The Texas House has proposed a budget that would keep spending flat over the next two years while addressing priorities such as education, transportation and border security.
The House's two-year state budget plan would spend $202.4 billion during the 2015-16 budget cycle, up from an estimated $202.1 billion in the current cycle – an increase of 0.2%. The plan appropriates $98.8 billion in General Revenue, up from $95.2 billion.
The summary budget released by the House is a high-level overview of major changes between the biennia and between iterations of the bill. The House Appropriations Committee will work from this initial proposal as it prepares a budget for the full House to consider later in the session. Speaker Straus is expected to name House committees in the coming weeks.
Senate Finance Chairwoman Jane Nelson told the Texas Tribune that she is putting the "finishing touches" on the Senate's own base budget but it will not be released until after Lt. Gov.-elect Dan Patrick is sworn in. She vowed the budget would be conservative, strengthen boarder security, address transportation as well as achieving tax relief.
Spotlight on the Recommendations for the 2016–17 biennium:
FOUNDATION SCHOOL PROGRAM
- $31.7 billion in General Revenue Funds and $41.4 billion in All Funds is provided for state aid for school districts and charter schools through the Foundation School Program (FSP) system. This represents level funding in General Revenue Funds and an increase of $1.8 billion, or 4.4 percent, in All Funds compared to the 2014–15 biennium.
- The All Funds increase is attributable to projected increases in revenues from the Property Tax Relief Fund and from recapture payments, both of which are classified as Other Funds. FSP funding is increased by $2.2 billion over what is estimated to be required to fund the current law FSP entitlement. The additional funding is to be delivered in a manner determined by the Legislature to improve equity, reduce recapture, and increase the state’s share of the school finance system.
- Major FSP cost drivers include the following: (1) projected enrollment growth of 83,000 to 85,000 students in average daily attendance annually (1.7 percent) at an estimated cost of $2.5 billion for the biennium; (2) approximately $4.5 billion in reductions to state obligations resulting from projections of strong growth in property values; and (3) approximately $1.4 billion in increased formula costs, largely offset by recapture payments and revenue from the franchise tax component of the Property Tax Relief Fund.
MEDICAID
- $60.1 billion in All Funds, including $24.8 billion in General Revenue Funds and $0.1 billion in General Revenue–Dedicated Funds, is provided for the Texas Medicaid program. This is an increase of $1.2 billion in All Funds, including $1.8 billion in General Revenue Funds and General Revenue–Dedicated Funds. Approximately $1.3 billion in General Revenue Funds is provided for items including projected caseload growth, including the transition of certain children from CHIP to Medicaid; maintaining fiscal year 2015 average costs for most programs, including fi scal year 2015 rate increases; replacing $300 million in Interagency Contracts with General Revenue Funds; and full biennial funding of the Community First Choice program.
- Full funding for anticipated increases in cost due to medical inflation, higher utilization, or increased acuity is not included.
- There is an anticipated net supplemental need estimated at $171.2 million in General Revenue Funds to complete fiscal year 2015 Medicaid expenditures.
TRANSPORTATION
- $23.7 billion in All Funds is provided for all functions of the Department of Transportation; this includes an increase in State Highway Funds (Other Funds) made available from the discontinuation of $1.2 billion in State Highway Fund appropriations to agencies other than the Department of Transportation and the inclusion of $2.6 billion in funding from oil and natural gas tax-related transfers to the State Highway Fund as approved by voters in November 2014 (Proposition 1, 2014). The net agency increase of $582.8 million is the result of the increases referenced above and of declines in bond proceeds as well as in other revenue sources.
- $20.1 billion in All Funds is provided for transportation planning and design, right-of-way acquisition, construction, and maintenance and preservation (an increase of $181.9 million in All Funds). The All Funds amount includes $9.0 billion for maintenance and preservation of the existing transportation system (an increase of $874.3 million); $5.8 billion for construction and highway improvements (a decrease of $1.5 billion); $2.6 billion from estimated oil and natural gas tax related transfers to the State Highway Fund (Proposition 1, 2014) for constructing, maintaining, and acquiring rights-of-way for non-tolled public roadways (an increase of $835 million); $1.8 billion for transportation system planning, design, and management (an increase of $165.7 million); and $911.9 million for right-of-way acquisition (a decrease of $215.2 million).
- $2.4 billion in All Funds is provided for debt service payments and other financing costs, including $1,596.8 million in Other Funds from the State Highway Fund and Texas Mobility Fund, $700.9 million in General Revenue Funds (an increase of $386.5 million), and $125.7 million in Federal Funds from Build America Bond interest payment subsidies.
MENTAL HEALTH
- Recommendations related to behavioral health and substance abuse services in the 2016–17 biennium are $3.4 billion in All Funds, including $2.6 billion in General Revenue Funds and General Revenue–Dedicated Funds, which is equal to 2014–15 Budgeted/Estimated General Revenue Funds and General Revenue–Dedicated Funds. These appropriations are distributed across 17 agencies in five articles, and include funding for inpatient client services at the state hospitals and the community hospitals, outpatient services provided through the local mental health authorities and NorthSTAR, mental health care services and substance abuse treatment for incarcerated offenders, mental health care services for veterans and infrastructure for the state hospitals.
HIGHER EDUCATION FORMULA FUNDING
- Higher Education formulas are supported by $6.9 billion in General Revenue Funds and $1.3 billion in General Revenue–Dedicated Funds. Included in this amount are an increase of $154.0 million in General Revenue Funds and an increase of $43.4 million in General Revenue–Dedicated Funds. These increases are the result of funding enrollment growth and maintaining the formula rates for the Instructions and Operations formulas for the General Academic Institutions, Lamar State Colleges, and the Health-Related Institutions (HRIs), as well as maintaining the rates for the Research Enhancement and Graduate Medical Education formulas for the HRIs. The Infrastructure formula rate was also maintained for all but two institutions, The University of Texas M.D. Anderson Cancer Center and The University of Texas Health Science Center at Tyler, whose General Revenue rate was increased to align with the average General Revenue rate of the other HRIs. Additionally, General Revenue for the mission specific formulas for these two institutions was increased to align with the average General Revenue increase in the HRIs’ Instruction and Operations formula. Public community and junior college funding amounts also maintain the rates for core operations and contact hour funding and maintain the percentage split for formula funding at 90 percent for contact hour funding and 10 percent for success point funding. Formula funding amounts also maintain the Texas State Technical College’s Returned Value formula.
GENERAL REVENUE–DEDICATED FUNDS
- A total of $6.8 billion is provided in General Revenue–Dedicated Funds, a decrease of $0.6 billion, or 8.1 percent, from the 2014–15 biennial level.
- Pursuant to the process set out in House Bill 7, the Legislative Budget Board identified $1.5 billion in options to further reduce reliance on General Revenue–Dedicated account balances for certification. These options will be included in a special report to the Eighty-fourth Legislature.
