Lt. Gov. Dewhurst files for re-election

AUSTIN (KXAN/AP) - Lt. Gov. David Dewhurst has filed for re-election.

Dewhurst filed the paperwork with the Republican Party of Texas on Tuesday. He is seeking a third term as lieutenant governor, who presides over the Texas Senate.

The Republican had been expected to make a bid for the U.S. Senate seat now by Sen. Kay Bailey Hutchison, who is running for governor. Hutchison has delayed her resignation, casting uncertainty into the race to replace her.

"The Lt. Governor is just focusing on what's ahead of him, and doesn't have time to worry about hypotheticals," Dewhurst spokesman Rich Parsons said after being questioned on the U.S. Senate scenario.

He did not rule out the Senate run in the future.

"Maybe four or five years or now I would look," said Dewhurst. "At some point in the future I would look at a Senate run."

Dewhurst is the only candidate for lieutenant governor so far. He said his hands would be full in the Legislature, with state budget troubles and congressional redistricting on the horizon. Although he has not filed yet, Austin deli owner Mark Katz said he has plans on running on the Democratic ticket.

Session 2011 budget woes

Although his position as lieutenant governor is not promised during the next legislative session in 2011, Dewhurst said he is already preparing for it. He said Tuesday Session 2011 will be tight on money and he will ask for every agency to cut their spending by about 2.5 percent.

"We had a tough session [in 2009] and we've got another tough session ahead of us," Dewhurst said during a private luncheon with reporters after his filing Tuesday.

Projections from the office of the Texas comptroller show Texas having absolutely no revenue growth in 2010, and only 4 percent growth in 2011.

Dewhurst said he distributed bullet points this month to all senators to let them know where the state is now, and where Texas will be financially when the 82nd regular legislative session begins. These talking points are the same notes from a speech Dewhurst gave in November before the Texas Taxpayers and Research Association.

Below are the talking points from that speech:

• One of the most critical issues we'll face next Session is how we deal with the structural shortfall. In recent weeks it has been estimated that the structural shortfall could be anywhere between $9-16 billion (depending on the methodology used.)
• Let me stick to the facts as we know them today. First, the Comptroller has said that, for now, she is sticking with her revenue estimate of near zero percent growth in 2010, followed by 4 percent growth for 2011. There are many people concerned about the drop in sales tax collections the last two months. But according to most economists, the fundamentals are in place for consumer spending to slowly increase over the next year, meaning a rebound in sales tax collections. Said differently, it's too early to panic. We have enough tools in our tool box to balance our budget.
• Second, some math. Let's start with the "big ticket" items in our current budget. This 2009 Session, we appropriated $3 billion from the Property Tax Relief Fund, which we set aside in 2007, to continue local school property tax cuts we first adopted in 2006. This was a one-time funding source.
• We also used $2 billion in General Revenue balances this year, and approximately $6 billion in federal stimulus funds, also one-time funding sources. Adding up those items, along with assuming up to $5-6 billion in spending growth in FY 2012-2013, we could need as much as $17 billion in 2011 to balance our budget.
• However, that takes nothing into account on the revenue side. You know we have saved between $8-9 billion in the Rainy Day Fund because we all knew the economy would still be sluggish leading up to FY2012-13, and that the 2009 federal stimulus funds would probably be a one-time source of funding. In addition, because the Rainy Day Fund is based on oil and gas tax receipts, at current prices we anticipate up to $1 billion per year revenue stream into the Fund. That means the $8-9 billion we left in the Rainy Day Fund, plus an additional $2 billion in revenue growth for FY2012-13, could result in close to $11 billion in the Rainy Day Fund available to help balance the budget next Session.
• The Comptroller does forecast flat revenue growth in 2010, but she also expects 4 percent growth in 2011 and beyond. And any growth in revenues in 2011-2013 would be available to balance the budget next Session. Three to four percent revenue growth over that time period would result in a $4-6 billion increase in revenues. When added to our Rainy Day Fund balances, we could have between $15-17 billion in total revenues available to balance the FY 2012-13 budget.
• Another revenue source that may work in our favor is the Permanent School Fund. This fund has been making a recovery and has a good possibility of adding about $1 billion in 2011, and another $1 billion in FY 2012-2013. Taken all together with the other revenue sources above, that's $17-$19 billion in estimated revenue that could be available.
• Let me pause for a moment and say I want to be conservative and cautious about how we spend the Rainy Day Fund, as I believe we need to leave some balance going forward to maintain a reasonable cushion and help with our bond ratings. Let me just remind you about April 2007, when I recommended we hold onto most of our surplus, which turned out to be $9 billion. That decision left Texas one of only six states in the black, instead of one of the 44 states in the red when Comptroller Combs cut our revenue estimate for 2010- 2011 by $9 billion.
• Now let's look more closely at the spending side. Just like we did working together in 2003, facing a $10 billion shortfall, if a gap still remains after what I just laid out we will find the necessary spending reductions to balance the budget.
• We were very clear with agencies that received federal stimulus funds last Session that those funds were to be used to the extent possible for one-time items. Now, there's been discussion that it may be difficult to discontinue some of those items that were paid for with one-time stimulus funds. But by placing the stimulus funds in an entirely separate part of the budget, Article 12, we made it clear that those programs will be first to be scrutinized by the Legislature in 2011.
• Of course, I don't intend to wait until 2011 to see what happens to the economy. If revenue continues to be flat or sluggish, I would recommend a letter from leadership telling agencies to slow down spending their appropriated funds.
• From one-time expenditures using stimulus funds, and savings from directing certain agencies to reduce FY 2010-11 spending by 1- 2 percent, if necessary, we could generate additional savings to help balance the FY2012-13 budget. Again, we have the tools in our toolbox at the present time to balance our budget with anticipated revenues and selected reductions in spending, and hold a reserve in the Rainy Day Fund to help balance our budget in the 2013 legislative session.
• We'll also ask the LBB to bring forward performance review ideas that could save the state money, and intend to ask committees in some of my interim charges to look at additional government efficiencies.
• In closing, let me say we've made decisions with a lot of help from many of you over the past four years that have put Texas in a position to weather this economic storm better than virtually any other state in America.