The Legislative Budget Board (LBB) met this past week, as published in the Monday, November 15th HillCo Client News Flash. The rate of expected economic growth for the state was discussed, which affects a constitutional spending cap the state must operate under.  The Texas constitution requires a balanced budget. Lt. Governor Dewhurst and Speaker Straus led the discussion of the budget shortfall the state will face when the 82nd Legislature convenes on January 11, 2011. 

Lt. Gov. David Dewhurst and House Speaker Joe Straus said during the hearing they will call on state agencies to make additional spending cuts now, which will be implemented in this current fiscal year, to help prepare for the anticipated upcoming state budget shortfall.

“Prudent actions taken today by the state agencies are going to reduce spending further … to avoid more difficult reductions that are going to be needed to balance the budget” for 2012-13, Straus said.

State agencies will receive a letter by the end of the month asking for additional cuts of 2-3 percent in the current year spending, ending August 2011.

Comptroller Susan Combs will issue the revenue estimate in January, but regardless of the amount of available revenue, the shortfall has been projected to be in the range of $20-25 billion. 

So far this year, agencies have implemented cuts which went into effect September 1, 2010, and have identified an additional 10 percent general revenue spending reduction for the 2012-13 budget which will be finalized in the new legislative session. The 10 percent reduction for the new budget would be on top of any other cuts that go into effect for the current fiscal year. 

For the latest rounds of cuts, Dallas Morning News reports that Dewhurst has noted the 2-3% cuts won’t be across-the-board but targeted reductions; similar to the first round of cuts which included hiring freezes and 1% provider rate cuts.

Clients can expect the budget crisis to be what some have called the driving force behind nearly every decision during the 82nd Legislature. At this time, leadership and many members of the Legislature, are talking of balancing the budget only with cuts and without new revenue.  The total reductions to be made will have a significant impact on available funding for many major programs across the state.  For the first time in years, cuts in core state services and layoffs of state employees are possible.  Given the severity of the budget shortfall, every area of the budget will be affected.  The legislature convenes Tuesday, January 11th and will last for 140 days. Insiders are saying special sessions dealing with budget and other major issues are likely.

For more information on the budget process: