Budget: Manufacturing a Bogeyman

Illustration by Jason Stout

If there's a more thankless task in Texas than building the state budget ... you can keep it. Last session, in the turmoil of the recession and the Tea Party revolution, Texans saw government spending plummet while needs rocketed upward. The 2013 session seems doomed to follow the same path.

In 2009, Texas lawmakers planned a $188 billion budget for the 2010-11 biennium. Two years later, they slashed that to $173 billion for 2012-13 – an 8% cut. Some agencies saw their budgets slashed much more – such as a 40% cut to the Texas Education Agency. The state dumped some 10,000 employees, not including the staff laid off by school districts when their state funding collapsed. In total, the Legislative Budget Board estimated the decimated budget would mean 335,000 fewer jobs in 2013 – both private and public sector – than if state spending had stayed static. Much of the blame has been aimed at Gov. Rick Perry, who rejected all proposals for new revenue, quashed all plans to tap the $8.1 billion Rainy Day Fund to reduce cuts to schools, and even blocked applications for federal health and education funds.

Republicans call this the "new normal," and they are widely expected to punt on the two most pressing issues – school finance and health care funding – until the courts force them to act. However, there is a note of tepid optimism. Eva DeLuna Castro, senior budget analyst for the Center for Public Policy Priorities, observed that state revenue forecasts may exceed earlier projections by as much as $8 billion in the current biennium. She said: "There may very well be enough to keep the current, cut budget going. The question is, will it be enough to undo all the cuts that were done last time?"

Even though the House and Senate collaborate on the budget, they alternate top billing, so this year's budget will be dubbed Senate Bill 1. The process sees a new Senate team in place, as Senate Finance Committee Chair Steve Ogden, R-Bryan, has retired, replaced by the more conservative and less experienced Tommy Williams, R-The Woodlands. Across the Dome, House Appropriations Chair Jim Pitts, R-Waxahachie, is regularly sighted in Austin, searching for ways to close the impossible gap between needs and revenues.

Gov. Rick Perry (Photo by John Anderson)

Meeting once every two years fulfills the conservative fetish for microgovernment, but it leaves the Legislature incapable of responding quickly to economic realities. Rep. Richard Raymond, D-Laredo, has proposed a radical plan to change that: His House Bill 136 would replace biennial budgets with fiscal year planning. Regular sessions in odd-numbered years would remain, but the Legislature would convene in April of every even-numbered year just to set annual spending.

DeLuna Castro predicted that the massive incoming freshman class in the House will have a steep learning curve, as the budget process will begin with the grand bait-and-switch of the supplemental appropriations bill. That's a $6 billion backfill for the 2012-13 biennium to cover long-predicted underpayments to Medicaid and school districts. Conservatives expecting to blame everything on health care reform may be shocked to learn that lawmakers knew they were creating a shortfall when they passed HB 1 in 2011. The projected extra cash may not make the 2013 process much smoother. Said DeLuna Castro: "Senator Ogden would point out, it's a lot easier when there's no money because you just have to keep telling people no. But when there is [money], all these bottled-up expectations come into play, and you have to pick who the winners and losers will be."

It's not all up to lawmakers. On June 4, Perry's office and the Legislative Budget Board sent a now-perennial draconian memo to state agencies telling them to prepare alternate budgets: one based on the current biennium's numbers, and a second with a 10% cut in general revenue and general revenue dedicated funds. In a break with tradition, requests to expand budgets must be submitted as extraordinary items, rather than as part of the regular request. However, the GOP is divided on new revenue and new spending. Sen. John Carona, R-Dallas, for example, has repeatedly proposed raising the gas tax. Meanwhile, Lt. Gov. David Dewhurst has split with Perry over the Rainy Day Fund and wants to tap it to pay for water infrastructure – although thus far, nothing else.

Republicans also seek to further shackle future Legislatures by creating new barriers to restabilizing the budget. If freshman Rep. Matt Krause, R-Fort Worth, gets his way, his HB 204 would require state agencies to submit a "zero-based" budget when they undergo Sunset review, rather than the current process of justifying changes in their requests to the Legislative Budget Board. Meanwhile, separate resolutions from Rep. Bill Callegari, R-Houston, and Rep. Charles Perry, R-Lubbock, would create another constitutional limit on spending, tying the state budget to population growth and the size of the Texas economy. This would be doubly troubling: First, it would do nothing to address need, and second, it would use the current bare-bones budget – slashed to ribbons in the last two sessions – as its growth-measuring baseline. DeLuna Castro said: "They're not responding to reality. They're just putting some straw man – bogeyman – on the table."