AUSTIN -- Raising hopes that lawmakers can avert a midsummer special session, legislative leaders forged a little-time-to-spare budget agreement Friday that cuts government spending by $15 billion over the next two years.
The agreement, which requires approval from the full House and Senate, would cut state funding for public schools and higher education, but in amounts less than predicted. Public school funds would be reduced by $4 billion, higher education by $1.3 billion.
Within hours after the agreement was announced, House members began grappling with a $2.5 billion non-tax-revenue measure deemed essential to help finance the budget deal. In one key action, lawmakers agreed to back away from a proposal to suspend the state's popular sales tax holiday, which draws million of shoppers every August.
More than a half-dozen other key bills tied to the agreement face lawmakers as they head toward their May 30 adjournment. The House planned to work through the weekend, and the Senate scheduled a session for today.
Hundreds of educators and parents were expected to rally at the Capitol today to protest the cuts. Education funding has been one of the most volatile elements of the budget deliberations over the past four months, provoking impassioned debate over the prospect of teacher layoffs and shrinking school budgets.
"Full speed ahead," rally organizer Jason Sabo said. "Public education is taking a $4 billion hit, which is something voters need an opportunity to express their concerns about."
The agreement was announced by Lt. Gov. David Dewhurst and House Speaker Joe Straus after days of behind-the-scenes negotiations. By most accounts, budget negotiators had until today to reach accord to avoid the need for a special session. Although lawmakers acknowledge that any blowup before adjournment could still a force a special session, that prospect appears more remote.
"I'm pleased that the House and Senate have come to an agreement that will help balance the budget and protect Texas taxpayers while making an historic $15 billion cut in government spending," said Dewhurst, the presiding officer of the Senate.
Straus called the accord a "disciplined, fiscally conservative budget that funds priorities including public schools, financial aid for college students and nursing homes while keeping substantial revenue in reserves and avoiding new taxes."
But Democratic leaders blasted the agreement.
"This budget is still far worse than it needs to be because this Republican-dominated Legislature made cruel choices based on completely misplaced priorities," said Texas Democratic Party Chairman Boyd Richie.
Negotiators for both chambers made concessions to close the deal. Senators accepted a lower withdrawal from the state's $9.7 billion rainy-day fund, agreeing to the House-passed drawdown of $3.1 billion to help overcome a deficit for the current biennium.
The Senate had called for a rainy-day withdrawal of nearly $4 billion, antagonizing conservative groups that believe the reserve pool should be left intact for future emergencies.
House negotiators agreed to move closer to the Senate's more generous funding level for public schools and higher education. The budget passed by the House in April proposed reductions of $7.8 billion in public education and $2 billion in higher education.
The proposal calls for spending $80.6 billion in state general revenue for the 2012-13 biennium, but officials said it may be days before they can calculate the total amount, which also includes billions of dollars in federal funds.
The House budget called for spending $164.5 billion in state and federal funds for 2012-13 -- a $23 billion reduction (12.3 percent) from current spending. The Senate budget of $176.5 billion proposed an $11 billion reduction (5.9 percent).
Although lawmakers are dealing with a host of other issues, resolving the budget crisis was deemed Job No. 1 even before the session began in January. Lawmakers entered the session facing a budget shortfall of up to $27 billion because of a plunge in state revenue during the recession.
Budget negotiators got a helping hand from Comptroller Susan Combs this week when she announced $1.2 billion in additional revenue as a result of a better-than-expected improvement in the economy. That helped the House boost its education expenditures.
House Republicans, who hold a 101-49 majority in the chamber, seemed inclined to rally behind the agreement.
"I think it's a good conservative budget," said Rep. Phil King, R-Weatherford. "I'm particularly pleased that our schools don't have to go through the large cuts that we originally anticipated."
Rep. Vicki Truitt, R-Keller, said she has had preliminary discussions with school officials to discuss the measure. "It's a lot better than it was," she said.
Democrats, however, seemed unified against the measure.
"The Democrats weren't included in it, obviously, and we're pretty unimpressed," said Rep. Lon Burnam, D-Fort Worth. "I imagine we'll all be voting against it."
Stephanie Gibson of the Texas Retailers Association applauded the House decision to strip the provision suspending the sales tax holiday. Consumers and business groups waged a high-profile effort against the proposal after it was included in a committee-passed version. House Appropriations Committee Chairman Jim Pitts, R-Waxahachie, indicated recently that he would offer an amendment repealing the provision.
"We're ecstatic," Gibson said.
Dave Montgomery is the Star-Telegram's Austin bureau chief. 512-476-4294