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Highland Lakes officials pessimistic about funding picture as legislators ponder red ink

AUSTIN — It’s official. Texas is broke by billions — and that doesn’t bode well for Highland Lakes governments, school districts and anyone else who depends on state financing. 
The deficit could be $15 billion, according to projections drawn from a state comptroller’s report released Monday, or go as deep as $27 billion, say some analysts. But largely because of funding cuts already agreed upon by several state agencies, the deficit is actually closer to about $3 billion, state Sen. Troy Fraser, R-Horseshoe Bay, told The Tribune.
“It (the comptroller’s report) was not a surprise at all,” Fraser said. “We (lawmakers) believe it is a manageable deficit.”
The good news? State forecasts indicate the Texas economy may be emerging from a protracted recession.
Only one day before the start of the 82nd Legislature, Monday’s report by Texas Comptroller Susan Combs indicates state lawmakers will have to reduce a state budget deficit of about $4.3 billion now on the books for fiscal year 2010-2011.
McCombs said the state will have general revenue of about $72 billion to spend during 2012 and 2013, a drop of about $8 billion from the last state budget.
Since Texas will lose about $7 billion in federal stimulus money this year, lawmakers will face a budget “shortfall” of about $15 billion over the next two years, according to the Associated Press.
The recent recession is largely to blame for the red ink, according to Combs.
“With respect to the recent recession, the State of Texas is emerging from what may have been the worst economic downturn since the end of World War II,” Combs said Monday. “The state’s economy is growing, but we have not yet reached a stage of sustained and broad-based robust growth. I would urge lawmakers to continue their historical practice of careful budget deliberations.”
Most of the deficit could be erased by a transfer from the state economic stabilization fund or “rainy day fund,” Fraser said.
“There is sufficient money in the rainy day fund to cover it,” Fraser said.
About $8.2 billion is currently in the fund, which could grow to about $9.4 billion if no transfers from the fund are approved by the end of 2013, according to the Comptroller’s Office.
Meanwhile, the Texas economy is expected to improve by 3.4 percent over the next two years, according to Combs. 
Nevertheless, other sources project the deficit could grow much more than $4.3 billion over the next two years.
The Austin-based, nonpartisan Center for Public Policy Priorities predicts the deficit could grow to $26.8 billion if current spending levels stay the same, population increases and costs go up for education, health and human services, employee retirement systems and other state-supported services. 
However, Fraser dismissed such speculation.
“They are assuming the state will continue the runaway spending they have done in the past, and I do not believe that will happen,” Fraser said. “During the last election, the voters gave us a very clear mandate. They expect the state to live within available funds, and that is our intention.”
Whatever the amount of red ink, local officials are worried the deficit could have a negative impact on Burnet County government and public school districts. 
“It is something I am very concerned about, and our taxpayers need to watch what is going on,” County Commissioner Bill Neve said.
During the session that begins Tuesday, the Legislature may cut state funding for some county services or impose unfunded mandates on the county — that is, transfer responsibility for some programs from the state to the county without additional funding, he added.
Funding cuts or the imposition of unfunded mandates could force the county to raise its property tax rate later this year, Neve said.
“I see (the deficit) as a problem for us,” Neve said. “We (the Commissioners Court) will work very hard not to raise taxes. We will keep our fingers crossed.”
Local school officials are also warily watching the state budget.
The Texas Education Agency has already told school officials across the state to reduce district budgets by 4 to 10 percent during upcoming months, according to Burnet Consolidated Independent School District Business Manager Preston Ingram.
“We (BCISD) are in the process of identifying what we can do without,” Ingram said. “We have started a project to identify some items for the board. We are trying to dig up what their options may be.”
School districts may not offer raises or new positions while the Legislature tackles the budget, Ingram predicted.
“I think that goes without saying,” Ingram said.
Marble Falls Independent School District Interim Superintendent Dr. Jim Boyle also voiced reservations about the state financial picture over the next several months.
“Right now, it is very early,” Boyle said. “But regardless of what the deficit is at the state level, we are not looking at the state session with great optimism in terms of additional state aid.”
Texas law stipulates MFISD is a property-rich district that must transfer about $3 million each year to the state for redistribution to less wealthier districts under the so-called “Robin Hood” legislation, Boyle added.
“The chances are high they (legislators) are going to ask us for more to offset the state (financial) burden, and we simply cannot afford to do that,” Boyle said. “We are pessimistic. There is a silver lining to every cloud, and we are trying our best to find that silver lining.”