Monday, August 09, 2010

Punishing Texas for acting responsibly

Stephen Spruiell has a cute little detail from the $26 billion aid package that the House is voting on today. Buried in the bill is a provision that singles out one state - Texas - to require the governor of Texas to "provide an assurance" that it will not cut the percentage of spending that goes to education for the next three years.
Gov. Rick Perry argues that this is impossible: The state legislature controls education funding in Texas, not the governor, and the governor cannot bind future legislatures to any level of spending. Because Perry cannot provide the kind of assurance the Doggett amendment appears to require, he argues that it would deny Texas, and only Texas, over $800 million in education funds.
The real reason that the Democrats want to single out Texas is because of what Texas did with the stimulus funds it received for education last year.
Following Perry’s acceptance of stimulus funds for education in 2009, the Texas legislature reduced education spending by $3.2 billion, plugged the hole with federal money, and used the savings to shore up a rainy-day fund. This move infuriated Democrats in the Texas congressional delegation, who wrote an angry letter to the speaker of the Texas house. Their letter gave the game away regarding the true purpose of the education funds in the last stimulus as well as the education funds in the current state-bailout bill. It conceded that Texas did not face a shortfall in its education budget and therefore had no need for federal aid. But it argued that, instead of using the money to prepare for future budget shortfalls, Texas should spend it “as the law directs, ‘to provide local educational agencies in the State with subgrants,’” regardless of whether those agencies were facing shortfalls.

This was an obvious attempt to force Texas into future increases in education spending by juicing the local districts with a temporary influx of federal aid and thus raising the amount they expect to receive every year. In future years, if the federal government ever decides to stop passing stimulus bills, local districts will complain that the state government is forcing them to undertake “massive cuts” because it is either unwilling or unable to pick up where Washington left off.

Meanwhile, the Texas legislature’s decision to save the money from the first stimulus is looking like a wise move. Texas is facing an $18 billion shortfall this year, which its $10 billion rainy-day fund will help it weather. That won’t be enough, of course, and Texas officials are asking agency heads to trim 5 percent from all departments and looking at ways to raise revenue without having adverse effects on economic growth.
So the Democrats want to tie the hands of state legislators who are trying to figure out how to balance their budgets in times of declining state revenues. They want to prevent states from cutting education spending at all come what may with the rest of the states' spending problems.
At a time when Texas and other fiscally responsible states need maximum flexibility to balance their budgets without resorting to growth-killing taxes, Democrats have decided that stronger handcuffs are needed to bring troublemakers such as Perry into line. But Perry has decided that the Doggett amendment, unlike previous “maintenance of effort” requirements, places impossible constraints on Texas’s autonomy, and the state’s lawyers sound prepared to fight back. “The Governor cannot assure the federal government at this time what the 82nd Legislature will do,” said Texas attorney general Greg Abbott in a statement. “The State’s inability to legally comply with the Doggett Amendment means that Texas is the only state that cannot receive federal dollars under this bill, as it is currently written.”

Doggett set out to force Perry to fund education in the state of Texas at the level that Democrats in Washington want it funded. Instead, he’s kicked off a high-stakes game of chicken between the advocates of dependency and the state leaders determined to resist them.
So if a state acts responsibly, the Democrats think that they should be punished. Better the states should spend money they don't have and just wait around for the federal government to come up with more aid.