Texas Senate leaders presented a $205.1 billion two-year base budget Tuesday, promising to provide property tax cuts that Texans “actually feel” while keeping the state’s economy humming along.
The Senate budget is $3 billion larger than the $202.4 billion House budget that Speaker Joe Straus released nearly two weeks ago. However, the Senate budget includes $4 billion allocated for tax cuts. Straus opted to leave tax cuts out of the House’s opening proposal to allow members to formulate their own ideas on how to cut taxes.
At a Tuesday news conference, Senate Finance Chairwoman Jane Nelson, R-Flower Mound, said the Senate budget plan includes $3 billion set aside for “meaningful” property tax relief that homeowners would notice, as well as $1 billion for business franchise tax cuts. She and Lt. Gov. Dan Patrick said the mechanisms by which they intend to cut property and margins taxes were still being worked out and could end up higher than the $4 billion currently proposed.
“We are taking in substantial revenue, and we have an obligation to return a large share of those dollars to the people who have worked hard and earned that in the first place,” Nelson said.
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Nelson said the budget maintains current formula funding for public education, accounting for the expected growth of about 84,000 students annually.
The Senate budget would add $815 million for border security, more than the previous seven years combined, according to Nelson’s office.
The House budget allocates $396.8 million for border security, which House officials described as enough to maintain the increased presence of DPS officers that were sent to the border in June as part of a high-profile border surge.
Like the House budget, the proposed Senate budget ends $1.2 billion in spending that is currently paid out of the gas tax but is not directly related to transportation. Most of that money currently goes toward funding the Department of Public Safety.
For years, lawmakers have discussed ending those so-called diversions from the gas tax. Nelson’s budget also includes a one-time dedication of $1.2 billion in sales taxes collected on motor vehicle sales to the highway fund.
Lawmakers are expected to consider permanently dedicating that revenue stream to road construction, an idea that Nelson indicated she is open to.
In two areas, Nelson made clear she is using the threat of defunding to change public policy. Her budget defunds the public integrity unit, a division of the Travis County district attorney’s office that investigates corruption of public officials. The House’s budget largely restores the state’s funding of the unit at $6.6 million, contingent on the Legislature passing measures “to reform the system of investigating and prosecuting crimes related to state government.”
“This budget does not fund the public integrity unit anywhere. … I personally do not believe it belongs in Travis County,” Nelson said.
Nelson’s budget also defunds the Texas Racing Commission, which has been under fire in recent months for its decision to move forward with plans to permit for a controversial form of gambling known as historical racing at the state’s racetracks despite objections from many lawmakers.
Nelson said the commission should have waited for the Legislature to convene and debate the issue. The commission’s funding would not be restored “until we have an agreement on that,” she said.
Patrick praised Nelson for the budget she had crafted. “The budget has been a collaborative effort between the lieutenant governor’s office and her office, but she’s done 99 percent of the work,” Patrick said.
Straus’ proposed budget increases general revenue, the portion of the budget that lawmakers have the most control over, by 3.9 percent from $95.2 billion to $98.8 billion. General revenue typically makes up around half of the total budget, with much of the remainder coming from federal funding.
House officials said the budget avoids cost increases in part through cuts, but also through some unexpected savings. For instance, the budget spends an additional $1.8 billion in Medicaid, largely to address caseload growth. Officials last session had assumed higher cost increases were coming related to the implementation of the federal Affordable Care Act, according to a House official.