Terrance Heath's List: Texas & Rick Perry

• Yesterday, Texas lawmakers in the state house passed a 142-page measure in special session that could drastically change how 6.6 million Texans benefiting from Medicare, Medicaid, and SCHIP programs receive their care. The bill — which includes two controversial amendments that have yet to be adopted by the state Senate — strongly mirror the reforms offered in Rep. Paul Ryan’s (R-WI) budget, but would have to be approved by the federal government:

   

   – Convert Medicaid into a block grant: The state will apply for a waiver that would convert the existing Medicaid financing structure — under which the federal government reimburses Texas for a certain percentage of its Medicaid spending — into a capped block grant that would increase only for population and the general rate of inflation, not medical inflation.

   

  – Privatize Medicare: Texas would enter a compact that would exempt the state from the federal eligibility and benefit rules in the Medicaid program and from all Medicare rules, allowing lawmakers to “possibly sweep Texas seniors on Medicare into private health insurance policies.”

• (Milwaukee, Wis.) Journal Sentinel: "[M]ore than 1.1 million people in Wisconsin depend on Medicaid health programs for the poor. Medicaid provides health care for one in five Wisconsin residents; the group of programs has expanded faster here over the past nine years than in any state except Arizona. That has placed health care among the state's fastest-rising costs for taxpayers. ... To keep up, the state Department of Health Services is requesting $675 million more for Medicaid and other programs over the next two years, a huge part of the more than $3 billion shortfall in the two-year state budget that awaits the next governor." The candidates for governor, Republican Scott Walker and Democrat Tom Barrett "have not said how they'll cover the full costs of Medicaid" (Stein and Marley, 10/11).

   
• To keep up, the state Department of Health Services is requesting $675 million more for Medicaid and other programs over the next two years, a huge part of the more than $3 billion shortfall in the two-year state budget that awaits the next governor." The candidates for governor, Republican Scott Walker and Democrat Tom Barrett "have not said how they'll cover the full costs of Medicaid"

• The (Columbia, S.C.) State: "More than 656,000 people, or 15 percent of all South Carolinians, could lose access to their doctors and prescription drugs if state lawmakers refuse to play by rules laid out by the federal government for health care. Advocates said this week that denying those families and children — many of them the newly poor — combined with the loss of $4 billion in federal money are the consequences the state could face if it follows the directives laid out in a scathing letter from its most powerful legislator. Senate President Pro Tem Glenn McConnell, R-Charleston, told Emma Forkner, director of the state Health and Human Services Department, that when the money provided by the state for is Medicaid is gone, the insurance program for the poor must simply stop providing services. Cash from the federal government requires a state match" (Wenger, 10/11).  

   

   

   

• Texas Tribune: Thousands of Texans with disabilities "fear losing their services because of budget cuts demanded of state agencies. Advocates say the Department of Aging and Disability Services' baseline budget request eliminates financing for more than 13,000 people — the majority of them waiting to receive so-called Medicaid waiver services in private homes, group homes or other community settings. Agency officials say an 'unknown number' of people already receiving the services could lose them. ... Lawmakers would have to approve another $317 million off of the agency's budget wish list — called 'exceptional items' — to keep the services intact, a pipe dream when the state is facing an estimated $21 billion shortfall and has asked agencies to submit options for cutting their budgets another 10 percent" (Ramshaw, 10/12).

   

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• To date, 682,900 U.S. jobs have been lost or displaced since the North American Free Trade Agreement (NAFTA) took effect in 1994, a new Economic Policy Institute (EPI) study finds. The main reason for the job loss is a $97.2 billion trade deficit with Mexico. In 1993, one year before NAFTA was implemented, the United States had a $1.6 billion trade surplus with Mexico that supported nearly 30,000 U.S.  jobs.   

   

  All 50 states, the District of Columbia and Puerto Rico have seen jobs lost or displaced to Mexico in the past 17 years, says Robert Scott, EPI’s senior international economist and author of  “Heading South: U.S.-Mexico trade and job displacement after NAFTA.”

• During a phone conference today, Scott said NAFTA supporters argued the pact would create jobs in the United States. Backers of proposed trade deals with South Korea and Colombia are making similar claims, he said. But his research has shown that each trade agreement would cost thousands of U.S. jobs. In the first eight years, the current deal with Korea could cost 159,000 jobs, he said, and Colombia could swallow up 60,000 U.S. jobs.

   

  Scott found the five states that experienced the largest percentage of local jobs displaced by trade with Mexico since NAFTA began are Michigan, Indiana, Kentucky, Ohio and Tennessee. The five that have the largest actual number of jobs displaced due to Mexico trade deficits are California, Texas, Michigan, Ohio and Illinois. (Check out the map above.)  

  • Tack to manufacturing.

  • Which of these state match up with the states Algernon Austin researched?
• Most of the jobs displaced by trade with Mexico—415,000 jobs, or 60.8 percent of the total—have been in manufacturing. 

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• The head of the House's tax-writing panel wants to find new money to minimize painful cuts to programs for needy Texans next session.

  So as they have each month since January, Rep. Rene Oliveira and his Ways and Means Committee spent hours Tuesday poking and prodding various industries and trade groups about the merits of keeping or killing their favorable treatment in state tax laws.

• he head of the House's tax-writing panel wants to find new money to minimize painful cuts to programs for needy Texans next session.

  So as they have each month since January, Rep. Rene Oliveira and his Ways and Means Committee spent hours Tuesday poking and prodding various industries and trade groups about the merits of keeping or killing their favorable treatment in state tax laws.

• It was a preview of the long dance sure to dominate next year's legislative session. Members of both parties hurled thinly veiled threats and barbs at corporations, such as State Farm Insurance and Dow Chemical, for assorted perceived transgressions.

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• With proposed drastic budget cuts to public education and social services, some Texas lawmakers are now looking to see where they can find new sources of money.

• A new report by the legislative budget board to lawmakers says since 2004, tax breaks on natural gas wells amounted to $7.4 billion.

   

  Senator Wendy Davis of Fort Worth questions that amount, given looming budget cuts. “Are we going to stick to this political rhetoric of saying ‘we’re going to solve this problem through cuts’ and therefore your children are going to suffer the consequence?” she asked. “I think we are failing our duty, failing our responsible duty to the people that we represent.”

   

  Conversely, the Texas Oil & Gas defends the tax breaks.

   

  The tax credit was set up in 1989 and made permanent in 2003 to encourage natural gas exploration and production.

• Business tax breaks cost Texas $4.3 billion in the last state budget, a figure that amounts to about a third of the state's massive revenue shortfall, according to a legislative report obtained on Friday by the Associated Press.

   

  The report also found that local governments lost $235 billion in state property tax exemptions, including those given for elderly and disabled homeowners, according to the report prepared by the House Ways and Means Committee. A tally for sales tax exemptions - the state's biggest cash generator - was not available.

   

  One of the largest carve-outs was for the natural gas tax, which totaled about $1 billion a year in exemptions, according to the report. An exemption for bottled water sales amounted to a loss of about $250 million a year for the state, while an exemption for corporations with business interest in solar energy devices cost more than $1 million over the last two years.

• A bill filed by Texas State Rep. John Otto (R – Dayton) would amend the portion of the state tax code that allows online-only retailers to avoid collecting sales and use taxes.

   

  HB 2403 redefines what constitutes a “physical presence”, or “nexus”, in regards to a retailer engaged in business in the state.

   

  The issue was put in the spotlight last fall when Texas Comptroller of Public Accounts Susan Combs attempted to collect $269 million in back taxes from Amazon.com. The online retailer operates a Dallas-area distribution center, but argued it shouldn't owe sales tax because its owner, Amazon.com KYDC LLC, is a legally separate entity based elsewhere.

• Picking up a six-pack of soft drinks could soon cost Texans more.

  A penny per ounce more, to be exact.

  State Sen. Eddie Lucio, D-Brownsville, is proposing increasing the taxes on sodas -- both regular and diet, and energy drinks too -- to raise money for the state and cut down on obesity in children and adults.

      

    That means a typical 12-ounce Diet Dr Pepper could cost 12 cents more at a grocery or convenience store. A six-pack of Coke would cost an extra 72 cents. And a 24-count box of Big Red would cost an extra $2.88.
• As state lawmakers face a multibillion-dollar shortfall -- and making cuts to education and social services to balance the budget -- Lucio said his proposal could raise an extra $4 billion every two years.

• After urging GOP Texas House members to cut the state budget before dipping into the state’s "rainy day" fund, Gov. Rick Perry told reporters outside the closed-door meeting that he’d compared the situation to what lawmakers faced in the 2003 session.
   
    "So we talked about the difference between 2003 and 2011," Perry said. "And the percentage of the budget shortfall versus the budget is really not that much different than it was in 2003."
   
    We asked Perry’s office to elaborate, then hunted comparisons of the state’s current fiscal situation to 2003 when lawmakers resolved a $9.9 billion projected revenue shortfall with funding cuts, fee increases, federal aid and other strategies. Missing from that mix: state tax increases.
• In a Feb. 20 political commentary, reporter Peggy Fikac of Hearst Newspapers quoted an expert saying today’s budget crunch is most comparable to 1987 when lawmakers and GOP Gov. Bill Clements agreed to a record tax increase.
• Fikac’s column touched on the projected $10 billion revenue shortfall faced by lawmakers in 2003, but did not compare it to the $15 billion to $27 billion shortfall that’s currently projected if the state either maintains current spending or the current level of government services through 2012-13.
• Upshot: The current-spending shortfall is 40 percent larger than in 2003 while the shortfall to maintain current services is nearly 63 percent larger.
• Our read: If it’s reasonable to make the comparisons we’ve laid out--and we think it is--then Texas faces a significantly greater shortfall now than in 2003. And that’s without taking into account the unlikelihood of a federal aid rescue and potentially greater difficulties reducing health and human services.
• Our read: If it’s reasonable to make the comparisons we’ve laid out--and we think it is--then Texas faces a significantly greater shortfall now than in 2003. And that’s without taking into account the unlikelihood of a federal aid rescue and potentially greater difficulties reducing health and human services.

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• The state of Texas is facing a $27 billion deficit, creating headaches for public schools and other state agencies facing budget cuts. But El Paso State Rep. Joe Pickett said the economy is not to blame.

  Gov. Rick Perry and house leaders have agreed to dip in to the state's Rainy Day fund, but Pickett said even if the entire Rainy Day fund were to be used, it would only make up for a third of what the state needs.

  Rather, Pickett points out to legislation made two sessions ago as the cause, and the potential fix for the state's budget woes.

  "We changed the franchise tax into a different form called a margins tax, and that business tax was supposed to capture all the people who weren't paying, and its not working. It's only collecting half of the money that was anticipated," said Pickett.

• Manifiestos, the tax rebate offered to Mexican shoppers, may soon be a thing of the past.

  Texas State Rep. Chente Quintanilla (D-El Paso) recenlty filed House Bill 344 and House Bill 1894 changing how customs brokers deal with sales taxes for Mexican shoppers.

  Texas State Senator Dan Patrick (R-Houston) also filed Senate Bill 830 on the same topic.

  Both Mexican shoppers and businesses are concerned that this bill could have a negative impact on the economy.

  "It's a way for us to recuperate some of the money that we spend when we come over here," said Rosalinda Peña.

  When Mexican shoppers come to the Rio Grande Valley, they bring in the dough.

  "We don't come here to spend one hundred dollars or two hundred, we come to spend more than $1,500 or $2,000 dollars every time we come here," said Oscar Gutierrez.
• Some shoppers said if they can't use manifiestos anymore, then they just won't come as often to do their shopping here anymore.

• Texas is one of seven states that have no individual income tax.  Most of Texas's tax revenue comes from state sales taxes and taxes on businesses and specific industries.  Texas does have a property tax, but its collected by cities, counties, and school districts and can only be used for local needs. 
• Sales Tax: 6.25%.  Localities can add their own sales taxes, which can bring the sales tax rate up to 8.25% in some areas.  Unprepared food, prescription drugs, and over-the-counter drugs are exempt.  

• It’s come to this: The Texas budget outlook has become so bleak that we’re comparing rather favorably to the one state where balanced budgeting goes to die.
  
  People, our budget deficit is now as bad as California’s.
  

• Comptroller Susan Combs' quiet acknowledgment that Texas will show a $1.3 billion deficit at the end of the budget year contrasts with the happy face she's put on state finances leading up to the 2010 elections. The numbers are the worst since 2003, when the Legislature responded with $10 billion in spending cuts, and increased fees, tuition and other revenue sources to balance the budget. And the deficit gives ammunition to lawmakers who want to trim spending in 2011.

   

  Publicly, the state's chief financial officer has said there's no reason to adjust income and spending estimates to account for the effects of the recession on the Texas budget: mostly, falling tax revenue. But on Wall Street — where the bond markets require hard numbers before they'll lend money — Combs had to report the deficit that will require legislative attention, and that it will have to borrow from other state funds to meet cash-flow requirements.

• The deficit came to light because of a routine borrowing exercise. Every year, the state borrows money to make up for a cash-flow gap created every autumn, when its bills arrive faster than its revenue. The state normally pays the loan back in the spring and summer, when revenues catch up. But this year, there's a dull-but-important fact hidden in that cash flow estimate: State leaders looked a year ago and determined that the "deep hole" — when the cash-flow demand peaks — would be $7.8 billion. Now, Combs has told the debt markets that the deep hole is actually $10.8 billion, or about $3 billion worse. 

   

• Yet the office acknowledges that its revenue forecasts — last made in 2009 — are not holding true because of underperforming sales and franchise tax collections. Combs hasn't put a number on that erosion and isn't expected to until the end of this year. That's the normal schedule — and it also falls conveniently after the November elections. Officially, her office says the disclosures don't address whether there's a deficit in the current budget. 

   

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• As the CNBC crew packed gear at Katz's Deli on Wednesday afternoon, ready to knock off after a long day of recognizing Texas' supposed status as the nation's number one place for business, I noticed a decidedly less happy figure in the doorway. Ryan Cruckshank-Dittmar had also arrived at the Austin restaurant—looking for work.

  "I'm a college graduate, I've got two degrees, but I still can't find anything to apply my degree," he told me. "I can only find work in the food industry."

  He's been looking for something long-term for the last year and half, but he's only found gigs delivering pizza and the like. "I'm open to almost everything," he sighed.

  Such ill fortune had little place in this daylong celebration of America's most wondrous economy. CNBC had named Texas the best state for business on Tuesday, then decided to commemorate the honor by filming at Austin's only New York deli. Among Subway maps and Yankees memorabilia (welcome to Texas!), owner Marc Katz, whom you may remember from his losing bid for lieutenant governor, seemed to treat the event as an extended advertising opportunity for both the cowboy state and his own East Coast-style restaurant.

• Though Texas kept the top credit rating from Moody's Investors Service, the state's next two-year deficit could soar to between $11 billion and $18 billion, depending on how long the revenue-slashing recession drags on, the credit agency said on Friday.

    

  The recession landed in AAA-rated Texas later than in many other states, and Texas's diversified economy also should revive faster, Moody's said.

• Texas, facing a budget deficit of as much as $27 billion over the next two fiscal years, will propose a budget that cuts 8,000 state positions, according to Lieutenant Governor David Dewhurst.

   

  Cutting the workforce will help the state avoid a tax increase, Dewhurst spokeswoman Lauren Thurston said today in a telephone interview. Dewhurst, Governor Rick Perry and Speaker Joe Straus, of the House of Representatives, all said this week that the next state budget wouldn’t raise taxes. The cuts may not boost unemployment since most of the positions are vacant.

   

  “This past election showed people do not want their government, ours or the federal government, to be spending more money than they take in,” Dewhurst said today on Bloomberg Television’s “Bottom Line.” Dewhurst, Perry and Straus are Republicans. The fiscal biennium begins in September.

• On the eve of the second Texas Republican gubernatorial debate, Gov. Rick Perry told East Texans that under his administration, Texas has set a blueprint to recover from the economic crisis that he believes Washington should follow.

   

  Perry spoke to about 100 East Texans on Thursday at the Longview Community Center. Perry is seeking the GOP gubernatorial nomination against U.S. Sen. Kay Bailey Hutchison and Debra Medina, former chairwoman of the Wharton County Republican Party.

• Perry said under his leadership, Texas passed a balanced budget, cut taxes for businesses and retained about $8 billion in the fund balance "for a rainy day."

   

  "It didn't happen by accident," he said. "It happened because fiscally conservative decisions were made in this state in the last two years."

   

  The federal government needs to follow a similar formula that includes cutting spending, creating a regulatory climate that encourages business and allowing local officials to manage schools, Perry said.

• State Representative Tryon Lewis, who represents Andrews County, filed House Bill No. 2184 last week.

• The bill would basically add a five-percent state fee on any low-level radioactive waste (LLRW) that was imported into Texas on top of the current five-percent state fee on any LLRW received for disposal. WCS has estimated that this would generate approximately $30 million in total to the state for LLRW disposal in the next biennium.