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Government/Politics

San Antonio Republican Wants Debt Reduction Before Tax Cuts

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Rep. Lyle Larson
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A promise to cut taxes was on the agenda of nearly every GOP candidate who ran for a state office.  Now, some of the Republicans elected are saying tax cuts this legislative session aren’t such a good idea.  Texas Public Radio has been talking to area lawmakers about their priorities, and heard from one San Antonio Republican who's warning against the call for tax cuts that reverberated through the Texas Capitol last week.

On Tuesday Lt. Gov. Dan Patrick unveiled the Senate’s proposed state budget.   It called for cutting taxes by $4 billion dollars over the next two years. That’s something Patrick and a lot of Republicans told voters they’d do.

“The people want us to pass a conservative budget that includes significant funding for property tax and business tax cuts, and we will accomplish that,” Patrick said shortly after being sworn in last month.

But on the other side of the State Capitol, in the Texas House,  Rep. Lyle Larson of San Antonio has run the numbers, and he doesn’t like the way they’re adding up.

“I would like to deal with the debt that we have, first of all,” said Larson in an interview with Texas Public Radio just before the legislative session began.

“Over the past 10 years we’ve seen our debt grow by about 60 percent, from 2003 through 2014.  So we’re deferring addressing a lot of issues if we go out and start doing sales tax rebates or whatever mechanism we want to give tax relief,” he said.

State of Texas Debt Tops $44 Billion

The agency which tracks state debt- the Texas Bond Review Board- says it’s true: per-capita state debt grew about 60 percent over the past decade. As of last August, state debt topped $44 billion dollars. 

Just as individuals pay interest on credit card purchases, Texas taxpayers also pay interest on money the state borrows for road construction, water infrastructure, university building projects, and so on.  The interest payment on state debt in 2014 was more than $3.4 billion.  It’s scheduled to increase another $400 million in 2015.

Larson believes that’s the result of irresponsible governance.

“We get nothing out of that. We’re just paying interest of $3.4 billion.   Imagine how many roads we can build with $3.4 billion instead of paying the bond houses in New York for loaning that money to us.”

Rating Agencies Indicate Strong Financial Picture 

Having debt doesn’t necessarily mean there’s a financial crisis.  The three major credit agencies have rated Texas debt AAA, indicating the state’s financial situation is strong.  Bond experts say it’s also important to note that state tax dollars won’t be needed to pay off most of the debt.  The majority will be retired through toll road collections, student tuition, home loan repayments and other revenues.

Still, Larson believes the legislature should pay its bills before it cuts taxes.

“The political gimmickry you’re gonna hear is, ‘let me give it back.’ I think more importantly we should pay our debts off.”

“It’s not flashy.  It’s not something you can get out on the campaign trail and talk about.  It’s the most responsible government you can have as a Texas legislator,” Larson insisted.

So, what if a bill reducing property taxes or the business margins tax came to the floor for a vote?  Would Rep. Lyle Larson, a Republican, vote against it?

“No,” he said during the interview.  “I would amend the bill though.  We’ll do that (cut taxes) contingent on us reducing the debt for the State of Texas.”   

Legislation Requiring Debt Reduction

Another Republican state representative, John Otto from Dayton, has introduced legislation that would require the debt be reduced with oil and gas tax money, if the amount collected exceeds the maximum that can be held in the state’s Rainy Day Fund, which is like a savings account.  Right now those extra dollars go back into the general fund where they’re spent.

Larson’s office says he’s also working on a debt reduction bill.

He believes conservatives who rail against federal debt approved in Washington should be just as concerned about state debt blessed in Austin.