Senator Ellis Press Release

For Immediate Release
May 3, 2011
Contact: Jeremy Warren, 512-463-0113

Ellis: This Budget is Not Worthy of Texas

Texas is choosing to make reckless cuts, refusing to address systemic challenges

(Austin, Texas)—Senator Rodney Ellis (D-Houston) today issued a statement opposing CSHB 1 and outlined a path to a more responsible, less reckless Texas budget.

"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.

"We've constantly heard that, in these tough times, our state to act as responsible families sitting around the kitchen table, tightening their belts and making tough economic decisions and I couldn't agree more. Texas is one big family. We're all in this together, and a responsible family doesn't decide to let their children go hungry, or put grandma out on the street, or not help a sick child just because dad doesn't want to dip into his yacht fund. A responsible parent doesn't just decide to cut off electricity, the water and the phone; they go out and get a second job or hold a garage sale. They find more revenue. They figure out a way to make it work. If we're broke, we don't take a cuts only approach and tell little Johnny, "sorry, you don't get to go to college." We hunker down and find a way to make a little more.

"We're a family with a huge plate of food, enough for everyone to eat, it's just that one family member is eating 4/5 of the plate while four others are getting crumbs and being told to tighten their belts and stop complaining.

"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. We can show the leadership to address the structural deficit now.

"But we are choosing to take the easy, politically safe way and are making Texas families pay the price.

Earlier Filer Giveaway
"We could have ended huge giveaways to business, like the early filer tax break. 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 Giveaway
We could have eliminated the so-called "high cost" natural gas tax loophole. 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.

"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, major oil companies are. One huge oil 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."

Rainy Day Fund
"We could have used the Rainy Day Fund -- our savings account -- to spare cuts our kids, our seniors and our schools. 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 now choosing to leave all of our savings untouched.

"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.

Structural Deficit Remains
"We could have addressed the structural deficit. 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.

"Cuts to programs which help Texans over enacting systemic change: that is the choice this legislature has made.

Texas Ranks Low in Helping Families
"Texas is ranked 46th in tax revenue raised per capita and 50th in tax expenditures per capita. This is not an overspending problem. We rank 38th in current expenditures per student; 44th in state & local expenditures per pupil in public schools; 37th in percentage of school funding from state revenue; 45th in SAT Scores; 49th in percent of population who have graduated from high school.

"We have the highest percentage of overall uninsured -- and of uninsured children -- in the nation; we have the fourth highest percentage of children in poverty. The highest percentage of uninsured seniors, and is 49th in the percentage of our low-income population covered by Medicaid. Per capita, we rank 50th in spending on mental health, 49th in Medicaid spending and 45th in total health care spending.

"Texas is already at the bottom in what we provide to the people of the Lone Star State; today, we have decided to do even less and make life that much more difficult for those already struggling to get by. It's a road map to a third world economy.

"Just because this is a little better than the doomsday House budget, doesn't make it ok. It doesn't make it worthy of Texas. It doesn't make it worthy of this chamber. And that is why I oppose this budget."

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