State-Bailout Trap
Gov. Rick Perry fights to preserve the fiscal autonomy of Texas.


Stephen Spruiell

This was an obvious attempt to force Texas into future increases in education spending by juicing the local districts with a temporary influx of federal aid and thus raising the amount they expect to receive every year. In future years, if the federal government ever decides to stop passing stimulus bills, local districts will complain that the state government is forcing them to undertake “massive cuts” because it is either unwilling or unable to pick up where Washington left off.

Meanwhile, the Texas legislature’s decision to save the money from the first stimulus is looking like a wise move. Texas is facing an $18 billion shortfall this year, which its $10 billion rainy-day fund will help it weather. That won’t be enough, of course, and Texas officials are asking agency heads to trim 5 percent from all departments and looking at ways to raise revenue without having adverse effects on economic growth.

But if Texas lawmakers had listened to Doggett, they’d have about $3 billion less to work with, and the cuts local school districts are complaining about would have to be deeper, because they would be coming out of a higher baseline. Nor are those local school districts in as much trouble as they would have you believe; Sara Talbert of Texas Budget Source recently reported that the five largest districts in Texas are sitting on over $550 million in reserve funds. As Perry pointed out in his letter to Duncan last year, total funding for public education in Texas has increased by 66 percent since 2002, with the state’s share of that funding going up by 80 percent.

At a time when Texas and other fiscally responsible states need maximum flexibility to balance their budgets without resorting to growth-killing taxes, Democrats have decided that stronger handcuffs are needed to bring troublemakers such as Perry into line. But Perry has decided that the Doggett amendment, unlike previous “maintenance of effort” requirements, places impossible constraints on Texas’s autonomy, and the state’s lawyers sound prepared to fight back. “The Governor cannot assure the federal government at this time what the 82nd Legislature will do,” said Texas attorney general Greg Abbott in a statement. “The State’s inability to legally comply with the Doggett Amendment means that Texas is the only state that cannot receive federal dollars under this bill, as it is currently written.”

Doggett set out to force Perry to fund education in the state of Texas at the level at which Democrats in Washington want it funded. Instead, he’s kicked off a high-stakes game of chicken between the advocates of dependency and the state leaders determined to resist them.

Stephen Spruiell is a National Review Online staff reporter.