Associated Press Writer

AUSTIN (AP) - Already facing a multibillion-dollar budget shortfall, lawmakers learned Wednesday they don't have enough money to pay off loans used to run state government, sparking angry finger-pointing at Comptroller Carole Keeton Strayhorn.

Some members of the Senate Finance Committee accused Strayhorn, a Republican, of hiding the severity of the state's fiscal woes from lawmakers until earlier this month because she didn't want it revealed during a heated campaign season.

Republicans swept every statewide office and gained control of the Legislature in the November election. Some accused Democratic-led budget writers of going on a spending spree in 2001, creating the current budget trouble.

Throughout the campaign, Strayhorn and GOP Gov. Rick Perry said they expected a budget shortfall of $5 billion. But after Election Day, Strayhorn warned the news would be worse and on Jan. 13 announced a $9.9 billion shortfall through 2005.

"We don't need any smoke and mirrors or hiding the ball on us for whatever reason," said Sen. Robert Duncan, R-Lubbock.

"I think we got some poor numbers," said Sen. John Whitmire, D-Houston. "I think you had the information in your shop all fall."

Sen. Eliot Shapleigh, D-El Paso, noted Texas ranks 49th in per capita spending and dismissed the notion of a spending spree last session.

"Nothing could be further from the truth," Shapleigh said. "When you look at what that does to real lives of Texans, children, these programs, I think that allegation is baseless."

Strayhorn said she told lawmakers about the larger shortfall when she realized holiday sales were weaker than expected as tax receipts started coming in earlier this month.

"No one has the crystal ball, but the minute we saw what was happening, I told not only the Legislature but all the people of Texas," she said.

Finance Chairman Teel Bivins, R-Amarillo, said Strayhorn's notice this week that the state won't have enough cash to pay back loans due by Aug. 31 was a bombshell.

"The reason I called it a bombshell is because it was a surprise," Bivins said.

Stayhorn sent the committee a letter saying she warned lawmakers two weeks ago there wasn't enough money "to pay the bills" through August.

The state's $114 billion two-year budget uses a combination of sources to pay for programs and services, including cash from state tax revenue, income from investment funds and federal money.

The latest problem does not change the anticipated $1.8 billion fiscal year shortfall, but it complicates lawmakers' budget work.

The state typically takes out loans to cover expenses during the budget cycle before tax money is collected. Officials anticipate tax collections will be enough to pay off the loans by the end of the fiscal year.

But this time, the state will not have enough money to repay the loans on time.

If the cash isn't found by Aug. 31, the state's general revenue fund would have a deficit, which is prohibited by the state constitution. Also, Texas would not be able to get new loans, Deputy Comptroller Billy Hamilton told the committee.

Lt. Gov. David Dewhurst said he believes the state will find the cash to repay the loans, even if it means more borrowing.

Some have suggested using the emergency Rainy Day Fund, a move Strayhorn is against.

Also Wednesday, the 15 members of the Finance Committee agreed to co-sponsor a zero Senate budget bill, meaning state spending will start from scratch.

Agencies were told in a letter sent Wednesday to scrap their 2004-05 budget requests based on current spending because the state does not have enough money to pay for them.

Those budgets must be cut by a total of $10.5 billion and prioritized before being submitted to lawmakers, the letter said.