PJ Media

Taxes for Texas? Rick Perry, Bill White Battle in Texas Governor's Race

Is Bill White, the Democratic candidate for Texas governor, a tax-and-spend liberal? That is what this election boils down to when all the politicking is set aside.

Texas Governor Rick Perry is running for an unprecedented third term. Though Perry has endorsed the idea of Tea Parties, the state is currently facing a revenue shortfall of $11-20 billion in an $182.5 billion state budget. This means, of course, talk of whether to cut spending or increase taxes, or both.

Some of the problem in Texas lies in the way school taxes are collected. In 2003, Perry and others pushed for a decrease in state school taxes, with the difference to be made up in increased business taxes. With the business downturn, that bit of revenue is considerably less than school tax dollars were. The state is currently scrambling to raise money via increased tuition to the state colleges, and increased fees.

Of course, taxes have always been a major issue in the Texas governor’s race. Past governors have lost elections over increasing taxes, and candidates have thrown away what seemed to be promising candidacies because they either said they favored raising taxes or cutting services drastically. Bill White seems to be getting ready to do himself in, as the shortfall noted above has sparked fears of drastic cuts in services or drastic raising of taxes.

Texas has no income tax and generates most of its “tax” revenue via a sales tax, currently 6.25% on goods and services. Cities impose typically an additional 2% on top of the state rate for a total of 8.25%. There are some 100 things sold in Texas that are exempt from the sales tax. But raising the sales tax rate is fraught with danger for any candidate.

As the incumbent, Perry has refused to debate White. There are a few reasons for this: strategically, there is no reason for a leader to debate the fellow trying to catch up; Perry has enough problems in his past to be leery of a debate, such as his roundly criticized executive order requiring teenage girls to be vaccinated against STDs; and Bill White can be an eloquent speaker. Otherwise, it would seem like a no-brainer to have the debate if Perry can nail White on increasing taxes.

White’s focus on taxes can shoot down his candidacy in a state that has managed so far without a state income tax or increasing taxes on the oil industry, subjects that almost always come up in gubernatorial races. In the past, these two stances have sunk the political campaigns of both Republican and Democratic candidates. White has stated in the past that he won’t rule out raising taxes, nor will he release his most recent tax returns, though he has released some financial documents.

Texas may be facing a shortfall if planned spending doesn’t meet planned revenue. Texas has a constitutional mandate to have a balanced budget, and Perry wants to cut spending to do so. He has already asked state agencies to enact 5% spending cuts across the board, and spending is sure to be one of three issues that will dominate the 2011 legislative session (the other two: redistricting and voter ID). White, on the other hand, seems willing to raise taxes in a state that has always been loath to do so, although in the last week or so he has been waffling on that idea.

Taxes may be the very thing that stops White’s candidacy, identifying him as just another tax-and-spend liberal, but it will take an active Perry to make that charge stick — something Perry has yet to do in his refusal to meet White head on. (The fiscal conservative group Empower Texans has been happy to take that on, though.)

Both men are vulnerable on the subject of taxes: White, because Texans largely distrust the typical idea of tax-and-spend liberals, and Perry, because he can be criticized for cutting needed and traditional services that taxes pay for.

There are areas that can be cut. Schools spend too much on administration and sports — but in Texas, high school football is king. Spending on administration is defended by powerful teachers’ lobbies and the “education establishment.” There are many areas that could be looked at, but the politics of Texas will likely preclude an honest look at where to cut.

On the other hand, we’ve been here before, when the state faced a $10 billion shortfall going into the 2003 session. Republicans did cut spending then and righted Texas’ fiscal situation, so there’s no reason to believe they can’t do it in 2011.

Nevertheless, tax soundbites will, as in most every other Texas governor’s race, probably rule the day.

Two powerful men are vying for a very public governorship with a national stage. Both have won kudos and complaints, acclamations and criticisms, and both have a shot. With the current polls running 48% for Perry to 42% for White, I’m personally gambling that Perry will win, but I’m not betting a lot on that.