The state won't need new taxes or expanded legal gambling to cover a budget shortfall next session, but higher fees and more budget cuts are a possibility, Lt. Gov. David Dewhurst said at this morning's TribLive interview in Austin.

He half-jokingly praised himself for blocking plans to refund Rainy Day money to taxpayers in 2009. He argued that the state would need the money, and that fund — which he expects will be around $10.2 billion — will help offset drops in sales tax and other state revenues. "I showed what a brilliant politician I am," he joked, adding, "We saw this coming."

The lieutenant governor mildly disagreed with Gov. Rick Perry's decision last year to turn down $550 million in stimulus funds for unemployment insurance. That money came with strings attached, Perry argued, but turning it down increased the size of a tax hike on businesses during a recession. Sen. Kevin Eltife, R-Tyler, has called the decision "insane"; Dewhurst stopped short of that, said he didn't have all of the details Perry had in making the decision, but said: "I probably would have taken the money."

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Dewhurst and other state leaders asked agencies to offer up budget cuts of 5 percent, and he wouldn't rule out more. He's not looking at higher taxes to balance a budget that, for now, looks to be $11 billion to $18 billion out of balance. "I do not want to see taxes raised, and I do not thing we're going to need to raise them," he said. And later, he added, "You can't raise taxes during a recession."

He was less opposed to fee increases, while admitting that "to all of us as taxpayers, there's not a lot of difference."

"We want to hold down and keep fees as low as possible," he said. But he didn't say no, promising only to "keep fee increases as close to zero as possible." More cuts are possible, but he tried to drain some of the drama from that. "We're not going to cut into the muscle," he said. "We're not going to cut essential services."

Gambling could bring in some money, particularly in the budget after next, and has some proponents. Dewhurst isn't one of them. "I don't think there's a need to consider that … [and] I am personally opposed to expanding gambling."

Dewhurst was critical of the federal health care bill, saying it falls short of reform, increases taxes and "does nothing to improve health outcomes." Dewhurst said he doesn't support the immigration law recently enacted in Arizona. But he empathizes with the people who passed it, and says people have grown tired of "Republican presidents and Democratic presidents sitting on their hands." He suggested doubling the number of Border Patrol agents on the Texas-Mexico line.

Dewhurst doesn't publish his income tax returns. Perry has called on his own opponent, Bill White, to publish his. Asked if there's a difference, Dewhurst pointed to his own blind trust. "I don't know the assets that I have … if Mayor White had a blind trust, I would be supportive of his position," he said.

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Other notes:

• He plans to name a select committee on redistricting soon.

• Asked if he would serve all four years of his next term, if he's elected, and not run for another office in 2010, Dewhurst replied, "Nice try."

• He said the reason the state outperforms other states is "Texans." And he said Texans have been less tolerant of taxes than people in other states and have prospered, in part, because of that.

• Dewhurst took issue with reports that he got a play about a gay Jesus canceled at Tarleton State University, saying all he did was issue a press release. He'd have done the same, he said, if the play had "ridiculed" other religions, with, say, a gay Buddha.

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