On Tuesday, both the House and the Senate rolled out their proposed budgets. SB 1 will be the bill to follow since the Senate will initiate the discussions this session. These proposals will be a starting point for discussions that will undergo multiple revisions in committee and in their respective chambers before being sent to the Governor at the end of the 85th Session.  For more details on the process: Senate Budget 101.
 
Senate Finance will start meetings on Monday, January 23 and have posted meetings on SB 1 until February 15 (View Senate Finance Posted Hearings Jan. 23-Feb 15). 
 
The Senate first released their budget plan on January 17. SB 1, as filed, would spend $213 billion in All Funds (AF) and of that – $103.6 billion in General Revenue (GR).
 
The House then released their two-year state budget plan which would spend $221.3 billion in All Funds and of that – $108.9 million in General Revenue (GR). GR – state funds – are the amount lawmakers have the most discretion over during the appropriations process.
 
The House and Senate proposals, however, do not agree on the size of the current budget. The Senate LBB summary says the project expended and budgeted amounts for the 2016-17 biennium are estimated to increase by approximately $4.6 billion in All Funds noting the most significant non-GR funds increase occurs in Federal Funds and mainly consists of increases for Health and Human Services $1.1 billion.
 
The House LBB summary says the project expended and budgeted amounts for the 2016-17 biennium are estimated to increase by approximately $7.1 billion in All Funds noting the most significant non-GR funds increase occurs in Federal Funds and mainly consists of increases for Health and Human Services $2.5 billion.
 
This difference is notable since the amounts appropriated in the supplemental bill will impact the “Spending limit,” possibly increasing the cap set in December. As reported in the HillCo Client Advisory when the Legislative Budget Board met they set the rate of growth of 8.0 percent to the amounts appropriated in 2016-17 biennium which includes amounts in the supplemental appropriations bill.
 
Another notable difference is the Senate proposed budget provides a 1.5 percent across-the board reduction in an Article IX provision. The reduction would apply to all GR appropriations made in Articles I to VIII and Article X, with the exception of those for the Foundation School Program at the Texas Education Agency.
 
Spotlight on LBB Summary Highlights for Senate and House Proposed Budgets 
RDF/ESF
House & Senate: Both budgets note the 2018-19 recommendations do not contain an appropriation from the fund. The 2018-19 biennial ending cash balance of the Economic Stabilization Fund (ESF), also known as the Rainy Day Fund (RDF), would be $11.9 billion absent any appropriations made by the legislature.  
 
Transportation
House & Senate: $28.2 billion in All Funds is provided for all functions of the Department of Transportation with $24.7 billion in All Funds is provided for highway planning and design, right-of-way acquisition, construction, and maintenance and preservation.
 
Behavioral Health  
Senate: Funding includes $3.5 billion in All Funds ($2.8 billion in General Revenue Funds and General Revenue–Dedicated Funds) for non-Medicaid/CHIP behavioral health services. Funding supports programs at 18 agencies across six articles. Funding also includes $95.6 million in General Revenue Funds, contingent on passage of legislation produced by the House Select Committee on Mental Health, and $62.6 million in General Revenue Funds for the biennium to address current and projected wait-lists for community mental health services for adults and children.

House: Funding includes $3.4 billion in All Funds ($2.7 billion in General Revenue Funds and General Revenue–Dedicated Funds) for non-Medicaid behavioral health services. Funding supports programs at 16 agencies across five articles. Funding also includes $95.6 million in General Revenue Funds, contingent on passage of legislation produced by the House Select Committee on Mental Health, and $62.6 million in General Revenue Funds for the biennium to address current and projected waitlists for community mental health services for adults and children.
 
Child Protective Services
House & Senate: $3.2 billion in All Funds, including $1.9 billion in General Revenue Funds, is provided for all Child Protective Services (CPS) functions at the Department of Family Services (DFPS). This is an increase of $260.1 million in All Funds and $310.6 million in General Revenue over the 2016–17 base. Funding includes 828.8 full-time-equivalent (FTE) positions and an increase of $331.8 million in All Funds.
 
Article II Health and Human Services 
Senate: All Funds for Article II – Health and Human Services total $77.3 billion, a decrease of $1.2 billion from the 2016–17 biennium. General Revenue Funds and General Revenue–Dedicated Funds total $33.7 billion, an increase of $142.3 million from the 2016–17 biennium.

House: All Funds for Article II Health and Human Services total $81.8 billion, an increase of $736.4 million from the 2016–17 biennium. General Revenue Funds and General Revenue–Dedicated Funds total $35,670.5 million, an increase of $876.3 million from the 2016–17 biennium.
 
ECI 
House & Senate: Funding for the Early Childhood Intervention (ECI) Program totals $282.4 million in All Funds ($60.7 million in General Revenue Funds) for the 2018–19 biennium, reflecting an increase of $5.5 million in All Funds ($5.1 million in General Revenue Funds) from 2016–17 spending levels. The increase is primarily related to projected caseload growth in the ECI program.
 
Medicaid
Senate: $61.2 billion in All Funds, including $24.9 billion in General Revenue Funds and $0.2 billion in General Revenue–Dedicated Funds, is provided for the Texas Medicaid program. The 2016–17 amounts for Medicaid do not assume supplemental funding for fiscal year 2017. 2018–19 amounts do not include funding to support projected caseload growth, maintain fiscal year 2017 average costs, or fund anticipated increases in cost due to medical inflation, higher utilization, or increased acuity.
 
House: $65.1 billion in All Funds, including $26.8 billion in General Revenue Funds and $0.2 billion in General Revenue–Dedicated Funds, is provided for the Texas Medicaid program. The 2016–17 amounts for Medicaid assume supplemental funding to complete fiscal year 2017 expenditures. Increased funding for Medicaid client services supports caseload growth and maintains fiscal year 2017 average costs for most services. 
 
Foundation School Program
Senate: $34.1 billion in General Revenue Funds and $42.4 billion in All Funds.
House: $35.6 billion in General Revenue Funds (level funding from 2016-17 biennium) and $43.9 billion in All Funds (3.5% increase from 2016-17 biennium).
 
Senate: N/A
House: The General Revenue funding for the FSP represents an increase of $1.5 billion over what is estimated to be required to fund the current law FSP entitlement, contingent on enactment of legislation to reform the school finance system in a manner that improves equity, reduces recapture, and increases the state share of the FSP.
 
Instructional Materials and Technology
Senate: Based on a distribution rate of 48.6% of the Permanent School Fund (PSF) to the Available School Fund (ASF).  
House: Based on a distribution rate of 50% of the Permanent School Fund (PSF) to the Available School Fund (ASF).  
 
Texas Education Agency
House & Senate: Funding is provided for School Improvement and Governance Support which shall be used to provide intervention, governance and turnaround assistance, and technical assistance to campuses, districts, and charter schools.

House & Senate: Both have the following rider- Individuals with Disabilities Education Act State Maintenance of Financial Support. To the extent necessary, out of amounts appropriated above to the Foundation School Program, state maintenance of financial support (MFS) amounts for Part B of the Individuals with Disabilities Education Act (IDEA) are made available from the Regular Program Allotment for use by required entities receiving Foundation School Program payments in each fiscal year of the biennium to ensure the state's compliance with IDEA MFS. TEA shall post the amounts made
available in order to comply with this provision on its website as necessary.
 
Border Security
Senate: Funding of $800.0 million in state funds is provided to fund border security purposes at the Department of Public Safety (DPS).
House: $663.2 million in state funds is provided to fund border security purposes at the Department of Public Safety (DPS).
 
TERP
Senate: Funding provides $208.7 million from the General Revenue–Dedicated Texas Emissions Reduction Plan (TERP) Account No. 5071 to fund TERP, a set of programs that provide financial incentives to limit pollution from vehicles and equipment. This is a reduction of $27.7 million from the 2016–17 biennium.
 
House: Funding for the Commission on Environmental Quality provides $236.3 million from the General Revenue–Dedicated Texas Emissions Reductions Plan (TERP) Account to continue to fund TERP at the 2016–17 funding level.