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Texas state budget

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Texas state budget

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Budget calendar:  Biennial
Fiscal year:  2014
State Credit Rating:  AA+ (as of May 2012)
Current Governor:  Rick Perry
Financial figures
GF expenses[1]:  $43.521 billion (estimated for FY 2013)
All funds expenses:  $96.925 billion (estimated for FY 2013)
Spending % Change:  Green Arrow Up Darker.svg4.26%[2]
% from Federal Funding:  34.51%
State Debt:  $340,944,239,000
Per Capita State Debt:  $13,083
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Policypedia Budget Policy-logo-no background.png
This page contains information about budget processes and policy issues in Texas, including:
  • A summary of the budget drafting process
  • Trends in expenditures and revenues
  • Current and past fiscal year budget developments
  • Financial transparency measures

Between fiscal year 2009 and fiscal year 2013, Texas's total expenditures increased by approximately $4.629 billion, from $92.296 billion in 2009 to $96.925 billion in 2013. This represents a 5.02 percent increase, below the cumulative rate of inflation during the same period (9.06 percent, calculated using the Consumer Price Indices for January 2009 and January 2013).[3][4]

Budget process

The state operates on a biennial budget cycle. The sequence of key events in the budget process is as follows:[5][6]

  1. Budget instructions are sent to state agencies beginning in March.
  2. Agencies submit their budget requests to the governor from July through September.
  3. Agency and public hearings are held from July through September.
  4. The governor submits his or her proposed budget to the state legislature on the 30th day of the regular session.
  5. The legislature typically adopts a budget in May. A simple majority is required to pass a budget. The fiscal year begins in September.

In Texas, the governor may exercise line item veto and item veto of appropriations authority.[6]

The legislature is legally required to adopt a balanced budget. Similarly, the governor must sign a balanced budget into law.[6]

Expenditures

Definitions

Although each state executes its budget process differently, the National Association of State Budget Officers (NASBO) breaks down state expenditures into four general categories. This allows for comparisons among the 50 states. NASBO's categories are as follows:[7]

  • General fund: "The predominant fund for financing a state’s operations. Revenues are received from broad-based state taxes. However, there are differences in how specific functions are financed from state to state."
  • Other funds: "Expenditures from revenue sources that are restricted by law for particular governmental functions or activities. For example, a gasoline tax dedicated to a highway trust fund would appear in the “Other funds” column. For Medicaid, other state funds include provider taxes, fees, donations, assessments, and local funds."
  • Federal funds: "Funds received directly from the federal government."
  • Bonds: "Expenditures from the sale of bonds, generally for capital projects."

2013 expenditures

Breakdown of expenditures in FY 2013.
Source: National Association of State Budget Officers

The table below breaks down expenditures for fiscal year 2013 (comparable figures from surrounding states are provided to give additional context).[7] Figures for all columns except "Per capita expenditures" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita expenditures" have not been abbreviated.

Total state expenditures, FY 2013 ($ in millions)[7]
State General fund Federal funds Other funds Bonds Total Per capita expenditures
Texas $43,521 $33,147 $18,318 $1,939 $96,925 $3,664.71
Arizona $8,567 $12,332 $7,624 $770 $29,293 $4,420.50
New Mexico $5,656 $5,660 $3,227 $0 $14,543 $6,974.10
Oklahoma $6,892 $6,516 $7,878 $144 $21,430 $5,565.41
Per capita figures are calculated by taking the state's total expenditures and dividing by the number of state residents according to United States Census estimates.[8]
Source: National Association of State Budget Officers

Expenditures by function

Breakdown of expenditures by function in FY 2012.
Source: National Association of State Budget Officers

State expenditures in Texas can be further broken down by function (elementary and secondary education, public assistance, etc.). Fiscal year 2012 data is included in the table below (information from neighboring states is provided for additional context). Figures are rendered as percents, indicating the share of the total budget spent per category.

Expenditures by function, FY 2012 (as percents)[7]
State Elementary and secondary ed. Higher ed. Public assistance Medicaid Corrections Transportation Other
Texas 28.7% 15.8% 0.1% 30.1% 3.5% 8.1% 13.8%
Arizona 19.0% 13.5% 1.0% 32.0% 3.6% 6.4% 24.6%
New Mexico 19.7% 19.3% 0.5% 24.7% 2.0% 5.9% 27.9%
Oklahoma 16.5% 23.1% 1.0% 23.9% 2.5% 7.2% 25.8%
Source: National Association of State Budget Officers

Expenditure trends

From 2008 to 2012, the share of the state budget allotted for Medicaid expenditures rose by nearly 14 percentage points, or 83.5 percent. During the same period, transportation funding fell by 1.60 percentage points, or 16.5 percent, as a share of the budget. The table below details changes in expenditures from 2008 to 2012.[7][9][10][11][12] Figures are rendered as percents, indicating the share of the total budget spent per category.

Expenditures from 2008 to 2012 (as percents)
Year Elementary and secondary ed. Higher ed. Public assistance Medicaid Corrections Transportation Other
2012 28.7% 15.8% 0.1% 30.1% 3.5% 8.1% 13.8%
2011 30.0% 11.8% 0.1% 24.6% 4.1% 7.7% 21.6%
2010 29.3% 10.0% 0.3% 24.6% 4.0% 7.2% 24.6%
2009 31.0% 11.4% 0.4% 7.5% 3.9% 8.7% 37.2%
2008 28.8% 12.1% 0.1% 16.4% 4.0% 9.7% 28.8%
Change in % -0.10% 3.70% 0.00% 13.70% -0.50% -1.60% -15.00%
Source: National Association of State Budget Officers

Revenues

2013 revenues

Breakdown of general fund revenue sources in FY 2013.
Source: National Association of State Budget Officers

The table below breaks down general fund revenues by source in fiscal year 2013 (comparable figures from surrounding states are also provided to give additional context).[7] Figures for all columns except "Per capita revenue" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita revenue" have not been abbreviated.

Revenue sources in the general fund, FY 2013 ($ in millions)[7]
State Sales tax Personal income tax Corporate income tax Gaming tax Other taxes and fees Total Per capita revenue**
Texas $25,992 $0 $0 $0 $21,289 $47,281 $1,787.68
Arizona $3,822 $3,288 $688 $0 $785 $8,583 $1,295.23
New Mexico $2,395 $1,210 $250 $69 $1,731 $5,655 $2,711.86
Oklahoma $2,087 $2,114 $452 $15 $936 $5,604 $1,455.37
Per capita figures are calculated by taking the state's total revenues and dividing by the number of state residents according to United States Census estimates for 2013.[8]
Source: National Association of State Budget Officers

Revenue trends

The table below details the change in revenue sources in the general fund from 2009 to 2013.[7][9] Figures for all columns except "Per capita revenue" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita revenue" have not been abbreviated.

Revenue sources in the general fund, Texas ($ in millions)[7][9]
Year Sales tax Personal income tax Corporate income tax Gaming tax Other taxes and fees Total Per capita revenue**
2013 $25,992 $0 $0 $0 $21,289 $47,281 $1,787.68
2012 $24,100 $0 $0 $0 $20,780 $44,880 $1,722.13
2011 $21,401 $0 $0 $0 $18,367 $39,768 $1,550.96
2010 $19,560 $0 $0 $0 $15,810 $35,370 $1,401.06
2009 $20,935 $0 $0 $0 $17,043 $37,978 $1,532.46
Change in % 24.16% 0.00% 0.00% 0.00% 24.91% 24.50% 16.65%
Per capita figures are calculated by taking the state's total revenues and dividing by the number of state residents according to United States Census estimates.[8][13]
Source: National Association of State Budget Officers

State budgets by year

DocumentIcon.jpg See budget bill: General Appropriations Act

Fiscal years 2014 and 2015

Texas state budget -- 2014-2015
Texas State Legislature
Text:General Appropriations Act
Legislative History
Introduced:January 23, 2013
State House:April 4, 2013
Vote (lower house):135-12-1
State Senate:March 20, 2013
Vote (upper house):29-2
Conference:May 26, 2013
Conference Vote (upper house):27-4
Conference Vote (lower house):118-29
Governor:Rick Perry
Signed:June 14, 2013

On June 14, 2013, Governor Rick Perry signed the fiscal years 2014 and 2015 budget into law. To access the complete text of the General Appropriations Act, click here.[14]

Some conservatives criticized the budget and argued that state spending was expanding too quickly. A few days before signing the budget into law Perry responded by saying, "I did read some of the criticism, and I'm not sure that those who were making that criticism have a really good handle on the Texas budgeting process. Frankly, I don't understand their math." Perry contended that critics were including a supplemental spending bill in their calculations, which he maintained should be considered separately from the larger budget.[15]

One-time expenditures from the state's Rainy Day Fund totaling approximately $4 billion were also included in the budget, primarily to pay for infrastructure projects and "accounting tricks used in previous budgets." Perry said, "This state is growing and we're growing fast, and we're putting great pressure on infrastructure, both transportation, water, schools, and we have been meeting that challenge rather well."[15]

Fiscal years 2012 and 2013

See also: Texas state budget (2011-2013)

Fiscal year 2011

See also: Texas state budget (2010-2011)

Fiscal year 2010

See also: Texas state budget (2009-2010)

Historical spending

State budget historical spending below was compiled by the National Association of State Budget Officers. Figures reflect the reported "Total Expenditures" in Table 1. Figures for all columns are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000).[7][10]

Historical state budget spending in Texas ($ in millions)
Fiscal year General Fund Other funds Federal funds Bonds Budget totals
Total % of Budget Total % of Budget Total % of Budget Total % of Budget
2011-2012 $43,874 47.2% $15,892 17.1% $31,536 33.9% $1,661 1.8% $92,963
2010-2011 $42,684 45.4% $14,322 15.2% $35,606 37.8% $1,507 1.6% $94,119
2009-2010 $39,474 42.9% $14,845 16.1% $36,673 39.8% $1,064 1.2% $92,056
Averages: $42,010.67 45% $15,019.67 16% $34,605 37% $1,410.667 2% $93,046
General Fund: The predominant fund for financing a state’s operations. Revenues are received from broad-based state taxes. However, there are differences in how specific functions are financed from state to state.
Other funds: Expenditures from revenue sources that are restricted by law for particular governmental functions or activities. For example, a gasoline tax dedicated to a highway trust fund would appear in the “Other funds” column. For Medicaid, other state funds include provider taxes, fees, donations, assessments, and local funds.
Federal funds: Funds received directly from the federal government.
Bonds: Expenditures from the sale of bonds, generally for capital projects.

State debt

According to a January 2014 report by the nonprofit organization State Budget Solutions, Texas had a state debt of over $340 billion. Its state debt per capita was $13,083. The report revealed that state governments faced a combined $5.1 trillion in debt, 33 percent of annual gross state product. The obligation amounts to $16,178 per capita in the nation. A bulk of the state debt -- 79 percent -- was linked to unfunded public pensions.[16][17]

Total state debt in Texas[18]
Type Totals U.S. rank
Total state debt $340,944,239,000 3
Per capita debt $13,083 31
State and other fund expenditures $59,766,000,000 8

Public pensions

See also: Texas public pensions and Texas public employee salaries

A 2012 report from the Pew Center on the States noted that Texas's pension system was funded at 83 percent at the close of fiscal year 2010, above the 80 precent funding level experts recommend. Consequently, Pew designated the state's pension system as a "solid performer."[19]

The funding ratio for the state's pension system decreased from 88.75 percent in fiscal year 2008 to 83.14 percent in fiscal year 2012, a decrease of 5.61 percentage points, or 6.3 percent. Likewise, unfunded liabilities increased from nearly $20.9 billion in fiscal year 2008 to more than $37.2 billion in fiscal year 2012.[20][21][22][23][24]

Credit ratings

States sometimes sell general obligation bonds to investors in order to finance large-scale undertakings (e.g., road construction and other public works projects). Credit rating agencies, such as Standard and Poor's, assign grades to states, evaluating their ability to pay the principal and interest on such bonds. Standard and Poor's grades range from AAA, the highest available, to BBB, the lowest. Generally speaking, a higher credit rating indicates lower risk for an investor, which in turn lowers costs for taxpayers.[25]

The table below lists the Standard and Poor's credit rating for Texas from 2001 to 2012 (grades from surrounding states are provided for additional context).[25]

S&P credit ratings from 2001 to 2012
Texas Arizona New Mexico Oklahoma
2012 AA+ AA- AA+ AA+
2011 AA+ AA- AA+ AA+
2010 AA+ AA- AA+ AA+
2009 AA+ AA- AA+ AA+
2008 AA AA AA+ AA+
2007 AA AA AA+ AA
2006 AA AA AA+ AA
2005 AA AA AA+ AA
2004 AA AA AA+ AA
2003 AA AA- AA+ AA
2002 AA AA- AA+ AA
2001 AA N/A AA+ AA

Federal aid to state budget

See also: Federal aid to budgets in the 50 states

The chart below notes how much of the state’s general revenues come from the federal government. Figures were calculated by dividing each state’s federal intergovernmental revenue into its general revenue. The number in the rightmost column indicates the state's ranking in relation to the rest of the nation (e.g., if "1," the state receives the highest percentage of federal funding in the nation). Figures from neighboring states are included to provide additional context.[26]

State governments receive aid from the federal government to fund a variety of joint programs, such as Medicaid. Federal aid varies considerably from state to state. For example, Mississippi received approximately $7.7 billion in federal aid in 2012, which accounted for more than 45 percent of the state's general revenues. By contrast, Alaska received roughly $2.9 billion in federal aid in 2012, just under 20 percent of the state's general revenues.[26]

Federal aid to state budgets in 2012
State Federal aid as % of general revenue Total federal aid National rank
Texas 34.51% $37,310,756,000 20
Arizona 38.04% $10,394,549,000 8
New Mexico 36.61% $5,171,367,000 9
Oklahoma 35.54% $7,363,043,000 15

Stimulus

Texas received $15.19 billion in federal stimulus funding between February 2009 and June 1013.[27]

Budget transparency

Transparency evaluation
Texas Transparency
Searchability Y
600px-Yes check.png
Grants N
600px-Red x.png
Contracts Y
600px-Yes check.png
Line item expenditures Y
600px-Yes check.png
Dept./agency budgets Y
600px-Yes check.png
Public employee salaries N
600px-Red x.png
Date of last evaluation unknown.
See also: Evaluation of Texas state website and Constitutional provisions regarding reading of bills

The state's official online spending transparency database is managed by the State Comptroller.

Independent transparency sites

The Texas Public Policy Foundation has created an independent website dedicated to Texas's budget and issues of transparency. In addition to state transparency information, the site includes data about local government and school district transparency.[28]

Multi-measure budget transparency profile

The Institute of Government and Public Affairs at the University of Illinois created a multi-measure transparency profile for Texas, which measured state transparency as of September 2011 using indicators from a range of organizations. These indicators measured both website transparency and other recognized facets of governmental transparency. In addition, IGPA presented four unique indicators of non-transparency based on the observation that transfers or reassignments between general and special funds can obscure the true fiscal condition of a state.[29][30]

IGPA devised a budget transparency index based on information available from the National Association of State Budget Officers. Texas tied for 33rd in the nation with 12 other states, earning four out of eight possible points.[30]

Texas - IGPA score for budget process, contents and disclosure
Budget transparency indicator Yes or no?
Performance measures
{{{1}}}
"Generally Accepted Accounting Principles" budget N
600px-Red x.png
Multi-year forecasting N
600px-Red x.png
Annual cycle N
600px-Red x.png
Binding revenue forecast
{{{1}}}
Legislative revenue forecast
{{{1}}}
Non-partisan staff N
600px-Red x.png
Constitution or statutory tax/spend limitations Y
600px-Yes check.png
TOTAL 4

In addition to the individual state profile, IGPA offers a 50-state comparison and profiles for other states.[30]

U.S. PIRG "Following the Money" report

See also: Following the Money 2014 Report

The U.S. Public Interest Research Group, a consumer-focused nonprofit organization based in Washington, D.C., released its annual report on state transparency websites in April 2014. The report, entitled "Following the Money," measured how transparent and accountable state websites are with regard to state government spending.[31] According to the report, Texas received a grade of A- and a numerical score of 91, indicating that Texas was "leading" in terms of transparency regarding state spending.[31]

Accounting principles

See also: Texas government accounting principles

The Texas State Auditor's Office (SAO) is the independent auditor for Texas state government. The SAO operates with oversight from the Legislative Audit Committee (LAC), a six-member permanent standing committee of the Texas state legislature. The LAC consists of the lieutenant governor, the speaker of the state house, one member of the senate appointed by the lieutenant governor, and the chairmen of the Senate Finance Committee, House Appropriations Committee and the House Ways and Means Committee.[32]

Contact information

Texas Governor's Office of Budget, Planning and Policy
1100 San Jacinto, 4th Floor
Austin, Texas 78711
Telephone: 512-463-1778

See also

External links

Additional reading

References

  1. Refers to General Fund spending. Typically in state budgets the General Fund is spending that is most directly controlled by state legislators.
  2. This figure is derived by calculating the percent difference between the prior two years' spending levels according to the National Association of State Budget Officers.
  3. Bureau of Labor Statistics, "CPI Detailed Report Data for February 2014," accessed April 9, 2014
  4. InflationData.com, "Cumulative Inflation Calculator," February 28, 2014
  5. National Conference of State Legislatures, "State Experiences with Annual and Biennial Budgeting," updated April 2011
  6. 6.0 6.1 6.2 National Association of State Budget Officers, "Budget Processes in the States, Summer 2008," accessed February 21, 2014
  7. 7.0 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 National Association of State Budget Officers "State Expenditure Report, 2011-2013," accessed February 21, 2014
  8. 8.0 8.1 8.2 United States Census Bureau, "Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2013," accessed February 26, 2014
  9. 9.0 9.1 9.2 National Association of State Budget Officers, "State Expenditure Report, 2009-2011," accessed February 24, 2014
  10. 10.0 10.1 National Association of State Budget Officers, "State Expenditures Report, 2010-2012," accessed February 24, 2014
  11. National Association of State Budget Officers, "State Expenditure Report, 2009," accessed February 24, 2014
  12. National Association of State Budget Officers, "State Expenditure Report, 2008," accessed February 24, 2014
  13. United States Census Bureau, "Vintage 2009: Annual Population Estimates," accessed February 26, 2014
  14. Office of the Governor, "Gov. Perry Line-Item Vetoes in SB 1," June 14, 2013
  15. 15.0 15.1 The Texas Tribune, "Amid Criticism, Perry Defends State Budget," June 10, 2013
  16. State Budget Solutions, "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
  17. Washington Examiner, "EXography: Unfunded public employee pensions drive state debts skyward," January 21, 2014
  18. State Budget Solutions "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
  19. Pew Center on the States, "Widening Gap Update: Texas," June 18, 2012
  20. Employees Retirement System of Texas, "2012 Comprehensive Annual Financial Report," accessed November 20, 2013
  21. Teacher Retirement System of Texas, "2013 Actuarial Valuation Report," accessed November 20, 2013
  22. Texas Municipal Retirement System, "2012 Comprehensive Annual Financial Report," accessed November 20, 2013
  23. Texas County and District Retirement System, "2012 Comprehensive Annual Financial Report," accessed November 20, 2013
  24. Texas Emergency Services Retirement System, "2012 Actuarial Valuation," accessed November 20, 2013
  25. 25.0 25.1 Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2012," July 13, 2012
  26. 26.0 26.1 United States Census Bureau, "State Government Finances: 2012," accessed February 24, 2014
  27. Recovery.gov, "Stimulus Spending by State," accessed February 21, 2014
  28. Texas Budget Source, "Home page," accessed May 5, 2014
  29. Institute of Government and Public Affairs at University of Illinois, "Home page," accessed February 21, 2014
  30. 30.0 30.1 30.2 Institute of Government and Public Affairs at University of Illinois, "Budget Transparency Profiles - All 50 States," September 2011
  31. 31.0 31.1 U.S. Public Interest Research Group, "Following the Money 2014 Report," accessed April 15, 2014
  32. Texas State Auditor's Office, "Home page," accessed November 13, 2009