Monday, June 11, 2012

Is One Red Cent Too Much?

Education spending is still an important topic, even though most students and teachers are out for the summer. All too soon, we will be wrestling with public conversations on education reform and funding.

I thought I'd repeat a post that reminds us why we're in this situation in the first place and a rather sane solution, which no one has come close to considering. Maybe it makes too much sense...


A group of CitySquare employees, interns and supporters went to the Texas State Capitol on Wednesday in alliance with 'Cover Texas Now'. We were lobbying our legislators to find ways to fix our state's budget woes without drastic cuts in CHIP and Medicaid. It's incredibly interesting that a budget crisis caused by an economic collapse of near global proportions, stemming in no small part by the greed of the financial industry is to find its solution by draconian cuts in aid to the mentally ill and poor children. Yet, an overwhelmingly conservative majority is proposing just that.

The fact is, without some serious, sane budget legislation irreparable harm will be done in unimaginable ways to the most vulnerable Texans and to the Texas economy. A Dallas Morning News editorial on the subject affirms this:

"The budget bill the Texas House is considering Friday understandably is drawing fire from Texans concerned about health care, including from medical providers."
"The House’s two-year spending plan takes a big swing at the payments made to doctors and hospitals that treat Medicaid patients. It slices and dices payments to nurses. And it eviscerates spending for nursing homes."
"The tea party movement might think the public wants to gut health care spending, but judging from the response legislators are getting, there’s plenty of room to think otherwise. Dan Stutz, the Texas Hospital Association’s president and CEO, typified the reaction when he declared Tuesday, “The proposed budget before the House cuts into the core. Hospital services — and jobs — will be lost, and not just temporarily. These cuts won’t heal.”"

It seems that we have now become a society in which children are our most precious asset...until we have to pay for them!

One of the most interesting encounters I had was with Lan Bensen, Texas businessman and Chairman of the Texas advisory board of the Children's Defense Fund. He's also the son of the late and legendary U.S. Senator, and Vice-Presidential Candidate Lloyd Bentsen.

Lan, spoke at the rally held on the steps of the Capitol and quite unexpectedly joined the group I was with as we visited GOP Senator Bob Deuell, who apparently sees the unadulterated absurdity of a 'penny wise, pound foolish' politics that seeks to achieve prosperity by increasing the number of poor, uneducated and undereducated. Lan Bentsen eloquently laid out the finer points of our proposal and in leaving he shared with me that he had written an op-ed piece he had written that appeared in the Austin-American Statesman. Not only does he address the crisis from the standpoint of the business community, but he also suggests something that no one has suggested and its one of the sanest proposals I've heard this session: a temporary (two year), one cent sales tax to balance the budget. Read it here for yourself...

Bentsen: Three strikes against the Texas budget bill

Lan Bentsen, Special Contributor

Published: 6:54 p.m. Wednesday, March 23, 2011

Our Texas House budget bill fails the test of good public policy on three counts. Keep in mind, the question is how best to balance the budget and optimize the state's long term viability.
Strike 1 – The premise behind HR1 is the incorrect assumption that services must be cut because taxes cannot be raised. Today the people of Texas are certainly not over served or over taxed. We already rank at the bottom of the 50 states in both taxes and vital services; cutting another 27% in health and education services, from our already-last-place standing, to assure that we maintain our rank as the lowest of the low, cuts too far into our future workforce. This is not a rational approach. Successful businesses need a healthy educated workforce, and self sufficient consumers with purchasing power – and this budget undermines that.
Strike 2 – There are two parts to the current deficit, but HR1 only addresses one, and that one is done the wrong way. The legislature created a structural deficit when it rearranged education funding streams in 2006. It needs to address that fix permanently or we will continue to face $10 billion dollar deficits every session. The second part of the deficit is a short-term revenue deficit due to the economic downturn. Instead of addressing these two root causes, the legislature is balancing the budget on the backs of the poor, the elderly, and students with unintended irreversible long-term consequences. Some of the cuts proposed will cause hundreds of babies to die over the next two years due to lack of prenatal care, significant intellectual capital at the university levels will forever depart, and more lifelong dropouts will be realized at the K-12 level. There will be no restoring or reversing these losses in two years.
Strike 3 – The current cuts are terrible tax policy. Tax-wise, cutting $7 billion in state support for programs such as Medicaid ends up costing us another $10 billion in foregone federal matching funds. And yet another $10 billion will be spent at the local level because communities must now pick up the cost of that mandated care. In an effort to ‘save' $7 billion in the state budget, Texas taxpayers are out a minimum of $20 billion paid at the local and federal levels, before calculating the economic impact of the reduced spending and the benefits of proper services.
A Modest Proposal - The remedies should reflect the problems. Texas's leadership must permanently fix the business tax it broke in 2006 and provide an interim revenue patch to address the temporary economic downturn. Instead of cutting an already lean budget, dumbing down our education system and denying the most basic medical needs to our citizens, we should use the Rainy Day Fund and consider a one cent sales tax increase for the next two years to fix our temporary shortfall. With these measures we can affordably realign and balance our budget, recapture our federal matching funds and get us through this coming biennium with no expansion of services or irreversible long term losses. That is a win-win for all of us.

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