Texas Senate budget trims many agencies, avoids using rainy day fund


Highlights

The Senate unanimously approved a $217.7 billion state budget.

The budget now goes to the House, where leaders have criticized the Senate plan for cutting too deeply.

A key sticking point in House-Senate negotiations will be whether to tap the $10.2 billion rainy day fund.

The Texas Senate on Tuesday approved a two-year, $217.7 billion state budget that includes significant cuts to many state agencies, relies on a disputed $2.5 billion accounting maneuver and doesn’t tap the state’s $10.2 billion rainy day fund.

The 31-0 vote sends Senate Bill 1 to the House, where Speaker Joe Straus, R-San Antonio, has harshly criticized the Senate plan, setting up a showdown over the only bill lawmakers must pass before departing Austin at the end of May.

Introducing the budget on the Senate floor, Finance Committee Chairwoman Jane Nelson, R-Flower Mound, noted that lawmakers are dealing with a tight budget this year because state tax collections have been slowed by sluggishness in the fossil fuel sector, and she alluded to measures lawmakers approved in 2015 — especially a business tax cut and a set-aside for transportation funding — that have limited how much money they can spend.

“On one hand, our economy continues to grow. People and businesses continue to pour in,” Nelson said. “On the other hand, because of declining oil prices and other factors, we do not have the amount of revenue that we’ve seen in years before.”

Borrowing words from state Sen. Carlos Uresti, D-San Antonio, Nelson said the Senate had produced “a lean budget but not a mean budget.”

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The Senate budget, which includes state and federal money, would be a 0.7 percent increase over current spending. But after factoring in population growth and inflation, the plan would amount to a 7.1 decrease in spending, according to data from the Legislative Budget Board.

It spends $106.3 billion in state general revenue, which is above the $104.9 billion projection that Comptroller Glenn Hegar in January said lawmakers will have available for the next budget.

The Senate makes up the difference through a budgeting maneuver that delays to the 2020 budget year a $2.5 billion payment for state highways that was scheduled for fiscal 2019.

Straus said last week the Senate plan amounts to “cooking the books” and urged lawmakers to instead use the rainy day fund, which will grow to almost $12 billion by the end of 2019.

Senate Democrats, however, have offered little resistance to the maneuver or to the Senate budget in general.

State Sen. José Rodríguez, D-El Paso, said he had concerns about the bill, but supported it.

“We should, in my opinion, be using the rainy day fund to ensure that we are adequately funding our schools and health and human services programs,” Rodríguez said.

‘Fiscal restraint’

The Senate budget cuts deeply into higher education, trimming by 6 to 10 percent state spending for public colleges and universities. It leaves untouched the state’s K-12 education funding formula, which will result in a $1.4 billion decrease in the state’s share of the funding as school districts’ share increases due to rising property values.

The Senate plan continues the current $800 million funding level for the state’s border security initiative, which Democrats have been pushing to cut in light of President Donald Trump’s promises to ramp up U.S. Border Patrol spending.

The beleaguered Child Protective Services will get a $430 million boost, and spending on mental health services increases $240 million.

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Eva DeLuna Castro, budget analyst for the left-leaning Center for Public Policy Priorities, said the budget is “not good enough for Texas.”

“With substantial cuts to Medicaid, steep cuts to higher education and overall underfunding of critical state needs, this proposal doesn’t do enough to invest in our great state,” she said.

The conservative Texas Public Policy Foundation applauded the Senate for “practicing fiscal restraint and not dipping in the state’s savings account.”

“We commend the Texas Senate for passing a budget that meets the needs of Texans while restraining the increase in government appropriations,” Talmadge Heflin, director of the foundation’s Center for Fiscal Policy, said in a statement.

House next

In keeping with Senate tradition, the budget wasn’t amended on the floor. It now goes to the House, where it will be referred to the Appropriations Committee and replaced with the House budget plan by Chairman John Zerwas, R-Richmond.

After the House approves its version of the budget in the coming weeks, members from both chambers will meet behind closed doors to forge a compromise.

The House’s initial plan called for $108.9 billion in state general revenue spending and $221.3 billion overall. It includes a smaller cut to higher education and a $1.6 billion boost to K-12 spending.

Zerwas also is pushing to adopt a stop-gap measure known as a supplemental budget that would plug holes in the current two-year spending plan, in part using $2.5 billion from the rainy day fund.

Whether to tap the fund, which is formally known as the Economic Stabilization Fund and is primarily supported by oil and gas production taxes, will be a key sticking point in House-Senate negotiations.



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