New round of state budget cuts to be ordered

AUSTIN -- After months of belt-tightening, state agencies will be asked to trim spending for the current fiscal year by another 2 to 3 percent, two top elected officials announced Monday.

Lt. Gov. David Dewhurst and House Speaker Joe Straus said the new round of budget-cutting orders will go out this month. Those instructions will constitute the third budget-cutting edict since January.

Officials at state agencies, colleges and universities, and state court systems are warning of deep cuts in services and the potential layoffs of thousands of workers. Legislative officials are bracing for a budget shortfall possibly exceeding $20 billion when lawmakers begin work on a new two-year budget after the Legislature convenes Jan. 11 for its biennial 140-day session.

The latest cuts will apply to fiscal 2011, which started Sept. 1 and continues until Aug. 31, 2011.

In the opening round of budget-cutting in January, the state's top three leaders -- Gov. Rick Perry, Straus and Dewhurst -- ordered state agencies to cut spending by 5 percent for the current biennium. Those cuts totaled $1.2 billion, but Dewhurst said Monday that they amounted to about 3 percent after exemptions were granted to some agencies.

In addition, agencies have also been asked to identify cuts of up to 10 percent in their proposed budgets for the 2012-13 biennium. The Legislative Budget Board has been sifting through those recommendations to prepare a base budget that will be used as a starting point when lawmakers begin crafting a final 2012-13 budget.

The board's recommendations are expected to be released in the next few weeks.

Straus said lawmakers will be forced to impose "very significant reductions." He said revenue for the current biennium could wind up being nearly $4 billion below projections. The state has been hammered by 14 months of declining sales tax revenue, although collections have recently been trending upward.

"While Texas is seeing signs of improvement in the economy, we are still facing a significant budget shortfall next session," Straus said. "The cuts we are making are essential to address Texas' budget challenges to ensure we are fiscally responsible with taxpayer funds."

Perry, Dewhurst and Straus have ruled out new taxes, meaning lawmakers will be forced to deal with the projected shortfall by cutting spending.

Dewhurst, the Senate's presiding officer, said voters restated their disdain for new taxes in the Nov. 2 election, which dramatically expanded Republicans' majority in the Legislature.

Perry also forged a commanding re-election victory with a strong anti-Washington message that advocated limited government and low taxes.

Dave Montgomery is the Star-Telegram's Austin bureau chief. 512-476-4294