate giveaway.

"But it is not enough to just be critical of the budget cutting efforts. I believe there are much better, more responsible ways to balance our budget than on the backs of those who can least afford it.

"Let's be clear: nobody elected us to close nursing homes and leave vulnerable seniors with nowhere to go. Nobody elected us to cut billions for neighborhood schools, crowd our children's classrooms, fire quality teachers, and make a college education unaffordable and out of reach for Texas families. Nobody elected us to eliminate thousands of jobs for working Texas families struggling to make ends meet.

"And the truth is we don't have to. We can act responsibly and bring in new revenue and get rid of tax loopholes that rip-off Texans and benefit those already making out like bandits. We can use our savings account for the purpose it was intended"

Sales Tax Discounts to Big Business
"Texas gave retailers a tax break of over $200M last year simply to file their sales tax on time. We gave them another $200M to file them early, and we gave another $65 million to businesses who pay their fuel taxes on time. There shouldn't be such a huge reward for doing what you are supposed to do.

Natural Gas Exemption
"Texas gave away over $7.4 Billion in tax giveaways from 2004-09 to Natural gas producers who already profit in the billions, because their lobbyists have been able to maintain an antiquated definition of "high cost" gas in the code. From new drills established in 2009 alone , we will lose another $7.9B over the next 10 years. Members, this 'tax incentive' was created in 1989 to help companies with the costs of drilling high cost wells, which made sense then, but now virtually every new well produced is a so-called 'high cost' well.

"Mom and Pop producers are not getting this tax break. One major company saved $113.8 million in FY 2010, while reporting net profits of $4.6 billion. A subsidiary of another of the world's largest oil companies saved $113.2 million."

It's Raining Now
"How else could we find billions to spare cuts to kids? The Rainy Day Fund was created for budget challenges exactly like we face today. And, because of rising oil and gas prices, the Rainy Day Fund sits at $9.4 billion; yet we are leaving $3 billion aside.

"Those opposed to using more of the Rainy Day Fund to say we that times might be bad next session. Members, we have spent nearly every penny of the Rainy Day Fund on four occasions, including as recently as 2005, a year in which we had a strong economy and a stable budget and in 2003, the last time we faced a significant shortfall. In fact, in 2003 $295 million was taken from the Rainy Day Fund to create the Governor's Texas Enterprise Fund and, in 2005, millions more were diverted to creating the Emerging Technology Fund.

"Leaving billions in our savings account while nursing homes and schools are closed and tens of thousands lose their job is simply unacceptable. Since taxes on oil and gas revenue are what replenishes the fund, it will quickly gain back the funds we use to stem the tide during this crisis.

Address the Structural Deficit Now
"The truth is that most of this deficit has nothing to do with the economy. It's because the margins tax simply did not raise enough to offset property tax cuts we promised. And it's no fluke occurrence. We knew this when it passed in 2006.

"Standard & Poors recently wrote about our budget situation:

Indeed, we believe many of Texas' current budget challenges are the result more of previous fiscal policy decisions that created structural budget deficits, than of a weak economy. (Texas' Budget Challenge, Standard & Poors, February 16, 2011)

"The comptroller testified before the Senate Finance Committee the state would face a $10 billion shortfall every two years if we do fix the state's tax structure. So doing nothing is not feasible, but that is what we have chosen to do. Having the moral courage and determination to fix this problem now would mean fewer cuts this session and would keep us from being right back here next session.

"But somehow, sacrificing our children's educational opportunities and kicking the elderly our of nursing homes, so we can to continue multi-million dollar corporate giveaways to special interests, is being portrayed as responsible governing.

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