Se­nate bud­get makes big cuts, avoids rainy day fund

The $217.7 bil­lion plan re­lies on a dis­puted ac­count­ing ma­neu­ver.

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

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 31-0vote 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.”

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.

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 twoyear 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.

DEB­O­RAH CAN­NON / AMER­I­CANSTATES­MAN

Fi­nance Com­mit­tee Chair­woman Jane Nel­son, R-Flower Mound, dis­cusses the state bud­get on the Se­nate floor Tuesday.

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