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State Agencies Told To Propose 10 Percent Cuts

SAN ANTONIO (AP) - State agencies were told Tuesday to find ways to shave costs by another 10 percent for the next budget cycle, despite growing tax revenues that have raised hopes of restoring freshly slashed public services and jobs across Texas.

The governor's office and the nonpartisan Legislative Budget Board asked agencies in a letter to hit the same reduction target as the one prior to last year's legislative session, when Republicans pushed through about $11 billion in budget cuts they said were necessary belt-tightening in tough times.

Each agency is now being asked to submit a cost-cutting proposal to the board, which keeps track of how much money lawmakers have to spend. The board will assess the plans and make recommendations, but lawmakers will ultimately decide what cuts, if any, will be made when they reconvene in January.

Revenue projections for the state are rosier than when lawmakers drafted the current two-year budget. In February, Legislative Budget Board director Jim O'Brien told lawmakers the state raised $1.6 billion more in revenues because of the improving economy.

However, Gov. Rick Perry and other state Republican leaders on Tuesday stressed the need for fiscal discipline.

"I know that there are programs that aren't funded to levels that people would like to see funded. I don't argue that," Perry said at a luncheon at San Antonio. "But I've been given a responsibility to be a leader ... to not put this state in a position of this precarious standpoint of our economic condition."

The request wasn't a surprise following similar requests in past years. Texas Forest Service spokeswoman Linda Moon, whose agency fought one of the most destructive wildfire seasons on record last year, said the agency has its marching orders and will begin mapping out a budget that prioritizes protecting families.

The 10 percent request is a starting point. Agency directors were told not to submit budgets with a higher price tag than their current budgets, which are already leaner than in years past for many agencies. Though some of the state's costliest programs have permission to request more money, including funds for Medicaid entitlements, foster care and the Children's Health Insurance Program.

"While our revenue growth has been healthy this year, we must plan conservatively, which is why we have asked agencies to hold the line on spending," Republican House Speaker Joe Straus said.

Cost-cutting by the Legislature last year led to a $4 billion reduction in public education spending to help balance the budget. The fight over education funding defined the 2011 session, setting off packed teacher protests at the Capitol and triggering a special session.

Higher education coffers also took a hit, at the same time Perry called for campuses to make tuition more affordable. Democratic state Rep. Mike Villareal said a leaner budget can't do that with more and more students enrolling in colleges.

"The reality is that educating our growing number of college students isn't free," Villarreal said. "Saying you oppose tuition increases while quietly cutting funding for college students is disingenuous."

Bills are already piling up for the state even before the budget proposals are submitted. The Medicaid shortfall is more than $4.1 billion, and the state must also come up with $183 million to cover the cost of last year's wildfires and $60 million for child care costs.

A supplemental budget bill will cover those costs when the Legislature meets in January.

The state's Rainy Day Fund is expected to have $7.3 billion by October, but Perry on Tuesday reiterated his longtime stance that the fund needs to remain stocked as an emergency piggybank for disasters such as hurricanes.

(© Copyright 2012 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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