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RIP, One Bin For All

It had a good run, but at the very least the timing was all wrong.

The One Bin For All program would let Houstonians throw all trash in the same bin, to be separated for recycling later. The hope was to push up Houston’s low recycling rate. But now the city could end up with no recycling at all.

The city council on Wednesday delayed a vote on a new contract with Waste Management, which would cost the city about $3 million more per year because commodity prices for recyclables are low.

Several council members are calling for suspending recycling until that changes.

The One Bin program was not mentioned at all in the discussion.

It turns out Mayor Sylvester Turner is not a fan.

“I’ve looked at and read the paper that’s been presented from what was done,” he said. “I’m not convinced that that is something I want to move forward with right now, if at any time, but it’s not a part of this conversation.”

See here for the last update. Mayor Turner had spoken in generalities about One Bin before now – I’d have to go back and re-listen to the interview I did with him for the 2015 election, but that’s how I remember him speaking about it then as well – so this is a rhetorical shift for him. It’s not exactly a policy shift in the sense that he had never committed to doing anything with One Bin, so think of it more as a door being closed.

As for the Council action, the Chron story from Wednesday before the meeting suggested some pushback on continuing the recycling contract with Waste Management, but nothing more than that.

Until now, Waste Management would resell the recyclables, deduct a $65-per-ton processing fee and give 70 percent of the remaining revenue to the city. If the firm’s costs exceeded the fee the city paid, Waste Management ate the difference. Those terms meant the city could make $25 per ton two years ago, when recyclables were bringing $100 per ton.

Now, with commodities prices at lows not seen since the 2009 recession, Waste Management has been dropping or renegotiating its contracts with Houston and many other cities.

If City Council approves the new deal, the city next month will begin paying a $95-per-ton processing fee. With commodities now earning $48 a ton, that means each ton of material recycled will cost Houston almost $50, at least in the near term.

That’s nearly double what it would cost to truck the recycled items to the landfill, where the tipping fee is $27 per ton.

And, with Mayor Sylvester Turner warning that layoffs will be needed to close a projected $126 million budget gap by July, some council members are inclined to quit recycling until the market improves.

“As much as we are for recycling, I’m also against cutting people that are actually doing city services,” said Councilman Michael Kubosh. “It’s going to hurt to lay people off and then to tell them we laid them off because, ‘Well, we want to recycle.’ We’ve got to think it through.”

Councilman Jerry Davis, whose District B is home to landfill facilities, disagreed, citing studies showing negative health outcomes for those near dump sites.

“If we stop recycling, we’re going to have more crap taken to landfills in District B,” Davis said. “With the rate we’re growing, we have to find a way to get rid of our waste in an efficient manner. What are we going to do when all our landfills are full? I understand commodities are down, but it’s a cycle. I don’t think we need to steer away from sustainability because the market is somewhat volatile.”

See here for the background. The single-stream recycling program has been pretty popular, so I kind of doubt it’s in any danger, but I’m not surprised that there was some grumbling about possibly having to pay for something we used to make money off of. And if the words “garbage fee” are forming on your lips, you may want to bite your tongue.

If you were concerned Mayor Sylvester Turner could consider pushing a new garbage fee to cover that cost, however, think again.

As Turner put it, when asked at today’s post-City Council meeting press conference:

“No. I have never contemplated a garbage fee. When it’s come up, I’ve said to members of my own staff I’m not going to advocate a garbage fee and I’m not going to support a garbage fee. So, absolutely not, no.”

I don’t agree with that – at the very least, I think we ought to keep the option open – but that doesn’t appear to be the case. We’ll see what Council does with this next week.

Layoffs are coming

It’s gonna suck, though hopefully not as hard as last time.

Mayor Sylvester Turner

Mayor Sylvester Turner

Mayor Sylvester Turner said Wednesday that a still undetermined number of city employees will be laid off in the coming months, making his first formal acknowledgment that Houston’s projected $126 million budget gap can’t be closed by July without personnel reductions.

Though Turner did not provide an estimate of the number of employees at risk, personnel costs comprise more than 63 percent of the city’s general fund operating budget. Because another 19 percent of that money is set aside for debt payments, spending cuts need not go deep before they touch workers.

“It’s going to be very difficult to balance the budget at the end of June without some layoffs,” Turner said. “The question will be, how many there will be. I’ve taken no departments off the table. The only thing I will not do is I will not lay off a police officer.”

[…]

Noting that job cuts inherently mean cuts to city services, Turner sought to assure that his efforts to seek concessions from the leaders of the city’s economic development zones, pension boards and other groups are progressing well. He said he also is examining other ways to cut costs, such as restructuring the city’s debt.

Never missing a chance to repeat the refrain first issued in his inaugural address last month, Turner stressed that he also has asked City Council members to join in this “shared sacrifice.”

Beginning Tuesday and continuing at Wednesday’s council meeting, Turner hand-delivered letters to the 11 district council members. The notes, which he jokingly dubbed “Valentine’s cards,” told the council members he seeks to cut funds they use to support projects in their districts from $1 million to $250,000 in the upcoming budget, saving more than $8 million, in part, to avert additional layoffs.

“My hope is that we can put forth a budget that minimizes the number of layoffs, and that’s why I’ve asked everyone to engage in shared sacrifice,” Turner said. “It’s very difficult to tell people that they’re going to be laid off if we hold on to everything that we have.”

Mayor Turner has already asked Council to clip their discretionary budgets, because a little bit here and a little bit there may make the big pain a little smaller. I assume “economic development zones” means TIRZes, so I’ll be interested to see what that entails, and if the usual suspects start screaming bloody murder about the stupid revenue cap. If Turner can negotiate a minimal cost of living increase for the firefighters’ pension and/or a larger contribution from them as was the case with last year’s pension deal, that’s all to the good as well. We can’t do anything about the revenue cap now, but it will be on the horizon. If the general consensus is that Turner has done what he can to control spending (even though that has nothing to do with the rev cap), that may make it a little easier to get a revision to the cap passed. For now, anything that can be done to minimize job losses will be appreciated. I don’t envy him the task.

Things are tough all over

HISD faces a big deficit:

BagOfMoney

Houston ISD leaders are bracing for a projected $107 million budget shortfall that, in a worst-case scenario, could prompt the district to slash jobs.

During the school board meeting Thursday, however, officials pledged to try keep cuts away from schools.

“We get it,” Ken Huewitt, the district’s deputy superintendent and chief financial officer, told the board. “We’re in the business of teaching and learning.”

Huewitt said he told central office departments to consider not filling vacant positions and asked principals to weigh spending cuts up to $275 per student. His first-draft proposal also would save $10 million by dissolving the teacher bonus program, affecting payouts in January 2018. Money for next year already is in reserve.

He cautioned, however, that the district is still early in the planning process. The board is set to approve the budget in June. District officials typically present the severest financial outlook at the outset, without, for example, using savings to plug the gap.

The looming financial problem stems from the district expecting to reach, for the first time, the revenue level that requires property-wealthy school systems to send significant funding back to the state.

Lawmakers typically change the formula to avoid the so-called Robin Hood payback scenario for the Houston Independent School District and Dallas ISD, but that did not happen in the 2015 session, according to attorney David Thompson. The Legislature is not set to reconvene until January 2017 unless a special session is called.

Which there might be, depending on how the Supreme Court rules in the school finance case. If all goes well for HISD, they would be getting more money out of it. But you can’t count your chickens before they hatch, especially when you don’t know their timetable for hatching. The board has to make a budget, and they can’t make it based on assumptions about things that may happen at some unclear time.

And then there’s Houston.

As if nosediving sales tax revenues and a looming budget deficit were not enough, a swathe of successful lawsuits from business owners protesting their property values have handed Houston City Council another fiscal headache.

Mayor Sylvester Turner lamented what his finance director projects as a $16 million drop in property tax collections during the current budget year, which ends in June.

Granted, that’s not much in a more than $2 billion operating budget. But if all other trends hold, the news means there may be $16 million less on hand to close an already daunting $126 million budget gap for the new fiscal year that starts July 1.

Finance Director Kelly Dowe used new data from the Harris County Appraisal District to make the estimate. That data, said HCAD’s chief appraiser Sands Stiefer, was drawn from November and December, when many judges are trying to clear their dockets.

Turner at Wednesday’s council meeting lashed out at what he said is an “inherently unfair” system that rewards commercial property owners who hire lawyers to argue their properties are worth less than county officials contend.

That hands a higher share of the tax burden to individual homeowners who lack the same means to fight, the mayor said.

“They’re doing it each and every year. When they’re not successful at the appraisal districts, they go to court for relief,” Turner said. “The reality is, that $16 million is a real hit to the city’s budget.”

The hit is particularly harmful, Dowe said, because the city is operating under a cap on property tax collections that voters imposed a decade ago.

So this is the usual story, one part the rigged appraisal system and one part the stupid revenue cap, which does nothing but penalize the city for having strong economic growth, while exacerbating the problem in leaner times. The city has other issues it has to deal with, and the revenue cap is only part of the problem, but if you don’t recognize that it’s part of the problem, then you’re part of the problem, too.

And on that note, a song from the 80s that captures the theme of this post:

That’s John Cafferty and the Beaver Brown Band, who clearly kept on playing after the 80s. Good for them.

Circling back to city finances

I have three things to say about this.

BagOfMoney

This time, [City Finance Director Kelly] Dowe insists, the $126 million deficit he projects for the budget year that starts next summer is not going to disappear, as past projected shortfalls have. There are no more payments to defer, he says, no more valuable city-owned land to sell.

As a result, the city could be facing layoffs and cuts to services within a year – perhaps pool closures, restricted library hours and parks going to seed, and perhaps worse.

“We have an unsustainable financial model,” Councilman Dave Martin said. “We cannot continue to do this. If we continue down this path, we’ll be belly up.”

Dowe and his boss, Mayor Annise Parker, know Houstonians are confused as to why their government would face layoffs and service cuts while the region’s economy booms.

There are several reasons for this, all a decade or more in the making.

The city has been spending more than it brings in for years, a structural gap driven chiefly by soaring pension costs and, in recent years, a spike in debt payments. Houston typically bridges this gap by budgeting conservatively, being happily surprised when tax revenues exceed projections during the year, then using those “extra” dollars to balance the next year’s budget.

To balance the current budget for the fiscal year that started last week, council approved taking $86 million from last year’s leftover savings, the largest such transfer in a decade.

“Obviously we carry the reserves over from year to year. That’s money that’s not generated or not expected to be generated in the next budget cycle,” said Controller Ronald Green, the city’s elected financial watchdog. “Clearly, if you want to be technical, it is not a structurally balanced budget.”

This history of disappearing deficits has made some council members skeptical of just how dire current projections are. Dowe acknowledged that he originally projected an enormous shortfall for the current budget, which wound up being balanced without layoffs or service cuts.

But he also ticked off a litany of reasons that he says will make another easy fix harder in the future.

First, the city has run into a cap on property tax revenues that voters imposed a decade ago. Houston can collect more property taxes each year than the year prior, but is limited to the combined rates of inflation and population growth.

The city now knows exactly what it will collect each year from its largest source of revenue, and no number of new skyscrapers or townhomes will change that. The typical way the city has wound up with “extra” money at the end of each year is thus gone. Without the cap, the city would have had another $53 million to spend this year.

[…]

Each of the next two years also will bring a $50 million payment to the police pension, triggered under the pension board’s contract with the city because sluggish investment returns have eroded its funding level.

Without an increase in revenue, Dowe said, the only option is to cut services.

“Debt is what it is, pensions are what they are,” he said. “We will continue to get more efficient, we will continue to cut costs where we can, but in the long term it would be hard to say you wouldn’t affect services with the outlook we have.”

Debt payments for past public projects have risen by more than half over the last five years, to $346 million this year, and are projected to reach $411 million by 2020. Pensions are devouring $308 million of the city’s main operating fund this year, nearly three times what is spent on parks and libraries combined.

1. There’s no serious solution to this problem that doesn’t include repealing the revenue cap. Every candidate running for office runs on a promise of promoting economic growth and prosperity. Houston has had that these past few years, but thanks to the cap we’re being penalized for it. Fifty-three million dollars is a lot of money and would do a lot to reduce the scope of the problem we’re facing, and that’s just for this year. You want to argue that we don’t have a revenue problem in Houston I’ll be sympathetic, but that doesn’t mean that throwing away extra revenue like this makes any sense. There is no good reason not to use all available resources.

You may argue that the people won’t go for it, and you may be right. What evidence we have from limited polling certainly suggests that’s a strong possibility. To that I say, how about a little leadership from those who want to be Mayor? Politicians love to talk about “making the tough choices”, yet somehow choices like this never seem to be on the table. To be fair, at least some Mayoral candidates have mentioned this – I know Chris Bell has, I’ll have to check on some others – and Mayor Parker has brought it up as well. Any candidate who says they want to make “tough choices” but doesn’t consider this is to my mind not to be taken seriously.

2. Similarly, I don’t know how anyone can look at the debt figures and not support ReBuild Houston. One of the defining purposes of ReBuild Houston was to pay down existing debt and reduce the amount of future debt needed to pay for infrastructure. Put aside the extra revenue stream that ReBuild Houston represents, why would you want to add to the debt burden at this time? I’m not against using debt to invest in the city’s infrastructure, but now is not a very good time for it. What exactly is the case for going back to a bond-based system of paying for street and drainage improvements?

3. Finally, the pension issue. The choices are the same as they’ve always been – try to convince the Legislature to grant the city the authority to make changes to the pension plan; try to negotiate a different agreement with the firefighters; suck it up and figure out how to pay what we owe. I’m not sure why anyone thinks they’d be more successful at #1 than Mayor Parker has been, and I can’t imagine anyone advocating for #3. Maybe I’m missing something, I don’t know. I don’t know what else there is to say on this.

City deficit not as big as feared

This is a nice surprise.

BagOfMoney

A huge budget deficit looming at City Hall – which has spurred talk of layoffs, service cuts, new fees and higher taxes – has been cut in half, relieving some pressure to scramble together a budget patch but doing little for Houston’s long-term financial health.

The unexpected boost of good news came from city Finance Director Kelly Dowe, who told a City Council committee Tuesday that what recently had been an estimated $144 million gap for the budget year that starts next summer has shrunk to about $63 million.

“That’s no small amount of change,” Dowe said, “but definitely a better picture than $144 million.”

The improvement is thanks mainly to a change in the police pension board’s funding formula that means Houston no longer must pay $50 million into the pension in each of the next two years on top of the $123 million and then $133 million, respectively, the city already is scheduled to pay. Savings in city operations and the city’s health care costs leveling off also helped narrow the budget gap.

Dowe still projects deficits in each of the next four fiscal years, driven largely by a spike in the cost of servicing city debt, rising payments into all three city pension funds and a cap voters imposed a decade ago that limits the property tax revenues Houston can collect to the combined rates of inflation and population increase. Though these coming budget gaps have narrowed, the numbers remain sobering, reaching a projected $112 million deficit in the fiscal year that starts July 1, 2017.

[…]

Rice University political scientist Mark Jones said narrower budget gaps lessen the problem’s urgency and make items like changes to the revenue cap, which would require a public vote, less plausible.

“The strongest case for lifting the revenue cap would be this cataclysmic effect if those revenues were not available for core city services like police and fire,” he said. “As that number gets lower and lower, a doomsday scenario is a much tougher sell.”

Other observers said the new numbers better enable Parker to argue she is pushing the ideas because they are sound policy, not as part of a scramble to close a budget gap.

Needless to say, I agree with that view. Repealing the cap is still the right thing to do. The immediate deficit may be smaller now, but it’s still substantial, and it gets bigger a couple of years out. We can use all available resources to deal with it, or we can be forced to cut taxes and make more cuts than we otherwise would have in years where revenues grew faster than expected. That should be good news in a scenario like this, but only if we repeal the cap first. Let’s not lose sight of that.

Searching the couch cushions for loose change

That’s basically what this is.

BagOfMoney

To say the city of Houston is working to cut a looming $120 million budget deficit one color copy at a time would not be accurate. It’s more like millions of color copies.

Cellphones no one is using, old cars no one is driving, a 50-step process for approving fire alarm permits no one can explain – these are the targets and triumphs of a small team of efficiency experts tasked with burrowing into mounds of data and analyzing city operations to find savings.

While city leaders are looking at some painful ways to close next year’s massive deficit – pension reform, layoffs, cuts in service – the six members of the Lean Six Sigma squad have generated $25 million in savings and better processes in three years, showing there are easier ways to cut.

Next on the list? Perhaps an email to the sixth floor of the Houston Fire Department headquarters at 600 Jefferson. The shared printer there spit out 32,519 color pages in September, the most of any of the city’s networked printers. About 81 percent of the machines’ pages printed in color, nine times the citywide average.

It may sound like small ball, but given the size of city operations – 55 million pages are printed each year – the potential savings can add up quickly.

Finance director Kelly Dowe, who formed the Lean Six Sigma team in May 2011, said the group – named for decades-old problem-solving methods that began in manufacturing – has a broad focus, targeting everything from shortening the time it takes to hire city workers to helping pollution and restaurant inspectors plan better daily routes.

I don’t want to denigrate or belittle this in any way. It’s a valiant and necessary effort, it will achieve real savings, and it will make government work better. These are all very good things. What I do want to do is disabuse anyone of the notion that there’s more of this that can be done to close the rest of the budget gap. In the best case scenario, Dowe’s efforts might shave five percent or so off that projected $120 million deficit. That’s real money, but it’s nowhere close to a solution. The rest of the way there is a lot harder, with the choices a lot less pleasant.

The other point that needs to be made is that we need this level of scrutiny on the whole budget, including the public safety budget. As far as I can tell, that part of the budget has been walled off and the only thing one can do with it is propose to spend more. That’s not something I will accept, certainly not until my questions about HPD’s operations are answered. I’ve said before and I’ll say again, I’m willing to accept the possibility that we really do need to spend more on public safety to get what we want out of it. (Body cameras, for example, I’d absolutely support spending on.) But I want to see the numbers first. I want to know what what we’re spending our money on now is the best and most efficient use of it. Show me we’re putting the same effort into critically examining the public safety budget, and then we can talk. Along the way, we might also make some more progress on that deficit.

McClelland wants more money for more cops

And I want some answers before we go along with this request.

Houston Police Chief Charles McClelland asked city leaders Tuesday for an additional $105 million over five years to hire hundreds of new officers as part of a plan to shore up divisions where thousands of crimes are never investigated and bolster traffic enforcement as automobile collisions citywide are rising.

McClelland’s request comes as Mayor Annise Parker is searching for cuts to address an estimated $120 million budget deficit for the fiscal year that begins next July 1. Rising pension and debt costs, along with a voter-approved cap on city revenues, are fueling the city’s looming budget problems.

Executive assistant chief Timothy Oettmeier said HPD is proposing hiring 540 additional officers over the next five years, part of a 10-year plan to add 1,200 officers to investigative and patrol divisions. The staff increase would include new officers and hiring civilians to free up officers for field work.

Oettmeier said HPD was “enormously sensitive” to the budget situation and is using the hiring plan as a way to start a discussion. “What we’re simply saying is we need additional personnel, but given the current economic climate, can we sit down and figure out how to proceed at a time that’s appropriate for everybody,” Oettmeier said.

[…]

This summer, two independent police research groups hired to analyze HPD’s staffing noted that the department’s division commanders reported they had more than 20,000 crimes with workable leads that were not investigated due to a lack of manpower. That figure included burglaries and thefts, hit-and-run crashes and assaults.

Crime statistics provided to the committee showed HPD’s clearance rate for theft, burglary and auto theft was 11 percent last year.

[Ray Hunt, president of the Houston Police Officers’ Union] blamed a 44 percent clearance rate for rapes on low staffing, adding that HPD has seven detectives working adult sex crimes, compared to 15 deployed by the Austin Police Department.

“There’s no question that we’re struggling in some of the investigative divisions,” Oettmeier said, responding to the union.

I’ve expressed my opinion on that no-investigations report before, and the questions I raised then have not been addressed, as far as I know. I am not willing to spend more money on hiring officers until we get some answers to how well HPD uses the budget and resources it has now. We may well need to hire more officers, and to increase the pay we offer to them. I’m perfectly willing to accept that possibility, and the possibility that we will need to spend more money on police, but I am not willing to accept anyone’s word for it. Show me how HPD has performed in comparison to its own recent past and to other large city police forces, and then we can talk staffing levels. I don’t think I’m asking for too much here.

Endorsement watch: Chron for Collier

Add the Houston Chronicle to the list of papers endorsing Mike Collier for Comptroller.

Mike Collier

Mike Collier

[Sen. Glenn] Hegar knows politics; Collier knows the numbers. In our view the choice is clear: Texas needs the numbers man, not a politician who wants to use the office as a stepping stone to higher office.

Texans know what can happen when a comptroller gets the numbers wrong. In January 2013, the outgoing comptroller, Susan Combs, produced a Biennial Revenue Estimate that showed she had grossly underestimated what the state’s revenue would be in the 2012-13 biennium. That mistake, which prompted Collier to run for the office, played havoc with budget choices during the 2011 legislative session, including a $5.4 billion cut in education funding that didn’t have to be made.

Hegar, who has said he was proud of the education cut, seemed to suggest during the GOP primary that his chief qualifications for serving as comptroller were his opposition to abortion and his enthusiasm for the 2nd Amendment.

Since then, he has offered suggestions about how to run the office more effectively – more transparency, more training, a top-down review of the office’s basic functions – but it’s our impression he’d be learning on the job, and probably biding his time for the next office to open up.

Collier, one of the more engaging and articulate candidates we interviewed during the campaign season, clearly has the experience to run the comptroller’s office. He also has ideas for making it function more effectively – among them, producing quarterly revenue estimates so that lawmakers would have a better understanding of the state’s fiscal health.

The Chron joins the Statesman and the Caller and recommending Collier. I feel confident they won’t be the last paper to do so. Again, does this mean much? No, certainly not in this day and age, and in a partisan election. But it’s not nothing, and every little bit of reinforcement for the message that Collier is easily the better choice helps. Look for my interview with him on Monday.

Collier keeps up the attack

I really like the way he’s running his campaign.

Mike Collier

Mike Collier

Democratic comptroller nominee Mike Collier says his Republican opponent Glenn Hegar bragged to a Houston-area tea party interviewer last year that he was proud of the Legislature’s 2011 budget cuts to public schools. On Friday, Collier released a web video to prove it.

“It’s embarrassing and unacceptable that Glenn Hegar takes pride in cutting education despite our extraordinary prosperity,” Collier said in a statement.

“Hegar does not share our values, and he poses a profound threat to something Texans have held dear since our founding, … a great educational system,” said Collier, a Houston businessman.

Hegar spokesman David White called Collier’s 40-second video “a distortion.”

Though Hegar, a state senator from Katy, joined other Republican lawmakers in approving $5.4 billion in cuts to schools in the budget-cutting session of 2011, “Senator Hegar believes in adequately funding our education system,” White said.

Collier’s “entire campaign amounts to a distortion of truth and negative campaign commercials,” said White, Hegar’s senior adviser.

You can see the ad and the video from the Montgomery County Tea Party event from which the quote was taken at the link above. Note first that Hegar doesn’t actually deny saying what Collier accuses him of saying. He just says it’s not as bad as Collier makes it out to be. When he says he supports “adequately funding our school system”, he doesn’t say what he thinks “adequate” means. Remember, the state’s argument in the school finance lawsuit is that the current level of funding, which is still billions less than it was before 2011, is perfectly (and constitutionally) adequate. Glenn Hegar isn’t going to argue with that. Funny how these guys will proudly say something to one audience, then try to obfuscate what they actually said when it’s presented to a wider audience, isn’t it? The more Hegar complains, the more you know Collier is hitting the mark.

Bell op-ed for eliminating the revenue cap

More like this, please.

Chris Bell

A decade ago, Houston voters restricted city property tax revenues to the combined rates of inflation and population increases. Like most arbitrary rules that politicians apply to math, this revenue cap sounds like a great idea until it meets the realities of a growing and expanding city.

During the Great Recession, property values remained largely constant while the global economy struggled and revenue to the city fell. City government tightened its belt, cutting spending and reducing its number of employees. Critical investments in our infrastructure, public safety and human services were deferred because we simply couldn’t afford them.

Today, with our strong economy and increased property values, we should be able to make those key investments we were unable to make. The only problem is that the revenue cap prevents us from doing so. We remain in the difficult position of either cutting services, laying people off, or having to seek voter approval to raise the tax rate – because our property tax revenues are capped.

Now, Houston budget writers are trying to recover from those bad choices. The revenue cap has created an artificial crisis for a growing population with rising real estate values. Instead of considering all the choices, Houston faces more hard, if false, choices in the near future.

Managing Houston’s ballooning debt obligations is going to squeeze services that will face an increasing demand. The better Houston does, the worse Houston will become. The revenue cap, as currently written, punishes Houston for its success, antithetical to our city’s core values.

See here for the background. You know I agree with what Bell says, so I’ll keep this brief. As a matter of philosophy, I’m opposed to stupid budget tricks, the vast majority of which offer little more than illusion, distortion, and perverse incentives. I hope to see more people join Bell’s call to repeal this bad law. I just wish more people had spoken against it back in 2004 as well.

TM talks to Mike Collier

He’s a really impressive candidate.

Mike Collier

Mike Collier

What I’ve been surprised by in the past two years is how much farther right the state has gotten, even compared to someone like Rick Perry, who has, I think, been conservative by any normal standard. When Combs came back in 2013 reporting an $8.8 billion surplus—to me, that was a red flag that we cut the schools budget $5 billion by accident in 2011, or perhaps not by accident; perhaps in an abundance of caution that should raise some eyebrows.

Here’s my perspective on that. When the Eighty-second Legislature sat in January 2011, she showed up with a Biennial Revenue Estimate that showed a deficit that surprised everybody. It should have been a red flag to everybody: maybe this estimate isn’t right. If you look at the state’s economy, even in the document itself where she transmits the news, page 1 says we’re going to have less in revenues, which leads to the deficit. Page 2 says the good news is that we grew in 2010 and we’re going to grow in 2011 and we’re going to grow in 2012 and we’re going to grow in 2013. Anybody with any finance sense should have said, “There’s something really wrong here.” And my opponent didn’t say, “I think there’s something wrong here.” I’ve gone back and looked at the revenues coming into the treasury at the time. If you did a quarter on quarter analysis—this past quarter versus a year ago—you would have seen that revenues were roaring in. She should have at least stopped and said, “How do we manage our way through this uncertainty?” I think it was politics, and unacceptable.

I tend to agree with that, although within the Lege, I think there were people on both sides who were trying to maneuver their way through it, because they were logistically constrained by what the comptroller had projected, or maybe they were politically constrained. So they wrote a budget knowing they would backfill the budget. But there were also some who genuinely didn’t understand, and maybe some who felt genuinely cautious because it’s better to have a surplus than a shortfall.

You know, Erica, what I think this all boils down to is that if you’re a politician, you struggle with all the political implications of what you do. But if you’re a chief financial officer and you’re not a politician, it suddenly becomes very simple. You think of it the way a real executive would think of it and say, “These are the numbers; these are the uncertainties; these are the possibilities.” You don’t have to go through all of that political stuff. But you have to have a comptroller who’s not a politician to do that. And that’s, I think, what makes this so compelling to Texas voters. When I tell the story, the response I get—this whole notion of what party am I running for—just dissolves when I tell that story.

Go read the whole thing, it’s worth your time. I believe it’s a bit naive, albeit quite normal for an idealistic first-time candidate, to think that you can remove political considerations from inherently political processes. Revenue forecasts rely on assumptions, and assumptions are colored by one’s beliefs. Be that as it may, some forecasters are justifiably more trusted than others, and that’s a function of transparency and fidelity to verifiable facts. I feel quite confident that anyone who listens to Mike Collier will come away feeling good about his ability to make reliable forecasts. The key is whether he can get enough people to hear what he has to say. I actually got a genuine snail mail fundraising pitch from Collier the other day, and I plan to send him a check. If he can raise $5 million or so, who knows? What I do know is that the more voices like Mike Collier there are out there, the better off Democrats as a whole will be this fall.

More details on the House budget

Consider this to be written in pencil, because it’s going to change.

More than $1.6 billion and disagreements on how much Texas should spend on public education and Medicaid separate the budgets proposed by the House and Senate.

The Senate budget proposal, passed 29-2 by the upper chamber last week, spends $195.5 billion, a 2.9 percent increase from the current two-year budget. The House budget, which is scheduled for a vote on the House floor on April 4, spends $193.8 billion, a 2.1 percent increase.

While the House budget is smaller, it spends nearly $1 billion more on public education. The Senate plan spends $604 million more on higher education.

The Senate also invests $2.1 billion more in health and human services. A large portion of that extra spending, $974.5 million, covers projected growth in costs associated with Medicaid such as more Texans enrolling in the program and general medical cost inflation. The House budget does not address those costs.

“Our bill does not include cost growth, does not include rate increases, and we need to address those things,” state Rep. Jim Pitts, R-Waxahachie and the chamber’s chief budget writer, said last week.

Assuming the House proposal passes that chamber, members from both the House and Senate will meet in conference committee to resolve differences between the two plans.

The final product is likely to be larger than what either side has proposed. Neither budget addresses large shortfalls in transportation or water funding, two issues many lawmakers have discussed tackling this session. Legislators have also said they are considering additional spending on tax reform and further reversing last session’s public education cuts.

Lawmakers are also waiting on an updated revenue projection from Comptroller Susan Combs. If she tells them there is more revenue available than what she estimated in January, lawmakers may feel more comfortable spending more.

As the story notes, don’t be fooled by the graphic for higher education. There was an accounting change that makes it look like there was a cut, but in actuality there’s more money being appropriated, so that’s good. The budget still isn’t where it needs to be to account for growth and need, and we suffered needlessly for two years thanks to Comptroller Combs’ lousy revenue forecast, but things are better and that’s no doubt why this session has been less contentious so far. I do believe the House will account for Medicaid and the Senate will bump up its public education spending, with both being abetted by a higher revenue projection for the biennium. Beyond that, watch for the usual shenanigans in the amendment and rider process.

More on sunsetting tax expenditures

I say again, this is a good idea that really needs to happen.

Sen. John Carona

The Texas tax code is rich with tax breaks. There are tax breaks for industries relocating to the state and for anyone with an Internet connection. Tax exemptions for groceries and bottled water. Tax holidays for back-to-school supplies. Tax exemptions for golf courses at private country clubs.

It adds up to at least $38 billion a year for the state’s major taxes and school property taxes, the comptroller estimates — hardly pocket change in a state that is expected to collect $80 billion in tax revenue in 2012-13. But no one claims to know for sure how much the state is forgoing because, by law, smaller taxes — those that raise $2.2 billion or less — are excluded from a biennial report by the state comptroller.

Sen. Rodney Ellis

“We have so many exceptions to the tax code, none of us really know how many we have, what they cost, if they make sense or they don’t,” said state Sen. Rodney Ellis, D-Houston.

To get a handle on all those tax breaks, Ellis, along with Dallas Republican state Sen. John Carona, has filed legislation to create a “sunset” process that would eliminate any tax break that isn’t renewed by the Legislature.

“I truly believe every conservative in this Capitol ought to be supportive of analyzing those special government giveaways on a regular basis,” Carona said. “And that’s all this bill seeks to accomplish.”

Just as the state now reviews every agency and its programs on a 12-year cycle, Ellis and Carona want every state and local “tax preference” reviewed on a six-year cycle. The comptroller would set the schedule, the Legislative Budget Board would present the facts, and the Legislature would be forced to reaffirm the tax break or it would die.

Both lawmakers expect that the Legislature would reaffirm most of the tax breaks, including the popular homestead exemption and exclusions for groceries, medical and dental services, and medicines, for example.

But a periodic exam invariably would raise questions. Should golf courses at private country clubs be appraised at less than 10 percent of the land’s market value? Should retailers be paid — some say overpaid — for remitting sales taxes on time? Is there still a need to encourage the spread of the Internet by exempting sales tax on the first $25 of your monthly bill?

Then there are the oddities of the sales tax. Soda is taxed; bottled water isn’t. The services of landscape architects aren’t taxed, but landscape services are. Food meant to be eaten at home is exempt, but not food intended for immediate consumption.

And so on and so forth. If it helps, think of these exemptions and exceptions and what have you as expenditures, because that really is what they are. Expenditures get plenty of scrutiny – too much, sometimes – unless they’re tucked into the tax code. We could have recouped about $2 billion from ending unnecessary tax expenditures back in 2011, but of course the Republicans weren’t interested in cutting that kind of spending. It would be nice if there were some more interest in it this time around. If nothing else, we’re almost certainly going to need to find some more money to comply with the latest school finance lawsuit ruling once the Supreme Court has reviewed it. This is a sensible place to start looking. See here for more.

Senate committee restores some money to public education

Emphasis on the “some”.

Texas public schools would get back a chunk of the $5.4 billion in state funding they lost two years ago under a budget proposal adopted by the Senate Finance Committee on Thursday.

But they probably should not expect much more than the $1.5 billion the committee added to the 2014-15 state budget, said Chairman Tommy Williams, R-The Woodlands.

“It is going to be very difficult given the other demands we have in the budget to add any more,” said Williams.

Williams plans to pay for all the demands, including water projects, highways and some form of tax relief, without exceeding the constitutional spending cap. That would leave about $1 billion of projected state revenue over the next two years unspent. Lawmakers could exceed the cap with a simple majority vote in both the House and the Senate, but there is little appetite within the GOP to do so.

Many Republicans are also reluctant to increase education spending until the Texas Supreme Court rules in the pending school finance litigation. A district court judge found the school finance system unconstitutional earlier this month.

“Based on the politics of the state, we will not see the $5.4 billion that was cut last time go back into” education, said state Sen. Royce West, D-Dallas.

More from the Trib:

The money would come on top of the proposed $35.1 billion in general revenue for public education, which unlike the 2011 budget did, accounts for new students expected to enroll in the state’s public schools. The additional funding approved Thursday would also restore some of the $5.4 billion reduction in state funding that lawmakers passed during the last legislative session. The full Senate must still approve the Finance Committee’s recommendation.

During Thursday’s hearing, lawmakers on the committee suggested they might fight for more education funding, including money for measures like early college high school programs and the Student Success Initiative, which provides remedial help for students who fall behind.

The $40 million for pre-kindergarten — which Sen. Tommy Williams, R-The Woodlands and chairman of the committee, referred to as a “down payment” — would replace a fraction of the $200 million in competitive grants the Legislature eliminated in 2011 for full-day programs for low-income children. The funds would be distributed proportionally to school districts based on eligible student populations.

Again, note the partial and incomplete nature of this. The Observer highlights one salient feature.

Finance chair Tommy Williams (R-The Woodlands) said the new amount would mean “no net revenue losses for any school district for 2014.

You may recall that HISD was talking about raising their tax rate to make up for an operational shortfall next year, which was caused by the 2011 budget cuts. If this extra funding, which keep in mind only represents 28% of the $5.4 billion that had been cut in the first place, prevents the need for that, it would at least be something. That question hasn’t been answered yet.

Anna Eastman, president of the Houston Independent School District’s board, called the Senate panel’s decision a step in the right direction.

“It’s good news and I’m glad to see the state making this effort, but I still think it doesn’t come close to restoring the large cuts made two years ago,” Eastman said. “We’re at a place right now where we have a big gap to fill to maintain what we’re doing.”

Until that gap is closed, Eastman said, HISD cannot consider hiring new teachers or taking on additional costs.

Texas State Teachers Association President Rita Haecker said lawmakers can restore all $5.4 billion cut from school spending in 2011 “and meet other important state needs without raising anyone’s taxes.”

Education Committee Chairman Dan Patrick, who also serves on Finance, disagreed, citing other pressing needs, finite dollars and a constitutional spending cap. The $1.5 billion increase is recommended on top of the committee’s starting-point budget, which accounted for student enrollment growth.

“We don’t have those dollars. It’s not a choice,” said Patrick, R-Houston. Asked whether it may be an option to exceed the spending cap, which would require a majority legislative vote, Patrick said, “Not in my world.”

So yes, it is a choice, just not one that Dan Patrick wants to make. But it’s very much a choice, and don’t let anyone mislead you about that.

Assuming this survives the full Senate and the House, this is good in the sense that it’s not bad, but it’s not good in a quantitative sense. How can it be, when schools are still down almost three quarters of the original total? I’ve been trying to come up with a snappy analogy for this, but really, what it comes down to is simply the fact that the Lege cut a bunch of money last time, and has now restored just enough of it to keep things from getting worse, but not enough to make anything better. We’re stuck with this until the Supreme Court rules on the school finance appeal. Just take a look at that chart I embedded above of inflation-adjusted dollars per student, provided by the office of Rep. Gene Wu, and you’ll see how little that $1.5 billion will do.

On a side note:

The committee left just one piece of the education budget in limbo: funding for a new charter school authorizer that would be created under Sen. Dan Patrick’s Senate Bill 2—a seven-member appointed board to oversee the state’s charter schools.

It was a telling diversion in an otherwise agreeable budget meeting to watch a pair of Democratic senators try to make Patrick, the usually tight-fisted tea party favorite, defend the extra cost of his school reform plans.

Dallas Democrat Royce West began by saying he wasn’t convinced Texas should create a separate board for authorizing charter schools. That’s already the State Board of Education’s job, West said. He worried about putting charter school approvals in the hands of an unelected board and questioned how they’d be held accountable.

The move clearly irritated Patrick, who said he wished West had told him about his reservations sooner. (West said he already voted against it once in their workgroup, which should have been sufficient notice.) Members of the charter school authorizing board, Patrick said, would probably need Senate confirmation, and might answer to the State Board of Education—though those details aren’t final yet.

SB 2 is still pending in Patrick’s education committee after a hearing last week. The Legislative Budget Board has estimated Patrick’s bill would carry other huge costs to the state, growing every year—from $24 million in 2014, up to $55 million in 2018. Those costs include students coming from private or home-schooling into a charter school, new funding for charter school buildings, and state employees to oversee all the new schools.

Today’s argument focused on what the new Charter School Authorizing Authority would cost.

“Why would we turn to more government as a solution?” Houston Democrat John Whitmire asked Patrick. “Because I know that’s not your philosophy; I do listen to you closely.”

“Instead of fixing the agency that is in charge of this responsibility, you want to turn and create a new bureaucracy, more state employees, and I promise you this [charter school authorizer] budget will not remain where it is,” Whitmire said.

“I will bet you, whoever evaluates us,” Whitmire said, “this will be a measurement by the folks that advocate less government, that we’re creating another governmental entity. It is what it is.”

I wouldn’t take that bet.

Supplement this!

Time for the Lege to pay a few past-due bills from 2011.

That’s where a supplemental budget comes in. It is literally a second budget added to the original one lawmakers approved in 2011. It’s not an unusual course for lawmakers to take to address lingering IOUs, but this year’s efforts are becoming more complicated and politically fraught than in the past.

For starters, lawmakers are planning at least three bills to address the state’s supplemental needs instead of the usual one. The first measure needs to be signed by Gov. Rick Perry in March so the state can pay billions in upcoming health care bills on time. A second supplemental bill will address the state’s costs from fighting wildfires and providing prisoner health care, but it won’t need to pass so quickly. A third measure, also not a rush item, will reverse $1.75 billion in delayed funds to school districts.

State Rep. Jim Pitts, R-Waxahachie, chairman of the House Appropriations Committee, said separate bills were needed to ensure that the emergency item makes it to Perry’s desk quickly.

Texas has $6.8 billion of unmet costs in the current budget, nearly all of it related to Medicaid and public education, according to the Legislative Budget Board. Lawmakers plan to use most of the extra $8.8 billion the Texas comptroller reported collecting from this biennium to pay those costs.

One way of thinking about this is that if Comptroller Combs had given us an accurate revenue estimate in the first place, we we could have dealt with all this in 2011 instead of pretending it didn’t exist for the purposes of “balancing” the budget. This is also a reminder, once again, that the concept of “balancing” the budget as we do in Texas is a fiction imposed by an artificial deadline.

The House Appropriations Committee passed its first supplemental bill on Monday, and Pitts plans to bring it to the House floor for a vote early next week. The bill, House Bill 10, has “emergency” status, a parliamentary designation that allows legislators to vote on the measure during the first 60 days of the session if Pitts can get the support of 120 of the 150 House members.

“It’s the first time I’ve ever had an emergency supplemental,” Pitts said.

The emergency stems from the last Legislature’s decision to fund Medicaid and the Children’s Health Insurance Program for only 18 out of 24 months in the budget cycle, a move that allowed lawmakers to delay $4.5 billion in spending from state coffers. HB 10 will fund those programs for the full two years with $4.5 billion in state money, which will automatically trigger an extra $6.6 billion in federal funding.

The bill needs to get to Perry’s desk by early March so that health care workers aren’t left in the lurch, Pitts said.

“If we do not pass House Bill 10 for Medicaid, the doctors, the hospitals, the nursing homes will not be paid after the middle of March. … That is the emergency,” Pitts told his colleagues on the House floor Monday. The bill also includes $630 million owed to schools districts.

The emergency is one part the result of Combs’ inaccurate revenue projection, and one part the Republicans’ fanatical refusal to find new revenue. Most likely, these bills (about which you can learn more here) will pass, but you never know what the bomb-throwers in the GOP caucus might try to do. You may be wondering about the issue of school finance, for which Democrats have tried to get the cuts from 2011 restored. That’s not going to happen, but some kind of partial restoration may be possible.

House Appropriations Chairman Jim Pitts, R-Waxahachie, said that lawmakers have just under $1 billion available to spend without hitting the constitutional spending limit on the current two-year budget. He and a group of lawmakers, which includes House Speaker Joe Straus, R-San Antonio, are in talks to add some of that money to a supplemental spending bill expected to reach the full House next month.

“We’re still working on it,” Pitts said Thursday.

State Rep. Donna Howard, D-Austin, said the discussions are looking at adding public education money both to the current budget and the next two-year budget cycle.

[…]

During debate over the rule, Pitts told lawmakers the second supplemental bill may include funding for public education. That bill is also expected to address unexpected costs related to recent wildfires and prisoner healthcare.

State Rep. Mark Strama, D-Austin, urged Pitts to make clear publicly as soon as he could how much more money school districts could expect so they could properly plan to use it before the end of the fiscal year. He said many districts might use some of the funding to hire tutors for students who need to retake the STAAR end-of-course exams.

“There is time for us to make a meaningful difference in the resources available to them,” Strama said.

The rule in question was one that forbade any amendment to HB10 that added to the total cost without any offsetting cut elsewhere. We’ll see what comes of this. EoW has more.

Crocodile tears over the school finance lawsuit

This is little more than blaming the victim.

Sen. Tommy Williams

A state judge is expected to rule next week on whether the school finance system is broken, but lawmakers aren’t anywhere near ready to launch repairs.

Instead, Republican leaders plan to wait for an appeal and a final Texas Supreme Court ruling so they know exactly what they are forced to do.

In a twist, some of their rhetoric seems to suggest school districts have only themselves to blame for the postponement of hopes of restoring funds cut back from education two years ago.

The delay in acting is business-as-usual for the Legislature, which as an institution typically waits as education funding problems get bad enough to prompt a lawsuit by school districts. Then lawmakers wait some more, until the state’s highest court outlines the parameters of the mess they must fix.

Senate Finance Chairman Tommy Williams, R-The Woodlands, said at a hearing last week that lawmakers should pay attention to those who want funding restored for key education programs.

But Williams also stressed the need to weigh that against other education-related funding demands, and he repeated his belief that the ongoing lawsuit makes it difficult for lawmakers to put in additional money for anything other than enrollment growth.

He also seemed to suggest that school districts used the courthouse as an alternative to discussion, odd to those who remember quite a school funding debate in the 2011 legislative session.

“I wish the school districts would sit down and talk to us,” Williams said. “It really ties our hands when they file a lawsuit.”

Please. There was plenty of talk two years ago when the Lege slashed $5.4 billion from public education. How much did you or your colleagues listen then, Tommy? It’s only now that the schools may have the upper hand that the Legislature is talking about the importance of having a dialog. Well, it’s too late now, but I’m sure after Judge Dietz issues his ruling next week there will be opportunity anew for discussion. Let’s not waste it then.

Another reason why spending caps are a bad idea

There are many reasons why, but this is one we haven’t encountered before.

Several political observers well-versed in the state’s finances say that lawmakers could hit the state’s spending limit this session, complicating efforts to access the $11.8 billion in the state’s Rainy Day Fund.

The Texas Constitution says the government can’t grow faster than the state’s economy. That growth rate is always set ahead of the session based on the estimated rate of growth in Texans’ personal income over the next two years. Passing a budget that busts the limit requires support from a simple majority of the House and Senate.

While it’s a simple idea, in practice, the constitutional spending limit is about as clear as mud. The exact amount of the spending limit for the next budget remains a moving target, and there is disagreement on some aspects of how the limit is meant to be applied, particularly whether any spending from the Rainy Day Fund is subject to the limit.

“Apparently there’s a lot of confusion out there about what counts and what doesn’t,” said Eva DeLuna Castro, a senior budget analyst for the liberal Center for Public Policy Priorities in Austin.

This year, lawmakers find themselves contending with reaching the limit largely because of the Texas economy’s rapid swing from a recession to a robust recovery. Cuts made in 2011 were based on estimates from the comptroller’s office that revenue would come in at low levels. The rebound happened faster than expected, leaving the current Legislature with a large surplus and calls to spend some of it on a range of expensive proposals, including tapping the Rainy Day Fund to restore billions in education cuts made last session.

“One can argue that we really didn’t need to make many of the cuts in the budget that were made in the last legislative session, including the $5 billion in cuts to public education,” said education finance expert Lynn Moak. “But to get it back, you have to bust the spending limit.”

[…]

In November, the LBB voted to set the growth rate in spending at 10.71 percent. Several people watching the budget process predict that rate should lead to a final spending limit that will allow lawmakers, if they choose, to spend virtually all of the available general revenue this session, expected to be roughly $95 billion after lawmakers pass a supplemental budget for 2012-13.

The $11.8 billion projected to be in the state’s Rainy Day Fund is a different matter. House officials have said the limit applies to most types of spending that lawmakers have proposed for the fund, though certain kinds of tax relief would be exempt. Dale Craymer, president of the Texas Taxpayers and Research Association, helped write the legislation that created the Rainy Day Fund in the late 1980s, and he said that’s not what the lawmakers who originally approved it bargained for.

“It was never the intent that the spending limit apply to the Rainy Day Fund,” said Craymer. He agreed the issue is now a point of debate.

Well, this is the sort of thing that happens when you let ideology override policy. Surely no business would allow itself to be handcuffed by the inept forecast of an incompetent financial officer, but that appears to be the position Texas has put itself in. The good news, as the Statesman notes, is that so far at least legislators don’t appear to be willing to tie themselves down in this fashion. Rep. Donna Howard has filed a bill to clarify that the Rainy Day Fund is not subject to this spending cap; the bill in question is HB652. There’s hope that we can work around this without anything too dumb happening.

This assumes that Rick Perry doesn’t make the situation worse by pushing through an even tighter cap, because doing stupid and harmful things like that is his job. Scott McCown explains why this is such a bad idea.

If a family budgeted this way, no matter how much money the family made, it could never improve its life. Imagine sitting down to write your first family budget. Naturally it is lean, but you have dreams of a better future — a safer neighborhood, a graduate degree. Under the governor’s proposal, though, even as your income increased, you would be stuck living under that lean budget adjusted only by family growth and household inflation. You could never make your life better.

Not being able to make things better would be a big problem for Texas. However you measure it, Texas ranks low in spending. Our systems for education, water, transportation, mental health, child protection, and many others are struggling. If we could adjust our current lean budget only for population and inflation, we could never make major new investments to improve our state.

The governor’s proposal has another big problem: Not only could a family not improve its life, periodically things would actually get worse. As the Great Recession reminded us, income doesn’t always go up. Sometimes breadwinners suffer a pay cut or lose a job, and a family has to cut its budget. Under the governor’s proposal, this lower level of spending would become the new base.

For a family, that would mean if it made $35,000 last year, but only $30,000 this year, its budget for next year would have to be based on the lower figure even if it made $40,000. Yes, even after the family’s income recovered, it couldn’t increase spending. No family would budget in a way that prevented recovering from a setback, and no state should, either.

The governor’s formula also uses the wrong measures of population and inflation. A family budget isn’t based merely on family size, but on family composition — whether the family is budgeting for a baby, for a child in college, or to care for grandma matters a lot to the bottom line. Likewise, a state can’t merely consider growth in total population; a state must consider who it is actually serving. For example, in Texas the rate of elderly who potentially need assisted living through Medicaid is projected to grow twice as fast as our total population between now and 2040.

And just as a family wouldn’t base its budget on government inflation, a state shouldn’t base its budget on household inflation. Families and governments buy different “baskets” of goods and services. A much higher portion of the state budget, for example, goes to buy health care, which is increasing in cost faster than household inflation. By using the wrong measures of population and inflation, year after year, the governor’s proposal would force Texas to do less and less for fewer and fewer.

As far as Perry and his cronies are concerned, doing less and less for fewer and fewer is a feature, not a bug. As always, now is an excellent time to let your State Rep and State Senator know that you want them to work on solving Texas’ problems, not making them worse. It’s not their job to tell future legislators what they can and cannot do. EoW has more.

The revenue estimate is in

And under normal circumstances it would be very good news.

Texas Comptroller Susan Combs, laying out the parameters for state spending on the eve of the legislative session, said Monday that the rebounding Texas economy gives lawmakers $8.8 billion unallocated in state coffers for this budget period and an improving picture for the next two years.

The extra money has been eagerly anticipated by state lawmakers who two years ago slashed spending in the face of a budget shortfall.

In the 2014-2015 budget period, the state’s general revenue from taxes, fees and other income is estimated to reach $96.2 billion, with $3.6 billion earmarked for future transfers to the rainy day fund, Combs said.

The total $101.4 billion available for general-purpose spending through 2015 – taking into account the predicted $8.8 billion balance and future revenues – is 12.4 percent greater than the corresponding amount of funds available for the current budget period, according to the comptroller’s office.

To clarify what this means, Comptroller Combs is forecasting that the state will generate $96.2 billion in revenue for the next biennium. Of that, $3.6 billion is earmarked for the Rainy Day Fund, which leaves $92.6 billion. However, Combs is also saying that her forecast from two years ago was too low by $8.8 billion. You may recall that two years ago she predicted there would be $76.5 billion in revenue for 2012-2013, with $4.3 billion needed to close a shortfall from the 2009 budget; the Rainy Day Fund was used to cover most of that shortfall. In actuality, there turned out to be $85.3 billion. Oops!

You may wonder why Combs was so far off in her estimate. The DMN tries to be sympathetic.

Nobody is blaming Combs, but all recognize a two-year revenue forecast is not, by any means, an exact science.

“You’re always wrong,” said Billy Hamilton, revenue estimator when Bob Bullock was comptroller. “It’s just a matter of by how much.”

The Texas Constitution requires a balanced budget, so lawmakers can plan to spend only as much as they’re projected to bring in. A large portion of revenue comes from state taxes, which until recently had been on a relatively stable 40-year pattern, said fellow number cruncher and retired fiscal analyst Stuart Greenfield.

But in the last four years, the state’s economy has been especially volatile. Greenfield said tax collections have declined four times since the new millennium, most recently in 2010, but has been higher than average the last couple of years.

Hamilton, now the interim chief financial officer for Capital Metro, Austin’s public transportation provider, estimates Combs was off by $6 billion to $8 billion in the tax revenue estimate for the current biennium. Greenfield says it’s worse, predicting tax revenue will be closer to $11.5 billion more than what Combs suggested.

Officials from the comptroller’s office declined to weigh in on Greenfield or Hamilton’s forecast, but spokesman R.J. DeSilva said that with growth in the oil and gas industry and car buying, the revenue for fiscal 2012 is up $3.7 billion from her forecast, and lawmakers will have the most up-to-date projections when they convene.

Greenfield said tax collections have held at 10 percent since the beginning of fiscal 2011, peaking in October 2011 at close to 16 percent. Hamilton says the result is “we’ll be swimming in money.”

“It’s going to be a big number because the sales taxes are going like gangbusters and performing at a rate that nobody in their right mind would predict,” Hamilton said.

This is all well and good, but the bottom line of Combs’ misfire is that the Lege cut billions of dollars from the budget that ultimately didn’t need to be cut. We may be able to do something good with this extra money now, but we can’t go back two years and un-fire all those people who lost their jobs as a result of the Republicans’ budgetary chainsaw massacre. We can’t go back and un-shortchange all the school districts and students that took those cuts right where it hurts. It’s all so much bloodstained water beneath the bridge.

Given that we can’t un-screw the past, the best thing we can do is work to make things better going forward. This is what many people, such as State Rep. Mike Villarreal, State Sen. Jose Rodriguez, and the Texas AFT, both of whom are calling for the restoration of the $5.4 billion that was cut from public education last session, are doing. The problem, and the danger, is that some people are saying that what this means is that we have too much money.

Can Texas afford to eliminate its state business tax?

As the federal tax bite grows, there is a nascent movement at the Texas Legislature to phase out the tax, commonly called the margins tax, without replacing it.

Business leaders and some conservative lawmakers say the tax, which taxes gross receipts as opposed to profits, is complicated and not applied evenly. Other critics of the tax say dropping it would make the state’s business climate even more attractive.

At first blush, eliminating the tax without a replacement might seem improbable. The tax raised $4.5 billion in 2012 and accounted for 10.3 percent of the state’s total taxes, according to the comptroller’s office.

Budget writers are already warning that any “surplus” from the rebounding economy must be used to restore $11 billion in cuts to public education and other programs from the 2011 legislative session and to pay for the accounting gimmicks lawmakers used to sidestep more cuts and tax increases. And the courts are hearing another constitutional challenge to the school finance system — similar to the one that prompted the 2006 creation of the margins tax — that could make more demands on the state pocketbook.

State leaders are also talking about weaning themselves from $5 billion of dedicated taxes and fees diverted from their intended purposes over the years to help balance the state budget.

Finally, more business leaders are expressing concerns about the need to invest in education, workers’ training, water, transportation and other long-term needs essential for a good business climate.

Despite those hurdles, Will Newton, executive director of the Texas chapter of the National Federation of Independent Business, or NFIB, argued that public services can’t expand without a growing economy.

“We’re starting the debate in the wrong way,” Newton said. “We need to ‘invest’ in the private sector to grow (state) revenue.”

Let’s be clear here and state that the NFIB, which was and continues to be a rabid opponent of the Affordable Care Act – they were, in fact the named plaintiff in the lawsuit that sought to declare the ACA unconstitutional – is acting solely in its own interest. They’re seeking a tax cut, as we all do, and hoping that we’ll forget that the margins tax, however flawed and kludgey it may be – was designed to help pay for a one-third cut in property taxes. How do they expect us to fund that massive expenditure now? By assuming, in the words of Molly Ivins, that it’s nothin’ but good times ahead. I mean, sure, we’ve had two ginormous revenue shortfalls in the last decade, but seriously, who expects that to ever happen again? No amount of empty blather about “investing” should distract from this point.

One more point: As the Trib notes, even with this healthy revenue forecast, we’re still behind where we ought to be.

“$108 billion is what it takes to actually undo the last session and get us back to where we used to be,” said Eva DeLuna Castro, senior budget analyst for the Center for Public Policy Priorities, a left-leaning Austin-based think tank.

Early in the session, lawmakers are expected to commit several billion dollars to paying off bills that were purposely left unpaid at the conclusion of the 2011 session, including nearly $5 billion for Medicaid. That leaves the actual size of the surplus unclear.

“A lot of that gets sucked up right away just paying for the last session,” Castro said.

One hopes that the nearly-as-fat-as-it’s-allowed-to-be Rainy Day Fund would be tapped for that, since that’s what it’s there for, but the odds that the votes are there for that are basically nil. But this is the way we need to drive the discussion. We’re on more favorable turf now, let’s take advantage of it. Trail Blazers, the CPPP, and TM Daily Post have more, and you can see the official estimate here.

Two minus five is still less than zero

It’s nice that Speaker Joe Straus wants to restore public education funding, but let’s be clear about what that means.

Joe Straus

Texas House Speaker Joe Straus said Friday he’s committed to pumping billions of dollars back into the state’s public schools, even though the Legislature approved historically deep cuts just last year.

In an interview with The Associated Press, the San Antonio Republican said “we will fund enrollment growth going forward,” which he estimated will be a $2 billion item when lawmakers head back to work Jan. 8.

“The good news is we’re dedicated to doing that, committed to doing that,” Straus said.

Texas’ booming population means its current 5 million-plus public school enrollment increases by as much as 80,000 every year. But the 2011 legislative session failed to provide enough new funding to keep up with enrollment, instead passing $5.4 billion in overall cuts to public education and classroom grant programs for things such as pre-kindergarten programs — sparking the state’s first decrease in per-student spending since World War II.

Straus wouldn’t say he will push to find the additional $5.4 billion necessary to roll back all of those funding cuts. He did say, though, that since Texas’ economy has weathered the recession and is strong again, lawmakers have more options.

Covering growth for this two year period and going forward is one thing – in fact, it’s what the Lege always used to do. Putting schools back where they would be if the $5.4 billion in cuts from the 2011 had never occurred is another, and it’s hard for me to see how adding in $2 billion will do that. The Lege changed the way the basic funding formula was calculated. Is Speaker Straus talking about reverting that back to how it was, or coming up with a better formula, perhaps in anticipation of the ruling in the school finance lawsuit, or is he talking about a one-time band-aid? What about the money that was cut from pre-K, is that in scope here or not? I’m just trying to understand whether this is a real attempt to undo something bad, or just a little sleight of hand to make it look like such an attempt. We can’t tell from this story. Perhaps Democrats can get some clarity on this as they discuss whom they might support for Speaker this session.

One more thing:

More than 600 school districts have sued the state for failing to meet Texas constitutional mandate to fund public schools. Most observers expect them to win, but it could be years before the case works its way through the appeals process.

Actually, as I understand it, there’s just one appeal, to the Supreme Court, and it is supposed to be expedited. The expectation is that the Supreme Court will make its ruling in 2014, in time for the 2015 legislative session.

How the so-called “fiscal cliff” might affect Texas

There is of course a very simple way to avoid this.

Best when done in Acapulco

If President Barack Obama and congressional Republicans cannot avoid tripping off the edge of the so-called fiscal cliff, then the Texas budget could be more than $1 billion short over the next two years.

But fewer federal dollars flowing through the state budget would be just part of the problem for Texas.

The state could feel an even bigger pinch because Texas is so dependent on other federal dollars associated with defense, homeland security and border protection, said Eva DeLuna Castro, senior budget analyst for Center for Public Policy Priorities.

The potential for cuts to the state budget and to direct federal spending in Texas is serious enough that state lawmakers plan a hearing on the issue next week, with testimony invited from state agency officials and others about the possible impact.

Federal spending in Texas is about one-fifth of the total economy, DeLuna Castro said. Based on 2010 figures, $226 billion federal dollars were spent in Texas. Social Security made up $43 billion of the spending; Medicare accounted for $16 billion, and defense spending totaled $59 billion, DeLuna Castro said.

As far as the state budget goes, automatic federal spending cuts – which would be triggered Jan. 2 by the sequestration outlined in the Budget Control Act of 2011 — could reach $1.1 billion and affect 13 state agencies, according to the state’s Legislative Budget Board.

Just as a reminder, this dispute is over 1) the Republicans’ refusal to approve an extension of the Bush tax cuts for families making under $250,000 a year unless those making over $250,000 a year get the same extension for the top tax rate, and 2) the stupid “sequestration” budget cuts that the Republicans insisted on as part of the deal they made when they took the debt ceiling hostage in 2011. They’re holding out on saving tax cuts for the wealthy even though they have no leverage since the law will change and all tax cuts will expire if nothing happens by the end of the year and the voters made their preference clear last month in the hope of reaching a “grand bargain” on deficit reduction that gives them everything they want. All that needs to be done is for the House to pass the bill that the Senate already passed to extend the tax cuts for all but the top bracket, and there’s a discharge petition in the House that needs 26 Republican signatures to force a vote on that. The sequestration cuts can be easily undone as well, it’s just a matter of the GOP accepting the results of the election and the reality that tax rates are going up no matter what Grover Norquist says. This isn’t rocket science.

Plaintiffs rest their case in school finance lawsuit

Phase one is over.

Hundreds of districts suing the state over its school finance system wrapped up their case Wednesday with testimony that largely blamed the Legislature for creating the current funding crisis that stripped away an unprecedented $5.4 billion from public schools.

After more than six weeks of testimony, the four plaintiff groups of school districts put on their final witness, who summarized the main arguments against the funding system and asserted school districts will never be able to properly educate all their students without major changes.

On the list of the biggest challenges for schools are a rapidly increasing number of lower-income students, a new testing program that is already seeing widespread failures, the inability of districts to raise enough local tax revenue, and a cycle of funding cuts that is thinning teacher ranks and increasing class sizes.

John Folks, former Superintendent of San Antonio’s Northside ISD and 2011 Superintendent of the Year, was the closing witness for the school districts.

Folks discussed the impact of education budget cuts on Northside ISD, where officials cut spending by $61 million before the Legislature took away another $85 million for the past two academic years.

The district has cut computer specialists, library assistants, gifted and talent teachers, counselors, coaches, special education teachers and classroom teachers. In all, 80 elementary teachers, 80 middle school teachers and 64 high school teachers were eliminated, Folks told Judge John Dietz.

“We went from 6,218 teachers in 2010-11 to 5,972 in 2011-12 at a time when our enrollment increased by 2,500 kids,” he said, adding that Northside had to increase elementary class sizes for the first time.

Folks also described the structural deficit the Legislature created while passing the 2006 school-finance bill. Legislators miscalculated when they reduced school property taxes and replaced the revenue with a new business tax, which fell “far short” of what’s needed to replace the property tax cut, he said. The problems were compounded when lawmakers used one-time federal stimulus money in 2009 to fill the revenue hole.

“It (stimulus funds) was one-time money. We urged them not to use that money to fill the hole because it was going away. They were told not to put that money into recurring expenditures, but that is exactly what the Legislature did,” he said.

Like most Texas school districts, Northside’s student population is undergoing a major transformation. In the past 12 years, the district’s percentage of low-income students has jumped to 54 percent from 41 percent.

“As you get more of those students in your district, you have to have the resources needed to help those students be successful. I hold them to the same standard as I do other students who are not low-income or limited-English proficient,” Folks said.

He said districts have limited options to deal with their recent funding reductions.

“There is no meaningful discretion anymore,” Folks said, explaining Northside ISD has not held a tax-rate election to raise its current maintenance and operation rate of $1.04 because it has been forced to have a bond election every three years to handle tremendous enrollment growth requiring new schools.

And now Phase Two begins.

Shelley Dahlberg, lead counsel for the state, said during opening statements in late October that the school districts must prove that they are spending their money efficiently on providing students foundational knowledge rather than on extras such as iPads, teacher aides and sports.

“They make big, big budget decisions within their discretion,” Dahlberg said.

The Legislature has delegated a substantial amount of local control to the school districts when it passes on public money to them, Dahlberg maintained, so it would not be fair to fault the state for the districts’ failure to use that money wisely.

Speaking directly to state District Judge John Dietz, Dahlberg added: “I would ask you to look at district choices.”

[…]

Of the districts’ arguments, the most sweeping — and difficult to prove — is that the state has failed to provide adequate funding to ensure that students can meet the increasingly rigorous academic standards mandated by the Legislature.

In the 2005 school finance ruling, the state Supreme Court seemed to put the Legislature on notice that it could be headed for trouble absent reforms. The court cited substantial evidence that “the public education system has reached the point where continued improvement will not be possible absent significant change, whether that change take the form of increased funding, improved efficiencies, or better methods of education.”

But the high court did not uphold the district court’s finding that that system violated the Texas Constitution.

“An impending constitutional violation is not an existing one, and it remains to be seen whether the system’s predicted drift toward constitutional inadequacy will be avoided by legislative reaction to widespread calls for changes,” the Supreme Court wrote.

The state has homed in on that court language to suggest that the districts are jumping the gun in bringing the case so early in the roll-out of the new, more rigorous testing and accountability system.

So the state’s argument is basically “it’s too early to say that there are any problems, and if there are we can fix them later”. That may be true, but it won’t be of much use to the students who will be ill served until “later” arrives, whenever that is. Still, the state doesn’t have to have a compelling case, because the burden of proof is on the plaintiffs. That’s always a high bar to clear. We’ll see how much of a dent the state can make in the districts’ arguments.

Eight billion dollars

That’s how much is needed per year to make public education whole.

Lynn Moak

Lynn Moak told state District Judge John Dietz that it will take more than $8 billion a year in additional money to get students on target to graduate and to meet new college and career readiness standards. About 150,000 9th-grade students, or 47 percent of last year’s freshman high school class, are not on track to graduate, according to the state’s more rigorous academic standards, Moak told the court.

“We are in a current crisis. The crisis gets worse in the future,” Moak said during a break in the hearing. “The crisis is sufficient now to demand action.”

[…]

Moak told Dietz it will take about $6 billion in additional money per year to adequately educate Texas students, on top of restoring $2.65 billion per year in education cuts that lawmakers made last year to help balance the budget.

“If we don’t see improvement, you will see even larger numbers of students at risk of not being able to graduate,” Moak told the judge, who said he planned to grill policy experts on both sides.

[…]

The new accountability standards are hitting low-income students the hardest. Only 40 percent of them have passed all of the 9th grade tests, which are required for high school graduation.

The number of low-income students increases each year and now makes up more than 60 percent of Texas’ 5 million K-12 public school enrollment. Low-income students generally cost more to educate because many arrive in kindergarten or first grade with less-developed vocabularies and other skills than children from middle- and upper-income families.

Republican legislators last year cut $4 billion from public education formulas and another $1.3 billion in special grants, such as full-day Pre K programs for low-income children and student success initiatives for tutoring and summer school programs to help struggling students.

Moak said he could not assess the impact on schools and students.

“I do not know of any significant legislative review to determine if these programs were not needed or were not producing good results,” he said.

Spending per student in Texas peaked at $7,415 in 2009, and has dropped to $6,293 in 2013, Moak said.

I don’t expect there to be any significant legislative review. I don’t think the authors of these cuts want to know what their effect was. The Statesman notes that while only 40 percent of low-income kids are passing the required tests, 69% of non-economically disadvantaged students are passing. You can expect that gap to grow.

All this came from direct testimony – the state had not had the chance to cross-examine Moak as of the writing of those stories – so there will likely be more of these depressing numbers to come. The Moak, Casey website is a pretty good resource for following the trial on a blow-by-blow basis. Here’s an interesting tidbit from their embedded Twitter feed: “Moak: from 10-11 to 11-12 school year, 26.5k fewer teachers and staff while Texas schools added 44.5k students #schoolfinancetrial #txlege”. With numbers like that, what happened next should not surprise us.

Cuts are not increases, no matter how you spin it

This is the Chron overview of HD134, which is once again the highest profile legislative race in the county, in part because it’s a referendum on the 2010 election and the cuts to public education funding that resulted from that election.

Ann Johnson

In an area that takes great pride in its schools, [Rep. Sarah Davis] went along with her fellow Republicans and voted for major cuts in education funding.

As a result, District 134 is one of the few House seats believed to be in play. Although Davis has the incumbent’s edge in a Republican-leaning district, the race has become one of the most competitive – and expensive – in the state. Both candidates are spending freely, blanketing the district regularly with mailers.

“We knew there were funding cuts coming down the line for Texas schools,” said Sue Deigaard, a stay-at-home mom, “so, as a community, on a grass-roots level, we organized, we engaged other parents to give Sarah Davis the support as a legislator to say, ‘Hey, as you’re casting your vote on the budget, you have hundreds of parents, 400 petitions, hundreds of letters, phone calls, emails in a district you won by 750 votes.’ ”

Their message, Deigaard said, was “to, basically, give her the support, so that she could vote in a different direction from her party. And, as her record shows, she didn’t do that. So now we have this very motivated base of parents, bipartisan – Republicans and Democrats – who are supporting Ann Johnson.”

Davis, a fiscal conservative who is moderate on social issues, insists that Deigaard and other parents should not have been surprised.

“When I was campaigning, we all, particularly me, were campaigning on a message that we had a $27 billion budget deficit, and we’re going to have to balance the budget,” she said one evening recently. “I am opposed to increasing taxes or finding revenue, and I won, as did a hundred other Republicans, probably campaigning on the exact same message.”

So Davis, who as I have said before is a reliable, down-the-line Republican representative, claims that she campaigned and won on a promise to cut spending in 2010. Which is fine, as far as it goes, except for one small thing: She is now running away from those cuts that she made as fast as she can. Patti Hart calls Davis out for a blatantly dishonest campaign mailer that tries to claim she didn’t do what she actually did.

I called [Scott] McCown to get his reaction after seeing Republican Houston Rep. Sarah Davis’ latest campaign mailer, which claims that her Democratic challenger, attorney Ann Johnson, is spreading fiction in her assertion that Texas Republicans cut $5.4 billion from public education last year. On the cover, Davis invokes the dictionary, sharing this definition of fiction: “A belief or statement that is false, but that is often held to be true because it is expedient to do so.”

To back up her allegation that school budget cuts are a figment of Johnson’s imagination, Davis then asserts that Texas lawmakers actually added $1 billion to our schools. Johnson’s math, she tells us, includes “President Obama’s one-time stimulus money, that simply wasn’t available the following year.”

The mailer goes on to assert, with great umbrage: “So Johnson is blaming Republicans in Austin for what a Democratic President did in Washington. This happens all the time: liberals in Washington throw a bunch of money at programs, and then in later years leave the state to find the money to keep them going.”

In a campaign season full of tall tales, this may be the whopper that tops them all. State lawmakers in 2009 used $3.6 billion in federal stimulus money instead of state dollars to fund public education – essentially supplanting federal support for state support. In 2011, the Legislature added back only $1.6 billion in state money to replace the federal dollars.

To claim that the Legislature “increased” funding to public ed is, as I wrote when Lt. Gov. David Dewhurst made this claim, to have giant amnesia about the stimulus.

Now, Davis is using the state’s 2009 contribution to education as a baseline for comparison to state funding in 2011, and blaming Obama that the dollars fall short. It’s as if Davis is saying, two meals a day is more than what those kids were getting before Uncle Sam stepped in!

This outrageous claim – that Republicans didn’t cut public education funding – has been rated “Pants on Fire” by the newspaper fact-checking service, Politifact, on several occasions this year.

And Politifact’s researchers didn’t rely on the opinions of Democrats, noting that during the legislative session, Senate Education Chairman Florence Shapiro, R-Plano, said: “Nobody wants cuts. But we have to have them.” And House Education Chairman Rob Eissler, R-The Woodlands, predicted the cuts would amount to 4 percent to 5 percent, which he characterized as “not that big a cut.”

The writers’ conclusion: “So, lawmakers ultimately cut public school aid, with key leaders even acknowledging so as those decisions were sealed. To tell constituents otherwise is not only inaccurate, it’s misleading and ridiculous. Pants on Fire!”

Even Hart is understating how egregious this is, because Davis and her fellow Republicans all voted for the House budget that cut $10 billion from public education. It was the Senate’s refusal to accept that budget, and to restore half of the cuts made by the House, that left us with the $5.4 billion in cuts that we got. Try to square that with a claim that Davis “increased” funding to public education.

Maybe none of this will matter. It’s still a Republican-leaning district. Johnson may well not be able to convince enough people what happened and what they need to do about it now. Maybe that day of reckoning isn’t here yet, though if it hasn’t come by the 2014 elections I don’t know when it ever will. Be that as it may, I’m happy to have any campaign be waged on these terms. The more that candidates an officeholders run away from the idea of cutting education funding, the better.

School finance lawsuit starts today

Ready or not, the latest school finance lawsuit, which Judge John Dietz has called “the granddaddy of them all”, begins today in Travis County. The Statesman takes a look at the history of school finance and associated litigation, and how we got here.

In a 2006 special legislative session, lawmakers reduced local school property tax rates by one-third and dedicated more state money to the schools to replace the local money. So that no district suffered as they rebalanced the share of state and local dollars, legislators temporarily froze districts at the amount of per-student funding they were spending at the time and planned to implement a long-term solution the next year.

But the freeze was never lifted. There was no appetite in 2007 to dive back into school finance after years of tortured debate over the issue, and the problems with the temporary system were not immediately evident to legislators.

For some districts, the freeze came at a bad time. Pflugerville, for example, was in the middle of a growth spurt and a leadership change and had yet to invest in the programs needed to serve the districts burgeoning population of low-income students and English-language learners. Yet the district was locked at a low level of funding.

Compared with neighboring Round Rock, Pflugerville gets about $720 less per student. If funded at the higher level, Pflugerville would have an additional $19 million a year in its $160 million budget — or nearly 12 percent more, Superintendent Charles Dupre said.

There is no rational policy reason for the difference, said Dupre, who is also president of a coalition of more than 430 school districts that are advancing theequity argument.

“Pflugerville has always been fiscally lean. We have never had fluff or waste in our budget,” Dupre said. “Since 2006, we have been living in a stressful, perpetual state of budget reduction. … When they set in stone the target revenue, they basically codified inequity in our system.”

Past court rulings have found a $600 funding gap to be “minimally acceptable,” but the funding disparities now have increased by two and three times that amount, according to MALDEF, which is representing one of the plaintiff groups. Funding now ranges from about $4,000 per student to more than $12,000.

School districts with the most wealth have the most to lose, and they are making a different argument against the current finance system. They have avoided the equity argument in their briefs because of concerns that the potential remedy would probably hurt them without helping the overall public education system, lawyer Mark Trachtenberg said.

“To focus on equity doesn’t really capture the real problem with the current system,” Trachtenberg said. That problem, he said, is inadequate funding: The Legislature is asking districts to get students to ever-higher levels of academic performance without providing them sufficient resources to do so.

“We are making claims that, if successful, will benefit all districts,” said John Turner, another lawyer representing the property-wealthy school districts.

And you thought early voting was the biggest thing going on this week. The stakes here cannot be overstated. We won’t have a final answer until the Supreme Court has its say, but there’s an awful lot hanging in the balance for them.

The Lege is going to have to spend some money

Whether they want to or not, there are a lot of issues that will be demanding attention and money from the Legislature when they convene in January. For example, there’s water.

House Speaker Joe Straus said Friday the state’s water supply will be among his priorities after years of inaction by lawmakers. In the previous session, the House balked at two bills intended to create the first permanent funding source for a new round of reservoirs, pipelines and other projects to avoid grave shortages in 2060.

The plan would cost an estimated $53 billion, which proved too much for a spending-averse Legislature two years ago.

“That’s always where the conversation breaks down,” Straus, a San Antonio Republican, said of the price tag. “With water, the numbers can be so daunting that it is tempting to throw up your hands.

“We need to begin making some progress. I don’t expect to complete it in one year, but we do need to take the first step.”

[…]

In the 2011 session, state Rep. Allan Ritter, a Nederland Republican, proposed a tap fee that water users would pay each month for the next 15 years. He also sought the transfer of $500 million from the System Benefit Fund, which was created to help low-income people pay utility bills.

The two bills, which supporters said would have generated $27 billion for the plan, died in a House committee.

Straus did not say how he would help fund the plan, but suggested all options would be on the table.

“I do not want to see a newspaper headline saying a company is uprooting from Texas to move to a water-rich state because we have not addressed this issue,” he said. “Without water, we cannot have a good future for this state.

“We have decisions, but we have no choice.”

The scary thing isn’t the price of this project, or that its price tag is triple what it was a decade ago but that the recent amelioration of the drought has removed any sense of urgency from the Lege to take action. The time to do something was in 2011 when the state was being slow roasted like a bag of coffee beans, but now that we’ve had some rain it’ll be easy enough for spending-averse legislators to rationalize procrastinating again. Despite Speaker Straus’ apparent determination, I will not be surprised if this gets punted.

There’s roads.

The Texas Association of Business has thrown its support behind a $50 hike in the annual fee Texas drivers pay to register vehicles, with the money earmarked for new transportation projects. Meanwhile, some key lawmakers favor dedicating to roads the sales tax from vehicle purchases that Texans already pay.

As the 2013 legislative session approaches, transportation advocates have been trying to draw more attention to severe shortages in road funding, stressing that delaying road work around the state will lead to more congested roads and more expensive fixes later on.

“The cost of doing nothing is very expensive,” said state Sen. Robert Nichols, R-Jacksonville, who was appointed chairman of the Senate Transportation Committee earlier this month.

[…]

“Clearly this is a difficult task, but the business community in Texas feels like it’s spending an awful lot of time waiting in traffic,” Hammond said. “This would be new money coming in for maybe $15-16 billion of bonds for road construction.”

Rather than raising a current fee, Nichols wants to take a tax that many Texans already pay and dedicate the revenue to roads. He is calling for a constitutional amendment to dedicate the sales tax on new and used vehicle purchases to expanding and maintaining the state highway system and to paying off transportation-related debt. The money currently goes into the state’s catch-all general revenue fund.

The change could be phased in slowly over 10 years so as not to “wreck the budget,” Nichols said. Though the amount of revenue raised for roads would be small at first, knowing that the revenue stream would grow would allow the Texas Department of Transportation to move quickly on perhaps $10 billion worth of new projects, he said.

Nichols predicted that the public would back such a measure because it makes intuitive sense.

As long as you overlook the fact that it won’t bring any new revenue into the system, thus meaning that other parts of the budget would be sacrificed for roads, then sure, it makes sense. It’s just undoing what’s been done before, with funding for things like DPS coming out of the gasoline tax. Raising the gas tax and indexing it to the inflation rate for construction is still the best option, but the increased registration fee at least has the merit of being new revenue and having some support behind it to begin with.

All that’s without even getting into Medicaid, which remember was underfunded by five billion dollars last biennium, or public education, for which an array of freshman Republicans are claiming they support despite the $5 billion they cut from it. (State Rep. Mike Villarreal passed along this handy chart of how much those cuts affected each ISD in Texas.) Whether we expand Medicaid or not, we will be spending more money on it because we have such a large number of poor, otherwise-uninsured residents. I have no idea how the next Legislature is going to deal with these issues – burying their heads in the sand and denying the existence of the problem is always the strong favorite, with obfuscating the issue a close runner-up – but like it or not, they’re there to be dealt with.

Health care access continues to shrink in Texas

Who needs family planning services? I mean, every kid is born to people who want and can care for them, am I right?

About 15 percent of Houston-area clinics that received state funding for family planning services closed their doors because of budget cuts last fiscal year, and another 30 percent have reduced service hours, according to a study published this week.

Following a political firestorm in the 2011 legislative session, state family planning funds were cut from $111.5 million to $37.9 million for the biennium, cutting services to as many as 180,000 women in Texas a year, according to state health department officials. The number of clinics funded by the Texas Department of State Health Services has dropped from 300 to 136 since the Legislature slashed funding, state officials said.

“Ostensibly, the purpose of the law was to defund Planned Parenthood in an attempt to limit access to abortion, even though federal and state funding cannot be used for abortion care anyway. Instead, these policies are limiting women’s access to a range of preventive reproductive health services and screenings,” a team of academics from the University of Texas at Austin’s Population Research Center wrote in the New England Journal of Medicine article.

That report can be found here, via this Trib story that notes a total of 53 such clinics closed their doors statewide.

In addition, the report states, many clinics are now charging for services that were previously free, raising prices for other services and restricting access to more effective methods of contraception that are more expensive.

To meet the requirements of the new priority funding system, the Department of State Health Services told the researchers that the state stopped funding 35 of 76 family planning clinics in the 2012-13 biennium. The budgets of family planning clinics that still received funding were reduced by up to 75 percent. As a result, about half of the clinics that closed — 25 — were family planning clinics, according to the report.

Well-woman exams and contraception “remain out of reach for some of the poorest women,” sociologists conclude in the report. “The organizational leaders we spoke to reported that women who can pay the newly instated fees are choosing less-effective methods, purchasing fewer pill packs, and opting out of testing for sexually transmitted infections to save money.”

State Rep. Bryan Hughes, R-Mineola, said at The Texas Tribune festival on Saturday that many programs took financial hits last session because of the state’s budget shortfall. Funding that was cut from family planning “went to pretty noble places,” such as programs for children with autism. He also said the tiered funding system lawmakers implemented has brought new women’s health providers to his rural district.

But state Rep. Donna Howard, D-Austin, disagreed with Hughes. She said family planning providers in her district have told her that many clients can no longer afford to see them because they have to charge for services that were free before.

“We have the highest uninsured rate in the country,” Howard said at the festival. “If we want people who do not have the means to provide their own health care to be able to be healthy productive citizens, then, absolutely, we need to be looking at supporting family planning.”

And the Republicans, led by Rick Perry and Greg Abbott, are doing everything they can to ensure that Texas maintains that national lead in uninsured population. Again, there is nothing in the Republicans’ decade-long control of the state to indicate that they consider this to be a problem. And you have to love Speaker wannabe Hughes‘ excuse for cutting family planning: It was either that, or we stick it to the autistic kids. Because there were absolutely no other possible options available to them.

Former Trib writer Thanh Tan, now living in Seattle, puts all this into a national context.

And what are the consequences of cutting off family planning funds to women in a state like Texas? The Legislature’s own non-partisan budget team predicts at least 20,000 additional Medicaid births, for one thing. We’ll have to wait and see whether that actually happens. The National Latina Institute for Reproductive Health has reported higher-than-normal rates of diagnoses and death from cervical cancer along the Texas-Mexico border. It’s worth noting that cervical cancer is treatable if detected early. The greater challenge is convincing women to get screened in the first place.

So why do I care about this issue so much, even though I’m no longer living in Austin?

Overall, the left-leaning Center for Public Policy Priorities points to Census data that shows the U.S. added 2 million kids in the last 10 years– half of that growth came from Texas. One in 11 kids in the U.S. is a Texan. They’re growing up in an education system that lawmakers underfunded this biennium by $5.4 billion. The textbooks they’re learning from are highly controversial. Public schools only teach abstinence, even as the teen pregnancy rate ranks 4th in the nation.

For now, Texas is responsible for all those kids. But someday, they will grow up. Like me, they may even head to the Pacific Northwest. Therefore, I believe we all have an interest in ensuring that Texas women are healthy and become parents when they are ready. I admire those who choose to follow through with an unplanned pregnancy and become parents. But in too many cases, the consequences can be disastrous. I’ll never forget the experience of walking through an emergency shelter in San Antonio that was filled to capacity with abused and neglected children. The executive director told me it was a daily struggle to convince some kids they didn’t have to stuff their pockets with food.

Many opponents of family planning in Texas say they made the tough decision to reduce funding because of budget woes. Others deny birth control works. Most Republicans in the Legislature accuse Planned Parenthood of using the funds to prop up their abortion services. It’s all balderdash — claims based on political ideology over reason and science.

Federal studies have shown that for every dollar the state invests in family planning, more than $3 is saved. Helping women plan and space their pregnancies often means that they and their children will not be born into subsidized health care or have to rely on the state for basic nutrition needs. It’s a way to break the cycle of poverty, promote self-sufficiency and save taxpayers’ money in the long run.

Yeah, too bad we’re not doing any of that. We must love poor people in Texas, we do so much to ensure we have a steady supply of them.

It’s usually a bad idea to bet on any kind of overhaul in the Lege

I agree that it’s a sucker’s bet to think that the Lege will try to fix Texas’ tax code in any meaningful way. Nobody likes having to take votes that may later be used as clubs against them in a campaign, and the lobbyists swarm like no other time when someone’s tax break is on the line. But such an overhaul has to happen eventually.

For Rep. Mike Villarreal, a San Antonio Democrat who serves on the House Ways and Means and Appropriations committees, it amounts to financial mismanagement by GOP Gov. Rick Perry and the Republican-dominated Legislature.

“Frankly, when you have a governor who says he will veto anything that even looks like a tax bill – even if it’s a reform of an existing, broken tax – it gives little reason for legislators to devote resources to proposing tax legislation,” Villarreal added.

Not that Villarreal and others haven’t tried.

Former Senate Finance Committee Chairman Steve Ogden, a Bryan Republican who is retiring from the Legislature, last year sought a revamp of the chronically underperforming business tax, warning that local school property taxes would otherwise rise. The business tax was expanded in 2006 to help pay for lower local school property tax rates, but it has fallen short of projections. Ogden also has called the exemption-riddled sales tax system a “rickety” thing.

[…]

Villarreal has pushed to create a special commission to recommend exemptions ripe for elimination. It’s an uphill battle, he said, since tax code reform is “the right thing to do in the long term” but presents little short-term political gain.

“We do not scrub our tax code the way we scrub our budget. Every legislative session we open up the budget. We go line by line down the expenses that we approved in the entire session asking ourselves, ‘Is this working?’ ” he said. “In the tax code you can put an exemption in place and have it never be seen again.”

As I’ve said many times before, nothing will change until the state’s leadership changes. It makes no sense that tax expenditures never get the kind of scrutiny that every other kind of expenditure gets. To use the overworked analogy, it’s like going over your household expenses line by line every month, but never reviewing your investment portfolio to see what’s performing well and what isn’t. Of course, every exemption, exclusion, and loophole in the tax code was put there to benefit some interest group with the power to fiercely defend it, and that makes it a much harder fight. But we can see the consequences of avoiding that fight. Those chickens are going to roost whether we’re ready for them or not.

Cutting spending is always good for job creation

It must be true.

Eagle Ford Shale

A study by the University of Texas at San Antonio estimated that 20 counties in the Eagle Ford Shale supported 47,097 full-time jobs in 2011, a number that’s expected to grow to 116,972 full-time jobs by 2021.

For now, many of the jobs in demand are for truckers. And a pay range of $25,000 to $80,000 a year is attracting many applicants, according to Workforce Solutions Alamo officials. But even solid job applicants are being stymied by the licensing system, panelists said.

The whole process of getting the commercial driver’s license, or CDL, is backed up, said [Leodoro] Martinez, who also is chairman of the Eagle Ford Consortium.

The Texas Department of Public Safety is responsible for handling commercial driver’s license applications.

DPS spokesman Tom Vinger said that DPS “is addressing the increased demand for CDLs with our existing resources, and our examiners are processing them as quickly as possible.”

The department is expected to continue having to make do with existing resources. Rep. Rafael Anchía, D-Dallas, said that because of budget cuts, he isn’t hopeful that the Legislature will be able to increase funding to help expedite applications.

So, were it not for the budget cuts last year, these applicants would have an easier time filling these much-needed jobs, thus making life better for them and making the economy better for all of us. And even with sales tax revenues up and a cash balance of over $5 billion, the odds of these cuts being reversed are slim, partly because the last Lege deferred a huge amount of obligations to this biennium, partly because it’ll cost more money just to keep up with growth, and partly because our government leadership has its head up its posterior. Sometimes, there just isn’t enough magic in the free market to overcome determined shortsightedness.

Land Board throws the Lege a curveball on school finance

Oops.

In the waning days of the 82nd Legislature, state lawmakers came up with a plan to help cushion the blow of $5.4 billion in cuts to public education.

State Rep. Rob Orr, R-Burleson, proposed a constitutional amendment that he said could bring an additional $300 million to public schools. It unanimously cleared both the House and Senate. Orr’s measure became Proposition 6, which voters passed in November.

But that money has hit a roadblock on its way to public schools — and what looked like an easy fix for hard-pressed budget writers last May has turned into a headache that awaits their return in January.

The amendment allowed the School Land Board, which operates out of the General Land Office, to put a portion of earnings from investments on real estate assets into the Available School Fund, which along with property and sales taxes helps pay for public education. Last week, the little-watched board that oversees the state’s public school lands decided not to distribute the money. Commissioner Jerry Patterson, who sits on the three-member board, said it wanted to protect the funds for upcoming investment opportunities.

Usually the proceeds from the sale and management of public school lands would go into a $26 billion trust whose revenue feeds into what’s called the Available School Fund. Proposition 6 made it so the School Land Board, if it chose, could bypass that step and put money directly into the fund.

“We anticipated this funding for public education,” said Jason Embry, a spokesman for House Speaker Joe Straus, R-San Antonio. “We’re evaluating the impact on the budget and working with Commissioner Patterson to ensure there is no impact to public schools.”

Whether lawmakers should have expected the money is a matter of dispute. But the $300 million made it into the budget as part of general funds used to support school operations, contingent upon the constitutional amendment’s passage in November and the School Land Board’s approval of the transfer. During the special session last June, the Legislature added a provision to the appropriations bill that reduced general revenue funding to public education by $300 million if the amendment passed. It was to be replaced with the same amount from the Available School Fund with the board’s approval — but there was no provision to add that money back in if that didn’t happen.

“I was told that there would be $300 million going into the Available School Fund. Everything was put in place to allow to that to happen,” said Orr, who said the General Land Office agreed to transfer the money if the amendment passed. “I believe it needed to happen, so I’m not sure why it didn’t.”

Patterson said he did not recall committing to a transfer of the money and that his office had been unable to find “any evidence or documents or memos or testimony” that he did.

“I don’t have any control over what was written into the budget or what was made contingent. I don’t know who wrote that in there or why,” he said. “Somebody wrote a contingency rider assuming the answer would be yes.”

See here, here, and here for some background. If you look in the comments on those posts, you will see that Commissioner Patterson was never on board with this idea, so if the Lege was assuming that the School Land Board was going to go along with this idea, well, you know what they say about those who assume. I don’t think I realized till I read this story that the Lege had actually appropriated the $300 million based on that assumption; I must have been assuming that they would have made a supplemental appropriation at a later date once the Land Board signed off on it. Let that be a lesson to me. They’ll have to make a supplemental appropriation now, so you can add another $300 million to the Lege’s tab of unmet obligations from 2011. Good thing the Rainy Day Fund is full, because we’re really going to need it next year.

“Rather than trying a real solution to school finance they keep doing the little gimmicks and sleight of hands,” said David Bradley, the Beaumont Republican who chairs the Board of Education’s finance committee. “The Legislature is the problem. It’s totally improper for them to be pulling that kind of money out of these trust funds to use for general revenue funding.”

I hate having to agree with David Bradley, but he’s right. It’s on the Lege to fund school finance, and with the job they’ve been doing it’s no wonder we’re back in court a mere seven years after the last lawsuit was decided. I’m sure this seemed like free money to them – I admit, my first reaction was along those lines – and maybe that helped salve a bit of the guilt from having slashed $5.4 billion (and having voted to slash over $10 billion) from public education. But it was never a solution even if it did work.

What will the excuse for austerity be now?

We’re in the money, as it were.

Comptroller Susan Combs on Wednesday released updated details of how much money Texas is expected to collect in taxes and fees in fiscal year 2013, which begins on Sept. 1.

The report, prepared as Texas seeks $9.8 billion in short-term loans, indicated that the state will bring in about $2 billion more than Combs had previously estimated for 2013.

In addition, sales tax collections for the current fiscal year are running about $1.5 billion ahead of projections, while the business franchise tax has exceeded estimates by at least $300 million.

Combs previously reported that the state was sitting on a $1.6 billion cash balance from the previous budget, which brings the ever-changing total well above $5 billion.

[…]

An additional $5 billion would help lawmakers cover a tab for Medicaid costs that they must pay next year. That obligation has fallen from $4.8 billion to an estimated $3.9 billion as fewer people have enrolled in the health care program and changes aimed at controlling costs take effect.

[…]

The rainy day fund might be near capacity.

Combs expects the account to reach $8.2 billion by the end of 2013, almost $1 billion more than she projected in December. That amount would appear to approach the limit set on the fund by the state constitution.

Production taxes from the oil and gas boom are filling up the reserve fund, said R.J. DeSilva, a spokesman for Combs.

So the Rainy Day Fund is full, and the revenue projection may well be undershooting the mark. If we’re not restoring the funds that were cut from public education and a host of things besides, what are we going to do? This is why I say that the 2013 legislative session will be a major factor in the 2014 elections, because there’s a fundamental question about budgets and government services that needs to be answered. Do people have the expectation that the cuts made in 2011 were simply in response to the finances of the day, with the equivalent expectation that better times means putting things back as they had been, or do people believe this is the new normal? It’s not too early to start planning how to get voters to arrive at the answer you want them to.

Our high maintenance Governor

Ka-ching!

This corndog brought to you at taxpayer expense

Texans have been billed $2.2 million in out-of-state travel expenses for Gov. Rick Perry’s security detail since his November 2010 re-election, including his failed presidential bid and other trips ranging from vacations to state business and political gatherings, according to updated figures released Friday.

The new report released by the Texas Department of Public Safety freshly tallies $199,060.07 in expenses for Perry’s security detail within and outside Texas, with most for out-of-state trips.

The report covers the March-May fiscal quarter. It also includes expenses dating back to the September start of the fiscal year that came in after earlier reports were compiled.

[…]

Perry’s direct travel costs generally are paid by his campaign, but expenses for his security detail are paid mainly through the state highway fund, which includes proceeds from the state gasoline tax and vehicle registration fees.

Travel costs in the report include such items as airfare, rental car, food and lodging.

The quarterly report doesn’t include overtime for Perry’s security detail, which totaled more than $2.8 million from November 2010 through February. The overtime total includes trips within and outside of Texas.

The largest recent travel expense tallied in the report was a trip to San Diego, Calif., for $27,143.76.

[…]

“It seems like everybody else is tightening their belt, except for him,” said state Rep. Jessica Farrar of Houston, House Democratic Caucus leader, referring to state budget cuts and the potential of more to come. “If he’s asking for us to tighten our belts, he needs to look for a few notches himself,” Farrar said.

Perry and his staff have repeatedly turned aside the idea that he should cover the security costs, saying Perry is governor wherever he is and noting that previous governors also had security.

I do agree that governors travel as part of their jobs, and that they are entitled to security when they travel. It’s appropriate for those expenses to be paid by the state, and frankly that’s far superior to his trips being funded solely by campaign contributors. We have enough of a pay to play culture in our politics as it is, thank very much. That said, it is also the case that we are, as the Governor himself likes to proclaim loudly, in lean times that call for sacrifices and cutbacks. It would be nice if Perry could lead by example for once in his life and save us all a bit of money by travelling less often. The private sector uses virtual conference rooms, NetMeeting, Skype, Office Communicator, stuff like that as low-cost substitutes for travel. Perhaps the Governor’s office should look into that.

TAB takes a hostage

Can’t say I’m surprised by this tactic.

Leaders in the business community said Wednesday that they would not stand for increased funding for education if it came with any rollback of accountability standards in Texas public schools.

“If we are going to remain competitive in the world’s market, we are going to have to have an educated workforce. We do not have one today,” said Bill Hammond, the president of the Texas Association of Business. “We will vigorously oppose additional money for the public school system unless and until we are certain that the current accountability system is going to be maintained.”

The Capitol news conference, held by the Texas Coalition for a Competitive Workforce, comes as the standardized testing that is the backbone of the state accountability system is facing considerable backlash from parents, educators and lawmakers.

[…]

Wednesday, members of the workforce coalition — which includes groups influential in the Legislature like the Texas Association of Business, Texas Institute for Education Reform, Texas Public Policy Foundation and the Texas Business Leadership Council (formerly the Governor’s Business Council) — made clear they would not support any kind of tweaks to the system that was established by House Bill 3 in 2009. An attempt by outgoing House Public Education chairman Rob Eissler to do just that during the last legislative session failed with the opposition of the business community.

“Before this landmark piece of legislation, HB3, is even fully implemented, we have people who want to roll it back and go back to fight the old wars about teaching to the test and all these other myths that are out there,” said Jim Windham, chairman of Texas Institute for Education Reform.

They argued that the existing system is the only way to ensure taxpayers know their money is being well spent.

“STAAR testing is an excellent step towards ensuring that the state’s education dollars are being directed into the classroom so that college- and workforce-ready students emerge from Texas public schools,” said James Golsan, an education policy analyst for the Texas Public Policy Foundation, a conservative think tank.

To be blunt, these guys are full of it. The TPPF thinks we spend too much on education to begin with, and TAB is about as likely to support any measure that would actually increase revenue for education as Rick Perry is. Saying they’ll oppose an increase in funding for public education unless their demands are met is like Willie Sutton saying he’ll oppose the hiring of more police officers unless those pesky bank robbery laws get repealed.

On a more general note, I don’t understand the single-minded focus on the STAAR tests. Everyone wants accountability, and everyone wants students to graduate having received a good, comprehensive, useful education, but why in the world must we believe that STAAR tests are the only way to achieve that? I agree with this:

Dineen Majcher, an Austin lawyer whose daughter will be a sophomore at Anderson High School next fall, said she was offended by the insinuation that parents are being led around by superintendents.

“We are smart enough to see what that system is and is not doing and we can perfectly understand on our own that it is a badly flawed system that needs to be fixed,” said Majcher, who listened to the news conference at the Texas Capitol.

“I think it is inappropriate to hold public funding hostage to repairing the problems that we all know exist with the current testing system,” said Majcher, who is part of a new parent group called Texans Advocating for Meaningful Student Assessment. “The testing system is badly implemented, badly flawed, there are a lot of groups, a lot of parents who are working very hard to make positive corrections to that. I would not call that rolling it back. I think when we see a mistake, we make a course correction.”

Exactly. We’ve been pushing various accountability measures for 20 years in Texas. Some have worked well, others not so much, but it’s been an ongoing experiment, with tweaks, adjustments, and changes of direction as needed. To believe that the STAAR and only the STAAR can achieve the goals these guys says they want is myopic and suggests they care more about the process than the result. Turns out, even some prominent Republicans see it that way, too.

Texas Workforce Commissioner Tom Pauken said Thursday that the state’s current public education accountability system is “broken and badly in need of fixing.”

During testimony at a hearing of the House Committee on Economic and Small Business Development on career and technology education, the former state GOP chairman expressed his disagreement with a coalition of business leaders and a conservative think tank that announced Wednesday it would oppose any additional funding to public education if there were any rollback of existing accountability standards.

Pauken, who along with two other commissioners oversees the development of the state’s workforce, said he was surprised that the coalition claimed to speak for the business community and conservatives as it defended the existing testing system.

He said he had found widespread agreement among business leaders, teachers, school district officials and community college representatives he had spoken to around the state that “teaching to the test is one of the real reasons that we have a significant skill trade shortage.”

Pauken said he spoke as both a businessman and a conservative when he criticized the position taken by the coalition.

“The current system does not hold schools accountable for successfully educating and preparing students — rather it makes them beholden to performance on a single test,” Pauken said, adding that a consequence of the system was that “‘real learning’ has been replaced by ‘test learning.’”

Hammond and his buddies are speaking in their own interest, not those of schools, students, or parents. We should not take their little tantrum seriously.

HISD will not raise the tax rate

Instead, they will dip into their reserves to balance their $1.5 billion budget for this year.

The amount is about the same as last year, when the district reduced spending by approximately 5 percent to offset unprecedented state cuts.

Instead of seeking a tax increase – which the school board has been reluctant to embrace – [Superintendent Terry] Grier has recommended spending $9 million, or 3.5 percent, from savings next year.

“I would hate to arbitrarily raise taxes at this point when we don’t know what’s going to happen down the road,” said Mike Lunceford, president of the Houston Independent School District board.

HISD is one of about 600 districts suing the state, claiming funding is inadequate. Lunceford said he is hopeful that lawmakers will revise the school finance system next session.

[…]

[HISD Chief Financial Officer Melinda] Garrett said the district cannot continue to spend its fund balance. The account contains $257 million, about two months’ worth of operating expenses. HISD also plans to use $18 million from one-time federal jobs funding to close the budget shortfall.

“The district and the board will have to address how to balance this budget next year,” Garrett said.

The budget was adopted Thursday night. I’m sure the improved real estate market, which has led to higher property tax revenues and thus greatly eased the budget situation for entities like the city of Houston, enabled HISD to get close enough to balance to take this approach. A lot of the cost cutting they did last year – i.e., staff reductions – carry over as well. Still, as Garrett says, they can only go to their reserves for so much. Especially with a big bond package on the table for this year, they will need a healthy amount of reserves to ensure good bond ratings.

That bond package was unveiled Thursday as well, and unlike this year’s budget it will mean higher taxes down the line. Most of the focus will be on the high schools. You can see the details in School Zone and Hair Balls. The Board has not yet voted on Grier’s bond proposal, but there is some early opposition.

Trustee Juliet Stipeche criticized the plan for not including a new High School for Law Enforcement and Criminal Justice, her alma mater. Grier acknowledged the facility is lacking but said he wants to sell the valuable property on Dickson and find a new site.

Stipeche said she opposed changing the location, which is convenient to internships at downtown law firms and to students who transfer in from across the city.

State Sen. Mario Gallegos, D-Houston, made a special appearance at the board meeting Thursday night to tell trustees he did not support the bond proposal as is, particularly the slight to Law Enforcement.

You can’t have everything. I don’t think that’s sufficient reason to oppose the entire package, but by all means until such time as the board has voted on it anyone who is unhappy with some part of Grier’s proposal go ahead and fight to make it better as they see fit.

STAAR pushback

The House Public Ed committee gets an earful.

Members of the House Public Education Committee on Tuesday questioned why the first batch of students who took the end-of-course exams scored so poorly. For example, 55 percent of ninth-graders met the minimum passing standard on the English writing test, and only 3 percent hit the college readiness standard that will be required in 2016.

“Is it a function of the instrument? That’s one answer. Is it a function of student attainment? That’s a different answer,” said state Rep. Mark Strama, D-Austin.

They got few answers. State education officials said there is not enough data to draw conclusions with only one administration of the test.

[…]

Superintendents from across the state testified that the number of high school dropouts could skyrocket in the coming years because almost three-quarters of the students who failed the exams this spring were already considered at risk of dropping out.

In order to graduate, high school students must achieve an average passing score in the four core subject areas: math, English, science and social studies. Students who have failed two or three exams might give up because they will lose hope that they can catch up, said Amarillo Superintendent Rod Schroder, who testified at the hearing.

Manor Superintendent Andrew Kim, who also testified, said he supported the increased rigor of the end-of-course exams. But he said the state needs to help districts help students who struggled on the tougher test by allowing districts to start school earlier in the year and providing greater aid for students with limited English skills.

Only 8 percent of the ninth-graders with limited English skills met the minimum standard on the writing test, even with some accommodations. Educators asked legislators to give those students an extra year to get up to speed and offer the tests in the student’s native language.

Schroder drew applause from the audience when he called for eliminating a mandate that the end-of-course exam score count for 15 percent of a student’s final grade.

The Trib has more on this.

The 15 percent rule was designed to create “skin in the game” for students taking the exams, said Amarillo ISD Superintendent Rod Schroder and Aldine ISD Superintendent Wanda Bamberg. But students already have two other incentives to perform well, they said — the cumulative exam score they need to graduate and the minimum scores needed to pass each test.

The committee also heard testimony from TEA officials, who addressed difficulties in timing STAAR exams. Currently, exams are administered about a month before school ends, so teachers have not yet covered all course material.

If exams are administered later, schools will not have time to see the results before starting summer school for students who must retake tests, said Gloria Zyskowski, the agency’s director of its Student Assessment Division. In turn, summer school cannot be pushed back because that would interfere with the start of the next school year.

Given this year’s timeline for exam return, there is no way to resolve the timeline of the statewide exam so that it covers the entire course, said Tyler ISD Superintendent Randy Reid.

“I don’t see any solution to them getting the scores back in a timely manner,” Reid said.

Any new system is going to have some bugs to work out, but the issues here are pretty fundamental. I get the desire for more rigor, but it really sends a message that the push for higher standards comes at the same time as a $5.4 billion cut to the budget. The students that will have the greatest difficulty with the STAAR or any other accountability measure are exactly those who have the greatest needs. Jay Aiyer takes a closer look at the test scores and what they mean.

First and foremost, it is critical to understand what the test results actually say. If final standards scheduled to take effect in 2016 were used today, only 41 percent of students in biology, 39 percent in algebra 1, 40 percent in world geography, 46 percent in reading and 34 percent in writing would have passed. Based on this data, we can logically conclude that nearly 60 percent of high school students lack mastery of the tested subject at a level consistent with a student who is college-bound. If we analyze the data further, we see that students in affluent districts and students in admissions-based magnet programs far outperformed students in schools with large, economically disadvantaged populations. Unfortunately, this is consistent with a multiyear trend that strongly correlates family income with student performance.

This is true in Texas, across the country and around the world.

In fact, the Houston Independent School District, with a student population that is more than 80 percent economically disadvantaged, actually outperformed the state and many suburban districts, when the data are adjusted by income.

It is also important to note that the nearly 60 percent passage rate roughly corresponds to the percentage of students currently enrolled in remedial education classes at two and four-year colleges in our state. What STAAR results seem to have identified are students who are not on pace to graduate ready for college.

If we recognize that STAAR is simply a reflection of the underlying problems in public education, much of which is caused by economic factors that are outside the schoolhouse, what do we do?

Remediation can only do so much if you ignore the underlying issues, which is what we have always done and will keep doing, with even greater vigor these days. Meanwhile, the schools that are being told to do more with less now have to spend a bunch of money they don’t have on remediation. Don’t expect anything to be different next year.