House: Spend $2.5B of rainy day fund

Se­nate lead­ers craft­ing cuts, pos­si­bly set­ting up defin­ing bud­get dis­pute.

Austin American-Statesman - - FRONT PAGE - By Sean Collins Walsh scwalsh@states­man.com

Texas House lead­ers are up­ping the ante in their bid to use money from the state’s $10.2 bil­lion re­serve fund to plug holes in the state bud­get.

House Ap­pro­pri­a­tions Com­mit­tee Chair­man Rep. John Zer­was, R-Rich­mond, on Thurs­day un­veiled a new ver­sion of House Bill 2, a stop-gap fund­ing mea­sure known as a sup­ple­men­tal bud­get, that in­cludes al­most $2.5 bil­lion in money from the Eco­nomic Sta­bi­liza­tion Fund, more com­monly known as the rainy day fund. The orig­i­nal ver­sion of the bill in­cluded only $1.4 bil­lion from the rainy day fund.

Fac­ing a bleak bud­get out­look, Zer­was and House Speaker Joe Straus, R-San An­to­nio, have been ad­vo­cat­ing for the Leg­is­la­ture to use some money from the rainy day fund, pro­jected to grow to $12 bil­lion by the end of the next

bud­get cy­cle.

Se­nate lead­ers, how­ever, are craft­ing a pro­posal with deep cuts to many state agen­cies and pro­grams, es­pe­cially higher ed­u­ca­tion, set­ting up what might be the defin­ing dis­pute in ne­go­ti­a­tions over the state bud­get.

Lt. Gov. Dan Pa­trick, who leads the Se­nate, didn’t re­spond to a re­quest for com­ment.

Zer­was noted that the Texas comptroller’s of­fice has said law­mak­ers could take bil­lions out of the fund, which was cre­ated in 1989 and is pri­mar­ily funded by oil and gas pro­duc­tion taxes, with­out af­fect­ing the state’s credit rat­ing.

“Not us­ing the (rainy day fund) will lead to re­duc­tions that will cut to the core of our state’s pub­lic ed­u­ca­tion sys­tem, would re­quire our state’s re­tired teach­ers to spend more than half of their pen­sion on health care, and it con­tin­ues to place our state’s most vul­ner­a­ble chil­dren at risk by fail­ing to pro­tect them from abuse and ne­glect,” Zer­was said Thurs­day. “Some mem­bers of our body have said pub­licly that our sit­u­a­tion isn’t re­ally that bad. I can’t dis­agree more with that.”

Law­mak­ers have less to spend on the bud­get for 2018 and 2019 than they did on the cur­rent two-year bud­get due to low oil and gas prices drag­ging down tax col­lec­tions and re­cent fis­cal de­ci­sions, in­clud­ing a busi­ness tax cut and a $5 bil­lion set-aside for trans­porta­tion fund­ing adopted in 2015.

The sup­ple­men­tal bud­get plugs holes in the cur­rent two-year bud­get cy­cle, which ends in Au­gust, and can in­clude other one-time ex­pen­di­tures.

Along with fed­eral match­ing funds and re­al­lo­ca­tions of un­spent money in the state’s cur­rent bud­get, Zer­was’ sup­ple­men­tal bud­get would spend $5.2 bil­lion to shore up var­i­ous pro­grams, in­clud­ing $930 mil­lion to close a short­fall in Med­i­caid, $38.2 mil­lion for the Rail­road Com­mis­sion to plug aban­doned oil and gas wells and $80 mil­lion to close a deficit in the state prison health care ser­vices.

In the new ver­sion, which will likely get a com­mit­tee vote late next week, Zer­was adds spend­ing on two pro­grams that might have oth­er­wise been in­cluded in the next two-year state bud­get: $653.1 mil­lion on the state’s bor­der se­cu­rity cam­paign and $680.6 mil­lion on pub­lic ed­u­ca­tion, in­clud­ing $500 mil­lion for the re­tired teacher health care sys­tem.

“What we’re try­ing to do is re­ally lighten up the load on (the reg­u­lar bud­get) as much as pos­si­ble,” he said.

Zer­was added that he sep­a­rated bor­der se­cu­rity spend­ing from the reg­u­lar bud­get in the hopes that the state would wind down the pro­gram as Pres­i­dent Don­ald Trump’s ad­min­is­tra­tion in­creases fed­eral spend­ing on the bor­der.

“We think that with bor­der se­cu­rity spend­ing and the new ad­min­is­tra­tion in Washington that we should see much less of a need for us to be fund­ing that,” he said, “and so bring­ing that out and sort of fram­ing it as a one-time ex­pense is a good thing for us to do.”

Zer­was said Thurs­day that he en­vi­sions us­ing the rainy day money only on the HB 2 sup­ple­men­tal bud­get, which in turn will lessen the bur­den on what needs to be funded in the full two-year bud­get.

The Se­nate Fi­nance Com­mit­tee, mean­while, fin­ished mark­ing up its bud­get pro­posal for 2018 and 2019 and likely will vote on it next week. The Se­nate hasn’t put for­ward a pro­posal for the sup­ple­men­tal bud­get.

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