Texas governor: Disaster could blow hole in budget

Texas governor: Disaster could blow hole in budget

27 April 2011

published by www.businessweek.com

USA — With massive wildfires taking a toll on a strapped state budget, Gov. Rick Perry warned Tuesday that another natural disaster could leave the state “bankrupt” unless lawmakers show fiscal restraint.

Because of those financial threats, the Republican governor said it would be irresponsible for the Legislature to use money out of the so-called Rainy Day Fund to soften the blow from staggering budget cuts proposed by state lawmakers. A Senate proposal would take $3 billion out of the reserve account, fattened with oil tax money, to cut less from nursing homes, public education and other core state programs.

Perry made it clear that he was dead set against the idea. Speaking to reporters outside the Texas House Tuesday, he said it would be unwise to use money for a “short-term need” at a time when “nobody knows what the future is going to be.”

“If we had a major Category 5 storm that went into Corpus Christi or to Beaumont or to Houston, and we didn’t have those dollars to leverage against those losses, we would be bankrupt,” ‘Perry said. “And I’m not willing to do that.”

Perry said he was “worried” about the depth of the proposed state budget reductions but described the cuts-only approach as preferable to depleting cash reserves.

The governor was asked about state projections showing the Rainy Day Fund would grow to as high as $12 billion by the end of 2013. Perry said he had no faith in those numbers — or the non-partisan agency that produced them. Perry said the Legislative Budget Board, composed mostly of Republican legislative leaders, was no longer trustworthy.

“I’ve lost so much faith in the LBB and their ability to estimate what’s going on,” Perry said. “We got some people who don’t know what they’re doing over there.”

Perry, the longest serving governor in the United States, also sounded alarm bells about the cost of the wildfire response effort in the last few weeks.

Wildfires have already ravaged nearly two million acres in Texas, and Perry is requesting federal help to pay for the emergency response, officials said. Spokeswoman Katherine Cesinger said without the federal assistance, “we’re going to have to get pretty creative.” She said it has been about 10 days since the state requested federal disaster assistance and the governor, who has repeatedly bashed Washington, believes disaster response is one of the government’s “core functions.”

She said the state has estimated the cost of the response at $70 million. The state can pay 25 percent of that, or about $17.5 million, Cesinger added. Perry wants Uncle Sam to pick up the rest of it.

“We can’t afford ($70 milllion),” Cesinger said. “That’s why we asked them for help.”

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