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Stop robbing Peter to pay Paul - The Eagle: Columnists

Stop robbing Peter to pay Paul

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Posted: Sunday, February 27, 2011 12:00 am

By BILLY HAMILTON

It's official. With the comptroller's revenue estimate released, the task ahead for Texas lawmakers will be extremely challenging. No one expected anything less.

With a multi-billion dollar budget shortfall, it will take some tough choices and maybe some creative accounting to write a balanced budget before lawmakers leave Austin in June.

As they go about this difficult task, I hope the members of the 82nd Legislature won't resort to robbing Peter to pay Paul when writing the budget.

As most of you know just by looking at your telephone, electricity, gas, and water bills and even your vehicle title, there are a myriad of taxes and fees collected by the state and local taxing entities. Some of these include: 911 service fees and solid waste disposal fees. Most of the fees collected go into various "dedicated" accounts in the state General Revenue Fund. These dedicated accounts were established by the Legislature to meet important goals: protecting the coastline, apprehending fugitives, helping low-income people pay their electricity and phone bills, etc.

What is a little known fact is that in the past the Texas Legislature has used these dedicated funds to help balance the budget. That is, money that is statutorily supposed to go to help prevent, say, child abuse ends up being used to plug another hole in the budget. This practice of robbing Peter to pay Paul isn't unusual for state legislatures, but it isn't good policy.

Examples of this practice abound. Take the Designa-ted Trauma Facility and EMS Fund -- a fund dedicated to helping hospitals cover the costs of uncompensated trauma care. More than $331 million from this reserve was used in 2009 to help balance the budget. Texas hospitals, however, many funded by local property taxes, have spent close to $2.5 billion providing trauma care to indigent patients. They can't use the reserve created to pay the cost if it's being used for other purposes.

During this legislative session, it will be more tempting than most to do this type of re-shuffling of money from funds such as the Trauma Fund, System Benefit Fund, and the Texas Universal Service Fund. While, technically, lawmakers are not required to spend the money in a fund for the specified purpose, redefining what "dedicated" means through accounting slight of hand is not sound public policy and lacks transparency.

These dedicated funds were established by the Texas Legislature to achieve specific goals. If money is diverted away from these dedicated purposes to support other initiatives, the original goals established by statute cannot be accomplished effectively.

It may seem tempting to shuffle or sweep money when budget challenges will be especially severe, especially when the very accounts and purposes of the money are not always in plain view of the public. Now, though, more than ever, taxpayers are demanding greater fiscal restraint, transparency and accountability.

As the budget process gets under way, decisions regarding the state of Texas and its future will be driven by the budget crisis. I hope the members of the Legis-lature forgo the "rob Peter to pay Paul" approach that's been used before and that is so common in states such as California.

Instead, I hope they focus their efforts on balancing the budget in a smart, methodical way. The budget should not be balanced by diverting money from dedicated funds such as the Texas Universal Service Fund, Trauma, and 911 Funds.

Doing so harms essential public programs and only promises to drive up taxes and costs at the local level and in the pocketbooks of every Texan.

* Billy Hamilton is a tax and fiscal consultant, and a former chief deputy comptroller of public accounts for the State of Texas.

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