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How Rick Perry ‘cut spending’ in Texas (Fact Checker biography)

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Chris Keane/Reuters

“I was the first governor since World War II to cut general revenue spending in our state budget.”

--Texas Gov. Rick Perry, at the RedState 2011 Gathering in South Carolina, August 13, 2011

“We cut state spending for the first time since World War II. I was proud to sign that budget that said no, we can operate within our needs. We don’t have to raise taxes just so that some people can say, you know, you can’t live without government spending at this level. We’re doing it in my home state.”

-- Perry, Derby, N.H. townhall meeting, Sept. 30, 2011

“I pushed Texas to the second lowest debt per capita in the US...I’ve signed six balanced budgets in Texas.”

-- Perry, during GOP debate at Dartmouth College, N.H., Oct. 11, 2011

Perry’s comments suggested he took historic and fiscally conservative measures to balance his state’s budgets. We examined his lengthy record -- he’s been governor for more than a decade -- to find out whether he spoke accurately.

The Facts

We have to clarify the difference between general-revenue and all-funds spending before parsing these comments, because Perry appears to be talking about both. They don’t constitute the same thing.

General revenue is a narrow term that covers only the money coming from state taxes or fees. A broader category called “all funds” by Texas budget planners includes general funds, federal funds, dedicated funds (meaning you can only spend them on specific programs or type of programs), and more.

Perry’s campaign didn’t respond to requests to clarify which type of spending he was referring to with “state spending.” But the governor used a relatively broad term, so we’ll assume he was talking about the more inclusive category of all-funds spending. With that in mind, Perry appears to be suggesting he cut spending in both categories.

In terms of all-funds spending, Perry approved a reduction of $15 billion, or 7.5 percent, for the 2012-2013 biennium (the Texas legislature works in two-year cycles).

The Texas Legislative Budget Board confirmed that Perry is the first governor to reduce all-funds spending since at least 1951, which is about six years after Word War II ended. Any budgets older than that are located somewhere in the state’s Legislative Reference Library. Suffice it to say no Lone Star governor, except Perry, has reduced overall spending in modern times.

As for general revenue, Perry signed two budgets that reduced spending, according to budget board spokesman John Barton. The 2004-2005 budget trimmed general revenue appropriations by $1.7 billion compared to the previous biennium, and the 2012-2013 budget trimmed general revenue appropriations by $641 million.

So it appears Perry was correct, regardless of which type of “state spending” he referred to.

But wait, there’s a huge caveat for the newest budget: it covers only 18 of 24 months. That means it’s too soon to say whether the state will realize its intended reduction for 2012-2013.

The truth -- somewhat hidden -- is that lawmakers essentially deferred about $8.4 billion in Medicaid and public education costs, hoping the economy will improve or the price tag for those items will drop.

These passages from the legislature’s conference committee report on the budget address those issues (see pages 2 and 3):

“Funding levels in fiscal year 2013 assume a supplemental need for all other Medicaid programs estimated to be $4.4 billion in General Revenue Funds.
Total appropriations for the Foundation School Program are estimated to be $4 billion in General Revenue Funds below the amount required to fund the school finance formulas under the Texas Education Code.”

Those anticipated costs could push Texas well beyond the realm of a spending cut to a $7.8 billion increase by the time the legislature rolls out its supplemental budget.

Lucky for Perry, the state isn’t due to work on supplemental appropriations until after the 2012 election, so he can keep talking about spending cuts while chasing the GOP nomination.

We covered the governor’s record on taxation in a previous column, but we’ll summarize by saying he found creative ways to increase revenues -- lowering property taxes, boosting cigarette taxes, and broadening a business tax without raising the actual rate.

According to the fiscal-policy tracker USGovernmentSpending.com, Texas ranked second in the nation for lowest state debt per capita in 2009, the most recent year the U.S. Census Bureau collected data on state finances. The Lone Star State ranked seventh when Perry became governor in 2000, so he improved it’s standing.

Texas also ranked fourth-lowest in 2009 in terms of spending per capita. State expenditures increased 6.3 percent on average each year, outpacing the 2.4 percent national average for inflation.

True to his words, Perry has signed six balanced budgets, one for each biennium of his tenure.

But balancing budgets is nothing new in the Lone Star State. A voter mandate has required every governor since 1949 to do so. In fact, Texas has four constitutional mandates on appropriations, something Barton likened to a “canopy of trees.” (Explanation of the mandates starts on page 36 of Texas Fact Book).

Perry proposed a fifth amendment that would have limited spending to population growth and inflation, but it never passed muster with the legislature.

The Pinocchio Test

Perry told the truth about pushing Texas to the second lowest debt among all states, and he was right about signing six balanced budgets, although every Lone Star governor since the dawn of the Baby Boomer generation has done so in order to satisfy constitutional mandates.

Perry runs into trouble by saying he cut state spending for the first time since World War II. It’s true that he’s done that in the past with general-revenue spending, but the statement misleads in terms of spending for the newest biennial budget. Texas faces higher costs than its budget lets on, and state expenditures are likely to grow.

The governor, along with any member of the Texas legislature who brags about a spending reduction in the 2012-2013 budget, deserves two or three Pinocchios. On balance, though, Perry earns just one. He redeemed himself with true general-fund reductions for the 2004-2005 budget, with his comment about low debt, and to a lesser extent with his remark about balancing budgets.

One Pinocchio

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