The Looming Cuts

With some top state leaders warning that Texas’ dire fiscal situation will lead to the loss of several thousand state jobs, House budget writers will release their first draft budget today — and big job cuts may be just the beginning. 

House Appropriations Chairman Jim Pitts, who will file the budget bill today in the House, has spoken candidly about job losses. "There will be less state employees when we're completed with this budget process, because we're gonna have a whole lot less money to spend. We will cut a lot of programs that would not require state employees," Pitts said at a Texas Tribune event last week. "But in additional savings, we could require some furloughs."

Lt. Gov. David Dewhurst went a step further last week and put a number to the cuts, announcing that 8,000 state jobs could be eliminated. But thousands of other jobs dependent on state funds fall outside of those projections. Cuts to Medicaid and Medicare provider reimbursement rates could lead to job losses in health care, for example. Teachers could also face layoffs.  

Linda Bridges, president of the Texas chapter of the American Federation of Teachers, says it won’t be clear how many education jobs will disappear until legislative action and money begin to work their way back to local school districts, which will then make their own decisions to deal with funding shortfalls.

"Are they looking at eliminating positions through attrition? Are they looking at eliminating programs? We just don't have a handle on that yet," Bridges says. "A lot of it's speculation."

Audio: Ben Philpott's story for KUT News

And there's still another especially hard jobs equation to figure out. A recent report from Comptroller Susan Combs suggested getting rid of the cap on elementary class size. Bridges says that would cause about 12,000 elementary school teachers to lose their jobs.

But as economist Ray Perryman says, these cuts won't happen in a vacuum. He says public sector layoffs will have a multiplier effect of about 2.5.

"What that basically means is that, in addition to the direct job that's lost, you have one and a half additional jobs in the economy that are lost," Perryman says, "because it impacts suppliers. … It impacts spending on food, clothing, shelter other items that are made in the state."

Republican budget writers haven’t said making cuts will be easy, but it's a better solution than raising taxes, they say, because taxes limit private sector spending, which can also lead to layoffs. Perryman says cutting state jobs could even help bolster the economy.

"If it's something the state's doing that's inefficient that they could effectively do with fewer people, then society is better off if we take that resource and use it somewhere else that's more productive," he says. "Either the public sector somewhere else or the private sector."

But this budget isn't about reshuffling resources. Money cut from one state program won't be going to pay for another — it will simply be cut.

[Editor's note: An earlier version said the public sector layoffs would have a multiplier effect of 2.5 percent; it should've just said 2.5.]