Business leaders urged to support ‘balance'

Great article showing just how far the business community is from being a monolithic group. Props to Hobby's concern for the longer-term view of what's best for the state.

-Patricia

By Peggy Fikac And David Hendricks | SA Express News
Monday, January 31, 2011

AUSTIN — Former Lt. Gov. Bill Hobby is helping lead an effort to rally Texas business leaders against what he calls a “catastrophic” cuts-only approach to balancing the state's budget in the face of a massive shortfall, estimated at $15 billion to $27 billion over the next two years.

Hobby, a board member of the Center for Public Policy Priorities, and F. Scott McCown, the group's executive director, say in a letter being sent today to the state's hundreds of chambers of commerce that such an approach would undermine the state's economic recovery, weaken education and leave vulnerable Texans unprotected. The center focuses on low- and moderate-income Texans.

“We simply can't balance the budget through cuts alone without doing terrible damage to our economy and our future,” Hobby and McCown said in the letter.

They want business leaders to speak up for a “balanced approach” that includes spending the state's rainy day fund savings account, which is expected to contain $9.4 billion; adding new revenue through such options as increasing alcohol or tobacco taxes; raising taxes on “sugar-loaded” drinks; eliminating “unwarranted” sales tax exemptions; or temporarily increasing the state's sales tax rate.

Legislative leaders emphasize that the bare-bones proposals released by House and Senate leaders represent the start of a budget discussion that will unfold over months. GOP leaders have spoken against new taxes, saying they'd be damaging in tough economic times. Gov. Rick Perry has even said he's against spending money from the rainy day fund, although some other Republicans indicate they're open to spending at least part of it.

Among other points, legislative leaders' budget proposals would cost Texas billions of federal dollars as a result of paring back state spending. The letter notes that more than $10 billion would be lost in federal matching dollars for Medicaid.

“We're going to make these horrendous cuts in education, and we're not going to accept federal money that we have paid into the federal government,” Hobby, Democratic lieutenant governor from 1973 to 1991, said in an interview. “That's idiotic.”

Bill Hammond, president of the Texas Association of Business, which has 220 local chambers as members, said his group opposes a cuts-only approach, although it doesn't back spending the entire rainy day fund and doesn't want new taxes. It favors keeping spending about the same over the next two years.

The association has recommended items including spending $6 billion from the rainy day fund, putting slot machines at racetracks and expanding Medicaid managed care into the Rio Grande Valley, Hammond said.

“We should stay away from cuts in education,” said Ramiro Cavazos, president and CEO of the San Antonio Hispanic Chamber of Commerce. “The best investment for state funding is for education. ... As for tapping the rainy day fund, if now is not the time to tap it, then when is a good day?”

Hispanic Chamber leaders are traveling to Austin today. “We're going to talk to folks about how important education is,” Cavazos said.

Duane Wilson, president and CEO of the North San Antonio Chamber of Commerce, said his organization agrees that an all-spending-cuts approach is wrong.

“Texas needs educated workers. It's exactly the wrong thing to do, to cut, cut, cut,” Wilson said.

He said the North Chamber would not mind seeing San Antonio being allowed to hold local referendums for funding transportation projects if that will help the state budget. “We can build our own roads,” Wilson said.

“I think the former lieutenant governor is on the right track,” said Richard Perez, president and CEO of the Greater San Antonio Chamber of Commerce. “I think the budgets that have come out of the Senate and the House are worst-case scenarios. I believe the rainy day fund will be tapped.”

Cindy Taylor, president of the South San Antonio Chamber of Commerce, said that “more taxes on people and businesses is not the answer. Tightening the belt across the board on spending and a common-sense approach to future spending is the key to surviving this mess.

“(I) don't mind using the rainy day fund as long as it is only temporarily used to fill funding gaps and promptly paid back. Using sin taxes is not the way to go. Taxing sugar? What's next? Coffee? Beef?”