The sequester — Washington, D.C.’s worst-case scenario of automatic cuts and budgetary reductions — is upon us on March 1st. The White House wants us to know that our states will be directly harmed: and that’s why it’s produced a state-by-state list of affected programs.
A look at the Texas numbers suggests that, despite White House predictions, the sequester won’t be so bad for the Lone Star State after all — and may even do some good.
Texas’ portion of the cuts looks impressive: some $334 million—until one considers that Texas is due to spend $92.5 billion in the fiscal year ending August 31, 2013. This means that sequestration threatens to reduce Texas’ budget by 0.36 percent—about one-third of one percent.
In addition, the Department of Defense would see cuts of about $275 million in Texas, furloughing 52,000 workers for a total reduction of about $5,300 per worker.
As a portion of Texas’ $1.33 trillion economy, the $334 million of threatened cuts in federal state government funding and $275 million in defense expenditures amounts to 0.046 percent, or less than five-hundredths of one percent of the economy.
Federal funds constitute about one-third of Texas’ budget, with the majority of that being Medicaid funding, a healthy increase from just ten- and twenty years ago.
But Medicaid funding is off limits in the sequester, leaving the White House to list about a page of programs that would see reductions in Texas including: 930 teacher and aide jobs, or one-quarter of one percent of the 366,204 people employed in Texas’ government K-12 system; reducing the number of children in Head Start and Early Head Start by 4,800; $1,146,000 for 28,600 HIV tests at about $38.46 per test; and, $8,467,000 in environmental funding.
These line items are among the top 100 federal programs in the Lone Star State that will spend $31.3 billion this year alone. Each of these 100 programs brings with them their own set of requirements. Each force Texas to comply with Washington’s rules in exchange for “free” federal money taken from Texas taxpayers in the first place, returning about 94 cents for every dollar taken in federal taxes.
If Texas lawmakers saw it as a priority, they might decide to spend some of the billions the state collects in taxes for “Nonurbanized Area Formula Grants” ($34 million), the “National Bioterrorism Hospital Preparedness Program” ($25 million), or the “Job Access Reverse Commute” program ($6.8 million). Or, with a better understanding of local priorities and needs, they might not.
Keeping the “free” money flowing to the state’s coffers might be attractive to many people, but we live in extraordinary times and the federal government is extraordinarily bankrupt.
This raises some tough questions: Is it prudent for Texas, a state that prides itself on fiscal responsibility, to place such an outsized emphasis on the federal government, an institution that borrows 40 cents out of every dollar it spends and is now $16.6 trillion in debt? And what happens when the federal government inevitably cuts aid to the states because of the sheer unsustainability of it all, as is starting to happen with the sequester? All Americans should consider the answers to these questions before it is too late.
In January, the Texas House of Representatives convened the Committee on Texas Response to Federal Sequestration. After listing the various state programs that might feel the impact of federal budget cuts, the committee concluded its report with this warning about “becoming too dependent on the federal government”:
"The situation we find ourselves in with sequestration should serve as a cautionary tale to consider carefully how much we expand programs on the state level utilizing federal dollars. As recent events demonstrate, the federal government could pull funding at any time and Texas would be left to deal with the ramifications."
While the federal government has come in recent years to fund many important state and local government functions, such as public safety and K-12 education, these legitimate government functions are best handled at the state and local level with state and local revenue. Were the federal government to be downsized both in its spending and the associated tax burden it imposes, it would free up resources for the states to better meet local needs with local resources.
The sequester can be a precursor to both the elimination of functions best left to the private sector as well as a more orderly devolvement of many federal government powers and programs more appropriately delivered by state and local governments.
The truth is that, other than the military, the sequester affects few programs that are best performed at the federal level.
Perhaps the sequester will spark a long-overdue discussion about the appropriate size and scope of government and what level of government is best suited to perform functions the public sees as desirable.
In that light, far from hurting Texas, the sequester just might be the best thing D.C. has done for us in a long while.
Brooke L. Rollins is the President and CEO of the Texas Public Policy Foundation.
Mario Loyola is the Director of the Center for Tenth Amendment Studies at the Texas Public Policy Foundation.