AUSTIN -- A compromise budget that cuts state spending by $15.1 billion over the next two years is heading to lawmakers for a final vote before Monday's legislative adjournment.
But on another critical front, an impasse remained over school finance as House and Senate leaders near the make-or-break point for reaching a deal before time runs out.
Negotiators approved the $172.3 billion biennial budget Thursday, ending nearly four months of contentious deliberations over the dominant issue of the session. The House and Senate are expected to vote on the two-year spending plan Saturday.
The budget includes $4 billion in education cuts. Lawmakers on Thursday were still struggling to adopt a separate school finance plan essential to distributing the reduced funding to the more than 1,000 Texas school districts.
Senate Finance Committee Chairman Steve Ogden, R-Bryan, said that legislators will face the likelihood of a special session if they fail to produce a school finance plan.
Key lawmakers are hoping to forge a hybrid school finance plan from competing proposals designed by the leaders of the House and Senate education committees.
Today was widely considered the final day for producing an agreement, but lawmakers involved in the discussions said they were getting close to a deal. House members submitted a plan for senators to review overnight.
Rep. Garnet Coleman, D-Houston, said the proposed budget is based on "smoke-and-mirrors" accounting by Republican leaders and asked Comptroller Susan Combs to return it to the House if she determines that it isn't balanced, as required by the state constitution.
Legislative leaders signed off on the broad framework of the budget in an agreement last week, and House-Senate conferees continued deliberations to craft the final plan. The Republican-dominated conference committee voted 9-1 to advance the budget to the full House and Senate, with Rep. Sylvester Turner, D-Houston, casting the lone dissent.
Ogden and House Appropriations Committee Chairman Jim Pitts, R-Waxahachie, said that the budget averts some of the worst-case scenarios envisioned earlier and softens expected spending reductions on education and healthcare.
"Under the circumstances, this is a great budget," Ogden said. "It's not without pain. Budgets are going to be tight, but Texas is going to be fine for the next two years under this budget."
Sen. Rodney Ellis, D-Houston, suggested that Republican leaders orchestrated the budget process with "deliberately draconian" draft proposals in January followed by final recommendations that "appear somehow less severe."
"This has played out exactly as many of us predicted," Ellis said. "Now, we've gone from apocalyptic to merely horrific and we're calling that an improvement."
The Texas State Teachers Association blasted the proposal as the worst state budget for public education in at least 27 years.
"This budget fails to meet the Legislature's constitutional responsibility to adequately fund the public schools," association President Rita Haecker said. "It is a shameful disservice to the schoolchildren and taxpayers of Texas."
Health professionals also decried a 17.2 percent cut in health and human services. The Texas Hospital Association said that health funding took the biggest blow of any sector.
The Texas Public Policy Foundation, a free-market research institute in Austin, urged lawmakers to adopt the budget.
"Texas is leading the way in showing that government can be made smaller -- and that's an example for all of America," said Talmadge Heflin, director of the foundation's Center for Fiscal Policy.
The proposed 2012-13 biennial budget is less than the $176.5 billion Senate budget but more than the $164.5 billion House plan. The House called for a $23 billion cut (12.3 percent) from current spending. The Senate called for an $11 billion (5.9 percent) decrease.
Coleman, in a letter to the comptroller, suggested that the budget may not be balanced because of $4.8 billion in unfunded Medicaid expenses. The budget is also dependent on a nontax revenue measure that is still going through the legislative process, Coleman said.
Coleman said the Republican comptroller is required to send the budget back to the House, where spending bills originate, if she determines that it is not balanced.
Ogden disputed Coleman's assertions, declaring that "the budget is balanced" and will be certified by the comptroller.
A plunge in state tax revenue during the recession left lawmakers facing a projected shortfall of up to $27 billion when they began the session in January.
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. Texans face reductions in nearly all categories of state services. The plan cuts health and human services spending by $11.2 billion. Dave Montgomery is the Star-Telegram's Austin bureau chief. 512-476-4294