March 29, 2007
Budget battles today

Today the House will take up the Committee Substitute for House Bill 1 (CSHB1), which is the state budget bill. I'm sure I'll have plenty to link to and talk about later today, but for now, here's two items regarding this budget that you might not see elsewhere. First, from Capitol Inside, some early responses from the Democrats:

On the eve of the House floor debate on a $150 billion two-year state spending plan, Democratic leaders said they have no plans to offer a full floor substitute like they did in the school finance battle in special session two years ago. But the Democrats indicated that they'd be giving their colleagues substantial opportunity to shift funds to items they see as higher priorities within the parameters of a Calendars Committee rule that prohibits the bill's bottom line from growing beyond the total amount approved by the Appropriations Committee.

State Rep. Pete Gallego, an Alpine Democrat who chairs the Mexican American Legislative Caucus, said House Bill 1 in its current form would leave TYC spending at 2003 despite a sexual abuse scandal that has rocked the juvenile corrections agency and sent shock waves through the Texas Capitol.

State Rep. Ana Hernandez of Houston accused Republican budget-writers of essentially ignoring the explosive situation at the youth commission at a time when it's quickly become the biggest crisis facing the state. Hernandez called the proposed spending on TYC "inexcusable" and "unconscionable."

The spending bill that's being sponsored by State Rep. Warren Chisum, a Pampa Republican in his first year as the Appropriations Committee chairman, would leave fewer Texas children with Medicaid and CHIP benefits instead of boosting the number of kids who have health coverage, State Rep. Garnet Coleman of Houston asserted. Coleman said health and human services spending in 2008 and 2009 would be about the same as it had been in the last budget that the Legislature approved when Democrats still controlled the lower chamber in 2001.

Coleman said that Republicans had found a way to spend a record amount of money without getting more in return than the state had received in exchange for the funds that it had been spending before deep cuts were enacted in the face of a record deficit in 2003.

According to State Rep. Abel Herrero of Corpus Christi, the House will be debating a state budget with $8.5 billion more available but out of reach despite a need for more funds for essential services. Republicans are putting some of a current surplus in reserve for property tax cuts while proposing to keep more than $4 billion in the rainy day fund.

Chisum and other members of the leadership team have been reluctant to earmark all of the funds that are available in anticipation of an upcoming federal court ruling in Medicaid suit that could cost the state billions of dollars.

And from the Legislative Study Group:

Writing a budget is the only task the Texas Legislature is required to accomplish each session. Spending priorities are typically debated side by side to allow members to make a more informed decision on how to appropriate state funds. The General Appropriations Act, HB 1, is intended to lay out how state dollars will be allocated for the next two years.

It became evident at the beginning of this session that tax cuts were the top priority. The first order of business was the passage of SCR 20 and HB 2, ensuring that the constitutionally imposed spending cap was lifted for the sole purpose of providing property tax cuts. To fund this priority, $8.1 billion from the Property Tax Relief Fund and $6.1 billion in General Revenue was spent. Before a budget was able to be reviewed by the full House, $14.2 billion was eliminated from the budget - funds that otherwise could have been allocated for important budget priorities - such as improving our public schools, providing health care coverage to Texas families, making college affordable, reforming TYC, maintaining our state parks and properly funding the state's transportation needs. After the rush to pass out the property tax cuts, HB 2 has yet to be taken up in the Senate Finance committee.

This year, as state agencies were submitting budget requests for the coming biennium, they were instructed to limit their funding requests to 90% of their 2006-2007 budget. Items not able to be included in this "base budget" could be listed as exceptional items, in hopes of receiving additional funding to cover these expenses. A partial reinstatement of this initial 10% reduction was appropriated to some agencies, and could be misinterpreted by some as an increase in funding to that agency. Agencies were required to work up to meet their priorities - first by fighting to reach funding levels from last biennium, then fighting to maintain services with the growth of the state, and finally fighting for improvements to those services.

There is $8.5 billion in unspent GR left on the table that full House is unable to access - $4.3 billion in the Rainy Day Fund, $4.2 billion in unappropriated funds. Today's budget debate is the only chance for the House to vote to fund the state's priorities. After the bill leaves this chamber, conference committee members will ultimately decide the funding levels in the budget and House members will be only be allowed a straight up or down vote on the conference committee report.

Typically, all of the state's spending for the upcoming biennium is done in the General Appropriations Act. This session, three separate appropriation bills have been introduced to account for spending in the 2008-2009 biennium. It is important to take into account all three of these bills when evaluating the state's spending priorities.

-The main budget document, CSHB 1, appropriates $150.1 billion in All Funds, including $72.5 billion in General Revenue. This is an increase of $5.4 billion in All Funds and $4.7 billion in General Revenue from the current biennium's budget.

-HB 2 spends $14.2 billion on property tax cuts, including $6.1 billion in GR.

-The Supplemental Appropriations Bill, CSHB 15, spends $224.4 million in funding for fiscal year 2008-2009, leaving $40 million in funds vetoed by the Governor unappropriated.

All told, the state is spending $164.5 billion for the coming biennium, leaving $9 billion unspent and leaving the state's priorities fighting to keep up with growth.

More to come, so stay tuned.

Posted by Charles Kuffner on March 29, 2007 to Budget ballyhoo