Difference between revisions of "Texas state budget"

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After contentious negotiations, the [[Texas House of Representatives|House]] and [[Texas State Senate|Senate]] started to make progress toward a budget and resolve their differences on May 20, 2011, a week before the end of the legislative session.  The two chambers had differed on how much to spend of public education.  Negotiators announced they had agreed on spending $80.6 billion in state general revenue, and following the Senate's plan to cut $4 billion from public schools.<ref>[http://www.gosanangelo.com/news/2011/may/23/budget-agreement-details-released/ San Angelo Standard Times "Budget agreement details released" May 23, 2011]</ref>
 
After contentious negotiations, the [[Texas House of Representatives|House]] and [[Texas State Senate|Senate]] started to make progress toward a budget and resolve their differences on May 20, 2011, a week before the end of the legislative session.  The two chambers had differed on how much to spend of public education.  Negotiators announced they had agreed on spending $80.6 billion in state general revenue, and following the Senate's plan to cut $4 billion from public schools.<ref>[http://www.gosanangelo.com/news/2011/may/23/budget-agreement-details-released/ San Angelo Standard Times "Budget agreement details released" May 23, 2011]</ref>
  
Texas Comptroller Susan Combs, had estimated that Texas would collect $77.3 billion in funds available. However, $4.3 billion of those dollar would cover a shortfall in the current budget cycle, which developed after the economic downturn caused the state to collect less money expected. That would give Texas a total of $72 billion to spend, rather than the $87 billion last time, which included federal stimulus funds. <ref> [http://www.economist.com/node/18744627?story_id=18744627&fsrc=rss/ Economist, Texas’s legislature reaches for the axe, May 26, 2011] </ref>  
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Texas Comptroller Susan Combs, had estimated that Texas would collect $77.3 billion in funds available. However, $4.3 billion of those dollar would cover a shortfall in the current budget cycle, which developed after the economic downturn caused the state to collect less money expected. That would give Texas a total of $72 billion to spend, rather than the $87 billion last time, which included federal stimulus funds.<ref> [http://www.economist.com/node/18744627?story_id=18744627&fsrc=rss/ Economist, Texas’s legislature reaches for the axe, May 26, 2011] </ref>  
  
 
The Senate agreed to back off $1 billion in spending to reach consensus on the budget.  The House passed SB11, delaying approximately $2 billion in education costs until the first few days of FY2013 and defers costs without an actual loss of money for schools.  House and Senate leaders also found $800 million for the budget by assuming that property values will be higher over the next two years than previously estimated.<ref>[http://www.statesman.com/news/texas-politics/with-budget-deal-struck-lawmakers-get-moving-1488774.html The Austin American-Statesman "With budget deal struck, lawmakers get moving" May 21, 2011]</ref><ref name=SB1811/>
 
The Senate agreed to back off $1 billion in spending to reach consensus on the budget.  The House passed SB11, delaying approximately $2 billion in education costs until the first few days of FY2013 and defers costs without an actual loss of money for schools.  House and Senate leaders also found $800 million for the budget by assuming that property values will be higher over the next two years than previously estimated.<ref>[http://www.statesman.com/news/texas-politics/with-budget-deal-struck-lawmakers-get-moving-1488774.html The Austin American-Statesman "With budget deal struck, lawmakers get moving" May 21, 2011]</ref><ref name=SB1811/>
  
House and Senate negotiators on May 26, 2011 approved a $172.3 billion budget that calls for a $15.1 billion reduction in state spending over the next two years. The proposal, crafted after weeks of wrangling to confront a multi-billion-budget shortfall, now goes to both chambers of the 2011 Legislature for a final vote before lawmakers adjourn before midnight Monday. Chief budget-writers said they expect the House and Senate to vote on the two-year spending plan on May 28. <ref> [http://www.star-telegram.com/2011/05/26/3106175/texas-budget-with-151-billion.html/ Star Telegram, Texas budget with $15.1 billion in cuts approved by legislative negotiators, May 26, 2011] </ref> The budget includes $4 billion in education cuts but lawmakers are still struggling to adopt a separate school finance plan essential to distributing the reduced funding to the more than 1,000 school districts. The $15.1 billion reduction constitutes an 8.1 percent drop from current spending. A draft House budget at the outset of the session called for a $31.1 billion reduction, or 16.6 percent. <ref> [http://www.star-telegram.com/2011/05/26/3106175/texas-budget-with-151-billion.html/ Star Telegram, Texas budget with $15.1 billion in cuts approved by legislative negotiators, May 26, 2011] </ref>
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House and Senate negotiators on May 26, 2011 approved a $172.3 billion budget that calls for a $15.1 billion reduction in state spending over the next two years. The proposal, crafted after weeks of wrangling to confront a multi-billion-budget shortfall, now goes to both chambers of the 2011 Legislature for a final vote before lawmakers adjourn before midnight Monday. Chief budget-writers said they expect the House and Senate to vote on the two-year spending plan on May 28.<ref> [http://www.star-telegram.com/2011/05/26/3106175/texas-budget-with-151-billion.html/ Star Telegram, Texas budget with $15.1 billion in cuts approved by legislative negotiators, May 26, 2011] </ref> The budget includes $4 billion in education cuts but lawmakers are still struggling to adopt a separate school finance plan essential to distributing the reduced funding to the more than 1,000 school districts. The $15.1 billion reduction constitutes an 8.1 percent drop from current spending. A draft House budget at the outset of the session called for a $31.1 billion reduction, or 16.6 percent.<ref> [http://www.star-telegram.com/2011/05/26/3106175/texas-budget-with-151-billion.html/ Star Telegram, Texas budget with $15.1 billion in cuts approved by legislative negotiators, May 26, 2011] </ref>
  
 
In their initial budget proposals, the House version of the state budget cuts spending by $23 billion. In contrast, the [[Finance Committee, Texas State Senate|Senate Finance Committee]]’s budget uses $3 billion from the state’s Rainy Day Fund and cuts $17 billion.<ref name=gonzales>[http://www.gonzalesinquirer.com/opinion/article_ecd2a25a-751e-11e0-a6fe-001cc4c002e0.html The Gonzales Inquirer "Senate finds ways to shore up State budget" May 3, 2011]</ref>
 
In their initial budget proposals, the House version of the state budget cuts spending by $23 billion. In contrast, the [[Finance Committee, Texas State Senate|Senate Finance Committee]]’s budget uses $3 billion from the state’s Rainy Day Fund and cuts $17 billion.<ref name=gonzales>[http://www.gonzalesinquirer.com/opinion/article_ecd2a25a-751e-11e0-a6fe-001cc4c002e0.html The Gonzales Inquirer "Senate finds ways to shore up State budget" May 3, 2011]</ref>
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The Senate also passed SB23, which would save about a half billion dollars in health care costs over the biennium by moving Medicaid prescriptions into managed care and increasing managed care for Medicaid patients in South Texas.<ref>[http://www.capitol.state.tx.us/BillLookup/History.aspx?LegSess=82R&Bill=SB23 SB 23]</ref><ref name=gonzales/>
 
The Senate also passed SB23, which would save about a half billion dollars in health care costs over the biennium by moving Medicaid prescriptions into managed care and increasing managed care for Medicaid patients in South Texas.<ref>[http://www.capitol.state.tx.us/BillLookup/History.aspx?LegSess=82R&Bill=SB23 SB 23]</ref><ref name=gonzales/>
  
On May 29, 2011 the legislature sent a $172 billion budget to Gov. Rick Perry. The 2012-2013 budget -- Texas has a two-year budget cycle -- slashes $4 billion from schools. Those cuts violate state law, so the budget plan depends on the passage of another bill that would tweak the state's school finance system. <ref> [http://www.reuters.com/article/2011/05/29/us-budget-texas-idUSTRE74S1F220110529/ Reuters, Texas House and Senate send governor budget that cuts spending, May 29, 2011] </ref> The budget cuts state spending by $15.2 billion, reduces funding for education and healthcare, and cuts more than 5,700 jobs from the state workforce. The budget would reduce state funding to school districts by $4 billion and shrink the state workforce to 235,135 by fiscal 2013, a decrease of 5,727 from the current 2011 level. <ref> [http://www.star-telegram.com/2011/05/28/3111691/texas-budget-with-15-billion-in.html/ Star Telegram, Texas budget with $15 billion in cuts clears legislature, May 30, 2011] </ref>
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On May 29, 2011 the legislature sent a $172 billion budget to Gov. Rick Perry. The 2012-2013 budget -- Texas has a two-year budget cycle -- slashes $4 billion from schools. Those cuts violate state law, so the budget plan depends on the passage of another bill that would tweak the state's school finance system.<ref> [http://www.reuters.com/article/2011/05/29/us-budget-texas-idUSTRE74S1F220110529/ Reuters, Texas House and Senate send governor budget that cuts spending, May 29, 2011] </ref> The budget cuts state spending by $15.2 billion, reduces funding for education and healthcare, and cuts more than 5,700 jobs from the state workforce. The budget would reduce state funding to school districts by $4 billion and shrink the state workforce to 235,135 by fiscal 2013, a decrease of 5,727 from the current 2011 level.<ref> [http://www.star-telegram.com/2011/05/28/3111691/texas-budget-with-15-billion-in.html/ Star Telegram, Texas budget with $15 billion in cuts clears legislature, May 30, 2011] </ref>
  
Texas Democrats opposed the budget submitted to the governor. An analysis by the House Democrats' Legislative Study Group said the budget does not account for the state's population growth. The state government needs $99 billion in state funds to maintain services at current levels, but the budget allocates only $80.7 billion in state general revenue, leaving a shortfall of $18.3 billion, according to the analysis. <ref> [http://www.star-telegram.com/2011/05/28/3111691/texas-budget-with-15-billion-in.html/ Star Telegram, Texas budget with $15 billion in cuts clears legislature, May 30, 2011] </ref>
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Texas Democrats opposed the budget submitted to the governor. An analysis by the House Democrats' Legislative Study Group said the budget does not account for the state's population growth. The state government needs $99 billion in state funds to maintain services at current levels, but the budget allocates only $80.7 billion in state general revenue, leaving a shortfall of $18.3 billion, according to the analysis.<ref> [http://www.star-telegram.com/2011/05/28/3111691/texas-budget-with-15-billion-in.html/ Star Telegram, Texas budget with $15 billion in cuts clears legislature, May 30, 2011] </ref>
  
 
====Legislative Recall====
 
====Legislative Recall====
On May 31, 2011 Texas lawmakers returned to the capital for a special session on the budget to deal with a school finance plan blocked by Democrats and Medicaid cost savings. Over the Memorial Day weekend Democrats filibustered a plan that would see a $4 billion cut in school funding. The Republican plan answers a multibillion-dollar shortfall with numerous spending cuts, because of GOP leaders' stand against new taxes and closing tax loopholes and their willingness to spend only a limited amount from the state's rainy day fund. <ref> [http://www.chron.com/disp/story.mpl/metropolitan/7587983.html/ Houston Chronicle, Perry orders special session for school finance plan, Medicaid costs, May 30, 2011] </ref>
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On May 31, 2011 Texas lawmakers returned to the capital for a special session on the budget to deal with a school finance plan blocked by Democrats and Medicaid cost savings. Over the Memorial Day weekend Democrats filibustered a plan that would see a $4 billion cut in school funding. The Republican plan answers a multibillion-dollar shortfall with numerous spending cuts, because of GOP leaders' stand against new taxes and closing tax loopholes and their willingness to spend only a limited amount from the state's rainy day fund.<ref> [http://www.chron.com/disp/story.mpl/metropolitan/7587983.html/ Houston Chronicle, Perry orders special session for school finance plan, Medicaid costs, May 30, 2011] </ref>
  
The Democrats in the legislature want to see more of the state's rainy day fund used to support education. <ref> [http://www.chron.com/disp/story.mpl/metropolitan/7587983.html/ Houston Chronicle, Perry orders special session for school finance plan, Medicaid costs, May 30, 2011] </ref> Gov. Perry is opposed to tapping the state's rainy day fund, which has approximately $9.7 billion. <ref> [http://www.reuters.com/article/2011/05/29/us-budget-texas-idUSTRE74S1F220110529/ Reuters, Texas House and Senate send governor budget that cuts spending, May 29, 2011] </ref>
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The Democrats in the legislature want to see more of the state's rainy day fund used to support education.<ref> [http://www.chron.com/disp/story.mpl/metropolitan/7587983.html/ Houston Chronicle, Perry orders special session for school finance plan, Medicaid costs, May 30, 2011] </ref> Gov. Perry is opposed to tapping the state's rainy day fund, which has approximately $9.7 billion.<ref> [http://www.reuters.com/article/2011/05/29/us-budget-texas-idUSTRE74S1F220110529/ Reuters, Texas House and Senate send governor budget that cuts spending, May 29, 2011] </ref>
  
Gov. Perry accused Democrats of wasting time and money for creating the need for a special session. <ref> [http://www.kvue.com/news/Texas-Legislature-goes-into-special-session-122905369.html/ KVUE, Texas Legislature goes into special session, May 31, 2011] </ref> In the meantime, bills governing sanctuary cities and TSA pat-downs have the potential to be revived, because Gov. Perry can bring back bills to the floor during the special session. Prior to the special session Perry vetoed a bill that would have expanded the number of Internet retailers required to collect sales tax. Retailers such as Amazon threatened to cut off relationships with Texas marketers if the bill became law. <ref> [http://www.kvue.com/news/Texas-Legislature-goes-into-special-session-122905369.html/ KVUE, Texas Legislature goes into special session, May 31, 2011] </ref>
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Gov. Perry accused Democrats of wasting time and money for creating the need for a special session.<ref> [http://www.kvue.com/news/Texas-Legislature-goes-into-special-session-122905369.html/ KVUE, Texas Legislature goes into special session, May 31, 2011] </ref> In the meantime, bills governing sanctuary cities and TSA pat-downs have the potential to be revived, because Gov. Perry can bring back bills to the floor during the special session. Prior to the special session Perry vetoed a bill that would have expanded the number of Internet retailers required to collect sales tax. Retailers such as Amazon threatened to cut off relationships with Texas marketers if the bill became law.<ref> [http://www.kvue.com/news/Texas-Legislature-goes-into-special-session-122905369.html/ KVUE, Texas Legislature goes into special session, May 31, 2011] </ref>
  
 
====Union Protests====
 
====Union Protests====
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A counter-protest calling on the Senate to make even deeper budget cuts was held simultaneously.<ref>[http://www.chron.com/disp/story.mpl/ap/tx/7510233.html The Houston Chronicle "Budget talks at Texas Capitol draws protesters" April 6, 2011]</ref>
 
A counter-protest calling on the Senate to make even deeper budget cuts was held simultaneously.<ref>[http://www.chron.com/disp/story.mpl/ap/tx/7510233.html The Houston Chronicle "Budget talks at Texas Capitol draws protesters" April 6, 2011]</ref>
  
Teacher's organizations continue to rally in Austin to protest proposed educational spending cuts, as well as plan to  allow districts to increase the number of students in the classroom and let go of teachers quicker. <ref> [http://www.kfoxtv.com/news/28153337/detail.html/ Fox TV, Teachers Take Stance Against Texas Budget Cuts, June 7, 2011] </ref>
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Teacher's organizations continue to rally in Austin to protest proposed educational spending cuts, as well as plan to  allow districts to increase the number of students in the classroom and let go of teachers quicker.<ref> [http://www.kfoxtv.com/news/28153337/detail.html/ Fox TV, Teachers Take Stance Against Texas Budget Cuts, June 7, 2011] </ref>
  
 
===Structural Deficit===
 
===Structural Deficit===
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Texas' biennial Medicaid budget is $45 billion.  The federal government covers 60% of the state's share and the remaining amount takes up 20% of the state budget.<ref name=nyt/>   
 
Texas' biennial Medicaid budget is $45 billion.  The federal government covers 60% of the state's share and the remaining amount takes up 20% of the state budget.<ref name=nyt/>   
  
The Senate and House passed similar Medicaid bills in the special session that combined bills that did not pass in the regular session. The Senate bill would expand the privatization of health care services, discourage the use of emergency rooms for non-urgent care and encourage state agencies and private health care providers to focus on improving patient outcomes as well as permit hospitals and doctors work together to control costs. <ref name=revamping>[http://www.businessweek.com/ap/financialnews/D9NKMEIG0.htm Businessweek "Committee approves revamping health care program" June 3, 2011]</ref>  The House passed its version of the bill with a vote of 91-47 on June 9, 2011, and the bill will now go back to the Senate for consideration of the small changes the House made.  It would permit the formation of health care cooperatives and establish the Texas Institute of Healthcare Quality and Efficiency, which would seek to identify and encourage innovative health care programs that save money.  The state would also create the Medicaid and CHIP Quality-Based Payment Advisory Committee to explore ways to pay doctors based on the patient's outcome rather than per procedure.<ref>[http://www.businessweek.com/ap/financialnews/D9NOCV4G0.htm Businessweek "Texas House approves Medicaid changes" June 9, 2011]</ref>  The plan requires federal approval.  The state's FY2012 budget relies on the cost saving of up to $700 million predicated on that approval.<ref name=revamping/>
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The Senate and House passed similar Medicaid bills in the special session that combined bills that did not pass in the regular session. The Senate bill would expand the privatization of health care services, discourage the use of emergency rooms for non-urgent care and encourage state agencies and private health care providers to focus on improving patient outcomes as well as permit hospitals and doctors work together to control costs.<ref name=revamping>[http://www.businessweek.com/ap/financialnews/D9NKMEIG0.htm Businessweek "Committee approves revamping health care program" June 3, 2011]</ref>  The House passed its version of the bill with a vote of 91-47 on June 9, 2011, and the bill will now go back to the Senate for consideration of the small changes the House made.  It would permit the formation of health care cooperatives and establish the Texas Institute of Healthcare Quality and Efficiency, which would seek to identify and encourage innovative health care programs that save money.  The state would also create the Medicaid and CHIP Quality-Based Payment Advisory Committee to explore ways to pay doctors based on the patient's outcome rather than per procedure.<ref>[http://www.businessweek.com/ap/financialnews/D9NOCV4G0.htm Businessweek "Texas House approves Medicaid changes" June 9, 2011]</ref>  The plan requires federal approval.  The state's FY2012 budget relies on the cost saving of up to $700 million predicated on that approval.<ref name=revamping/>
  
 
Republicans had suggested that the state should opt out of the federal Medicaid program and said that they are studying the cost savings that would result from the opt out.<Ref name=nyt>[http://www.nytimes.com/2010/11/12/us/politics/12ttmedicaid.html?src=twrhp The New York Times "Battle Lines Drawn Over Medicaid in Texas" Nov. 11, 2010]</ref><Ref name=pitts>[http://www.texastribune.org/texas-taxes/2011-budget-shortfall/pitts-readies-constituents-for-coming-budget-cuts/ The Texas Tribune "Pitts Readies Constituents for Coming Budget Cuts" Nov. 29, 2010]</ref> Options before the legislature include remaking Medicaid with only state financing to give states flexibility regarding benefits and cost design, or obtaining federal waivers to allow the state to change portions of its Medicaid program.<ref name=nyt/>
 
Republicans had suggested that the state should opt out of the federal Medicaid program and said that they are studying the cost savings that would result from the opt out.<Ref name=nyt>[http://www.nytimes.com/2010/11/12/us/politics/12ttmedicaid.html?src=twrhp The New York Times "Battle Lines Drawn Over Medicaid in Texas" Nov. 11, 2010]</ref><Ref name=pitts>[http://www.texastribune.org/texas-taxes/2011-budget-shortfall/pitts-readies-constituents-for-coming-budget-cuts/ The Texas Tribune "Pitts Readies Constituents for Coming Budget Cuts" Nov. 29, 2010]</ref> Options before the legislature include remaking Medicaid with only state financing to give states flexibility regarding benefits and cost design, or obtaining federal waivers to allow the state to change portions of its Medicaid program.<ref name=nyt/>

Revision as of 21:59, 10 March 2014

Texas state budget

Flag of Texas.png
Budget calendar:  Biennial
Fiscal year:  2014-15
Financial figures
GF expenses:  $94.6 billion
Other state budgets
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The Texas State Legislature passed and Governor Rick Perry signed the $94.6 billion state budget for FY2014-15.[1][2]

In per capita spending by state, Texas ranks 50th in the nation, meaning there is likely less fat to trim when making budget cuts in Texas than in other states.[3]

Texas operates on a biennial budget schedule, with the legislature addressing the budget on a biennial schedule as well.[4] The fiscal year begins on September 1 each year.[5] An overview of the Texas budget process prepared by the Senate Research Center can be found online.[6]

In FY2012, Texas had a total state debt of approximately $286,999,196,000 when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans, and the FY2013 budget gap.[7] The FY2013 state debt is slightly higher than the prior year's total of approximately $282,558,281,000[8]Texas's total state debt per capita was $11,178.30.[9]


Federal Aid to State Budget

The chart below represents how much of the state’s budget comes from the federal government. The number is the corresponding ranking in relation to the rest of the nation (if #1, the state receives the highest percentage of federal funding in the nation):

State 2008 2009 2010 2011
Texas 33.94% (#9) 36.9% (#10) 41.48% (#11) 39.98% (#11)
  • Figures were calculated by dividing each state’s intergovernmental revenue into its general revenue.[10][11]

Budget for the 2014-15 Biennium

Draft budget recommendations aimed to reduce community college funding by 5 to 6 percent over FY2014-15.[12]

Budget for the 2012-13 Biennium

The Legislative Budget Board voted on Nov. 15, 2012, morning to cap the state’s spending growth rate at 10.71 percent for the 2014-15 biennium.[13] If the base budget were to remain unchanged, nondedicated revenue would be capped at $77.9 billion for the 2014-15 budget under that growth rate adopted.[14]

On the same day, Lt. Gov. David Dewhurst vowed to use the conservative gold standard of limiting the state’s budget growth to less than inflation plus state population growth — or about 9.45 percent over the next two years.[15]

Each biennium, the Legislative Budget Board writes the first draft of the state budget, and then lawmakers debate an appropriations bill during the session, which begins in January 2013.[14]

Budget for the 2012-13 Biennium

In February 2012, John O'Brien, director of the Legislative Budget Board, told lawmakers that the state faced a $4.1 billion shortfall, with $3.9 billion of the deficit coming from Medicaid costs. The legislature intentionally underfunded Medicaid. When the Legislature meets again in 2013 lawmakers will need to pass a supplemental budget bill to cover the deficit. Options available to lawmakers include tapping a $1.6 billion revenue surplus or turning to the state's rainy day fund. John Heleman, the Texas comptroller's chief revenue estimator, said that the rainy day fund had $6.1 billion as of Feb. 2012 and will have $7.3 billion by October 2012.[16]

Revenue Reports

In December 2011, Comptroller Susan Combs wrote a letter to lawmakers stating that tax collections were on pace to produce a $1.6 billion budget surplus for the fiscal biennium ending in 2013. The state's Rainy Day Fund at the end of 2013 is forecast to reach $7.3 billion, the comptroller said.[17]

In September 2011, sales-tax receipts in the state rose to a record $1.76 billion, up nearly 12% from the prior year, according to Combs. She attributed the increase to the rise in spending, led by the oil and gas industries.[18] The rise continued in October 2011, when sales tax revenues rose to $2.07 billion, which was about 9 percent higher than expected. The increase is good news for the state budget given that sales tax dollars account for approximately 60 percent of the general revenue the state uses to pay for basic services, including public education and prisons.[19]

Budget

Education

Some Democrats hoped for a special session to restore some of the $4 billion cut from public schools, but Republicans were uninterested.[20] Gov. Rick Perry said on Feb. 21, 2012, that he would not call a special session to address education funding.[21]

The budget uses an accounting shift that delays a $2.3 billion payment owed to public schools in 2012-2013 by one day so that a bill is not due until 2014, thereby going into the next budget. The budget also assumes there will be no growth in the number of school children in Texas, even though it is one of the fastest-growing states in the nation. Critics say the state will short school districts $2 billion that way.[2]

K-12 education funding was cut by $4 billion. About 7,000 schools have been granted waivers to legally raise class size above the maximum 22 mandated in grades K-4, a three-fold increase from last year.[22]

More than 300 school districts filed suit against the state, hoping the courts will declare the cuts and the school funding formula in Texas unconstitutional.[22]

Medicaid

Legislators left a nearly $5 billion unpaid tab for Medicaid, which they planned to cover in 2013 with any unexpected revenue or the $7 billion rainy day fund.[19] The funding ignores the likely growth of enrollment in Medicaid.[2]

State Health and Human Services Commissioner Tom Suehs predicted on Feb. 1, 2012, that the state faces a shortfall of $15-17 billion due to Medicaid.[23]

On May 7, 2012, the state's Medicaid chief said the program will likely only achieve 88 percent of the savings lawmakers hoped for when they passed he budget. Texas Department of Health and Human Services officials expect that lawmakers will need to come up with more than $10 billion to cover the deficit as of May 2012 and increases in the next budget.[24]

Other Cuts

Lawmakers also made a $250 million across-the-board cut to most state agencies funded by general revenue.[19]


Passage of Budget

Lawmakers left unaddressed is the $8 billion structural deficit that recurs every two years as a result of a deal to lower property taxes while transforming the state's business tax that has never generated as much money as anticipated when it the deal was made.[2]

The state faced a budget gap for the 2012-13 biennium that had been estimated to be as high as $27 billion.[25] Lt. Gov. David Dewhurst, the presiding officer of the Senate, said legislators will pursue targeted cuts instead of across-the-board reductions and may even increase spending in some instances. "We're going to cover all our essential services," he said.[25] The budget was not completed during the regular legislative session and lawmakers went to in special session to make cuts of millions of dollars in state services in order to balance the budget.[26]

In a surprise move, the House voted down SB1, the primary budget bill, by a vote of 64 to 71 on June 28, 2011.[27] The House then decided to reconsider its vote and approved the budget by a vote of 80 to 57.[28] The approved bill cuts $4 billion from education and divides the cuts over two years, with 6 percent across-the-board cuts in 2012 and $2 billion in targeted cuts in 2013.[29][30]

The day before, on June 27, 2011, the Senate had passed Senate Bill 1[27] and both chambers of the legislature passed Senate Bill 2, a companion appropriations bill.[31][32]

Legislative Proposed Budgets

After contentious negotiations, the House and Senate started to make progress toward a budget and resolve their differences on May 20, 2011, a week before the end of the legislative session. The two chambers had differed on how much to spend of public education. Negotiators announced they had agreed on spending $80.6 billion in state general revenue, and following the Senate's plan to cut $4 billion from public schools.[33]

Texas Comptroller Susan Combs, had estimated that Texas would collect $77.3 billion in funds available. However, $4.3 billion of those dollar would cover a shortfall in the current budget cycle, which developed after the economic downturn caused the state to collect less money expected. That would give Texas a total of $72 billion to spend, rather than the $87 billion last time, which included federal stimulus funds.[34]

The Senate agreed to back off $1 billion in spending to reach consensus on the budget. The House passed SB11, delaying approximately $2 billion in education costs until the first few days of FY2013 and defers costs without an actual loss of money for schools. House and Senate leaders also found $800 million for the budget by assuming that property values will be higher over the next two years than previously estimated.[35][36]

House and Senate negotiators on May 26, 2011 approved a $172.3 billion budget that calls for a $15.1 billion reduction in state spending over the next two years. The proposal, crafted after weeks of wrangling to confront a multi-billion-budget shortfall, now goes to both chambers of the 2011 Legislature for a final vote before lawmakers adjourn before midnight Monday. Chief budget-writers said they expect the House and Senate to vote on the two-year spending plan on May 28.[37] The budget includes $4 billion in education cuts but lawmakers are still struggling to adopt a separate school finance plan essential to distributing the reduced funding to the more than 1,000 school districts. The $15.1 billion reduction constitutes an 8.1 percent drop from current spending. A draft House budget at the outset of the session called for a $31.1 billion reduction, or 16.6 percent.[38]

In their initial budget proposals, the House version of the state budget cuts spending by $23 billion. In contrast, the Senate Finance Committee’s budget uses $3 billion from the state’s Rainy Day Fund and cuts $17 billion.[39]

On April 3, 2011, the House passed the $164.5 billion state budget by a vote of 98-49, primarily split down party lines.[40] It cuts approximately $23 billion in state spending with cuts to K-12 education, elderly care and higher education.[41]

Lawmakers positioned themselves for the fiscal debate, with Republicans saying that the state spends too much, and Democrats arguing that the state fails to generate sufficient revenue.[42] Republicans said that no new taxes will be used to balance the state budget.[25][43]

After a delay, on May 4, 2011, the Senate maneuvered around a 2/3 vote requirement and approved its $176.5 billion state budget bill with a vote of 19-12.[44] The Senate version of the budget spends $7 billion more than the House version and differs in substantial ways. The Senate budget would spend billions more on public education, nursing homes and Medicaid.[41] It cut $11 billion when compared to the FY2011 budget.[44]

The Senate also passed SB1811, which injected $4 billion in non-tax revenue into the budget and utilizes accounting strategies including moving the state’s final $2 billion payment of the fiscal year to the Permanent School Fund from August into September, the first month of FY2012, and collecting the state’s franchise tax a month early in 2013 to bring in about $800 million.[36][39]

The Senate also passed SB23, which would save about a half billion dollars in health care costs over the biennium by moving Medicaid prescriptions into managed care and increasing managed care for Medicaid patients in South Texas.[45][39]

On May 29, 2011 the legislature sent a $172 billion budget to Gov. Rick Perry. The 2012-2013 budget -- Texas has a two-year budget cycle -- slashes $4 billion from schools. Those cuts violate state law, so the budget plan depends on the passage of another bill that would tweak the state's school finance system.[46] The budget cuts state spending by $15.2 billion, reduces funding for education and healthcare, and cuts more than 5,700 jobs from the state workforce. The budget would reduce state funding to school districts by $4 billion and shrink the state workforce to 235,135 by fiscal 2013, a decrease of 5,727 from the current 2011 level.[47]

Texas Democrats opposed the budget submitted to the governor. An analysis by the House Democrats' Legislative Study Group said the budget does not account for the state's population growth. The state government needs $99 billion in state funds to maintain services at current levels, but the budget allocates only $80.7 billion in state general revenue, leaving a shortfall of $18.3 billion, according to the analysis.[48]

Legislative Recall

On May 31, 2011 Texas lawmakers returned to the capital for a special session on the budget to deal with a school finance plan blocked by Democrats and Medicaid cost savings. Over the Memorial Day weekend Democrats filibustered a plan that would see a $4 billion cut in school funding. The Republican plan answers a multibillion-dollar shortfall with numerous spending cuts, because of GOP leaders' stand against new taxes and closing tax loopholes and their willingness to spend only a limited amount from the state's rainy day fund.[49]

The Democrats in the legislature want to see more of the state's rainy day fund used to support education.[50] Gov. Perry is opposed to tapping the state's rainy day fund, which has approximately $9.7 billion.[51]

Gov. Perry accused Democrats of wasting time and money for creating the need for a special session.[52] In the meantime, bills governing sanctuary cities and TSA pat-downs have the potential to be revived, because Gov. Perry can bring back bills to the floor during the special session. Prior to the special session Perry vetoed a bill that would have expanded the number of Internet retailers required to collect sales tax. Retailers such as Amazon threatened to cut off relationships with Texas marketers if the bill became law.[53]

Union Protests

Between six and seven thousand people gathered at the Capitol on April 6, 2011, to take part in a union-organized protest of budget cuts to education and health care as well as those that would impact public employment levels.[54]

A counter-protest calling on the Senate to make even deeper budget cuts was held simultaneously.[55]

Teacher's organizations continue to rally in Austin to protest proposed educational spending cuts, as well as plan to allow districts to increase the number of students in the classroom and let go of teachers quicker.[56]

Structural Deficit

The state faces a structural deficit in its budget, meaning that a $10 billion budget shortfall will reappear in each future fiscal year until lawmakers align revenues and expenditures, according to John Heleman, chief revenue estimator for Comptroller Susan Combs.[57]

The structural deficit stems from issues with education funding. Heleman said a "structural deficit" developed in the state budget after the 2006 school finance reform package that lowered local school property taxes and restructured the business tax. The Texas Supreme Court found the state's school finance system to be unconstitutional and in response the legislature increased public education funding to $14 billion per biennium. The revenue sources meant to pay for it — primarily the revised business tax — have not covered the cost.[57]

Spending Cuts

K-12 Education

Although school districts had been mostly exempt from prior rounds of budget cuts, lawmakers told school district to anticipate approximately $5 billion less in the FY2012-13 budget as lawmakers begin wrestling with a large revenue shortfall.[58] Cuts of $5 billion would leave the state approximately $10 billion short funding levels required by state law, leading officials to recommend legislation that would alter formulas to cut about 14% of state funding to school districts.[59]

Higher Education

In the initial budget proposal, five community colleges would be shut down.[59]

Medicaid

Texas' biennial Medicaid budget is $45 billion. The federal government covers 60% of the state's share and the remaining amount takes up 20% of the state budget.[60]

The Senate and House passed similar Medicaid bills in the special session that combined bills that did not pass in the regular session. The Senate bill would expand the privatization of health care services, discourage the use of emergency rooms for non-urgent care and encourage state agencies and private health care providers to focus on improving patient outcomes as well as permit hospitals and doctors work together to control costs.[61] The House passed its version of the bill with a vote of 91-47 on June 9, 2011, and the bill will now go back to the Senate for consideration of the small changes the House made. It would permit the formation of health care cooperatives and establish the Texas Institute of Healthcare Quality and Efficiency, which would seek to identify and encourage innovative health care programs that save money. The state would also create the Medicaid and CHIP Quality-Based Payment Advisory Committee to explore ways to pay doctors based on the patient's outcome rather than per procedure.[62] The plan requires federal approval. The state's FY2012 budget relies on the cost saving of up to $700 million predicated on that approval.[61]

Republicans had suggested that the state should opt out of the federal Medicaid program and said that they are studying the cost savings that would result from the opt out.[60][63] Options before the legislature include remaking Medicaid with only state financing to give states flexibility regarding benefits and cost design, or obtaining federal waivers to allow the state to change portions of its Medicaid program.[60]


Possible Sources of Funds

The governor said he opposed tapping into the state's rainy day fund for the FY2012-13 biennium.[64]

The decision marks a reversal by Gov. Perry who had previously opposed tapping into the Rainy Day fund which he said was an "absolute last resort" because doing so meant, "all we've done is kick the can down the road."[65]

Lawmakers agreed to tap the Rainy Day fund for FY2011 budget in March 2011, and that, combined with budget cuts made for FY2011 and a projection from the comptroller that improved sales taxes will generate $300 million in additional revenue, freed up $4.3 billion for lawmakers to use as they write the FY2012-12 state budget. Legislators proposed a plan to use the newly available $4.3 billion in funds for education and Medicaid. Gov. Perry said that he would veto any plans to use more of the reserves to tackle the 2012-2013 budget.[66]

To combat the $18 billion gap, House budget chief Jim Pitts urged the legislature to consider allowing expanded gambling in the state,[67] although that is not considered to be likely.[68] Fee increases are expected, as is a disbursement from the state school trust fund.[68]

Budget transparency

The Texas Transparency page is managed by the State Comptroller.

The following table is helpful in evaluating the level of transparency provided by the state.

Criteria for evaluating spending databases
State Database Searchability Grants Contracts Line Item Expenditures Dept/Agency Budgets Public Employee Salary
Texas Transparency Y
600px-Yes check.png
N
600px-Red x.png
Y
600px-Yes check.png
Y
600px-Yes check.png
{{{1}}}
N
600px-Red x.png

For further information, see

See also: Evaluation of Texas state website

Independent transparency sites

The Texas Public Policy Foundation has created an independent website focused on Texas's budget and transparency. In addition to state transparency information, it posts data about local and school district transparency.[69]

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 measures state transparency as of September 2011 using indicators from a range of organizations. These indicators measure both website transparency and other recognized facets of governmental transparency. In addition, IGPA presents 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.[70][71]

In addition to the individual state profile, IGPA offers a 50-state comparison and profiles for other states.[72][73]

Budget background

The Texas state budget is implemented for two year durations by the Legislative Budget Board. Agencies develop their appropriations requests in the first year, the legislature approves the General Appropriations Act in the second year, and the budget is implemented over the next two years.[74] By constitutional mandate, Texas operates under budgets set for two-year periods.[75]

Texas' fiscal year runs from September 1st to the following August 31st of an odd-numbered year (for example, September 1, 2009 - August 31, 2011.[76] Since 1978, the state constitution has required the State Comptroller to create an itemized estimate of the incoming revenue that will be available to the state for spending in the upcoming two-year fiscal period (biennium).[77] This estimate is submitted to the Governor and the legislature and is used as a baseline to ensure that appropriations do not exceed incoming revenue.[78] Once an appropriation bill is agreed on by both houses of the legislature, it is sent to the State Comptroller for certification that there will be sufficient incoming revenue to cover the bill's appropriations.[79] If the Comptroller concludes that there is not enough money to cover the proposed spending, the bill is sent back to the legislature where any spending in excess of anticipated revenue must be approved by a 4/5 vote in each house.[80]

Once a bill is certified by the Comptroller, the bill is sent to the Governor for review and signature; the state constitution grants the Governor a line-item veto by which he can use to cancel out specific provisions without having to veto the bill in its entirty.[81]

The regular legislative sessions begin the second Tuesday in January every odd-numbered year and convene for not more than 140 days. The governor may call the legislature into special session as deemed appropriate. Special sessions are limited to issues specifically stated in the governor’s call and may meet up to the 30-day maximum.[82]

The Governor submits a recommended budget the 30th day of the regular legislative session. The Legislative Budget Office is responsible for fiscal notes, not the Executive Budget Office. Legislative Budget Board (the legislature’s budget agency) coordinates statewide performance measures and compiles reports.[83]

The state does have a constitutional cap on spending, using the growth of the state's economy, which is determined by the Legislative Budget Board (run by the Gov, Lt Gov, Speaker and Comptroller).[84] The calculation and methodology aren't as precise as the population plus inflation limit used by other states, and some are working to get such a proposal on the Texas ballot.[85]

In January of odd-numbered years. at the start of the legislative session, the comptroller provides an official estimate of state revenue for the coming two years, and that figure is the amount lawmakers can spend when they write the state budget. At any time, the comptroller may update that estimates and they often face pressure to do so late in the legislative session, when budget-writers need additional dollars.[86] Sen. Kirk Watson sent the comptroller a letter in September 2010 requesting an update to her official estimate of how much money the state will collect during the current two-year budget cycle as well as a forecast of the state's revenue outlook over the next two years.[86]

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 Legislature. The LAC consists of the Lieutenant Governor, the Speaker of the House of Representatives, 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.[87]

Credit Ratings

Credit Rating Fitch Moody's S&P
Texas AA+ Aa1 AA+[88]

o Despite the state's deficit, it has the second highest bond rating from Standard & Poor's.[89]

Stimulus

Texas received $15.19 billion in federal stimulus funding between February 2009 and June 1013.[90]

Public Employees

See also: Texas public employee salaries and Texas public pensions

According to 2011 Census data, the state of Texas employed a total of 363,533 people.[91] Of those employees, 284,729 were full-time employees receiving a net pay of $1.25 billion per month and 278,804 were part-time employees paid $114.4 million per month.[91]

External links

References

  1. Rick Perry says the 2014-15 Texas budget increases spending by less than the rate of inflation and population growth, June 10, 2013. Accessed September 18, 2013
  2. 2.0 2.1 2.2 2.3 NBCDFW.com "Perry Signs Balanced Budget" June 24, 2011
  3. The Dallas Morning News "How bad is the budget crunch?" Oct. 24, 2010
  4. National Conference of State Legislatures "State Experiences with Annual and Biennial Budgeting" April 2011
  5. Senate Research Center "A Guide to the Budget Process in Texas" 2007
  6. Texas Budget Overview, Senate Research Center
  7. Budget Solutions "State Budget Solutions' third annual State Debt Report shows total state debt over $4 trillion" Aug. 28, 2012
  8. State Budget Solutions “Report reveals aggregate state debt exceeds $4 trillion” Oct. 24, 2011
  9. State Budget Solutions "State debt more than $37,000 per private worker, $13,000 per capita" Oct. 2, 2012
  10. US Census Federal Aid to State and Local Governments
  11. Tax Foundation' "Monday Map: Federal Aid to State Budgets. Accessed October 15, 2013
  12. NBC Dallas-Fort Worth "Community Colleges Worry About State Budget" Jan. 28, 2013
  13. The Texas Tribune "State Leaders Adopt Spending Cap for 2014-15 Budget" Nov. 15, 2012
  14. 14.0 14.1 The San Francisco Chronicle "Texas' budget capped at $77.9B for 2014-15 year" Nov. 15, 2012
  15. The Dallas Morning News "Dewhurst vows Texas Senate will limit spending in upcoming state budget" Nov. 15, 2012
  16. CBSNews.com "Texas economy better, but state budget still short" Feb. 21, 2012
  17. Businessweek "Texas comptroller declares economic recession over" Dec. 12, 2011
  18. Businessweek "State Revenue Under Plan Means Cuts From New York to California" Oct. 14, 2011
  19. 19.0 19.1 19.2 The Austin American-Statesman "Texas sales tax collections hit monthly record" Dec. 7, 2011
  20. CBSNews.com "Texas economy better, but state budget still short" Feb. 21, 2012
  21. The Star Telegram "No special session on education, Perry says" Feb. 21, 2012
  22. 22.0 22.1 National Public Radio "Texas Schools Grapple With Big Budget Cuts" Dec. 22, 2011
  23. The Houston Chronicle "State Commissioner predicts $15 to $17 billion shortfall in Medicaid" Feb. 1, 2012
  24. The Houston Chronicle "Lawmakers hear update on Medicaid spending" May 7, 2012
  25. 25.0 25.1 25.2 The Fort Worth Star Telegram "GOP leaders say state budget can be balanced without tax hike" Jan. 12, 2011
  26. Businessweek "Texas House approves Medicaid changes" June 9, 2011
  27. 27.0 27.1 KVUE.com "Key budget bill fails to pass the Texas House" June 28, 2011
  28. The Houston Chronicle "Must-pass budget bill revived and approved by House" June 28, 2011
  29. phttp://www.chron.com/disp/story.mpl/ap/tx/7631170.html#ixzz1QdA8MeW7 The Houston Chronicle "Texas Legislature passes education cuts, TWIA bill" June 28, 2011]
  30. Senate Bill 1
  31. Senate Bill 2
  32. The Austin American Statesman "Must-pass budget measure clears both chambers" June 27, 2011
  33. San Angelo Standard Times "Budget agreement details released" May 23, 2011
  34. Economist, Texas’s legislature reaches for the axe, May 26, 2011
  35. The Austin American-Statesman "With budget deal struck, lawmakers get moving" May 21, 2011
  36. 36.0 36.1 SB 1811
  37. Star Telegram, Texas budget with $15.1 billion in cuts approved by legislative negotiators, May 26, 2011
  38. Star Telegram, Texas budget with $15.1 billion in cuts approved by legislative negotiators, May 26, 2011
  39. 39.0 39.1 39.2 The Gonzales Inquirer "Senate finds ways to shore up State budget" May 3, 2011
  40. The El Paso Times "Texas House passes state budget by 98-49 vote" April 4, 2011
  41. 41.0 41.1 cnbc.com "Texas Senate gears up for budget fight with House" April 18, 2011
  42. The Dallas Morning News "Let the Texas budget wars commence ..." Nov. 29, 2010
  43. The Texas Tribune "Some Eying Sales Tax Increase to Plug Budget Hole" Jan. 4, 2011
  44. 44.0 44.1 The Wall Street Journal ""Texas Senate Passes State Budget" May 4, 2011
  45. SB 23
  46. Reuters, Texas House and Senate send governor budget that cuts spending, May 29, 2011
  47. Star Telegram, Texas budget with $15 billion in cuts clears legislature, May 30, 2011
  48. Star Telegram, Texas budget with $15 billion in cuts clears legislature, May 30, 2011
  49. Houston Chronicle, Perry orders special session for school finance plan, Medicaid costs, May 30, 2011
  50. Houston Chronicle, Perry orders special session for school finance plan, Medicaid costs, May 30, 2011
  51. Reuters, Texas House and Senate send governor budget that cuts spending, May 29, 2011
  52. KVUE, Texas Legislature goes into special session, May 31, 2011
  53. KVUE, Texas Legislature goes into special session, May 31, 2011
  54. The Austin American-Statesman "Thousands protest budget cuts at Capitol" April 6, 2011
  55. The Houston Chronicle "Budget talks at Texas Capitol draws protesters" April 6, 2011
  56. Fox TV, Teachers Take Stance Against Texas Budget Cuts, June 7, 2011
  57. 57.0 57.1 The Austin American-Statesman "Texas' budget challenges could persist beyond 2011" Feb. 1, 2011
  58. The Austin American-Statesman "Texas schools no longer shielded from state budget cuts" Nov. 16, 2010
  59. 59.0 59.1 The Fort Worth Star Telegram "Highlights of proposed state budget cuts" Jan. 20, 2011
  60. 60.0 60.1 60.2 The New York Times "Battle Lines Drawn Over Medicaid in Texas" Nov. 11, 2010
  61. 61.0 61.1 Businessweek "Committee approves revamping health care program" June 3, 2011
  62. Businessweek "Texas House approves Medicaid changes" June 9, 2011
  63. The Texas Tribune "Pitts Readies Constituents for Coming Budget Cuts" Nov. 29, 2010
  64. The Houston Chronicle "Perry lets Lege tap into rainy day fund" March 15, 2011
  65. The Dallas Morning News "In Dallas visit, Perry urges not tapping Rainy Day fund" March 9, 2011
  66. Businessweek "Deal to tap reserves won't do much to avoid cuts" March 18, 2011
  67. Cite error: Invalid <ref> tag; no text was provided for refs named axe
  68. 68.0 68.1 The Houston Chronicle "State services unlikely to escape budget ax" Dec. 19, 2010
  69. www.texasbudgetsource.com
  70. Institute of Government and Public Affairs
  71. University of Illinois Transparency Profile for Texas
  72. [ University of Illinois 50 State Transparency Comparison
  73. University of Illinois State Transparency Profiles
  74. Texas Legislative Budget Board, Budget 101
  75. Legislative Budget Board, History
  76. Senate Research Center, Budget 101
  77. Legislative Budget Board, History
  78. Senate Research Center, Budget 101
  79. Senate Research Center, Budget 101
  80. Legislative Budget Board
  81. Senate Research Center, Budget 101
  82. Texas State Senate, "Citizen Handbook: How the Texas Legislature Works," February 2007
  83. National Association of Budget Officers, "Budget Processes in the States," 2008
  84. Comparison of Spending Limits
  85. Texas Monthly
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  87. Texas State Auditor's Office Web site, retrieved November 13, 2009
  88. Pew Stateline Infographic on State Credit Ratings. Accessed September 18, 2013
  89. Businessweek "California, Texas, and State Workers' Pay" April 28, 2011
  90. Recovery, "Stimulus Spending by State"
  91. 91.0 91.1 2011 Texas Public Employment U.S. Census Data