What Would Reagan Do?

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Ask any Republican: Budget cuts get applause. Discussions of closing tax loopholes and raising revenue … not so much. And so it’s not surprising that Republican lawmakers have reacted to our state’s unprecedented budget shortfall, currently estimated at around $24 billion, by eagerly reassuring voters that their taxes will not go up. As Gov. Rick Perry told Austin’s KVUE-TV in June, the plan is: “Fill that budget gap, if there is one—which we suspect there will be—with appropriate reductions in spending without raising taxes.”

For many Texas lawmakers, it’s a matter of principle that when it comes to government, the smaller the better. So for these committed ideologues, the upcoming session is an opportunity. But if the budget gap is as high as early estimates predict, it’s unlikely that even drastic cuts with a dull machete can actually free up enough money for a constitutionally required balanced budget.

In truth, we cannot cut willy-nilly. The state is under federal court order to improve its children’s Medicaid program; it’s unlikely the Lege could make reductions without being dragged back into federal court. Then there are the state’s institutions for the mentally disabled: After a major abuse scandal, the state reached a deal in 2009 with the U.S. Justice Department. The feds agreed not to sue, so long as the Legislature boosted funding for the facilities and improved conditions. The Legislature can’t reduce funding for public schools, either, without risking a court battle.

If the Legislature cuts other programs, Texans will still end up picking up the tab. For instance, if the number of uninsured Texans goes up, the cost gets passed to hospital emergency rooms and local hospital districts—and eventually leads to higher local property taxes and health care costs. And wholesale cuts to education might save money short-term, but would hamstring the state’s economy down the road by producing a less skilled workforce and reducing property values.

House Speaker Joe Straus, a San Antonio Republican, says lawmakers “must make tough choices and put every cost-saving idea on the table.” But if every cost-saving idea is on the table, why are lawmakers ignoring so many other options—like raising revenue through closing tax loopholes, broadening the sales tax to cover services or expanding and taxing gambling? Even Ronald Reagan understood there was a time to raise taxes. Lawmakers must face up to the fact that they are going to have to raise revenue, or we’ll all end up paying the price.