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Seal of the Senate of the State of Texas
Welcome to the official website for the
Texas Senate
February 2, 2009
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Sen. Eltife, Sen. Averitt
Waco Senator Kip Averitt (right) confers with Senator Kevin Eltife of Tyler during the session's first Finance Committee meeting.

(AUSTIN) — The Senate Finance Committee began public budget hearings on Monday, considering how to make decreasing revenues pay for increasing costs. John Helleman, chief Revenue Estimator at the Comptroller's Office, gave Senators a snapshot of the current state of the Texas economy and state revenues. Texas is fairing better than most other states during the economic downturn, but Helleman said the state is resistant, not immune to the recession. Revenues are down: the franchise tax collected about $4.3 billion, less than was projected, and growth in revenue from sales tax has slowed, from 6 percent growth in 2006 to a half percent projected for 2009 and 2010.

Helleman said much of the economic downturn in Texas, like the rest of the country, lies in the housing market. Luckily for Texas, he said, the state never had a huge housing bubble, so it wasn't as exposed when the national housing bubble burst. Home sales are down less in Texas than in other parts of the country. One area where the state economy is level with other states are housing prices, about a 30 percent decrease in Texas, on a par with the rest of the nation.

The jobs picture is brighter in Texas than elsewhere, but Helleman said the state could lose about 111,000 jobs through the third quarter of fiscal year 2009. The construction, retail and oil and gas industries will make up the bulk of these losses. Helleman said one bright point is the health care industry, which is projected to add jobs in Texas.

Projections show the state will begin to recover in 2010, with a full recovery coming some time in 2011, Helleman testified. The Legislative Budget Board's base budget presented before the Finance committee Monday showed a 2 percent increase in spending over last biennium. In order to help cut additional costs, Lt. Governor David Dewhurst and Speaker Joe Straus submitted a letter to state agencies, asking them to find ways to cut between 2 and 3 percent out of their current 2009 budgets. Dewhurst said this will mean about $500 million in savings to the state. Certain agencies, those dealing with education, health care and criminal justice, will not be asked to make these cuts, but to other agencies the letter is a "strong recommendation", said Dewhurst, to comb through their budgets. "As the agencies come before us in Senate Finance we're going to want to understand what they’ve been able to do, and if they cant come up with savings, explain to us why," he said.

The Senate will reconvene Tuesday, February 3, at 11 a.m.

Session video and all other Senate webcast recordings can be accessed from the Senate website's Audio/Video Archive.