Robert T. Garrett

AUSTIN - State leaders asked agency heads Friday to submit ideas to cut spending by 5 percent this year.

While Lt. Gov. David Dewhurst and House Speaker Joe Straus, R-San Antonio, have called the move a precaution, Gov. Rick Perry urged immediate trims.

"We've got to cut our spending now, to stay ahead of this budget challenge that we're going to face" in next year's legislative session, Perry told a group of conservative lawmakers and policy analysts.

Last week, U.S. Sen. Kay Bailey Hutchison, Perry's main rival in the March 2 Republican primary for governor, criticized him for not already ordering cuts. And on Friday, Democratic gubernatorial candidate Bill White chimed in, saying Perry should have moved at least two months ago.

Sales tax receipts began a run of double-digit monthly decreases in July.

"At least the first 2 or 3 percent in cuts should have been identified by now," said White, a former Houston mayor.

Perry said that although state government is "a lean operation," he's confident he and the GOP-controlled Legislature again - as they did in 2003 - will avoid raising any broad-based taxes. In that year, they closed a $9.9 billion budget shortfall with deep spending cuts and some federal help, user-fee increases and accounting maneuvers.

"We've taken this tack before," Perry said. "We did it. And it works. Texans depend on us to make tough decisions in tough times."

Hutchison has criticized Perry's fiscal leadership, arguing that the budget has grown too quickly - from about $100 billion in overall spending in the last budget passed under former Gov. George W. Bush to the current plan to spend $182 billion this year and next.

Perry notes that spending of state-generated tax dollars declined from the previous two-year cycle in two budgets enacted on his watch - last year's and the one passed in 2003.

The Legislative Budget Board, after adjusting for population growth and inflation, published figures last month showing that spending of state general revenue has decreased by nearly 10 percent since the 2001 session, Perry's first. Overall spending, including federal funds, has increased nearly 11 percent in those years.

Perry said he had wanted to nudge state agency chiefs to aim for a higher spending-cut target - 6 percent of general revenue-related spending, minus items such as basic funding for public schools, which the leaders usually exempt.

He said Dewhurst and Straus settled on a 5 percent goal, which "is an appropriate number to strive for." The three leaders' letter instructs agencies to "identify savings in priority increments" by Feb. 15. It cites economic uncertainty and "potentially substantial long-term costs associated with" federal health care and environmental legislation.

In November, Dewhurst proposed asking for ideas for cuts. Straus wanted to wait to see if consumer confidence rebounded before Christmas. Both legislative leaders have stressed that there's no reason to panic, citing forecasts by Comptroller Susan Combs that the Texas economy is likely to rebound this spring or summer.

With the current budget set to spend about $87 billion in state taxes and earnings, a 5 percent trim would exceed $4.3 billion.

The Dallas Morning News
Jan. 16, 2010