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State budget plan would result in 'thousands' of job losses, analysis says

03/24/2011 11:43 PM

03/25/2011 10:59 AM

AUSTIN -- House Democrats on Thursday seized on an analysis by the Legislative Budget Board to escalate their attacks on a committee-approved state budget, saying the proposed cuts will result in the loss of thousands of jobs over the next two years.

The analysis forecasts that in 2013, as many as 335,244 jobs will be lost in the public and private sectors. A statement from the board's director said the reductions in the proposed budget stem largely from the "steep downturn of the Texas economy" over the past several years.

The board, the Legislature's chief budget agency, was required by a House rule to issue the economic impact statement after the House Appropriations Committee OK'd a spending blueprint Wednesday. The proposed budget would reduce state spending by $22.9 billion over two years, eliminating outright more than 8,000 state jobs and forcing deep cuts in healthcare, education and other services.

Rep. Mike Villarreal, D-San Antonio, who wrote the rule requiring the impact statement, said the board's findings showed that Texas faces the elimination of "hundreds of thousands of jobs."

"We can't grow the Texas economy with a budget that destroys jobs, hurts neighborhood schools, and makes college more expensive," Villarreal asserted.

The House plans to vote on the budget April 1.

"There's absolutely no way I would vote for the budget," said Rep. Marc Veasey, D-Fort Worth, who holds the second-ranking post in the House Democratic leadership. "It would be impossible for me to vote for this budget."

Later in the day, Lt Gov. David Dewhurst, the Senate's presiding officer and co-chairman of the budget board, issued a statement disputing Villarreal's interpretation.

"The LBB report clearly shows that job creation is tied to the size of the economy, not the budget," Dewhurst said. "What it does not calculate, however, are the dramatic job losses Texas would suffer if the Legislature raised taxes just as our economy is starting to rebound. You cannot expect to grow the economy and create jobs by growing bigger government."

The budget board report forecast that 271,746 Texans will lose their jobs in 2012, with the number growing to 335,244 in 2013, Villarreal's office said. Total employment in the state would drop by 1.9 percent in 2012 and by 2.3 percent in 2013.

The forecast seems to run counter to projections by state Comptroller Susan Combs, who has predicted a modest upswing as Texas recovers from the recession.

In the statement, board Director John O'Brien said a "correct interpretation" of the forecast "is essential to properly understand the effects" of the proposed budget on the Texas economy.

For instance, O'Brien said, the forecast of 272,000 job losses in 2012 "does not imply the state will lose that many jobs from our current employment level upon enactment of [the proposed House budget]."

"Rather, that figure implies Texas will have 272 thousand jobs less than a baseline scenario where state expenditures remained constant relative to 2010-11 levels and available revenue matched these spending levels," O'Brien told House Appropriations Chairman Jim Pitts, R-Waxahachie.

"Since available revenue for the 2012-13 biennium is predicted to fall well below that amount, in large part due to the national economic recession, many of these job losses can be attributed to the steep downturn of the Texas economy during the past several years."

North Texas economist Terry Clower said deep cuts in state services could affect the economy but would be unlikely to reverse the state's recovery. "My expectation is that it will certainly slow the pace of the recovery, but I do not think it will stop the recovery, nor would this action by itself cause us to go back into a recession," said Clower, director of the Center of Economic Development and Research at the University of North Texas in Denton.

Clower called the board's forecast a "much bigger number than I've heard before. I don't question the veracity of the number, but I don't know what underlies that number, how they got to it."

Budget-writers in the House and Senate are struggling to write a two-year spending plan in the face of a projected shortfall as high as $26 billion.

Preliminary budgets unveiled in both chambers in early January proposed education cuts in excess of $9 billion, but members of the Senate Finance Committee voted Thursday to ease the reduction.

In that budget plan -- written by Sen. Florence Shapiro, R-Plano -- nearly $6 billion in education funding would be restored, and the overall reduction would be about $4 billion instead of $9 billion-plus.

House budget-writers have also committed to restoring $2 billion, which would bring the education cuts in their plan to $7.8 billion, instead of $9.8 billion.

Education advocates said that even with the changes, the cuts will hurt school districts. "Clearly the Senate's version is looking better, but the level of cuts is still unacceptable," said Lonnie Hollingsworth of the Texas Classroom Teachers Association.

Dave Montgomery is the Austin bureau chief. 512-476-4294

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