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Why Texas Can't Promise Tax Cuts
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What would happen if we ran Texas like a business? A big chunk of our core revenue stream-oil & gas taxes-is suddenly on shaking ground. Do you hand out shareholder dividends (tax cuts), reinvest cash reserves for unmet needs (funding for schools, roads, and water), or hunker down in the face of economic uncertainty?
Oh, who are we kidding? “Running government like a business” is something politicians tell voters to trick them into letting politicians run government any way they please. And like a politician who knows who butters his bread, one of our newly minted leaders is getting ready to handle the economic threat of the falling price of oil by giving away money.
“Let there be no doubt - there will be tax cuts,” said Texas Lieutenant Governor Dan Patrick.
Oh, there’s doubt. In January 2009, oil prices fell below $43 a barrel, the biggest drop since 9/11. Out of some combination of a surfeit of caution and a deficit of ability, then-Comptroller Susan Combs predicted that the economy would grow but state revenues would decline, leading to unnecessary school funding cuts, underfunded roads and highways, and unaddressed water needs.
Then oil prices rose. Then doubled. Then boy howdy, we had another boom on our hands. An energy boom left Texas with $7.5 billion in cash reserves, but then the price of oil fell, as commodity prices do, and now we’re back where we started as far as the price of oil is concerned, which concerns a lot of folks.
But not Glenn Hegar, Texas’ new Comptroller. In determining how much the legislature can spend, he predicted moderate economic growth and a moderate increase in state spending. With all this moderation, he’ll probably get primaried by a tea party challenger.       
Hegar also predicted that the price of oil will increase to between $65 and $75 a barrel. He could be right. He’s only a rice farmer by trade, but that’s more expertise than I can claim. Of course, with Iraq increasing production, Goldman Sachs Inc. and Societe Generale SA are predicting prices to fall. But then Republican Party orthodoxy has never been subject to scientific laws such as supply and demand.
Amid this uncertainty, wouldn’t it be smarter to make sure we’re not giving away money when we might need it for basic needs that are already underfunded? It’s not like Patrick has a specific idea or a credible rationale about how tax cuts could increase economic activity or energy production. Should we cut gas taxes? Severance taxes? Business taxes? Property taxes? It would be easier to answer that if this was anything more than fulfilling a campaign promise.
One voice that isn’t singing from the tax-cut hymnal is the new Governor’s. In Greg Abbott’s inaugural address, the word “tax” appeared once, and it was not followed by the word “cut.” Here’s the whole paragraph, because I didn’t believe it either:
“As governor, I will ensure that we build the roads needed to keep Texas growing. That taxes raised for roads will be spent on roads. I will speed up our needed water projects, and I will secure our border,” he said.
Put another way, Abbott mentioned “state sovereignty” twice, and twice he uttered the canard “secure our border.” Not once did he talk about cutting taxes, and it certainly wasn’t because he was against jingoistic talking points.
What he did with some eloquence is list the unmet priorities of Texas. Credit where credit is due, even if in some cases the state’s needs are past due.
“Texas truly is the land of opportunity, the place where anyone can achieve anything,” he said. “But as great as Texas is there’s more we must do. More for the families stuck in traffic. More for parched towns thirsty for water. More for parents who fear their child is falling behind in school. More for employers searching for skilled workers.”
When Ted Nugent’s blood brother doesn’t mouth pieties about tax cuts, maybe high taxes are the last thing wrong with Texas’ economy. It’s time to run Texas like a business by investing in critical needs and hedging against uncertainty.
Tax cuts? Get real.
Jason Stanford is a regular contributor to the Austin American-Statesman, a Democratic consultant and a Truman National Security Project partner. You can email him at and follow him on Twitter @JasStanford