DALLAS — The $164.5 billion state budget adopted last week by a Texas House committee could cost the state more than 335,000 jobs over the next two years, according to an economic impact report from the Legislative Budget Board.
The LBB analysis released Thursday estimated that Texas would have 271,746 fewer jobs in 2012 and 335,244 fewer jobs in 2013 if the proposed budget becomes law.
The 2013 total includes 189,000 state and local government jobs and 146,000 private sector positions.
The report from the legislative agency said the state will not lose that many existing jobs, but that it would have that many fewer jobs than it would if state expenditures remained at current levels, with sufficient revenues to match spending levels.
“Since available revenue for the 2012-13 biennium is predicted to fall well below that amount, in large part due to the national economic recession, many of these job losses can be attributed to the steep downturn of the Texas economy during the past several years,” LBB director John O’Brien said in the report to Rep. Jim Pitts, R-Waxahachie, chairman of the House Appropriations Committee.
The board’s report said the gross state product would be $19 billion less in 2012 than it would be if revenues matched higher state spending.
Pitts’s two-year proposed budget would lower spending by $23 billion from the 2010-2011 budget, but the LBB report assumes spending will drop by $13.2 billion.
The budget reduces Medicaid spending by $10 billion, but the report notes that because Medicaid is an entitlement program, a cut in appropriations would not result in a cut of spending.
“Spending will occur regardless of appropriations,” O’Brien said.
The report assumes state spending of $87.9 billion in fiscal 2012 and $86.4 billion in 2013.
Pitts, who last week estimated that the proposal would result in 8,000 fewer state employees, called the job-loss numbers in the LBB report “shocking.”
“I’ve been trying to say how our economy was bad, and how our shortfall was going to be affecting Texas, and nobody seemed to believe me,” Pitts said. “But I think reality is probably setting in on that.”
Pitts is the sponsor of HB 1, the budget bill for fiscal 2012-13 adopted by the Appropriations Committee on March 23.
Lieut. Gov. David Dewhurst and House Speaker Joe Straus, R-San Antonio, said the board’s report is misleading because it does not consider the job losses that could occur if lawmakers raised taxes to cover the revenue shortfall.
“The LBB report clearly shows that job creation is tied to the size of the economy, not the budget,” Dewhurst said. “You cannot expect to grow the economy and create jobs by growing bigger government.”
Straus said the spending cuts were “the fiscally responsible course of action.”
He said the proposed pared-down budget would benefit the Texas economy rather than damage it.
“I question the validity of the assumption that requiring government to live within its means will lead to a downturn in the economy,” Straus said. “In fact, the opposite is true.
“The best way to jump-start growth is for the Legislature to keep taxes low and regulations reasonable to provide the opportunity for business to grow and thrive in Texas,” he said.
Rep. Mike Villarreal, D-San Antonio, a member of the Appropriations Committee who voted against Pitts’s budget bill, said the revenue problems are mostly caused a poorly performing business tax that is bringing in $5 billion a year less than expected.
“We can’t grow the Texas economy with a budget that destroys jobs, hurts neighborhood schools, and makes college more expensive,” Villarreal said.
“The voters did not elect us to eliminate hundreds of thousands of jobs. We have to be smarter than this.”