Tuesday, November 27, 2012

Shining the Light on State Budgeting

President's Page 
Nov. 15, 2012, Harris County Physician Newsletter 
Produced by Harris County Medical Society

By Keith A. Bourgeois, MD

The State of Texas collects revenue from a variety of sources — taxes, fees, special payments, etc. Many of these were designed to appear like they were being collected to fund specific purposes. The problem is that the Legislature has a habit of siphoning the money that has been set aside for some particular purpose into the General Revenue Fund, which is then used to balance the state budget. This financial shell game is having a negative effect on Texas patients.

For example, in 2003 Gov. Rick Perry signed the Texas Driver Responsibility Program (TDRP) into law. The law was designed to assess large additional fines — into the thousands of dollars apiece — to discourage certain offenses, such as DWI or reckless driving, and to generate money for trauma care. This makes sense since these unacceptable behaviors often lead to someone going to the emergency department (ED). In signing the law, Gov. Perry projected that the legislation would put $1 billion for trauma centers into the Texas Trauma Fund by 2008.

Annually, the TDRP actually generates about $125 million. In 2011, the Legislature allocated $60 million per year to offset hospitals’ uncompensated trauma costs. That means the Legislature is allocating only about 48 percent of the revenue from the TDRP for trauma funding. So, where does the rest of the money go? It goes into the General Revenue Fund to cover state expenses it didn’t pay for in the budget. The Trauma Fund was created because providing high-quality trauma care, at the moment it is needed, is a challenge and is very expensive. It is essential that the Legislature keep its word and stop borrowing money from the Driver Responsibility Program to support other, unrelated, budget items, and start supporting the state’s trauma system.

A second example of the reappropriation of state funds is found in the windfall Texas received from the tobacco lawsuit. Tobacco is the leading preventable cause of death in Texas. This year 24,500 Texans will die from tobacco-related diseases and 29,000 Texas children will start smoking.
In 1998, Texas entered into a settlement with the major tobacco companies after a landmark lawsuit in 1996. As a result of the settlement, Texas will receive about $14.1 billion over 25 years.

In addition, the state also collects substantial tax revenue on tobacco products. All told, Texas has collected about $1.9 billion in settlement payments and tobacco taxes in FY 2012.

The U.S. Centers for Disease Control and Prevention (CDC) recommends that Texas spend $266.3 million a year to have an effective, comprehensive tobacco prevention program. In FY 2012, Texas only allocated $5.5 million for tobacco prevention and cessation. This amount is two percent of the CDC’s recommendation, which results in Texas ranking 39th among the states in the funding of tobacco prevention programs. Texas’ spending on tobacco prevention amounts to only 0.3 percent of the estimated $1.9 billion in tobacco-generated revenue the state collects each year from settlement payments and tobacco taxes. Guess where the rest of the money goes?

Not only is Texas refusing to spend the money it receives from tobacco sales and the lawsuit on tobacco prevention programs, the Legislature has actually cut back on these programs. The $5.5 million allocated for tobacco prevention and cessation in FY 2012 is half what was allocated in FY 2011.

There is no doubt that Texas has some very difficult issues regarding its budget; however, Texans deserve honesty and prudence with regard to taxation and spending.

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