House, Senate converge on budget price tag, but not funding methods


Highlights

A House committee approved a $106.8 billion budget a day after the Senate adopted a $106.3 billion plan.

The two chambers remain at odds over how stretch the state’s dollars in a tight budget year.

The House wants to tap the rainy day fund. Both sides are looking at accounting maneuvers to free up money.

The battle lines have been drawn for a showdown over the state budget between the Texas House and Senate, with the two chambers proposing to spend similar amounts of money but paying for their plans in different ways.

The Texas House Appropriations Committee on Wednesday unanimously approved a $106.8 billion state budget for the next two years that uses $2.5 billion from the rainy day fund, defers a $1.9 billion payment to the school funding system until the following budget year and assumes $1 billion savings in Medicaid spending due to federal action.

The vote came a day after the Senate unanimously approved its version of the budget, which spends $106.3 billion in state discretionary money, avoids tapping the $10.2 billion rainy day fund and frees up $2.5 billion by delaying a transportation payment until fiscal 2020.

The gap between the two chambers’ plans has narrowed, after Senate and House leaders put forth initial proposals that were $5.3 billion apart. Including federal money and funds dedicated for specific purposes, the House plan spends $218.2 billion and the Senate $217.7 billion.

“In the world of this budget that we live in, that’s not too much money for us to get our arms around,” House Appropriations Committee Chairman John Zerwas, R-Richmond, said of the roughly $500 million difference in the plans. “At least in terms of total money spent, we have come very close to each other. We have chosen to find $2.5 billion in a very different way, but that’s just part of the conferencing process.”

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The overall price tags, however, mask differences in assumptions that put them further apart than they appear, and the two sides are still odds over how to stretch the state’s money in a tight budget year.

Due to low oil and gas prices cutting into state revenue and decisions made in the 2015 legislative session — especially a $2.6 billion business tax cut and a $4.7 billion set-aside for highway projects — both plans aim to spend less state money in the next budget cycle than in the current $108 billion two-year budget. After factoring in inflation and population growth, they amount to a roughly 7 percent cut from current spending levels, according to Legislative Budget Board data.

State Rep. Donna Howard, D-Austin, said, “self-inflicted wounds that we made last session” are the reason lawmakers can’t keep up with the needs of a growing state.

“To many of us, this is the best we could do with what we have, but not something to be proud of,” she said.

Education spending

One area where the House is pushing to increase spending is public education. The House plan calls for $1.5 billion in new funding to the state’s school finance system. The Senate budget leaves untouched the current education funding formula, resulting in a $1.4 billion decrease in the state’s share of school spending as districts pay more due to rising property values.

Disbursements from the House’s use of the rainy day fund, which is funded primarily by oil and gas production taxes and is projected to grow to almost $12 billion by the end of 2019, include almost $670 million in border security spending, $500 million to help plug a shortfall in the retired teacher health care system and $187 million for state hospitals and supported-living centers.

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Led by Lt. Gov. Dan Patrick, fiscal conservatives in the Senate have said the rainy day fund should only be used during natural disasters or for one-time expenses.

Former lawmakers and Capitol staffers who drafted and approved the fund in 1987, however, have said that the intended use was to smooth out the inevitable ups and downs involved in managing and budgeting in a state dependent on the boom-or-bust energy industry.

Sniping between chambers

In laying out the new House proposal Wednesday, Zerwas took a jab at the Senate’s plan to delay a $2.5 billion transfer of general sales tax revenue that lawmakers and voters in 2015 decided should be earmarked for highway projects in the 2019 budget year until fiscal 2020. Zerwas said after the meeting that the move would violate a provision in the Texas Constitution requiring that the sales tax transfer occur in the same fiscal year that it is collected.

“The (House) budget does not rely on budget gimmickry that puts the state’s investment in transportation at risk,” he said.

The House’s plan to delay a $1.9 billion monthly payment to the Foundation School Program until the first month of 2020, an accounting maneuver the Legislature has made in the past, is different, Zerwas said, because there is no constitutional requirement the payment be made within a certain time frame.

Senate Finance Committee Chairwoman Jane Nelson, R-Flower Mound, contends the Senate plan still allows the Texas Department of Transportation to spend the money in the 2019 budget year. The Constitution, she said, contains conflicting language on how to handle the transportation transfer.

“The Senate is not willing to default on a commitment that 83 percent of Texas voters approved,” Nelson said in a statement, referring to the results of the 2015 ballot measure approving the transportation set-aside. “This is constitutional – and common sense.”



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