Bloomberg News

Perry Asks Texas Lawmakers to Swear Off New Taxes

April 16, 2012

Governor Rick Perry laid out his terms for next year’s Texas (STOTX1:US) budget debate by calling on lawmakers to sign a “compact” forswearing new taxes to keep the state’s job-creation machinery from slowing.

Perry, who is 62 and quit the Republican presidential race in January, said lawmakers in the state, one of nine that don’t tax wages, also should promise to maintain budget reserves, cut waste and support tighter spending limits.

“We will ensure continued growth and prosperity” by following the rules laid out in the agreement, Perry said today in a speech prepared for a Houston audience. “We need to do everything we can to help Texas become a stronger, more prosperous state, better prepared to deal with the unexpected.”

Lawmakers last year eliminated an estimated deficit of at least $15 billion partly by shortchanging schools by more than $5 billion as Perry and fellow Republicans balked at Democrats’ appeals to raise taxes to balance the two-year budget. Perry said more than 331,000 nongovernment jobs were created in Texas in the 12 months ended in February, more than any other state.

“The decisions we made in 2011 helped stabilize our economy and kept industries hiring in the Lone Star State far better than anywhere else in the country,” Perry said in his prepared speech. Lawmakers will return to Austin in January to begin the next budget debate.

Democrats Respond

The proposal amounts to a “plan to continue to take Texas down the wrong path,” Democrats shot back.

“Real Texans don’t hurt seniors and children,” Boyd Richie, the state Democratic Party chairman, said in a prepared statement. “Perry is calling on his fellow Republicans to commit to permanently underfunding public education and human services.”

Lawmakers last year also projected a $4 billion shortfall in the two-year budget for Medicaid, the joint state-federal health-insurance program for the poor.

“The cost of Medicaid is a ticking time bomb, and is primed to do massive damage to our budget,” Perry said in his prepared speech. He didn’t offer any solution to the funding gap, however.

“This plan ensures higher public costs through an uneducated workforce and treatment of chronic illnesses that could’ve been stemmed through preventative health care,” said state Representative Jessica Farrar of Houston, the Democratic leader in the House.

“His proposal promotes more fiscal irresponsibility in asking lawmakers to blindly sign a blood oath that will result in a doubling down of the devastating cuts already made to public schools, colleges, and universities,” Farrar said in a prepared statement about Perry’s proposal.

To contact the reporter on this story: Darrell Preston in Dallas at dpreston@bloomberg.net.

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net.


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