"We cut a record $15 billion from our state budget."
Rick Perry on Monday, October 31st, 2011 in a television ad
Rick Perry says Texas leaders cut $15 billion from state budget
Proclaiming himself a "doer, not a talker," Republican presidential hopeful Rick Perry makes two claims about his accomplishments as the Texas governor in a television ad that has been broadcast in Iowa and New Hampshire.
"In Texas, we created 40 percent of the new jobs in the entire country since June of 2009," Perry says. "And we cut a record $15 billion from our state budget."
We’ve checked numerous claims about Texas job growth, including one by Perry in June 2011 that 48 percent of all jobs created in the United States since June 2009 were in the Lone Star State. Half True, we said, pointing out that there are many ways to slice and dice employment statistics. Also, experts have advised us that a state’s job performance — be they gains or losses — shouldn’t be pinned on the top officeholder. Too many factors are in play for a single state official to merit credit or blame.
For this article, we wondered whether a record $15 billion was cut from the state budget, as Perry says.
As backup for that claim, Perry’s campaign pointed to a May 2011 report on the two-year state budget that the Texas Legislature approved and Perry signed into law this year. The budget covers fiscal 2012, which began Sept. 1, 2011, and fiscal 2013.
The report by the Legislative Budget Board — whose staff members analyze state appropriations — compares spending in the 2012-13 budget ($172.3 billion), including state and federal money, with that in the previous budget cycle ($187.5 billion). The difference is $15.2 billion.
(Since Perry’s ad began airing, the board has released updated budget figures that are slightly different from those in the May 2011 report. That information was not available to the Perry campaign, however, so our research focuses on the earlier report.)
The $15 billion reduction amount stands alone for the past half-century, according to John Barton, a spokesman for the budget board’s staff. From 1951 through 2009, Barton said, no Legislature budgeted less spending from all sources than what had been spent in the previous budget. Before then, he said, Texas lawmakers did not write a single budget covering all state agencies.
So, there’s a basis for Perry’s "record" $15 billion boast.
Next, we looked at the figures behind it and found three factors that seem to diminish Perry’s claim. Let’s take them one by one.
First, Perry’s cited spending reductions were primarily federal funds, most of them being one-time stimulus dollars that lawmakers knew wouldn’t be available for the 2012-13 budget cycle.
According to the LBB report, federal funding dropped 25 percent, compared with a 2 percent cut in state general revenue spending — the expenditures over which the governor and lawmakers have the most sway. In raw figures, federal funding fell by $18.2 billion while state general revenue spending dropped $1.6 billion. (Increases in other spending categories offset some of those losses, bringing the net reduction to $15.2 billion.)
More than half the drop in federal money, $11.8 billion of it, traces to the absence of one-time federal economic stimulus aid that Congress approved in 2009, Barton told us. Texas lawmakers used that money primarily for education and health care costs in the 2010-11 budget.
Second, the 2012-13 budget is expected to grow, which will drive down Perry’s $15 billion reduction figure.
It was much-reported during this year’s legislative session that lawmakers failed to appropriate enough state money to cover all of the projected Medicaid costs for 2012-13. That means that absent major changes in demand for services or program costs, the Legislature will have to pony up more money for Medicaid — a state-federal partnership providing health insurance to low-income Americans — before the end of the 2013 fiscal year.
In its May 2011 report, the budget board staff estimated that lawmakers would need to infuse the program with an additional $4.4 billion in state dollars.
If the $4.4 billion in state aid is added on, the federal government will send the state an estimated $5.3 billion in federal Medicaid "matching" funds, according to Stephanie Goodman, a spokeswoman for the Texas Health and Human Services Commission.
So, total spending in the 2012-13 Texas budget could increase by nearly $10 billion, although Goodman cautioned that actual Medicaid spending will probably vary from the projections reached this year based on factors such as the size of the state’s caseload and medical costs.
An extra $10 billion in spending for 2012-13 would bring the total budget to about $182 billion and reduce Perry’s budget cut to about $5.5 billion.
Third, it was also well-reported that lawmakers reduced spending on public education in the 2012-13 budget by delaying a regular $2.3 billion state payment to school districts a few days, pushing it from the end of the 2013 fiscal year into the next budget cycle.
Considering these factors, the cuts in the 2012-13 budget don’t look as large as Perry touts in his campaign ad. Counting the effects of postponing Medicaid and public school expenditures and including additional federal aid that would roll in if the state commits more to Medicaid, the 2012-13 budget may actually be closer to $184.3 billion. Compare that total to the $187.5 billion spending figure for 2010-11 in the LBB report, and the budget cut shrinks to about $3.2 billion.
There is another perspective on the question of how much the Legislature cut the budget this year. Eva DeLuna Castro, an analyst at the Center for Public Policy Priorities, a left-leaning Austin think tank, told us that any analysis by her organization would also consider as cuts the difference between 2012-13 appropriations and the amount of money the state would have had to spent to maintain current service levels in its programs, including the cost of school-age population growth. DeLuna Castro said that in this vein, the budget cuts for 2012-13 were "closer to $22 billion."
We also looked into what experts at the Texas Public Policy Foundation, a conservative Austin think tank, have said about the 2012-13 budget.
In a May 26, 2011, statement, Talmadge Heflin, director of the foundation’s Center for Fiscal Policy, praised Texas as "leading the way in showing that government can be made smaller." He also noted, however, that $12 billion of the $15 billion reduction "comes from the expiration of the federal stimulus package." Heflin continued: "Just as those one-time stimulus funds artificially inflated the current budget, the end of those funds makes it look like the Texas Legislature cut deeper than it really did."
Nobody disputes that the latest Texas budget spends considerably less than the previous one — and Perry’s $15 billion figure has a basis.
However, much of the ballyhooed reduction reflects the loss of one-time federal stimulus aid — a "cut" originating in Congress and one that was not in Perry’s control. Put another way, the budget he signed into law trimmed state spending (which the governor can directly influence) by $1.6 billion.
Also, Perry’s calculation doesn’t acknowledge the state’s underfunding of Medicaid and a delayed education payment — which, if counted, would knock the budget cut down to about $3 billion in total, $12 billion less than what Perry celebrates.
We rate his statement Half True.