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State Budget Estimate Up, But Much Already Spent

Texas prepares for second half of grand bait and switch
Richard Whittaker, 2:05pm, Mon. Jan. 7, 2013
Comptroller Susan Combs: Numbers up, and the fight begins
As the Texas Legislature prepares to reconvene tomorrow, there's some good budget news from Comptroller Susan Combs with a healthier-than-expected budget revenue estimate.

Here are the headline numbers:

– Combs' staff estimate they will collect $96.2 billion in General Revenue-related taxes and fees during the 2014-2015 biennium.

– In addition, there is a forecast balance at the end of the current budget cycle of $8.8 billion

– That leaves $105 billion in predicted general revenue.

Now, here's where the math gets complex. $3.6 billion of that goes straight into the Economic Stabilization Fund, aka the Rainy Day Fund, bringing that reserve to a grand total of $11.8 billion. So the revenue available goes down to $101.4 billion.

Next, we have to take out an estimated $5 billion to cover the actual costs of Medicaid over the current budget cycle. Yes, lawmakers passed the last budget knowing full well that they had not appropriated the cash necessary to balance the budget, and so one of their first acts of the new session will be to pass a supplemental appropriations bill to cover that obligation. Add on a deferred payment to the Foundation School Program, plus unpaid obligations for wildfire reconstruction, and $6.7 billion of that $8.8 billion 'surplus' is already accounted for.

So, where does that put us?

A $96.2 billion forecast, plus $8.8 billion in extra revenue, minus $3.6 billion to the Rainy Day Fund, leaves $101.4 billion. Take away the $5 billion for Medicaid, another $1.7 for school and wildfire commitments, and lawmakers will base their calculations on a roughly $94 billion general revenue cash pile. ((Now, the important thing to remember is that this is only general revenue, and does not include the numbers for dedicated general revenue, federal funds etc etc etc.)

That $94 billion is dramatically up from the $81 billion budget legislators hacked and slashed into shape two years ago. With new, healthier estimates in their hands, Democrats (and doubtless more than a few Republicans) look set to demand the restoration of the crippling cuts to education passed in 2011.

They will be particularly frustrated that the GOP, after railing that they had to protect the Rainy Day Fund at all costs, will have both a balance sheet surplus and extra cash to drop into the slush fund. As Rep. Donna Howard, D-Austin, dryly Tweeted this morning, "Too bad #txlege didn't keep my amendment to use RDF for enrollment growth."

Educations advocates are already firing up for the fight, and will be demanding the restoration, at minimum, of the $5.4 billion cut from schools. With the student body expanding by 80,0000 kids a year, Texas State Teachers Association President Rita Haecker said, "It would be extremely short-sighted for state politicians to stick their heads in the sand and falsely plead 'austerity' in order to pander to ideological extremists intent on privatizing public schools and sacrificing our future."

Texas AFT president Linda Bridges backed that call, and said, "Today’s revenue forecast leaves no excuse for state leaders and the legislature – they have the money, if they have the will, to restore the funds cut last session." She continued, "We urge them to seize that opportunity and to reject the unwise counsel of those who would again needlessly sacrifice our children’s and our state’s future prospects by continuing the deep cuts of 2011 in the 2014-2015 budget."

Howard's fellow Travis County Democrat, Sen. Kirk Watson, added that while "today’s announcement of additional revenue speaks very well of the entrepreneurs, business owners and workers who are fueling the Texas economy. But it doesn't speak well of the Texas budget or those in control of it."

Calling it "irresponsible to hoard nearly $12 billion" in the Rainy Day Fund, in a press release Watson said that lawmakers should restore last session's cut as a top priority. He has spent the last couple of sessions in pursuit of budget transparency, and returned to that drum beat, noting that "if there's an honesty deficit in the way your state balances its books, you don't have a surplus." He attacked talk of a surplus by noting that the prime reason lawmakers cut the budget in so draconian a fashion in 2011 was because Combs' estimate was so far off. He said, "If the Comptroller's estimate from two years ago had been even close to accurate, the Legislature would have had almost $9 billion more in 2011 to cover Texans’ most critical priorities."

That may be a low estimate. Rep. Mike Villareal, D-San Antonio, has observed that Combs' 2011 estimate was actually out by $14.9 billion. She forecast $77.3 billion in general revenue, and the actual figure was $92.2 billion. That means her estimate, which underpinned all the cuts, was out by 20%.

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