Belt-Tightening Season for State Agencies

Dan Patrick (Photo by John Anderson)

Here come the cuts (again). On June 30, Gov. Greg Abbott, Lt. Gov. Dan Patrick, and House Speaker Joe Straus sent a message to all state agencies: Expect to see your funding cut by 4% in the upcoming biennium, and prepare your draft budgets accordingly.

House Appropriations Committee Member Donna Howard, D-Austin, said she was disappointed by the news. "We take a couple of steps forward and then we take couple of steps back." For example, during the 2015 session, lawmakers added 3% to higher education funding, but now the state leadership wants to negate that. "How does that get us moving forward?"

The core issue is the volatile nature of the oil and gas market. Crude oil prices have plummeted, and that's made Texas hydrocarbons – especially the marginal business of fracking, the expensive processes of which demand high prices – less attractive. According to figures released by Texas State Comptroller of Public Accounts Glenn Hegar, oil and gas production tax collections for the first seven months of the 2016 fiscal year had dropped 50% compared to the same period in 2015. Howard said, "It's discouraging that we spent last session doing tax cuts when everyone knew that the oil and gas tax revenues were going to go down."

The announcement came with a handful of exceptions to the cuts, such as debt service, border law enforcement, state employee pensions and benefits, and Medicaid. Eva DeLuna Castro, state budget analyst for the Center for Public Policy Priorities, said that exempting key health and welfare areas "eases some of the concerns that many social services advocates would otherwise have." However, she added, "Given the tax cuts and diversions of General Revenue that legislators have recently made, it'll be tough to make significant improvements to anything in the state budget – that's why the public needs to weigh in, early and often." Howard echoed DeLuna Castro's muted relief about the exempted spending, though she accused the state leadership of "nickel and diming" Texans because "the parts that they're omitting, they're the bulk of the budget."

Within the exempted areas, there's good news and bad news for Texas' children, as the letter said funding should be "maintained" for the Foundation School Program under current law. However, while the state recently won a lawsuit challenging the current school finance system, many legislators concede that the system must be fixed, and needs a cash injection.

It's even bleaker news for Child Protect­ive Services and the foster care system, which will budget for current funding plus projected caseload growth. However, this comes after a federal judge ruled last year that the state's foster system was so dismal that it violated the constitutional rights of children in its care. Judge Janis Jack hammered the state for having too few caseworkers and paying them poorly, leading to burnout and massive turnover. Howard said she is still hearing on the House side that there has to be reform of both the foster system and school finance, "but how we do that without funding remains to be seen."