Sat May 21, 2011
The Budget: Where Everything Stands
Where did the time go? Texas legislators are a mere nine days away from the end of the session and still have to finish work on several bills to finish up their budget for the two-year period that starts September 1.
On Saturday, the House voted 100-44 to pass SB 1811, a key fiscal matters bill that Senate Finance Chair Steve Ogden, R-Bryan, says needs to produce $2.6 billion in revenue to balance the state’s budget. However, the amendments added by state representatives during the floor debate Friday night included a tax break for businesses worth about $2 billion. That, combined with other cuts, left the bill producing only $400 million in new revenue. The bill will now head back to the Senate and on to conference committee, where those changes are expected to be stripped.
House and Senate leaders started the weekend with the Friday evening announcement that they had agreed to spend $80.6 billion in general revenue. The details are yet to be released, but Lt. Gov. David Dewhurst praised budget writers for “making a historic $15-billion cut in government spending.” House Speaker Joe Straus called the budget “disciplined” and “fiscally conservative” because it does not raise taxes or spend any additional Rainy Day Funds in the next biennium.
Some issues remain outstanding. For instance, the conferees haven't decided whether to spend $37 million on family planning, as the House wants to do, or $99 million, the Senate number.
So they've got an overall deal, but are still banging out the details in areas like public education, higher education, and health services. The budget conference committee, consisting of five senators and five representatives, has yet to vote on two major articles of the state budget: public and higher education (Article III) and general government (Article IX, a section of the budget that covers a broad range of government rules from state salaries and travel guidelines to health-related costs for employees).
Education is all but worked out; it's typical to hold the general government section until last because it's the easiest place to add last-minute details to mop up the negotiations.
The budget isn't the only bill that has to pass to get the state's two-year spending plans in place. Here's where it and others stand in the process:
HB 1 is the big one. When it is passed, HB 1 will set the spending guidelines for the state in the next biennium. The House passed a bare-bones $164.5 billion budget in late March that slashed spending by $23 billion. The Senate version was a $187.5 billion proposal that still cut overall spending by $11 billion. The bill is now in conference committee, where lawmakers are trying to reconcile the differences and where they've agreed to cut $15 billion from current spending. Once it emerges from the conference, it needs a simple majority of support from each chamber to become law.
HB 4 is a so-called supplemental appropriations bill that balances the current budget, which ends August 31. The state has a $4 billion budget deficit in the current fiscal year, which has to be settled now or it spills into the next budget. The bill has cleared the lower chamber and the Senate Finance Committee, but it has yet to be debated by the full Senate.
HB 9 relates to higher education funding and the state’s goal of graduating more students by 2015. The funding is intended to de-emphasize funding based on enrollment and to reward outcomes. The bill already passed the House. It was stuck in the Senate until Gov. Rick Perry made it a part of the budget negotiations in closed-door meetings with House and Senate leaders. The Senate Higher Education Committee revived the bill and passed it.
HB 275 authorizes the state to withdraw funds from the state’s Economic Stabilization Fund, known as the Rainy Day Fund to cover part of the current year deficit. The House authorized spending $3.1 billion. The Senate chose to spend $3.97 billion, which the House refused to support. The bill is now being dealt with in conference committee. Gov. Perry has taken the House's side in that argument.
SB 1811 is a major “fiscal matters” bill sponsored by Sen. Robert Duncan, R-Lubbock, who chaired a committee charged earlier this session with finding $5 billion in non-tax revenue. He found about $4.2 billion in revenue by using tactics such as payment deferrals. The House balked at some of that, cutting out accelerated business tax collections and suspension of a popular back-to-school sales tax holiday, cutting the bill to $2.6 billion. House members filed hundreds of amendments and debated for hours on Friday and Saturday. In the end, the measures included some surprises: a statewide smoking ban (that would save the state $31 million in Medicaid expenses) and the tax breaks that cut the size of the bill down to $400 million. It has to get back into the $2.6 billion range for the package of bills to balance.
SB 23 is a fiscal matters bill related to cutting health and human services costs. The bill passed both chambers, but not without some major amendments by House members, including a provision to ban the use of state family planning dollars for any organization that offers abortions or “abortion-related” services. Lawmakers have cut Medicaid spending by $4.5 billion in the budget, hoping to cover that tab with efficiencies and savings from this bill, from improvements in the economy, and changes in federal law. They plan to use the Rainy Day Fund in early 2013 to cover any shortfall.
SB 1581 is a school finance and fiscal matters bill that is expected to generate about $339.4 million for schools in the next two years through several mechanisms, including reducing the state’s contribution rate to the Teacher Retirement System and capping “revenue target” spending for students at $8,000 per pupil. The Senate passed the bill once, but the House returned it because of a provision allowing students to carry concealed handguns on college campuses. The Senate promptly passed the bill again, adding the school finance provisions. The House is expected to take up SB 1581 again on Monday.