Budget: Heavy on Tax Cuts, Light on Services

It's easy to pretend you've got a surplus when you spend years cutting services.

That lesson was learned while lawmakers passed House Bill 1, the state budget for the 2016-17 biennium. After the great gouging of 2011, when Republicans slashed spending, the talking point was that this hamstrung spending was "the new normal." Even with a partial economic revival in 2013, the 84th Legislature lived up to that mantra, and handed out $3.8 billion in tax cuts, rather than re-invest a smoke-and-mirrors surplus.

First, there were unpaid bills to be paid. Every biennium, the Legislature passes a budget propped up on IOUs to be covered next session. This time around, HB 2 contained $565 million to cover those chits, but shuffled around a whole lot more in unexpended balances to bail out other programs: for example, $768 million to stabilize TRS-Care, the health-care package for retired state employees.

On the main budget, each chamber had its draft, and the total spending gap between them wasn't huge: $210 billion from the House, $211 billion from the Senate. Relatively small sums were shuffled around: a $25 million boost for the Alamo, and $4.5 million for a seismic study of unprecedented earthquakes in North Texas' fracking fields. These were arguably paid for in part by cutting the Texas Moving Image Incent­ive Program from $95 million in the past biennium to $32 million for the next two years. But it was the big numbers that mattered, and only a last-minute fix over how to pay for highways, injecting an immediate $2.5 billion into the budget, brought peace to the joint House-Senate conference committee.

With money to spare, at least nominally, the session devolved into an ugly fight between two pugnacious politicos. In the Senate, Lt. Gov. Dan Patrick wanted a franchise margins tax cut and an increased property tax homestead exemption. House Ways and Means Committee Chair Dennis Bonnen echoed the franchise reduction, but pushed for a sales tax cut instead of property tax reductions. Superficially, Patrick got his way, yet there was a theory on the House floor that the irascible but wily Bonnen was simply dispatched to keep the lite guv distracted and annoyed.

That still didn't appease groups like Americans for Pros­perity, which has long called for complete franchise tax repeal. They threw begrudging support behind Senate Bill 9, further restricting the spending cap, but Texas AFP Policy Director Peggy Venable called that "problematic" because the House's version requires only a simple majority of the chamber to break the cap, instead of the Senate's call for a three-fifths supermajority.

But Democrats were angry in the opposite direction. Sen. Sylvia Garcia, D-Houston, spoke for many when she voted against a final $209 billion budget that spent billions on tax cuts, and $800 million for border security, but passed on a chance to boost school spending, or work on Medicaid expansion. It wasn't just progressives and liberals complaining: Mid-session, the fiscally conservative Texas Associ­ation of Busi­ness joined with other trade and industry groups, pleading with the legislature to invest in Texas' future, rather than fritter away a fortune on a tax cut that even Bonnen has called basically worthless. Even Comptroller Glenn Hegar sent a letter to lawmakers, urging them "to give priority" to the $1.5 billion in deferred maintenance on state facilities, tackling road and bridge repairs, and stabilizing retirement funds, before the state's bond rating takes a hit.

However, it's a lot easier to just promise more tax cuts when primary season comes around.