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First drafts of state budget hold the line on spending

Posted Tuesday, Jan. 15, 2013  comments  Print Reprints
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AUSTIN - The Republican-led Legislature plunged into the opening round of writing a new state budget Monday as leaders in the House and Senate released separate initial spending plans that drew quick attacks from critics for failing to restore more than $5 billion in education cuts imposed by lawmakers two years ago.

House leaders are calling for $187.7 billion in spending over the next two years, while the Senate version proposes $186.8 million.

Reflecting a directive from Gov. Rick Perry, the budgets essentially take a hold-the-line approach to spending and are substantially below robust revenue projections available to lawmakers for the upcoming 2014-15 fiscal biennium, which starts in Sept. 1. The Senate proposes a $3.1 billion, or 1.6 percent, decrease from current spending while the House would cut spending by $2.2 billion or 1.2 percent.

Budget writers acknowledged that the proposals are only the first step in the budget debate and will likely undergo substantial revision before lawmakers adapt a final version before they go home in late May. The 140-day biennial legislative session convened last week.

High points of the bills include funding education to meet projected enrollment increases over the next two years and covering projected growth in Medicaid. They also put a hold on funding for the Cancer Prevention and Research Institute of Texas, which has come under scrutiny for possible favoritism for the awarding millions of dollars in grants.

Sen. Jane Nelson, R-Flower Mound, who chairs the Senate Health and Human Services Committee, expressed concern about the funding moratorium on the research institute.

"I am concerned about this strategy because I want the world to know that Texas will continue to lead in our strong commitment to fighting cancer," she said. "CPRIT's mission needs to continue in a manner that is fair, transparent and in compliance with the laws on the books, as well as the new ones that we are developing this session."

House Appropriations Committee Chairman Jim Pitts, R-Waxahachie, said the House version of the budget "steadfastly maintains the House's commitment to fiscal discipline."

Lt. Gov. David Dewhurst, the presiding officer of the Senate, called his chamber's plan "a careful budget, a thoughtful base budget."

Although the spending plans meet educators' demands to fund public school enrollment growth - something the state didn't do two years ago - the head of the Texas State Teachers Association called the plans a "recipe for failure" because they don't restore cuts in education assistance made by the last Legislature.

Lawmakers in 2011, for the first time in decades, did not fund anticipated enrollment growth and cut a total of $5.4 billion in assistance to the state's nearly 1,100 school districts. TSTA President Rita Haecker challenged the current Legislature to "begin restore the damage on our local public schools last session," noting that lawmakers have an $8.8 billion surplus and a projected $11.8 billion in the state rainy-day fund.

TSTA spokesman Clay Robison said the proposal takes "a good step in addressing enrollment growth going forward but it doesn't repair the damage in the last budget."

The revenue outlook is considerably brighter than two years ago when lawmakers cut $15 billion in state services in the aftermath of the recession to pass an austere budget for the current biennium. The 2011 budget totaled $173 billion, but it has since been adjusted to $189 billion to cover spending adjustments and additional federal revenue.

Comptroller Susan Combs told incoming legislators last week that they will have $101.4 billion in state general purpose revenue for the upcoming biennium and a total of $208.1 billion from all sources, including federal money.

Nevertheless, the initial spending plans take a conservative path, adhering to Perry's admonition to avoid a spending spree with the expanded revenue. Perry and legislative leaders have targeted infrastructure improvement - such as transportation and water - as a major priorities and have also put possible tax relief on the table.

"This session, we will again balance our budget without raising taxes on Texas families and businesses, while keeping spending as low as possible," Dewhurst said. "Year after year, we've made state government live within its means while adequately funding our priorities. The Senate will continue to work through the budget program by program to identify savings and determine our priorities with the revenue available."

The House plan assumes passage of a $6.8 billion supplemental bill in the coming weeks to take care of leftover obligations in the current biennium, meaning that the proposed 2014-15 budget will reflect a $2.2 billion decrease over current spending, Pitts said.

He said that the proposed budget falls below Combs' revenue estimate and is $3.7 billion less than a constitutional spending limit. It includes $89.1 billion in state general revenue.

Pitts said the bill reflects the demands of a rapidly growing state "as well as the House's continued commitment to responsible fiscal leadership."

Remaining costs from the 2012-13 biennium, such as the five unfunded months of Medicaid, a shortfall in the Foundation School Program, and reimbursements for wildfire expenses will be covered in a supplemental appropriations bill, Pitts said.

Dale Craymer, president of the business-oriented Texas Taxpayers and Research Association, said the spending plan "is certainly a lot better than it was two years ago" and reflects the state's "much healthier economy."

"That said," Craymer added, "it's still a starting point for a lot of work that lies ahead, particularly in Medicaid and Education."

Eva de Luna Castro of the Center for Public Policy Priorities, which advocates for low-income residents, said an analysis by her group concludes that it would take $108 billion to restore cuts from the previous session, adding that lawmakers still "have a lot of money on the table" under the better-than-expected revenue projections.

In contrast to two years ago, the spending proposals call for increases in both public education and higher education. Both budgets call for an increase of $285.8 million - including $30.2 million in state general revenue money - for the Foundation School Program, which provides state assistance to public schools.

The increase, among other things, would cover the estimated $2.2 billion cost of an additional 85,000 students, a growth of about 1.8 percent.

The budgets also include increases for the judiciary, public safety and criminal justice, regulatory functions and general government. The biggest boost is a 13 percent increase for business and economic development.

Dave Montgomery is the Star-Telegram's Austin bureau chief. 512-739-4471

Twitter: @daveymontgomery

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