Texas state budget

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The Texas State Legislature passed and Gov. Rick Perry signed on June 19, 2009 a $182 billion 2-year budget (Sept.1, 2009 to Aug. 31, 2011) with a projected $9 billion Rainy Day Fund. The FY 2010-2011 biennium budget of $182.3 billion spends $1.6 billion less in general revenue than the previous biennium. Gov. Perry used his line-item veto power to cut $97.2 million in general revenue and $288.9 million from all funding sources. ^[1] Comptroller Susan Combs' quiet acknowledgment that Texas will show a $1.3 billion deficit at the end of the budget year^[2], which is up dramatically from the July 2010 estimate of a shortfall of up to $18 billion dollars.^[3]

The federal $26 billion jobs bill intended to protect 300,000 teachers and other nonfederal government workers from layoffs enacted on August 10, 2010, included a state-specific provision for Texas that requires Gov. Perry to ensure that Texas will maintain certain state education spending levels through 2013. Perry has said that the Texas Constitution prohibits him from committing future state spending and therefore he believes the requirement is unconstitutional.^[4] The state will receive $1,664,295 in federal stimulus funds from the ARRA FMAP extension & Education Jobs Fund package.^[5]

Texas has far to go to meet the gains projected for the current two-year budget cycle, despite some signs of an improving economy.^[6] Lawmakers have called for budget cuts. For FY2010, state agencies cut their budgets by 5 percent, saving $1.2 billion.^[6] In the $182 billion budget, only $87 billion is general-revenue money, with the rest of the funds coming from the federal government or placed in the highway fund and bond proceeds, the uses of which are tightly specified.^[3]

See also: The Texas State Budget on State Budget Solutions

[edit] Budget for the 2012-13 Biennium

The state faces a budget gap for the 2012-13 biennium and it has been estimated to be as high as $18 billion.^[6] The legislature will face the issue when it next meets in January 2011.^[3]

Gov. Perry announced $1.2 billion in cuts in May 2010. “Every penny we save now in the 2010-11 biennium is one penny closer to balancing the budget in the next legislative session,” Perry said in a statement.^[7] Perry has pledged not to raise taxes.^[8] One week later, Gov. Perry ordered additional cuts of 10% because the 5% cuts in the prior year were insufficient.^[9] He told state agencies to submit their base-line budget requests for the 2012-13 biennium along with a "supplemental schedule" outlining how they would reduce the base-line requests by 5 percent each year by August 30, 2010.^[9]

Some of the agencies detailed the difficulties a 10% cut would involve. For example, the Texas Department of Criminal Justice, which runs the state prison system, says it could lose at least 4,700 positions and as many as 7,200, including correctional officers and parole staff.^[10] The agency was largely exempted from the 5 percent cuts for the current biennium after agency officials and their supporters warned that massive layoffs of correction officers could endanger the public.^[10] The Texas Alcoholic Beverage Commission said a 10% reduction would involve cutting 94 positions, reducing the number of enforcement agents to pre-2005 levels and eliminating half the department's field auditors.^[10] The Second Court of Appeals could lose 18% of the court's legal staff, which would cause the court's disposition of cases to drop to 82 percent of new appeals filed over the next two years.^[10]

Read more: http://www.star-telegram.com/2010/08/21/2417313_p2/state-budget-contingency-plans.html#ixzz0xOnQxPHa

Several major programs, including Medicaid and the Children's Health Insurance Program, are declared off limits from the cuts.^[10] However, the cuts do include a drop in reimbursement rates for doctors and other health care providers who treat Medicaid patients and $21.5 million in general-revenue spending cuts in his office, including $20 million from the deal-closing Texas Enterprise Fund that he has touted as a valuable tool to lure business.^[10]

To combat the $18 billion gap, House budget chief Jim Pitts urged the legislature to consider allowing expanded gambling in the state.^[11]

The state's Rainy Day Fund's anticipated balance next year is $8.2 billion but a two-thirds vote of the Legislature is required to access those funds.^[6]

[edit] Budget for 2010-2011

The 2010–11 biennial budget includes appropriations for state government operations that total $182.2 billion in All Funds. The 2010–11 biennial budget includes estimated appropriations of $80.6 billion from General Revenue Funds, $6.4 billion from General Revenue–Dedicated Funds, $65.5 billion from Federal Funds, and $29.7 billion from Other Funds.^[12]

Gov. Perry, Lt. Gov. David Dewhurst and House Speaker Joe Straus ordered agencies, universities and appeals courts to submit plans for cutting 5 percent from spending, roughly equaling $1.7 billion -- in the 2010-11 biennium, which started Sept. 1.^[13] State leaders exempted prison operations, inmate treatment programs, state mental hospitals, and some education programs from the 5 percent cuts.^[11]

To combat the economic downturn, Governor Perry stressed that all tools that could continue growth should be considered, "including implementing additional sales tax holidays."^[14]

Governor Perry's proposals for the 2010-2011 fiscal term included the following^[15]

• • $260 million for the Texas Enterprise Fund;
  • 203.5 million for the Emerging Technology Fund;
  • $60 million for the Texas Film Incentive Program ;
  • $60 million for the Skill Development Fund;
  • $97 million for the Texas High School Project;
  • 622.5 million in teachers incentive and reward programs;
  • 645.7 million related to higher education programs;
  • $110 million for the Texas Grant Program for financial aid;
  • $28 million for community college financial aid;
  • $168.9 million for higher education incentive funding;
  • $10 million for nursing education;
  • $10 million for health and fitness programs for middle and high school students;
  • $150 million for disaster and emergency appropriations; and
  • $135 million for border security.

The 2010-11 appropriations bill can be found here.

GENERAL REVENUE FUNDS – STATEWIDE SUMMARY, 2008–09 AND 2010–11 BIENNIA (IN MILLIONS)^[12]

ALL FUNCTIONS	ESTIMATED/BUDGETED 2008–09	APPROPRIATED 2010–112	BIENNIAL CHANGE	PERCENTAGE CHANGE
Article I – General Government	$2,242.4	$2,442.9	$200.5	8.9
Article II – Health and Human Services	21,776.3	24,413.6	2,637.3	12.1
Article III – Education	48,484.4	48,942.9	458.5	0.9
Public Education	35,762.7	35,219.1	(543.6)	(1.5)
Higher Education	12,721.6	13,723.8	1,002.1	7.9
Article IV – The Judiciary	402.9	437.8	34.8	8.6
Article V – Public Safety and Criminal Justice	8,293.2	8,630.2	337.0	4.1
Article VI – Natural Resources	755.2	875.1	119.9	15.9
Article VII – Business and Economic Development	648.3	586.8	(61.6)	(9.5)
Article VIII – Regulatory	339.9	311.8	(28.1)	(8.3)
Article IX – General Provisions	0.0	2.1	2.1	NA
Article X – The Legislature	343.5	354.3	10.8	3.2
Article XII – ARRA Funds (Federal Simulus)	(1,647.1)	(6,383.3)	(4,736.1)	287.5
TOTAL, ALL FUNCTIONS	$81,639.0	$80,614.2	($1,024.8)	(1.3)

Since the budget was passed, in FY2010 the legislature cut $527.4 million. The cuts were made in education, K-12 and higher ed, public assistance and corrections.^[16] Much of the budget is in funds that cannot be cut, making the less restricted programs, such as higher education, more vulnerable.^[3]

The current budget included $203 million for the Emerging Technology Fund, but midway through the biennium, the fund was tapped out and stopped taking applications for future awards.^[17] Slow federal payments that had not arrived accounted for $50 million in the fund, and another $50 million was missing due to a discrepancy in the state appropriations process.

[edit] Tax revenues increasing

Comptroller Susan Combs projected approximately $76 billion in state revenue from taxes and fees for the biennia, and more than half of that amount comes from sales tax receipts.^[18] She included in her projection a $1.2 billion gain in sales tax and legislators built that into the two-year, $87 billion budget. Combs said she doesn't think she will have to revise the state's revenue estimate, however, due to continued growth and better-than-expected performance in the oil and natural gas taxes.^[18]

In July 2010, state sales tax receipts were up 2.2%, marking the fourth month in a row they have increased.^[18] The gains, however, have been insufficient to eliminate the $1.39 billion year-to-date deficit in sales tax revenue from the first 11 months of the previous fiscal year.^[18]

[edit] $1 billion shortfall

Despite painting a rosy picture of increasing revenue, Combs had to report a $1.3 billion deficit that will require legislative attention, and that it will have to borrow from other state funds to meet cash-flow requirements.^[2]

The Comptrolloer's office acknowledges that its revenue forecasts which were last done in 2009 are not holding true because of low sales and franchise tax collections, but has not quantified that decline and is not scheduled to do so to until the end of this year. That's the normal schedule, which places the relase of that information conveniently after the November elections. Officially, the Comptroller's office says that its recent information doesn't address whether there's a deficit in the current budget.^[2]

[edit] Budget Background

The Texas state budget is implemented for two year durations by the Legislative Budget Board. Agencies develop their appropriations requests in the first year, the legislature approves the General Appropriations Act in the second year, and the budget is implemented over the next two years.^[19] By constitutional mandate, Texas operates under budgets set for two-year periods.^[20]

Texas' fiscal year runs from September 1st to the following August 31st of an odd-numbered year (for example, September 1, 2009 - August 31, 2011.^[21] Since 1978, the state constitution has required the State Comptroller to create an itemized estimate of the incoming revenue that will be available to the state for spending in the upcoming two-year fiscal period (biennium).^[22] This estimate is submitted to the Governor and the legislature and is used as a baseline to ensure that appropriations do not exceed incoming revenue.^[23] Once an appropriation bill is agreed on by both houses of the legislature, it is sent to the State Comptroller for certification that there will be sufficient incoming revenue to cover the bill's appropriations.^[24] If the Comptroller concludes that there is not enough money to cover the proposed spending, the bill is sent back to the legislature where any spending in excess of anticipated revenue must be approved by a 4/5 vote in each house.^[25]

Once a bill is certified by the Comptroller, the bill is sent to the Governor for review and signature; the state constitution grants the Governor a line-item veto by which he can use to cancel out specific provisions without having to veto the bill in its entirty.^[26]

The regular legislative sessions begin the second Tuesday in January every odd-numbered year and convene for not more than 140 days. The governor may call the legislature into special session as deemed appropriate. Special sessions are limited to issues specifically stated in the governor’s call and may meet up to the 30-day maximum.^[27]

The Governor submits a recommended budget the 30th day of the regular legislative session. The Legislative Budget Office is responsible for fiscal notes, not the Executive Budget Office. Legislative Budget Board (the legislature’s budget agency) coordinates statewide performance measures and compiles reports.^[28]

The state does have a constitutional cap on spending, using the growth of the state's economy, which is determined by the Legislative Budget Board (run by the Gov, Lt Gov, Speaker and Comptroller).^[29] The calculation and methodology aren't as precise as the population plus inflation limit used by other states, and some are working to get such a proposal on the Texas ballot.^[30]

[edit] Budget Figures, 2000-2009

The following table provides a history for Texas's budget and actual expenditures from 2000 to 2009.

Biennium Term	Estimated/Budgeted	Amount Actually Spent
2000-2001	$101.8 billion[31][32]	$101.9 billion[33]
2002-2003	$114.1 billion[34]	$115.9 billion[35]
2004-2005	$118.2 billion[36]	$126.6 billion[37]
2006-2007	$138.2 billion[38]	$145.1 billion[39][40]
2008-2009	$167.8 billion[41][42]	n/a

[edit] Breakdown of Sources of Revenue

The following table breaks down the state budget by sources of revenue for the 2008-2009 term.^[43]

Source of Revenue	Percentage of Overall Revenue
Tax collections	52.1%
Federal income	31.1%
Miscellaneous	9.8%
Licenses, Fees & Fines	7.9%

[edit] Breakdown of spending by area

The following table breaks down the state budget by areas of spending for the 2008-2009 term.^[44]

Area of spending	Percentage of Overall Spending
Education	44.4%
Health & Human Services	31.6%
Business & Economic Development	12.2%
Public Safety & Criminal Justice	6.2%
General Government	2.4%
Natural Resources	1.9%

• See Texas state budget (2008-2009) for more information.

[edit] Accounting Principles

Main article: Texas government accounting principles

The Texas State Auditor's Office (SAO) is the independent auditor for Texas state government. The SAO operates with oversight from the Legislative Audit Committee (LAC), a six-member permanent standing committee of the Texas Legislature. The LAC consists of the Lieutenant Governor, the Speaker of the House of Representatives, one member of the Senate appointed by the Lieutenant Governor, and the chairmen of the Senate Finance Committee, House Appropriations Committee and the House Ways and Means Committee.^[45]

The Institute for Truth in Accounting (IFTA) rates Texas “Tardy” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Texas' CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.^[46] Texas' CAFRs are annual publications of the Texas Comptroller of Public Accounts. Susan Combs was elected Texas Comptroller of Public Accounts in 2006. The Comptroller is the chief steward of the state’s finances, acting as tax collector, chief accountant, chief revenue estimator and chief treasurer for all of state government.^[47]

Credit Rating	Fitch	Moody's	S&P
Texas[48]	AA+	Aa1	AA+

[edit] Government tools

The Texas Window on State Government page provides a searchable expenditures function for Texans. Specifically, it provides information on how much each agency spends and which vendors receive state funds. The database is updated nightly, and is managed by the State Comptroller, Susan Combs.

The following table is helpful in evaluating the level of transparency provided by the Texas Window on State Government.

Criteria for evaluating spending databases

State Database	Searchability	Grants	Contracts	Line Item Expenditures	Dept/Agency Budgets	Public Employee Salary
Texas: Where the Money Goes

For further information, see

• Texas Window on State Government
• Collins County Check Register

See also: Evaluation of Texas state website

[edit] Economic Stimulus Transparency

The state will receive approximately $209 million from the federal government under H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.^[49]

The directors of a $2.3 million stimulus-funded summer youth program claimed the program created or retained 680 jobs but an audit found that only 124 were created.^[50]

• The economic recovery website to show how legislators and government officials in Texas are spending Federal funds is available here.

[edit] Error in ARRA

On November 16 and 17, 2009, many errors were found in the $747 billion American Recovery and Reinvestment Act that showed the plan set aside money for districts that do not exist. According to Recovery.gov, the plan shows its funds will go to 884 Congressional Districts, though there are only 435.^[51][52]

The ARRA website reported that the stimulus package sent more than $14.7 million to seven Congressional Districts in Texas that do not exist. Two fictitious districts combined to receive $12.5 million of that sum, District 52 was given nearly $9 million and District 58 received nearly $3.7 million.

District 58 claimed to create or save 45 jobs, while District 52 did not produce any jobs, despite more than twice the amount of funding.^[53]

[edit] Stimulus updates

• Texas Watchdog reported that inspections done under the federal stimulus weatherization contract found flaws in workmanship so serious that more than 60 percent of the jobs will have to be fixed. This was the second biggest ARRP weatherization contract in Texas, amounting to $22.3 million. The Department of Housing and Community Affairs criticized Sheltering Arms Senior Services of Houston for poor performance and for spending nearly half of its funding on administrative costs.^[54]

• Eight Texas projects were noted in Senator Coburn and Senator McCain's "Summertime Blues, 100 stimulus projects that give taxpayers the blues" report. FEMA awarded $7.3 million to the city of San Antonio for construction of two fire stations, but the projects have become so bogged down in red tape that it is unknown when they will be built.^[55] In another project, scientists at the Southwest Research Institute received nearly $300,000 to research interplanetary weather^[55]

[edit] Independent transparency sites

The Texas Public Policy Foundation has created www.texasbudgetsource.com, an independent website focused on Texas's budget and transparency. In addition to state transparency information, it posts data about local and school district transparency.

[edit] Public employee salary information

The Houston Chronicle has complied this list of Houston public employee salaries in 2007, and News 4 has provided school superintendent salaries across the state for 2007-2008.

[edit] See Also

Texas taxpayer-funded lobbying

[edit] External links

[edit] References

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