Texas showed how cuts can go wrong

Jeffrey M. Shear, North Las Vegas

Monday, June 23, 2008 | 2:03 a.m.

As regards Nevada’s ballooning budget deficit and Gov. Jim Gibbons’ refusal to consider any offsetting increase in tax revenue in favor of “across the board” budget cuts, the experience of Texas in 2002 may offer Nevada a blueprint.

Two years after passing (with the blessing of then-Gov. George Bush) a number of nonfunded “feel good” programs, including health insurance for teachers, the Texas Legislature was forced to deal with a multibillion-dollar budget shortfall.

Politically divided and unable to prioritize one program over another, and unwilling to raise taxes, the Legislature instituted a Gibbons-style cut to every state program and institution, with budget cuts of 15 percent in 2002-03 and 7.2 percent in 2003-04.

These cuts included refusing 3-to-1 federal Medicaid matching funds, a 7.5 percent decrease in Texas’ Medicaid rolls, closing hospital floors at state universities and medical centers, postponing state infrastructure projects and laying off many state employees.

The human suffering was intense, but two years later, with the price of oil doubling and Texas consumers consuming, the Texas economy was booming and its budget was back in the black.

Was an “across the board” cut achievable? Yes. Was it reasonable? I don’t think so. The magnitude of the Texas cuts ruined many people’s health and lives, particularly untold numbers of poor children.

If a state has a vibrant economy and a productive citizenry, budget shortfalls are usually short-term situations.