Gov. Perry says he made tough decisions including $3 billion in vetoes to boost economy

UPDATE, Aug. 10, 2010: The article below corrects an error in the original on the percentage increase in non-dedicated state spending on Perry's watch. The increase amounts to 45 percent. This correction doesn't affect our rating of Perry's overall statement.

Republican Gov. Rick Perry, seeking his party’s nod for a third full term, says he’s made tough decisions making Texas the best state for business.

In a TV ad that debuted Feb. 8, Perry lists seven reasons voters should support him in the March 2 primary: "I vetoed more than $3 billion in spending. Lawmakers and I cut taxes for 40,000 small businesses. Now Texas is No. 1 in job creation. The nation’s five best housing markets are right here in Texas. We balanced five state budgets and we cut state spending. Today we have billions in surplus."

Phew. Is all of that so?

We previously gauged Perry’s reference to the state having billions in surplus, a statement we rated as Barely True here.

As for Perry’s veto claim, his campaign told us it was based on adding up all spending that Perry vetoed after each of five regular legislative sessions.

That sounds straightforward. But it’s been debunked by the Dallas Morning News, which found that much of the vetoed spending never would have happened regardless. That’s because separate legislation authorizing the expenditures failed to pass into law. The newspaper said that nearly $2.5 billion of the more than $3 billion touted by Perry already was doomed because the required authorizing measures failed to pass.

The News said the funds at issue reflected "agencies that were discontinued, federal money that had to be repaid anyway and spending that was shortly thereafter restored, with Perry’s general approval." The newspaper's analysis continued: "The governor has even acknowledged that the vetoes were merely procedural. In supporting materials for the ad, his campaign points to the veto proclamations Perry issued at the time, and in those, he explains that the underlying bills failed to pass the Legislature."

Perry’s reference to cutting taxes for small businesses harkens to a proposal he signed last year raising the annual income threshold for businesses subject to the state’s retooled business franchise tax from $300,000 to $1 million. Thanks to the action, more than 130,000 businesses were exempted from the tax, including almost 40,000 that had to pay the tax in 2008 and 2009, according to the state comptroller’s office.

Perry's ad doesn't mention that on his watch, more than 940,000 businesses were subject to the revamped tax as of 2008, up from more than 692,000 businesses subject to the old version in 2007, according to the state comptroller's office.

Perry traces his statement that Texas is now No. 1 in job creation to a press release issued recently by Tom Pauken, who chairs the Texas Workforce Commission. Pauken compares the number of private-sector jobs in each of the most populous states in December 2009 to the number of jobs in December 1999. Texas saw a private-sector jobs increase of 9.3 percent over the period with Florida proving the only other big state with net job gains.

That's impressive history, though it doesn't confirm Texas is currently No. 1 in job creation, as Perry says in the ad.

The commission provided a national breakdown showing that between December 2008 and December 2009, only the District of Columbia enjoyed net job gains. Texas saw a 2.6 percent drop in employment over the year, faring better than 33 states though worse than 16.

More recently, Texas has fared better. In the last quarter of 2009, Texas enjoyed a net jobs gain of 49,100 to 10,355,000 jobs. Among the 10 most populous states, only Michigan enjoyed any gains, of 9,700 jobs. All in all, Texas's net job gains exceeded the total of 47,200 job gains combined reported by nine other states and the District of Columbia, the only other places in the United States that recorded net job gains in the quarter.

Perry ties his celebration of the Texas housing market to a February 2009 article in Builder 2009, a publication of Hanley Wood Market Intelligence, which rated Houston, Austin, Fort Worth, San Antonio and Dallas as the nation's best housing markets based on population and job growth changes, which its article calls "perennial drivers of housing demand." The publication states it also looked at what’s happened with home prices and new building permits. All the indicators were combined to score each community; the 15 cities with the best scores were featured. An October update of the rankings shows each of the Texas cities still among the country's top 10 markets.

As Perry says, Texas has balanced five state budgets on his watch. But he doesn't let on that it has to. It's constitutionally impermissible for the budget not to be balanced.

The governor makes a shakier claim when he says: "And we cut state spending."

That's not true if one compares how much state spending was budgeted before he became governor to the current budget. Spending of non-dedicated state general revenue has gone up about $25 billion since the 2000-01 budget -- an increase of 45 percent in Perry's time as governor.

Perry’s campaign notes correctly that twice in Perry's time as governor, lawmakers budgeted less spending from general revenue funds than had been spent in the previous two-year budget. The 2009 Legislature approved a budget that spent nearly $80.7 billion in non-dedicated state funds in 2010-11, down nearly 2 percent from the 2008-09 budget, thanks in part to federal stimulus aid. And in 2004-5, non-dedicated state spending dropped 1.6 percent as lawmakers adjusted to a projected $10 billion revenue shortfall.

All told, Perry talks a good game in his ad. Much of what he says has some truth to it.

Texas is a jobs Mecca. Several of the state's housing markets were national standouts last year. And Perry is correct too that about 40,000 businesses were exempted from paying the franchise tax though he fails to note that more businesses are subject to the revamped tax than before.

Not so good: Perry misrepresents the significance of balancing the state budget, a must-do for every legislature and governor. He distorts the size and substance of his budget vetoes. As previously reported, his claim that Texas has a surplus in the billions is Barely True since the state is expected to confront a revenue shortfall in 2012-13. Finally, Perry's claim to cutting state spending could lead viewers to think spending has decreased on his watch, which isn't so.

Perry’s ad drifts from evidence-strong facts to full-bore misrepresentations. We rate his statement altogether as Half True.

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