Tuesday, May 6, 2008
Craddick: State should have a near $15 billion surplus going into next session
By Steve Taylor
House Speaker Tom Craddick speaks at the Lincoln Day Dinner in Pharr on Wednesday evening. (Photo: RGG/Steve Taylor)
PHARR, May 1 - Texas House Speaker Tom Craddick says the state should have about a $15 billion surplus going into the next legislative session.
“We went from a $10 billion deficit in four and a half years, to a $14.5 billion surplus,” Craddick said, of the period between 2003 and 2007. “We are going to go into session in January next year. We project we are going to have close to a $15 billion surplus.”
Craddick made the forecast during a speech at the Hidalgo County Republican Party’s Lincoln Day Dinner, held at the Nomad Shrine Club in Pharr. The speech focused on the achievements he believes Republicans have made during the six years they have controlled the House and the major tasks facing lawmakers in 2009. Craddick acknowledged that while rising oil prices have helped build the state's surplus, GOP policies have played a big part too.
“Your taxes have gone down. We’ve got a surplus and it just didn’t happen,” Craddick said. “Now, I didn’t create the price of oil and I know that’s helped a little but let me tell you right now, so did cutting spending, so did consolidating agencies, so did saying the word ‘no.’”
Having a surplus will allow lawmakers to bring more transparency to the budget process, Craddick said. For example, he said, the sales tax raised on sporting goods needs to go where it was intended, which is Texas Parks and Wildlife. An even bigger funding switch should happen with the gas tax, some of which currently pays for the Department of Public Safety, Craddick said.
“In the next session of the legislature, we need to quit funding DPS with highway money. We need to fund highways with highway money. It’s $1.6 billion. We need to move it (DPS) out of the highway fund and fund it in general revenue. We’ve got the money, now’s the time to do it. Let’s spend it on programs like that,” Craddick said.
Craddick said Republicans could be proud of the way they balanced the budget without raising taxes, brought in sweeping tort reform, and pumped more money into public and higher education.
Craddick became speaker in 2003, with the state facing a $10 billion budget deficit. The deficit was eliminated through cutting spending and consolidating agencies, Craddick said, pointing out that 13 health and human service agencies were consolidated into two. “Saved $1.2 billion a year in administration,” he said, of the HHS reforms.
Craddick said the new leadership came in with a different mindset. “We are going to treat this thing like a business, for the first time in years. We did. We ended up with a balanced budget at the end of the session. We funded schools. We didn’t have any new taxes,” he said.
Craddick said just changing the names of some of the state programs helped the state qualify for federal matching grants. In some cases, he said, the state could have been receiving $3 for every $1 it put towards a certain program. “Those federal dollars are dollars you paid into the federal budget. We weren’t getting our federal dollars back. Texas wasn’t participating,” he said.
Craddick said Republicans should also be proud about passing the largest property tax cut, not just in Texas but in the United States, $14.5 million. Property taxes went from $1.50 per $100 valuation to $1 dollar. “Many of you did not see all of that. That’s because your appraisals went up,” Craddick said. “We have got to get control of the appraisals in this state.” The audience clapped enthusiastically. “I know there is a lot of controversy over that but it’s a reality and we’ve got to do it,” Craddick added.
Craddick did not mention the new business margins tax that was brought in to replace funding lost through property tax cuts.
Another significant achievement for Texas, Craddick said, was the way it has led the nation in job creation and business start-ups these past five years. He said 200,000 new jobs were created in Texas last year. “We have created an Enterprise Fund that you all have used in this part of the state to bring in new business,” Craddick said, perhaps not realizing that the Rio Grande Valley has yet to benefit from the fund administered by the Governor's office.
Another huge improvement has been tort reform, Craddick said. He pointed out that in November 2002, just before he was elected speaker, he visited the Rio Grande Valley and learned how bad the situation was for doctors.
“It was interesting to me. Every chamber said, ‘Our major problem is medical malpractice. We have lost 100 doctors in the last 12 months. We can’t get doctors to practice here. They can’t find medical malpractice insurance. We’re Lawsuit Heaven USA, in South Texas,’” Craddick recalled.
“We went in and passed the greatest tort reform legislation that has ever been passed in the United States. You read any article in the country, they talk about Texas first. Mississippi, Georgia, Oklahoma, California, have all sent delegations to our office and said, ‘how did you do it?’”
Craddick said tort reform was passed by legislators meeting for 14 days straight, from 9.30 or 10 a.m. until four or five o’clock the next morning. The leadership fought off 750 amendments to the tort reform bill, he said. “What we did is we settle down and say, these are the things that have got to be done.”
Craddick said he remembers Gov. Rick Perry coming to his office in the early hours of the morning one day during the 2003 session and saying, “you’ve got to give,” on tort reform. Craddick said he handed Perry a note with one word on it. The note said: ‘No.’
“I said, ‘I’m not giving. People might think I’m hard-headed. They’re wrong. I just think we’ve got a task to do, we’re going to do it, and we’re going to stay here,” Craddick said, claiming Perry still carries the note.
Tort reform was achieved because Republicans “joined together in unity to do what was right and needed to be done in this state,” Craddick said. “That’s the reason we passed the budget with no new taxes. We can do it and we have done it in the past.”
As a result of tort reform, Craddick said, frivolous lawsuits have been reduced and 9,000 new doctors have come to Texas. “Look at other states, they are losing medical people. They are losing doctors and we are gaining them. Our hospitals have gone up in accreditation. Our programs have gone up more,” he said.
Craddick pointed to discipline, working long hours, and not reading the newspapers as key factors in the GOP’s legislative success. “None of these things were greeted with a lot of cheers. Change sometimes causes problems and change makes people upset. If you are in power and you lost power and changes are made, it even makes it more so. We did what we thought was right,” he said.
On the subject of public education, Craddick said everybody wanted better schools and more money for those schools. However, few people had any idea how to pay for it.
Craddick said Republicans were willing to put more money into schools and give teachers pay raises because they deserved it. Craddick said they did both, but with that had to come greater accountability.
“We want to know where they (school districts) are spending their dollars and what kind of return we are getting. What are the test scores? Today, I think if you talk to the school districts, they are very happy that came about,” he said.
“It took us a couple of special sessions, but we did that. We are now putting more dollars into teachers’ salaries and where it is needed, in the classroom, and not into administration.”
Craddick placed great emphasis on higher education and workforce training during his speech. He said Republicans had put more money into higher education in the last six years than was done throughout the 1990s. “I really believe, not only K through 12 but higher education, the junior college system and the four-year college system, is the backbone of this economy,” Craddick said.
Craddick said every region of the state wants to attract more businesses but in order to do that the state needs to do a better job of training its workforce. If not, he said, it is “all in vain.”
Craddick said he might not be popular for saying it but he does not subscribe to the view that every student needs to go to college or university. “Have you hired a plumber lately or an electrician lately?” Craddick asked, suggesting that greater emphasis needs to be placed on technical and service sector training.
“These people that get out of high school and then… to have to take millions of dollars that we are paying every year for remedial training to teach to get to a level where they can take a college course, it is ridiculous. We need to get rid of that,” Craddick said.
“There’s another side to that and the technical side and the service sector, we need to focus on these people, rather than have them drop out of school.” The audience applauded.
Reinforcing his belief that higher education and workforce training were key to the state’s future, Craddick told a story from a few years ago about the first time he met Michael Dell, founder of Round Rock-based Dell Computers. Dell explained that he was about to announce a new computer assembly plant and it was going to be in Georgia, rather than Texas.
“Unless you fix higher education and get more graduates and better graduates out of our four-year institutions the next time we add jobs we are moving out of Texas too,” Craddick said Dell told him.
Dell’s remarks said everything one needed to know about Texas’ approach to higher education in the 1990s, Craddick said. “We did not fund higher education. We have funded higher education. We spent $2 billion on tuition revenue bonds to build new facilities, to expand our medical schools, our law schools, our campuses here,” Craddick said.
Craddick concluded by saying that in the last six years the House had focused on education, tax cuts and jobs. “If you focus on those three it works and it has worked,” he said.
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