The Budget Crisis

Why are Texas schools in financial crisis now?

Texas schools are in financial crisis due to a $27 billion hole in the most recent state budget. In short, the state simply did not have enough money to continue funding public education at current levels without increasing taxes, which many elected officials had sworn not do. Instead, these legislators  chose to slash $5.4 billion from public education, along with huge cuts to other vital programs.

Why is the state budget shortfall so big? A key factor is an ongoing structural problem created in 2006 when the Texas Legislature reduced property taxes by one-third. State legislators increased the business tax and cigarette tax at the same time, but these changes did not produce enough money to offset funds lost due to property tax cuts. This is known as a “structural deficit” because it does not depend on how well the economy is doing. Though the size of the gap may fluctuate, it will persist in boom or bust because of the way the tax law is structured.

In addition, the national economic downtown caused a drop in state sales tax collections, which are only now starting to rebound. And one-time general revenue funds and federal stimulus funds – both of which were used to help balance the previous state budget – are no longer available.

Finally, enrollment in Texas schools and community colleges continues to grow, while at same time, declining property values have resulted in falling local property tax revenues. Together, these factors amount to a perfect budget storm – and a perfect mess for Texas schools.

The 2013 Legislature will have the opportunity to tackle these problems, but it will take vision, wisdom and hard work. We must ensure that every candidate and state officeholder supports an outstanding education for all Texas students and has the courage to act on this commitment.

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