Legislators face grim forecast on budget
Legislature begins against backdrop of a worsening budgetary forecast
Texas lawmakers arrive at the Capitol today facing bigticket demands but with less cash on hand. The state comptroller’s office predicts there will be about $7 billion less in the budget than in 2015.
AUSTIN — Texas’ 181 lawmakers arrive at the Capitol on Tuesday facing big-ticket cash demands to revamp an outdated school funding scheme and fix a broken foster care system, while at the same time reducing property and business taxes, all against the backdrop of a worsening budget forecast that means they will have billions of dollars less to spend than they did two years ago.
The grim news came in the release of Comptroller Glenn Hegar’s biennial revenue estimate — the benchmark number that tells the Legislature how much money it can spend out of the state’s general fund — that legislators will have $104.9 billion to spend in the two-year state budget. That is about $7 billion, or 2.7 percent, less than in 2015.
Hegar attributed the reduction to a drop in oil prices and sluggish consumer spending that has brought less money into state coffers.
Additionally, a constitutional amendment approved by voters in 2015 requires the state to dedicate up to $5 billion in sales tax revenue to the State Highway Fund, meaning less money for the budget even as the state wrestles with continuing population growth.
Lawmakers had expected a tighter budget after Gov. Greg Abbott last year told most state agencies to begin preparing their budget plans with a spending cut of up to 4 percent.
Leaders Monday expressed confidence that strategic trimming can be accomplished to minimize the effect on state programs.
“As fiscal conservatives, we must treat our state budget the way families do — by funding our priorities, while constraining the size and growth of government,” Abbott said. “I will work
with the Legislature this session to craft a budget that funds our most vital services without growing faster than the growth of population and inflation.”
Most Texans are touched by the state budget because it pays for such programs as public schools, public safety, border security, health care and other state services. Less money could mean significant cuts in these and other state programs.
Hegar: State ‘well-positioned’
Hegar said that despite the drop in available budget cash, “Texas remains well-positioned” for future growth — and, with a diversified economy, has done better than many other states that have been hammered by the downturn in the oil and gas industry.
At the same time lawmakers will have less money to spend, the state faces billions of dollars more in additional mandates that they could also have to pay for during the next two years to address public school funding inequities, an overhaul of the troubled foster care system, increasing caseloads in human services programs, continued funding for a billion-dollar border security initiative and key mental health programs, among others.
State Rep. Drew Darby, a San Angelo Republican who could be in line to chair the budget-writing House Appropriations Committee this session, told reporters after Hegar’s announcement that cuts appear inevitable.
“There are obviously going to be cuts to the budget. We’re just going to have to figure out where those cuts are going to come,” he said, predicting the amount of available general revenue could be as much as $6 billion less than what is needed to continue current services, with growth and inflation factored in.
He and other legislative budget leaders gave no specifics Monday on where cuts might be needed.
Budget officials said Monday’s revenue forecast is not as dire as a $27 billion shortfall in 2011. In 2003, state leaders tapped into the state’s emergency cash fund — generally called the Rainy Day Fund — to make up some of the shortfall, but have been reluctant do so in the years since.
“This may be the year,” said Eva DeLuna Castro, who monitors state budget issues for the Center for Public Policy Priorities, an Austin public policy organization.
‘Strengthens our resolve’
Conservative groups and lawmakers insisted Monday that despite the decrease in state revenues, a fiscally responsible budget can be written without growing state spending by using the fund, which Hegar estimated will have about $12 billion this year. Lt. Gov. Dan Patrick said the Senate — which will initiate the budgetwriting process this year — will be “striving for a lean and efficient government while still meeting the needs of Texans. This is critical because, nearly 90 percent of our general revenue budget is spent on education and health care.
“Today’s revenue estimate strengthens our resolve to continue to live within our means and not spend more than the growth of population times inflation,” he said. “When I gavel-in the Senate tomorrow and the 85th Legislature opens, we will begin this process.”
Patrick deflects rumors
Michael Quinn Sullivan, president of Empower Texans, an Austin organization that promotes fiscally conservative state spending policies, said tapping the Rainy Day Fund should not be a first option.
“Before we start raiding the piggy bank we should look at … belttightening and priorities,” he said.
If most of the run-up festivities to the Legislature’s opening gavel at noon Tuesday were about money, or the lack thereof, Patrick made headlines by announcing that he will not run against Abbott for the state’s top elected job. The reason for the unusual pronouncement, he said, is that he wants to put persistent speculation to rest so the Legislature can concentrate on solving the state’s budget challenges.
In his announcement, Patrick — a former Houston radio talkshow host who was elected two years ago to the state’s No. 2 state job — said he will seek re-election in 2018, then endorsed Abbott for re-election. The governor, a Republican like Patrick who has not formally announced for re-election, had no immediate response.
Referring to the governor as “my friend, my ally, my conservative partner,” Patrick said he and Abbott “are a great team. We work well together.”