Senate Budget Lesser of Two Evils

The 82nd session of the Texas Legislature will end as it began: with outside observers waiting to see what budget emerges from Republican infighting.

On May 4, the Senate broke along party lines to approve its version of House Bill 1, and the cuts are brutal. Unsurprisingly, the Senate draft has been greeted with rose petals and cheers by conservatives like Lt. Gov. David Dewhurst, who praised Senate Republicans for passing a draft budget that "reduces current spending by $14.7 billion – and they did so without raising taxes." More surprisingly, even the Center for Public Policy Priorities, which has warned that the Senate budget represents a $16 billion shortfall, is supporting the Senate numbers – but only because the draconian House budget leaves the state $21 billion shy of what it needs to continue current services. As bad as the Senate version is, CPPP Executive Director Scott McCown wrote, "At this point, though, we must rally around the better budget."

Now both chambers – or rather House and Senate Republicans, since the Democrats have been effectively sidelined in this process – send their respective number into the black box environment of the conference committee to solve the differences. However, the process is already well behind schedule, and it's unclear if lawmakers can catch up with the ticking clock. Two years ago, when the budget was in less of a hole, both chambers had announced their conference committee picks by April 28, and it still took them nearly a month to solve a $4 billion gap between House and Senate. This year, Dewhurst did not make his picks until May 9, and now they must join House Speaker Joe Straus' conferees to thrash out an $11 billion difference in a way acceptable to both chambers. On top of that, there are a whole series of bills with serious budget implications that are stalling out. The Senate has yet to see the changes to teacher contracts in HB 400, while the House seems in no great hurry to discuss the $4 billion in extra revenue generated by Sen. Robert Duncan's Senate Bill 1811. With less than three weeks until the session's end on May 31 and such a great divide between the two chambers, no one is ruling out a budget special session.

The differences between the two drafts are monumental: a $2.8 billion gap in planned funding for the Department of Aging and Disability Services, $165 million less from the House for the Health and Human Ser­vices Commission, and a $3.8 billion disagreement over public education funding. In each case, the Senate is more generous but still proposes radical cuts from the 2010-11 budget. Take Article II, the complete Health and Human Services budget. In 2009, the Legislature approved a $60 billion budget for all the health and welfare agencies. When all the accounts are done at the end of the financial year, the state is estimating it will really spend $65 billion. The Senate draft cuts spending for the next biennium by $7.8 billion, leaving only $58 billion in the health care kitty. Still, that's better than the House draft, which would slash an additional $4 billion. "The House budget is significantly more damaging to Health and Human Services than the Senate budget, but the Senate budget is certainly not free from problems," said Anne Dunkel­berg, associate director of the Center for Public Policy Priorities.

The Legislature is already moving toward a bait and switch, which would pass a budget that will not pay for the full 24 months of the biennium then pass a supplemental appropriation bill in 2013 to cover any debts. Lawmakers walked into the current session with a $4.3 billion bill for deficit spending that they plan to retroactively fill with $1.2 billion in cuts and a $3.1 billion withdrawal from the Rainy Day Fund. They did the same thing in 2009, using $3.3 billion in federal stimulus funds and $699 million in state funds to clear the outstanding debt for the 2008-09 biennium. Some of this extra spending will be planned, but since some cuts are dependent on federal reforms, such as Medicaid waivers, and state reforms are still stuck in debate, it seems no one will know what the spending will really be until Septem­ber 2013. Dunkelberg said: "There are some things in the Senate that are clearly cuts. There are other things where they are saying, 'This is not a cut, we are underfunding it, and we expect to come back and fill this gap with a supplemental,' and there are other things that are in a gray area where you don't know what's going to happen."