Budget tactic sparks battle
Senate, House vie for upper hand in rare public feud
AUSTIN — In a clear signal of a war over the state budget, House leaders are asking Attorney General Ken Paxton to block an accounting maneuver by Senate leaders that would give them an additional $2.5 billion to balance their draft version of the budget.
At issue: a four-word phrase in the Texas Constitution that directs the Texas comptroller to deposit the $2.5 billion for highway funding in “the same fiscal year” the revenue was collected as taxes.
At a time when final budget negotiations between the chambers are poised to start, House Speaker Joe Straus and Rep. John Zerwas, the House’s budget czar, blasted the Senate plan to delay the transfer of money into the state highway fund as “clearly and unambiguously” violating the state Constitution on such transfers.
The seven-page letter to Paxton, who as the state’s top attorney is expected to rule soon on the legality of the Senate plan, quickly touched off an angry response from Senate leaders, who appeared to harden their resolve on the issue.
Both sides promised not to back off their positions, meaning that a final state budget could be hostage until the issue is resolved.
It is unlikely that Texas taxpayers will feel much impact from the fight, since the Legislature has to approve a balanced budget before it leaves Austin, even if that’s in a special session, and $2.5 billion in cuts are unlikely.
But the political ramifications of how the current fight plays out could shape legislative politics for years to come, as moderate Republicans in the House
and far-right conservatives in the Senate continue to vie for the upper hand in Austin.
Since Paxton’s ruling does not carry the force of law, legislative leaders already are predicting the issue could end up in court — with just over a month left before the legislative session ends.
Paxton aides said Wednesday there is no timetable for a decision, although Senate leaders hinted they expect one “soon” and that they expect he will side with the Senate.
Paxton served in both the House and Senate before he was elected attorney general.
Depending on which way Paxton decides, Lt. Gov. Dan Patrick and Straus — who have been posturing for months on the budget and other legislation — could win or lose politically. Lawmakers in both chambers say that if the Senate transfer is ruled unconstitutional, the House could gain advantage at the bargaining table. If the Senate wins the ruling, the House could face issues over its budget plans that propose to tap the state’s Rainy Day Fund for $2.5 billion.
“The primary and short-term question is who has the most leverage going into the negotiations,” said Brandon Rottinghaus, a political scientist at the University of Houston who has been following the budget fight. “Longer term, whoever wins the upper hand in the budget wins more institutional control. Straus and Patrick both want to walk away from the budget table with pet projects for their members.” High-stakes test of wills
In a year when Patrick and Straus have sharply disagreed on a number of issues — the so-called bathroom bill, school choice, sanctuary cities and a ban on union dues from state paychecks — the growing budget fight has become a high-stakes test of wills rarely played out so publicly at the Texas Capitol.
In recent days, Senate and House leaders have made it clear they intend to defend their budget plans.
Last week, the Senate’s chief budget writer, Jane Nelson, asked Paxton to rule that the Senate plan was legal, arguing that delaying the transfer by a month of the $2.5 billion to the highway fund from sales tax collections would not run afoul of wording in the constitution requiring it be transferred in the same fiscal year.
Because the Senate plan would delay it for a month — from August 2019 until September 2019, into the next fiscal year — House leaders have said the maneuver is illegal, with Straus last month saying it was “cooking the books.”
Senate leaders have accused House budget-writers of using improper accounting tricks to balance their version of the budget, as well, for delaying a $1.9 billion payment for public schools into the next two-year cycle.
The House plan would also tap the state’s Rainy Day Fund, a savings account, for $2.5 billion in a move the Senate has said it will reject.
In the letter filed late Tuesday with Paxton, attorney Frank Battle wrote on behalf of Straus and Zerwas that they “believe the constitution clearly and unambiguously requires” that state money must be paid into the state highway fund “in the same fiscal year that the underlying revenue was received.” Contentious issue
In her letter to Paxton last week, Nelson said Comptroller Glenn Hegar has determined it is not logistically feasible to calculate the tax revenue in question until after the end of the fiscal year, suggesting that it is impossible to comply with the Constitution.
Battle said the Senate plan could violate the rules of the Texas House, raising the possibility that a lawmaker could kill the budget through a procedural motion known as a point of order. If passed, the budget could also open the door to lawsuits from any Texas taxpayer arguing that lawmakers had unconstitutionally spent public funds, he noted in his letter.
In recent years, both the Senate and House have relied several times on accounting maneuvers to balance the budget.
But in recent weeks, House and Senate leaders have increasingly been at odds publicly over budget issues — and leaders in both chambers have said the proposed maneuvers promise to be the single most contentious issue in final budget talks expected to begin next week.
For her part, Nelson on Wednesday dismissed the House’s criticism.
“The opinion that matters will be from the attorney general,” she said when asked about the House’s letter to Paxton.
“We carefully made this decision in consultation with the comptroller and believe this approach complies with the Constitution and addresses our transportation needs. It also helps us balance the budget — just as the House employs deferrals and other accounting measures to make its budget work.”